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CIMIC Group is an engineering-led
construction, mining, services and
public private partnerships leader
with a history dating back to 1899.
Peak Downs Coal Mine
Thiess, Queensland, Australia
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Maintenance Docking of HMAS Toowoomba, Henderson Common User Facility
UGL, Western Australia
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Executive Chairman’s review
CIMIC is in a strong position,
with a high level of demand
for our operations.
And CIMIC is at the forefront, leveraging
our world of experience and expertise,
using our culture of innovation, and
further building our capabilities and
skills, to lead the digital transformation in
our industries.
For CIMIC Group, digital transformation
is not about technology adoption for the
sake of it. It’s about changing the way we
work so we’re adding more value to our
clients, stakeholders and communities.
It is about turning insights into solutions
by producing results that are grounded
in a deep understanding of our clients’
needs, priorities, challenges and
opportunities.
Thank you
In summary, CIMIC is in an excellent
position. Demand for our operations is
robust, led by the strong performance
of the mining sector, an increasing
level of infrastructure opportunities in
Australia, and the trends towards more
outsourcing of services and for greater
investment in PPPs.
Our pipeline of work has further
increased and we have a positive outlook
for 2019 and beyond.
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 our Annual General Meeting on 11 April
2019.
Sincerely
Marcelino Fernández Verdes
Executive Chairman
This kind of proactive collaboration, as
a committed part of our culture, is at
the heart of our competitive advantage,
equipping us to win and execute the
most sought after projects.
Our Principles – integrity, accountability,
innovation and delivery, underpinned by
safety – are essential to this and were
evident throughout the year.
Also crucial to our culture is our
commitment to continue to build a truly
diverse global team, keeping them safe
and prioritising health and wellbeing in
all that we do. We increased our focus
this year on providing an inclusive
workplace – one where our people feel a
sense of belonging and safety.
Diversity of thought, experience and
skills will only make our business
stronger, so we are undertaking activities
(such as unconscious bias training) to
encourage greater intentionality by our
people in the pursuit of different ways of
thinking.
Digital transformation
With greater opportunities for our
people to collaborate comes greater
opportunities to work with the future
in mind.
Our industries have always faced the
traditional levers of change, such
as commodity cycles, infrastructure
investment levels and social priorities.
Today they also face new change agents,
with the greatest of these being digital
transformation.
In construction, mining, services and
PPPs, we are seeing advances in
people, process and daily practice
due to digitalisation and intelligent
technologies.
The speed of data capture and
information sharing, automation, artificial
intelligence, augmented reality, machine
learning, advanced analytics, the
internet of things, digital collaboration,
5D building information management,
drones and more are changing the way
we work.
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CIMIC Group I Annual Report 2018
4
Dear shareholders,CIMIC Group has a unique position in our markets globally. A family of industry leaders, our businesses offer integrated, engineering-led strength in construction, mining, services and public private partnerships (PPPs). In 2018, we focused on enhancing this collective capability, to provide our clients with enduring value across the lifecycle of assets, infrastructure and resources projects.It is an approach that has driven performance for our shareholders and clients, provided exciting opportunities for our people, and will power the next phase of our transformation through digitalisation and innovation. Shareholder returnsThe value of our end-to-end offering is evident in our achievement of an outstanding operational performance and excellent returns for shareholders during the year in review.We achieved improved returns in 2018, reporting net profit after tax of $781 million, an increase of 11% on 2017 and at the top of our profit guidance range. Our strong performance enabled the Board to declare a final dividend of 86 cents per share to be paid on 4 July 2019 and franked at 100%. Total dividends declared for 2018 were 156 cents per share, representing a payout ratio of 64.8%.Our people and cultureThese results were possible because of our people’s passion and commitment to work as a team.Collaborating across our companies, our people secured and delivered work that provided clients with the best outcomes by combining our expertise across construction, mining, services, PPPs and engineering. Deep Tunnel Sewerage Phase 2 Contract T-09
Leighton Asia, Singapore
Chief Executive Officer’s review
Dear shareholders,
2018 was another successful
year for CIMIC Group, with
strong, sustainable growth
in our profit, revenue and
dividends.
Behind this performance is a talented
team of around 50,000 people, who
delivered exceptional results for our
clients in more than 20 countries.
A safe and sustainable approach
Reflecting the importance of our
people to our success, we increased
our focus on their development during
2018, including expanding our safety
commitment and leadership programs,
and giving greater attention to diversity
and inclusion.
This will continue during 2019 as we
advance on our digital transformation
journey, upholding the behaviours
necessary to support effective, practical
digital transformation, and developing
new skills in our people.
We also gave more focus to the
importance of being client-connected –
listening to and learning from our clients
– so that we know where the greatest
value lies for our projects and clients,
and can solve problems collaboratively.
strengthened our balance sheet.
Highlights of the 2018 result when
compared with 2017 were:
We have more work to do in 2019 to
ensure we actively listen to client and
partner feedback, and take on board
opportunities to improve our decision-
making and performance.
Fundamental to our approach to
delivery, growth and sustainability is
continual improvement and innovation.
Across our Operating Companies, we
are building a reputation as a provider
of choice with our clients, and creating
a positive legacy for our people,
stakeholders and communities.
This was evident in our sustainability
performance, including recognition by
the Dow Jones Sustainability Indices and
FTSE4Good Index. I encourage you to
review our Sustainability Report within
this Annual Report.
Performance overview
In 2018, our operating performance
was again strong, with an outstanding
financial result and a growing and
diverse portfolio of work in hand across
our core businesses.
We achieved net profit after tax at the
top end of our guidance and further
• Net profit after tax of $781 million, up
11%, at the top end of guidance;
• Revenue1 of $14.7 billion, up 9%, with
all Operating Companies recording
growth;
• Stable margins2;
• Strong cash flows from operating
activities3 of $1.9 billion, up 22%;
• Free operating cash flow4 of
$1.2 billion, up 18%; and
• Net cash of $1.6 billion at 31 December
2018, up by $709 million.
Further details on our performance are
contained in the Operating and Financial
Review section within this Annual
Report.
New work and outlook
With a focus on providing end-to-end
capabilities for our clients, our work in
hand5 grew to $36.7 billion at the end
of 2018, with the work in hand from our
Operating Companies up $1.8 billion year
on year.
* See page 9 for footnotes
5
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CIMIC Group I Annual Report 2018
CIMIC Group I Capability Statement
This included reaching contractual
close on the Waikeria Corrections and
Treatment Facility PPP in New Zealand,
using our financial strength through
Pacific Partnerships and the expertise of
CPB Contractors, to provide a whole-of-
life solution.
We delivered an integrated approach
for Victoria’s Metro Tunnel project,
combining our rail expertise in CPB
Contractors, UGL and EIC Activities to
secure this project as the premier rail
services provider in the region.
We also applied our integrated approach
to secure the line-wide rail works for
the Sydney Metro City and Southwest
project (Australia’s biggest public
transport project), with CPB Contractors
and UGL working together to provide a
unique solution for our client.
In mining and mineral processing, Thiess
and Sedgman achieved significant
growth in Australia and overseas, further
diversifying our portfolio by commodity
and geography. We secured mining
works in NSW and Queensland, further
extended our operations in the copper
belt of Chile, and won work at the
Pumpkin Hollow Copper concentrator in
the USA.
Our services division UGL also further
increased its market share with a range
of project wins and extensions across
the oil and gas, mining and rail sectors.
Our future
Our robust work in hand position,
combined with our focus on bidding
discipline, means we are positioned to
achieve net profit after tax in the range
of $790 million to $840 million in 2019,
subject to market conditions.
There are at least $130 billion of tenders
relevant to CIMIC Group expected to be
bid and/or awarded in 2019, and around
$300 billion of projects are coming
to the market in 2020 and beyond,
including about $120 billion worth of
PPP projects.
We are well positioned for this pipeline
as we leverage our unique collaborative
offer, and our discipline and creativity, to
drive results that benefit our clients, our
people and our shareholders.
Sincerely
Michael Wright
Chief Executive Officer
Fundamental to our
approach to growth
and sustainability
is continual
improvement and
innovation.
CIMIC Group I Annual Report 2018
CIMIC Group I Capability Statement
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9
2018
$781m
Amount of net profit after tax for 2018,
an increase of 11% to the top end of guidance
of $720m to $780m.
31km
Of tunnels delivered by CPB Contractors in
2018, bringing the company’s total tunnelling
work to 380km.
17,500
The approximate number of wheels changed
by UGL on rail rolling stock during 2018.
$36.7bn
Our work in hand5 as at December 2018.
Operating Company work in hand rose
$1.8 billion during 2018.
1,400
The number of Thiess apprentices trained at
the Balikpapan Training Facility, Kalimantan,
Indonesia to Australian standards since its
inception in 1992.
5.3 terabytes
Data captured by Sedgman through 3D scanning
of brownfields infrastructure, delivering improved
production and safety through improved
optimisation and reduced on-site changes.
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CIMIC Group I Annual Report 2018
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2018
at a
glance
Operations and Maintenance (Services) Workshop
UGL, Queensland, Australia
$1.9bn
Our cash flow from operating activities3, an
increase of 22%; representing 109% conversion
of EBITDA (earnings before interest, tax,
depreciation and amortisation).
10
The record number of tunnel boring machines
ordered by CPB Contractors in 2018, including
the two biggest machines ever used in the
Southern Hemisphere.
36,782
Number of participants who completed Code
of Conduct and related training (including
unconscious bias, anti-bullying and harassment)
during 2018.
$1.6bn
In net cash, underscoring our robust financial
position. Net cash increased by $709m during
the year.
20,000 hours
Spent working on improvements to the way we
operate in 2018. EIC Activities, in collaboration
with our Operating Companies, has invested in
43 innovation projects.
2.5m
Premises made ready for an nbn service
by Ventia’s Visionstream in Australia, using
26,000km of fibre optic broadband cable.
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CIMIC Group I Annual Report 2018
8
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 and taxes.
4 Free operating cash flow is defined as net cash from operating activities less net capital
expenditure for property, plant and equipment.
5 Order book or work in hand includes CIMIC’s share of work in hand from joint ventures
and associates.
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Northern Beaches Hospital
CPB Contractors supported
by EIC Activities
New South Wales
Australia
Contents
Directors’ Report
Operating and Financial Review
Remuneration Report
Sustainability Report
Financial Report
Additional Information
Shareholdings
Shareholder Information
Glossary
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56
132
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245
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CIMIC Group I Annual Report 2018
10
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).
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Mt Arthur mining services Thiess, New South Wales, AustraliaThiess is undertaking its third successive contract with BHP at Mt Arthur Coal Australia, recognition of the team’s specialist mining capability within the complex geology of Australia’s Hunter Valley and our ability to work flexibly and responsively with our client.Thiess has a proud history working in the Hunter Valley, where it has operated since the 1940s. Today Thiess provides mining services at three locations in the region, operates two maintenance workshops and contributes significantly to regional employment, local suppliers and businesses.The five-year contract expands the scope of Thiess’ operations to cover services as operator of the southern end of the Mt Arthur operations and includes design, planning and scheduling services, as well as drill and blast operations. t
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CIMIC Group Limited Annual Report 2018 | Directors’ Report
Directors’ Report
The Directors present their report for the 2018 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 5 February 2019.
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 1994, he became General Manager of OCP and in 1997, General Manager of ACS Proyectos,
Obras y Construcciones, and then took over as Chairman and CEO in 2000. Following the merger between ACS and Dragados in
2003, Mr Fernández Verdes took office as Chairman and CEO of Dragados S.A. He served as Chairman and CEO of Construction,
Environment and Concessions at ACS Actividades de Construcción y Servicios S.A. from 2006. Mr Fernández Verdes was appointed
to the Executive Committee of the ACS Group in 2000, and to the Board of Directors of ACS Servicios y Concesiones, S.L. (Chairman
and CEO) in 2006. 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. In May 2017, he became a member of the Board of Directors of ACS Group, as CEO. Since May 2018, he has
been the President of the Board of Directors of Abertis.
MICHAEL WRIGHT
Chief Executive Officer and Managing Director
MEngSc, BEng (Civil), FIEAust
Appointed Chief Executive Officer and Managing Director on 1 December 2017.
Mr Wright has a Bachelor of Engineering (Civil) from the University of Sydney and a Master of Engineering Science from the
University of New South Wales.
Mr Wright is a highly regarded leader with experience across multi-disciplinary projects in Australia, Asia, Africa and the Americas.
With more than 25 years experience across the mining, construction and services sectors, and over 20 years with the CIMIC Group,
he has held 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 of Thiess’ Australian Mining business and Thiess’ Services business,
General Manager of Leighton Asia’s China and Mongolia operations, and General Manager of Silcar, a joint venture between Thiess
and Siemens.
Mr Wright serves as a Director of the Minerals Council of Australia and is 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).
CIMIC Group I Annual Report 2018
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CIMIC Group Limited Annual Report 2018 | Directors’ Report
CIMIC Group Limited Annual Report 2018 | 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, is a Director and Board
Secretary of Dragados, S.A. 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 formerly a
director of Regis Healthcare Limited (from October 2014 to 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 is Ingeniero de Caminos Canales y Puertos 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 CESPA, 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), and 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 a Board Member of ACS Group and Vice Chairman of its Executive Committee, Vice Chairman of
Dragados S.A., Vice Chairman of ACS Services y Concesiones S.A. and Vice Chairman ACS Servicios Communicaniones y Energia S.A.;
Chair of Supervisory Board of HOCHTIEF AG, and Board Member of Abertis.
Mr López Jiménez is also Chairman of the Royal Board of the National Library of Spain and Board Member of the Malaga Picasso
Musuem.
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.
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DAVID ROBINSON
Non-executive Director
MCom, BEc, FCA, CTA
2011 to June 2013).
Appointed Non-executive Director in December 1990.
Member of the Ethics, Compliance and Sustainability Committee.
Previously an Alternate Director for Mr López Jiménez (from June 2014 to October 2017) and Mr Peter Sassenfeld (from November
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. He is also principal of Harveys Consulting. Mr Robinson is a Director of Catholic Schools NSW Limited. Mr Robinson is a
Director of HOCHTIEF Australia and was a former Director of Leighton Properties from May 2000 to August 2012. 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 the Chairman of 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.
KATHRYN SPARGO
Independent Non-executive Director
LLB (Hons), BA, FAICD
Appointed Non-executive Director in September 2017.
Chairman of the Ethics, Compliance and Sustainability Committee.
Mr Sassenfeld was appointed as the CFO of HOCHTIEF AG in November 2011 and is also the CFO of HOCHTIEF Solutions AG. Mr
Sassenfeld is a Director of HOCHTIEF Australia, The Turner Corporation and Flatiron Holding Inc. Mr Sassenfeld has previously
worked as the CFO of Ferrostaal AG and Krauss Maffei AG and in senior finance roles at Bayer AG and the Mannesmann Group.
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, Coinvest Ltd and Future Fuels Cooperative Research Centre. Ms Spargo’s previous Board positions included
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
Alternate Director for Mr Sassenfeld.
Mr Muriel joined the ACS group in 1995, and has held a number of global senior executive positions.
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.I In 2012 he became Head of Corporate Mergers and Acquisitions at HOCHTIEF AG, 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 Chief Financial Officer.
Since May 2017, Mr Muriel has a senior role at the ACS in Madrid, Spain.
18
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, is a Director and Board
Secretary of Dragados, S.A. 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.
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 formerly a
director of Regis Healthcare Limited (from October 2014 to November 2017).
PEDRO LÓPEZ JIMÉNEZ
Non-executive Director
MEng (Civil), MBA
Mr López Jiménez is Ingeniero de Caminos Canales y Puertos 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 CESPA, 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), and 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 a Board Member of ACS Group and Vice Chairman of its Executive Committee, Vice Chairman of
Dragados S.A., Vice Chairman of ACS Services y Concesiones S.A. and Vice Chairman ACS Servicios Communicaniones y Energia S.A.;
Chair of Supervisory Board of HOCHTIEF AG, and Board Member of Abertis.
Mr López Jiménez is also Chairman of the Royal Board of the National Library of Spain and Board Member of the Malaga Picasso
Mr López Jiménez is currently the 1st Vice Chairman of the European Club Association (E.C.A) and Vice Chairman of the Real Madrid
Musuem.
Football Club.
CIMIC Group Limited Annual Report 2018 | Directors’ Report
CIMIC Group Limited Annual Report 2018 | Directors’ Report
DAVID ROBINSON
Non-executive Director
MCom, BEc, FCA, CTA
Appointed Non-executive Director in December 1990.
Member of the Ethics, Compliance and Sustainability Committee.
Previously an Alternate Director for Mr López Jiménez (from June 2014 to 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. He is also principal of Harveys Consulting. Mr Robinson is a Director of Catholic Schools NSW Limited. Mr Robinson is a
Director of HOCHTIEF Australia and was a former Director of Leighton Properties from May 2000 to August 2012. 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 the Chairman of 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.
Chairman of the Remuneration and Nomination Committee. Member of the Audit and Risk Committee and the Ethics, Compliance
Mr Sassenfeld has an MBA from the University of Saarland.
Appointed Non-executive Director in March 2014.
Member of the Ethics, Compliance and Sustainability Committee and the Remuneration and Nomination Committee.
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.
Mr Sassenfeld was appointed as the CFO of HOCHTIEF AG in November 2011 and is also the CFO of HOCHTIEF Solutions AG. Mr
Sassenfeld is a Director of HOCHTIEF Australia, The Turner Corporation and Flatiron Holding Inc. Mr Sassenfeld has previously
worked as the CFO of Ferrostaal AG and 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.
Chairman of the Ethics, Compliance and Sustainability Committee.
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 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, Coinvest Ltd and Future Fuels Cooperative Research Centre. Ms Spargo’s previous Board positions included
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
Alternate Director for Mr Sassenfeld.
Mr Muriel joined the ACS group in 1995, and has held a number of global senior executive positions.
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.I In 2012 he became Head of Corporate Mergers and Acquisitions at HOCHTIEF AG, 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 Chief Financial Officer.
Since May 2017, Mr Muriel has a senior role at the ACS in Madrid, Spain.
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CIMIC Group Limited Annual Report 2018 | 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 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 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. He was a Director of Investa Office Fund
Management (from July 2016 to December 2018) and Investa Listed Funds Management Limited (from April 2016 to December
2018). 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
Alternate Director for Mr López Jiménez.
Mr Valderas was previously CEO and Managing Director of CIMIC Group up until 30 November 2017. Mr Valderas is a civil engineer
with proven expertise in leading companies with complex, multinational operations across Australia, Europe, the United States,
Canada, South America, Asia and China.
With more than 25 years experience, Mr Valderas has held various senior executive positions within the construction, services,
mining and concessions sectors. 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.
CIMIC Group Limited Annual Report 2018 | Directors’ Report
BOARD MEETINGS
2018 Financial Year are set out in the table below.
The number of Board and Board Committee meetings held, and the number of meetings attended by each Director, during the
Board
Audit & Risk
Ethics, Compliance &
Remuneration &
Committee
Sustainability
Committee
Nomination
Committee
Board Sub-
Committee#
H
7
7
7
7
7
7
7
7
7
-
-
-
A
7
7
7
5
7
7
7
5
7
3*
4*
4*
H
-
-
4
-
4
-
-
4
-
-
-
-
A
4+
4+
4
2+
4
4+
4+
4
4+
3*
4*
4*
H
-
-
4
4
4
4
4
-
4
-
-
-
A
4+
4+
4
2
4
3
4
2+
4
1*
4*
4*
H
-
-
3
3
3
3
-
-
-
-
-
-
A
2+
3+
3
1
3
2
3+
1+
3+
1*
3*
3*
H
1
1
1
-
-
-
1
-
1
-
-
-
A
1
1
1
-
-
-
1
-
1
1
1*
-
Directors
M Fernández
Verdes
M Wright
R Chenu
J L del Valle Pérez
T Gerber
P Lopéz Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
Á Muriel1
R Seidler AM2
A Valderas3
H
A
*
+
The number of meetings held during the period the Director/Alternate Director was a member of the Board and/or Committee.
The number of meetings attended by the Director during the period the Director/Alternate Director was a member of the Board and/or
Committee.
# Matters delegated to a sub-committee of the Board.
The number of meetings attended by the Alternate Director in his capacity as an Alternate Director or as a standing invitee.
The number of meetings attended by the Director as a standing invitee of the Committee.
1 Mr Muriel is currently an Alternate Director for Mr Sassenfeld.
2 Mr Seidler is currently an Alternate Director for Mr del Valle Pérez.
3 Mr Valderas is currently an Alternate Director for Mr López Jiménez.
In addition to scheduled meetings, briefing sessions were held for Directors during the year.
Between 2000 and 2010, Mr Valderas held roles with Dragados, including as Deputy International Manager. Prior to 2000, he held a
variety of positions within the construction industry. He has direct experience in delivering projects in high speed rail, road and
bridges, water treatment, construction, services, operations, maintenance and PPPs.
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.
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 Criminal Justice 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 18 years experience in a company secretary
role. Ms Nikolopoulos is also the company secretary of a number of subsidiaries of CIMIC.
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CIMIC Group Limited Annual Report 2018 | Directors’ Report
CIMIC Group Limited Annual Report 2018 | Directors’ Report
BOARD MEETINGS
The number of Board and Board Committee meetings held, and the number of meetings attended by each Director, during the
2018 Financial Year are set out in the table below.
Board
Audit & Risk
Committee
Ethics, Compliance &
Sustainability
Committee
Remuneration &
Nomination
Committee
Board Sub-
Committee#
H
7
7
7
7
7
7
7
7
7
-
-
-
A
7
7
7
5
7
7
7
5
7
3*
4*
4*
H
-
-
4
-
4
-
-
4
-
-
-
-
A
4+
4+
4
2+
4
4+
4+
4
4+
3*
4*
4*
H
-
-
4
4
4
4
4
-
4
-
-
-
A
4+
4+
4
2
4
3
4
2+
4
1*
4*
4*
H
-
-
3
3
3
3
-
-
-
-
-
-
A
2+
3+
3
1
3
2
3+
1+
3+
1*
3*
3*
H
1
1
1
-
-
-
1
-
1
-
-
-
A
1
1
1
-
-
-
1
-
1
1
1*
-
Directors
M Fernández
Verdes
M Wright
R Chenu
J L del Valle Pérez
T Gerber
P Lopéz Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
Á Muriel1
R Seidler AM2
A Valderas3
H
A
The number of meetings held during the period the Director/Alternate Director was a member of the Board and/or Committee.
The number of meetings attended by the Director during the period the Director/Alternate Director was a member of the Board and/or
Committee.
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.
# Matters delegated to a sub-committee of the Board.
*
+
1 Mr Muriel is currently an Alternate Director for Mr Sassenfeld.
2 Mr Seidler is currently an Alternate Director for Mr del Valle Pérez.
3 Mr Valderas is currently an Alternate Director for Mr López Jiménez.
In addition to scheduled meetings, briefing sessions were held for Directors during the year.
Between 2000 and 2010, Mr Valderas held roles with Dragados, including as Deputy International Manager. Prior to 2000, he held a
variety of positions within the construction industry. He has direct experience in delivering projects in high speed rail, road and
bridges, water treatment, construction, services, operations, maintenance and PPPs.
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.
ROBERT SEIDLER AM
Alternate Director
LLB
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 October 2017). Mr Seidler AM has served as an Alternate Director for a number of HOCHTIEF-nominated directors dating
He has a degree in Law from the University of Sydney and is a former partner of 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. He was a Director of Investa Office Fund
Management (from July 2016 to December 2018) and Investa Listed Funds Management Limited (from April 2016 to December
2018). 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
Alternate Director for Mr López Jiménez.
Mr Valderas was previously CEO and Managing Director of CIMIC Group up until 30 November 2017. Mr Valderas is a civil engineer
with proven expertise in leading companies with complex, multinational operations across Australia, Europe, the United States,
Canada, South America, Asia and China.
With more than 25 years experience, Mr Valderas has held various senior executive positions within the construction, services,
mining and concessions sectors. 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.
COMPANY SECRETARIES’ RESUMÉS
LOUISE GRIFFITHS
Company Secretary
BSc, BA, AGIA
CIMIC.
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 Criminal Justice 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
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 18 years experience in a company secretary
role. Ms Nikolopoulos is also the company secretary of a number of subsidiaries of CIMIC.
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CIMIC Group Limited Annual Report 2018 | Directors’ Report
CIMIC Group Limited Annual Report 2018 | Directors’ 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.
OPTIONS
As at the date of this Directors’ Report, there are 178,513 options on issue. 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.
Name
Relevant interests in CIMIC
Relevant interests in ACS and/or HOCHTIEF AG
2015 options
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
Ordinary
shares
2,7452
-
4,085
1,0002
2,000
1,1922
1,489
1,8582
3,000
14,991
2,941
2,500
Options1
Ordinary
shares
-
23,537
-
-
-
-
-
-
-
36,377
-
20,924
13,336 (ACS)
822,369 (ACS)*
12,931 (HOCHTIEF AG)
-
-
286,223 (ACS)
-
564,284 (ACS)~
-
11,841 (HOCHTIEF AG)
-
4,162 (ACS)
900 (ACS)
1,563 (ACS)
Options
over shares
500,000 (ACS)
-
-
275,000 (ACS)
-
-
-
-
-
275,000 (ACS)
-
200,000 (ACS)
Number of participants at date of grant
Date of grant
Exercise price
Expiry date
Number of options
Original number issued
On issue 6 Feb 20181
Lapsed since 6 Feb 2018
Exercised since 6 Feb 2018
1
The Company has determined that all options available to be exercised will be paid in cash in lieu of an allocation of shares (refer to the
Remuneration Report for a summary of our option plan and ‘Note 36: Employee benefits’ to the Financial Report within this Annual Report for
further details).
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).
2
*
~
No Director held a relevant interest in Devine.
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 2018 Financial Year:
the Company submitted its NGER Scheme report with EY, our NGER Scheme external auditor, providing limited assurance; and
across the 159.1 million hours worked on projects there were no material breaches of legislation or conditions of approval
(ie, those resulting in prosecution, significant financial penalties or contractual action against the Company, executive officers
or individuals). However, there were 21 breaches which involved written warnings from environmental regulators and five
fines totalling $21,379, 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.
controlled entity.
21
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22
36
29 October 2015
$27.53
29 October 2020
735,636
311,088
(11,444)
(121,131)
178,513
On issue 5 Feb 20192
1
2
Date of this Directors’ Report.
Date of the Directors’ Report contained in the 2017 CIMIC Annual Report.
On vesting, these options may be satisfied through the issue of ordinary shares in the Company, the allocation of ordinary shares in
the Company acquired on-market or in cash in lieu of an allocation of shares. During the 2018 Financial Year all vested options were
satisfied in cash. On 23 October 2018, the Company determined that all remaining options also be settled in cash in lieu of an
allocation of shares. Holders of these 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 options.
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, secretary or assistant secretary of the
Company or its related bodies corporate.
The Constitution states that, to the full extent permitted by law, the Company indemnifies each 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-
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 2018 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.
CIMIC Group Limited Annual Report 2018 | Directors’ Report
CIMIC Group Limited Annual Report 2018 | Directors’ Report
DIRECTORS’ INTERESTS
Directors’ Report are listed in the table below.
Details of the Directors’ relevant interests in the issued capital of the Company and its related body corporates as at the date of this
OPTIONS
As at the date of this Directors’ Report, there are 178,513 options on issue. 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.
Name
Relevant interests in CIMIC
Relevant interests in ACS and/or HOCHTIEF AG
2015 options
Options
over shares
500,000 (ACS)
Number of participants at date of grant
Date of grant
Exercise price
Expiry date
Number of options
Original number issued
On issue 6 Feb 20181
Lapsed since 6 Feb 2018
Exercised since 6 Feb 2018
On issue 5 Feb 20192
36
29 October 2015
$27.53
29 October 2020
735,636
311,088
(11,444)
(121,131)
178,513
1
2
Date of the Directors’ Report contained in the 2017 CIMIC Annual Report.
Date of this Directors’ Report.
On vesting, these options may be satisfied through the issue of ordinary shares in the Company, the allocation of ordinary shares in
the Company acquired on-market or in cash in lieu of an allocation of shares. During the 2018 Financial Year all vested options were
satisfied in cash. On 23 October 2018, the Company determined that all remaining options also be settled in cash in lieu of an
allocation of shares. Holders of these 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 options.
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, secretary or assistant secretary of the
Company or its related bodies corporate.
The Constitution states that, to the full extent permitted by law, the Company indemnifies each 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.
Directors
M Fernández Verdes
M Wright
R Chenu
J L del Valle Pérez
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
K Spargo
Á Muriel
R Seidler AM
A Valderas
Alternate Directors
further details).
Ordinary
shares
2,7452
-
4,085
1,0002
2,000
1,1922
1,489
1,8582
3,000
14,991
2,941
2,500
Options1
Ordinary
shares
13,336 (ACS)
822,369 (ACS)*
12,931 (HOCHTIEF AG)
23,537
-
-
-
-
-
564,284 (ACS)~
11,841 (HOCHTIEF AG)
-
-
-
-
-
-
-
-
-
286,223 (ACS)
275,000 (ACS)
-
-
-
-
-
-
-
-
1
The Company has determined that all options available to be exercised will be paid in cash in lieu of an allocation of shares (refer to the
Remuneration Report for a summary of our option plan and ‘Note 36: Employee benefits’ to the Financial Report within this Annual Report for
36,377
20,924
4,162 (ACS)
900 (ACS)
1,563 (ACS)
275,000 (ACS)
200,000 (ACS)
2
*
~
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.
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 2018 Financial Year:
the Company submitted its NGER Scheme report with EY, our NGER Scheme external auditor, providing limited assurance; and
across the 159.1 million hours worked on projects there were no material breaches of legislation or conditions of approval
(ie, those resulting in prosecution, significant financial penalties or contractual action against the Company, executive officers
or individuals). However, there were 21 breaches which involved written warnings from environmental regulators and five
fines totalling $21,379, 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.
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 2018 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.
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CIMIC Group Limited Annual Report 2018 | Directors’ Report
CIMIC Group Limited Annual Report 2018 | Directors’ Report
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.
AUDIT
The declaration by the Group’s external auditor, Deloitte, to the Directors in relation to the auditor’s compliance with the
independence requirements of the Corporations Act, and any applicable code of professional conduct for external auditors, is set
out in the section of this Directors’ Report titled ‘Lead Auditor’s independence declaration under section 307C of the Corporations
Act’.
No person who was an officer of the Company during the 2018 Financial Year was a director or partner of the Group’s external
auditor at a time the Group’s external auditor conducted the audit.
NON-AUDIT SERVICES
Details of the amounts paid or payable to our external auditor, Deloitte, for non-audit services provided during the 2018 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 2018 Financial Year is compatible with the general standard of independence for
auditors imposed by the Corporations Act.
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
2018, 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, 5 February 2019
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 2018 Financial Year and the
quantum of the fees which relate to non-audit services compared with the overall fees;
the Directors believe that none of the services undermine the general principles relating to auditor independence, including
reviewing or auditing Deloitte’s own work, acting in a management or decision-making capacity for the Group, acting as
advocate for the Group or jointly sharing economic risk and rewards; and
these assignments were carried out in accordance with the External Auditor Independence Charter.
The non-audit services supplied to entities within the Group by Deloitte and the amount paid or payable by type of non-audit
service during the 2018 Financial Year were as follows.
Non-audit services
Other assurance services
Taxation and other services
Total
Amount paid/payable $’000
92
-
92
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.
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 2018 Financial Year in accordance with section 295A of the Corporations Act.
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CIMIC Group Limited Annual Report 2018 | Directors’ Report
CIMIC Group Limited Annual Report 2018 | 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
2018, 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
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 2018 Financial Year is compatible with the general standard of independence for
auditors imposed by the Corporations Act.
J A Leotta
Partner
Chartered Accountants
The Board is satisfied that the provision of non-audit services by Deloitte, as set out in the following table, did not compromise the
Sydney, 5 February 2019
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.
AUDIT
Act’.
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
No person who was an officer of the Company during the 2018 Financial Year was a director or partner of the Group’s external
auditor at a time the Group’s external auditor conducted the audit.
NON-AUDIT SERVICES
Details of the amounts paid or payable to our external auditor, Deloitte, for non-audit services provided during the 2018 Financial
Year to entities within the Group are set out in the table below.
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 2018 Financial Year and the
quantum of the fees which relate to non-audit services compared with the overall fees;
the Directors believe that none of the services undermine the general principles relating to auditor independence, including
reviewing or auditing Deloitte’s own work, acting in a management or decision-making capacity for the Group, acting as
advocate for the Group or jointly sharing economic risk and rewards; and
these assignments were carried out in accordance with the External Auditor Independence Charter.
The non-audit services supplied to entities within the Group by Deloitte and the amount paid or payable by type of non-audit
service during the 2018 Financial Year were as follows.
Non-audit services
Other assurance services
Taxation and other services
Total
ROUNDING OF AMOUNTS
Amount paid/payable $’000
92
-
92
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.
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 2018 Financial Year in accordance with section 295A of the Corporations Act.
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CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
Operating and Financial Review
FINANCIAL HIGHLIGHTS
OPERATING PERFORMANCE
Revenue of $14.7 billion up 9.2% on FY17, with all Operating Companies recording growth.
Stable EBIT, PBT and NPAT margins of 7.8%, 7.3% and 5.3% respectively, driven by diligent focus on project delivery and cost
discipline.
PBT of $1,074.7 million up 12.0% on FY17.
NPAT of $780.6 million up 11.2% on FY17, at the top end of guidance range of $720 million to $780 million.
No significant one off impacts.
CASH FLOWS
Strong cash generation with cash flow from operating activities of $1.9 billion, up 22.0% on FY17.
Delivered strong EBITDA conversion rate of 109% in FY18.
Generated free operating cash flow of $1.2 billion in FY18, up 17.7% on FY17.
Strict focus on managing working capital and generating sustainable cash-backed profits.
Gross capital expenditure boosted by investment in tunnelling equipment with ongoing spend on mining equipment driven by
revenue growth.
FINANCIAL POSITION
Robust balance sheet with net cash of $1.6 billion, up $708.5 million since FY17.
Gross debt of $522.8 million, at lowest level since 2007.
Net contract debtors development in line with revenue growth. The $675.0 million contract debtors portfolio provision
remains unchanged.
Substantial capacity with $2.8 billion of undrawn debt facility available at 31 December 2018.
Cost of debt down 30 basis points to 3.8%, reduced from 4.1% at December 2017.
Strength recognised by investment grade ratings from S&P of BBB and Moody’s of Baa2, with stable outlook.
WORK IN HAND AND PIPELINE
Strong work in hand of $36.7 billion, equivalent to more than two years of revenue.
Operating Companies’ work in hand increased by 5.6% or $1.8 billion on FY17, with a significant number of projects
announced during the year.
New work of $17.9 billion awarded in FY18, disciplined bidding maintained.
Extensive project pipeline in our key markets / activities, providing a range of business opportunities.
$130 billion of tenders relevant to CIMIC to be bid and/or awarded in 2019, and around $300 billion of projects are coming to
the market in 2020 and beyond, including about $120 billion worth of Public Private Partnership (PPP) projects.
SHAREHOLDER RETURNS
Final dividend of 86 cents per share, 100% franked, up 14.7% on FY17, to be paid on 4 July 2019.
EPS (basic) was 240.7 cents, up 11.2% on FY17 (in line with 11.2% increase in NPAT).
Total dividend for the year of 156 cents per share, 100% franked, up 15.6% on FY17, representing a payout ratio of 64.8%.
Dividend yield of 3.6% on a share price of $43.41 as at December 2018.
From 2015 – 2018, CIMIC has returned $2.0 billion of cash to shareholders through dividends paid and share buy-backs.
GUIDANCE
FY19 NPAT is expected to be in the range of $790 million to $840 million, subject to market conditions.
Guidance supported by a positive outlook across the Group’s core markets.
25
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FINANCIAL HIGHLIGHTS
Financial performance
$m
Group revenue
Revenue – joint ventures and associates
2018
2017
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
Net cash/(debt) (including operating leases)
Net contract debtors (comparable)3 4
Cash flows
$m
Cash flows from operating activities5
Interest, finance costs and taxes
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
Operating Companies’ work in hand
Corporate work in hand
Total work in hand end of period
December
December
17,252.8
(2,582.6)
14,670.2
1,701.8
11.6%
1,142.6
7.8%
1,074.7
7.3%
780.6
5.3%
240.7c
2018
1,618.9
(807.8)
811.1
1,098.9
2018
1,858.9
(150.4)
1,708.5
(547.4)
82.6
(464.8)
1,243.7
December
2018
36,009.9
17,949.0
-
36,706.1
33,833.1
2,873.0
36,706.1
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
717.9
2017
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)
36,009.9
32,037.0
3,972.9
36,009.9
(17,252.8)
(16,110.7)
chg. $
1,142.1
98.6
1,240.7
188.1
30bp
140.2
30bp
115.5
20bp
78.5
10bp
24.2c
chg. $
708.5
(269.2)
439.3
381.0
chg. $
335.5
10.6
346.1
(123.3)
(36.0)
(159.3)
186.8
chg. $
1,997.9
(420.5)
260.9
(1,142.1)
696.2
1,796.1
(1,099.9)
696.2
chg. %
7.1%
(3.7)%
9.2%
12.4%
14.0%
12.0%
11.2%
11.2%
chg. %
77.8%
50.0%
118.2%
53.1%
chg. %
22.0%
(6.6)%
25.4%
29.1%
(30.4)%
52.1%
17.7%
chg. %
5.9%
(2.3)%
-
7.1%
1.9%
5.6%
(27.7)%
1.9%
1 Revenue excludes revenue from joint ventures and associates of $2,582.6 million (FY17: $2,681.2 million).
2 Margins are calculated on revenue as defined above.
3 The Group has applied AASB 15 with the cumulative effect of initially applying the standards as an adjustment to the opening balance of
net contract debtors. Refer to the Financial Report, ‘Note 1: Summary of significant accounting policies - Basis of preparation’.
4 Net Contract Debtors represents the net amounts of total contract debtors – trade and other receivables and total contract liabilities –
trade and other payables (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 and taxes.
6 Net cash from operating activities is defined as the cash flows from operating activities after interest, finance costs and taxes.
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 Relates to Macmahon work in hand at divestment date, 6 July 2017.
26
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
Operating and Financial Review
FINANCIAL HIGHLIGHTS
OPERATING PERFORMANCE
discipline.
PBT of $1,074.7 million up 12.0% on FY17.
No significant one off impacts.
CASH FLOWS
Revenue of $14.7 billion up 9.2% on FY17, with all Operating Companies recording growth.
Stable EBIT, PBT and NPAT margins of 7.8%, 7.3% and 5.3% respectively, driven by diligent focus on project delivery and cost
NPAT of $780.6 million up 11.2% on FY17, at the top end of guidance range of $720 million to $780 million.
Strong cash generation with cash flow from operating activities of $1.9 billion, up 22.0% on FY17.
Delivered strong EBITDA conversion rate of 109% in FY18.
Generated free operating cash flow of $1.2 billion in FY18, up 17.7% on FY17.
Strict focus on managing working capital and generating sustainable cash-backed profits.
Gross capital expenditure boosted by investment in tunnelling equipment with ongoing spend on mining equipment driven by
revenue growth.
FINANCIAL POSITION
remains unchanged.
Robust balance sheet with net cash of $1.6 billion, up $708.5 million since FY17.
Gross debt of $522.8 million, at lowest level since 2007.
Net contract debtors development in line with revenue growth. The $675.0 million contract debtors portfolio provision
Substantial capacity with $2.8 billion of undrawn debt facility available at 31 December 2018.
Cost of debt down 30 basis points to 3.8%, reduced from 4.1% at December 2017.
Strength recognised by investment grade ratings from S&P of BBB and Moody’s of Baa2, with stable outlook.
WORK IN HAND AND PIPELINE
announced during the year.
Strong work in hand of $36.7 billion, equivalent to more than two years of revenue.
Operating Companies’ work in hand increased by 5.6% or $1.8 billion on FY17, with a significant number of projects
New work of $17.9 billion awarded in FY18, disciplined bidding maintained.
Extensive project pipeline in our key markets / activities, providing a range of business opportunities.
$130 billion of tenders relevant to CIMIC to be bid and/or awarded in 2019, and around $300 billion of projects are coming to
the market in 2020 and beyond, including about $120 billion worth of Public Private Partnership (PPP) projects.
SHAREHOLDER RETURNS
Final dividend of 86 cents per share, 100% franked, up 14.7% on FY17, to be paid on 4 July 2019.
EPS (basic) was 240.7 cents, up 11.2% on FY17 (in line with 11.2% increase in NPAT).
Total dividend for the year of 156 cents per share, 100% franked, up 15.6% on FY17, representing a payout ratio of 64.8%.
Dividend yield of 3.6% on a share price of $43.41 as at December 2018.
From 2015 – 2018, CIMIC has returned $2.0 billion of cash to shareholders through dividends paid and share buy-backs.
GUIDANCE
FY19 NPAT is expected to be in the range of $790 million to $840 million, subject to market conditions.
Guidance supported by a positive outlook across the Group’s core markets.
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
Net cash/(debt) (including operating leases)
Net contract debtors (comparable)3 4
Cash flows
$m
Cash flows from operating activities5
Interest, finance costs and taxes
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
Operating Companies’ work in hand
Corporate work in hand
Total work in hand end of period
2018
2017
chg. $
17,252.8
(2,582.6)
14,670.2
1,701.8
11.6%
1,142.6
7.8%
1,074.7
7.3%
780.6
5.3%
240.7c
December
2018
1,618.9
(807.8)
811.1
1,098.9
2018
1,858.9
(150.4)
1,708.5
(547.4)
82.6
(464.8)
1,243.7
December
2018
36,009.9
17,949.0
-
(17,252.8)
36,706.1
33,833.1
2,873.0
36,706.1
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
December
2017
910.4
(538.6)
371.8
717.9
2017
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
32,037.0
3,972.9
36,009.9
1,142.1
98.6
1,240.7
188.1
30bp
140.2
30bp
115.5
20bp
78.5
10bp
24.2c
chg. $
708.5
(269.2)
439.3
381.0
chg. %
7.1%
(3.7)%
9.2%
12.4%
14.0%
12.0%
11.2%
11.2%
chg. %
77.8%
50.0%
118.2%
53.1%
chg. $
chg. %
335.5
10.6
346.1
(123.3)
(36.0)
(159.3)
186.8
22.0%
(6.6)%
25.4%
29.1%
(30.4)%
52.1%
17.7%
chg. $
chg. %
1,997.9
(420.5)
260.9
(1,142.1)
696.2
1,796.1
(1,099.9)
696.2
5.9%
(2.3)%
-
7.1%
1.9%
5.6%
(27.7)%
1.9%
1 Revenue excludes revenue from joint ventures and associates of $2,582.6 million (FY17: $2,681.2 million).
2 Margins are calculated on revenue as defined above.
3 The Group has applied AASB 15 with the cumulative effect of initially applying the standards as an adjustment to the opening balance of
net contract debtors. Refer to the Financial Report, ‘Note 1: Summary of significant accounting policies - Basis of preparation’.
4 Net Contract Debtors represents the net amounts of total contract debtors – trade and other receivables and total contract liabilities –
trade and other payables (refer to the Financial Report, ‘Note 8: Trade and other receivables’ – ‘Additional information on contract
debtors’).
5 Cash flows from operating activities is defined as the cash flows from operating activities before interest, finance costs and taxes.
6 Net cash from operating activities is defined as the cash flows from operating activities after interest, finance costs and taxes.
7 Gross capital expenditure is payments for property, plant and equipment.
8 Gross capital proceeds are proceeds received from the sale of property, plant and equipment.
9 Free operating cash flow is defined as net cash from operating activities less net capital expenditure for property, plant and equipment.
10 Work in hand includes CIMIC’s share of work in hand from joint ventures and associates.
11 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate movements.
12 Relates to Macmahon work in hand at divestment date, 6 July 2017.
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CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
SHAREHOLDER RETURNS
TOTAL SHAREHOLDER RETURNS
Shareholder returns
Closing share price
Market capitalisation ($m)
Final dividend per share
Interim dividend per share
Total dividends per share
EPS (basic)
Payout ratio for ordinary dividends (2018 estimate at the time the dividend is paid)
31 December
2018
$43.41
14,075.9
86c
70c
156c
240.7c
64.8%
31 December
2017
$51.45
16,682.9
75c
60c
135c
216.5c
62.3%
PERFORMANCE OF CIMIC SHARES
Over the past year, CIMIC’s share price declined by $8.04, representing a decrease of 15.6% since 31 December 2017. By
comparison, the S&P/ASX 200 index decreased by 6.9% to 5,646.4 points during the same period. CIMIC’s market capitalisation
represented $14.1 billion as at 31 December 2018.
Indexed performance of CIMIC shares
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
CIM-AU Close
S&P/ASX 200 Close
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 156 cents per share, 100% franked, up 15.6% on FY17, and comprised of:
an interim dividend of 70 cents per share, 100% franked, paid on 4 October 2018; and
a final dividend of 86 cents per share, 100% franked, to be paid on 4 July 2019.
This represents a full year payout ratio of 64.8% of NPAT.
The final dividend payable of $278.9 million is an estimate, based on the number of shares on issue as at the date of the Financial
Report. Due to the share buy-back referred to below, 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.
During the period, the Group’s major projects included:
rail and road developments in Australia, including Sydney Metro ‘Northwest’ and ‘City & Southwest’, WestConnex ‘M4 East’
and ‘New M5’ in New South Wales, the Level Crossing Removal projects and the West Gate Tunnel project in Victoria, and the
EPS (basic) was 240.7 cents, an increase of 11.2% on FY17 (in line with an 11.2% increase in NPAT).
social infrastructure projects including the Christchurch Hospital in New Zealand and Junee Correctional Centre in New South
SHARE BUY-BACK PROGRAM
On 14 December 2017, 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 2017. No additional shares have been bought back under the 2017 buy-back program.
On 14 December 2018, CIMIC announced 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 2018. As at 5 February 2019, no additional shares had been bought back since
the commencement of the buy-back program. The timing and number of any shares purchased will depend on CIMIC’s share price
and market conditions.
27
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FINANCIAL PERFORMANCE
Financial performance
$m
Group revenue
Revenue – joint ventures and associates
Share of profit/(loss) of joint ventures and
Revenue
Expenses
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)
Revenue by segment
$m
Construction
Mining & mineral processing
Services
Corporate
Revenue
Profit before tax by segment13
Mining & mineral processing
$m
Construction
Services
Corporate
Profit before tax
2018
2017
chg. $
17,252.8
(2,582.6)
14,670.2
(13,586.1)
58.5
1,142.6
7.8%
(67.9)
1,074.7
7.3%
(300.9)
773.8
6.8
780.6
5.3%
240.7c
7,965.2
3,966.9
2,676.5
61.6
14,670.2
2018
626.1
430.9
159.5
(141.8)
1,074.7
16,110.7
(2,681.2)
13,429.5
(12,377.2)
(49.9)
1,002.4
7.5%
(43.2)
959.2
7.1%
(268.6)
690.6
11.5
702.1
5.2%
216.5c
7,599.1
3,164.4
2,607.2
58.8
13,429.5
2017
623.7
338.8
164.8
(168.1)
959.2
1,142.1
98.6
1,240.7
(1,208.9)
108.4
140.2
30bp
(24.7)
115.5
20bp
(32.3)
83.2
(4.7)
78.5
10bp
24.2c
chg. $
366.1
802.5
69.3
2.8
1,240.7
chg. $
2.4
92.1
(5.3)
26.3
115.5
chg. %
7.1%
(3.7)%
9.2%
9.8%
(217.2)%
14.0%
57.2%
12.0%
12.0%
12.0%
(40.9)%
11.2%
11.2%
chg. %
4.8%
25.4%
2.7%
4.8%
9.2%
chg. %
0.4%
27.2%
(3.2)%
(15.6)%
12.0%
REVENUE AND PROFIT BEFORE TAX BY SEGMENT
Revenue increased by $1.2 billion, or 9.2%, to $14.7 billion in FY18. Revenue increases were recorded across all Operating
Companies. PBT was $1,074.7 million for FY18, an increase of 12.0%, or $115.5 million, compared to FY17. The PBT margin of 7.3%
reflected strong performances from all Operating Companies.
2018
2017
Group revenue from the various market segments was split 73:27 between domestic and international markets, in line with FY17.
CONSTRUCTION REVENUE
Construction revenue was $8.0 billion for FY18, an increase of 4.8%, or $366.1 million, compared to FY17. This increase reflects
substantial contributions from the delivery of a number of large scale transport infrastructure projects.
Logan Enhancement Project in Queensland;
Wales;
infrastructure projects in Hong Kong including the Passenger Clearance Building for the Hong Kong Boundary Crossing
Facilities, the Central Wanchai Bypass Tunnel, and the Liantang / Hueng Yuen Wai Boundary Control Point; and
several PPP projects, including Transmission Gully and New Zealand Schools in New Zealand, and Canberra Light Rail in
Australia Capital Territory.
Construction PBT was $626.1 million for FY18. This result was driven by revenue growth of 4.8% and strong margins.
13 FY17 PBT comparative has been restated to include the results of the former BICC segment within the Corporate segment result.
28
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
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)
2018
2017
chg. $
chg. %
17,252.8
(2,582.6)
14,670.2
(13,586.1)
58.5
16,110.7
(2,681.2)
13,429.5
(12,377.2)
(49.9)
1,142.6
7.8%
(67.9)
1,074.7
7.3%
(300.9)
773.8
6.8
780.6
5.3%
240.7c
1,002.4
7.5%
(43.2)
959.2
7.1%
(268.6)
690.6
11.5
702.1
5.2%
216.5c
1,142.1
98.6
1,240.7
(1,208.9)
108.4
140.2
30bp
(24.7)
115.5
20bp
(32.3)
83.2
(4.7)
78.5
10bp
24.2c
7.1%
(3.7)%
9.2%
9.8%
(217.2)%
14.0%
57.2%
12.0%
12.0%
12.0%
(40.9)%
11.2%
11.2%
REVENUE AND PROFIT BEFORE TAX BY SEGMENT
Revenue increased by $1.2 billion, or 9.2%, to $14.7 billion in FY18. Revenue increases were recorded across all Operating
Companies. PBT was $1,074.7 million for FY18, an increase of 12.0%, or $115.5 million, compared to FY17. The PBT margin of 7.3%
reflected strong performances from all Operating Companies.
Revenue by segment
$m
Construction
Mining & mineral processing
Services
Corporate
Revenue
Profit before tax by segment13
$m
Construction
Mining & mineral processing
Services
Corporate
Profit before tax
2018
2017
chg. $
7,965.2
3,966.9
2,676.5
61.6
14,670.2
2018
626.1
430.9
159.5
(141.8)
1,074.7
7,599.1
3,164.4
2,607.2
58.8
13,429.5
2017
623.7
338.8
164.8
(168.1)
959.2
366.1
802.5
69.3
2.8
1,240.7
chg. $
2.4
92.1
(5.3)
26.3
115.5
chg. %
4.8%
25.4%
2.7%
4.8%
9.2%
chg. %
0.4%
27.2%
(3.2)%
(15.6)%
12.0%
Group revenue from the various market segments was split 73:27 between domestic and international markets, in line with FY17.
CONSTRUCTION REVENUE
Construction revenue was $8.0 billion for FY18, an increase of 4.8%, or $366.1 million, compared to FY17. This increase reflects
substantial contributions from the delivery of a number of large scale transport infrastructure projects.
31 December
31 December
2018
$43.41
14,075.9
86c
70c
156c
240.7c
64.8%
2017
$51.45
16,682.9
75c
60c
135c
216.5c
62.3%
Payout ratio for ordinary dividends (2018 estimate at the time the dividend is paid)
PERFORMANCE OF CIMIC SHARES
Over the past year, CIMIC’s share price declined by $8.04, representing a decrease of 15.6% since 31 December 2017. By
comparison, the S&P/ASX 200 index decreased by 6.9% to 5,646.4 points during the same period. CIMIC’s market capitalisation
represented $14.1 billion as at 31 December 2018.
Indexed performance of CIMIC shares
SHAREHOLDER RETURNS
TOTAL SHAREHOLDER RETURNS
Shareholder returns
Closing share price
Market capitalisation ($m)
Final dividend per share
Interim dividend per share
Total dividends per share
EPS (basic)
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
CIM-AU Close
S&P/ASX 200 Close
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 156 cents per share, 100% franked, up 15.6% on FY17, and comprised of:
an interim dividend of 70 cents per share, 100% franked, paid on 4 October 2018; and
a final dividend of 86 cents per share, 100% franked, to be paid on 4 July 2019.
This represents a full year payout ratio of 64.8% of NPAT.
The final dividend payable of $278.9 million is an estimate, based on the number of shares on issue as at the date of the Financial
Report. Due to the share buy-back referred to below, 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.
EPS (basic) was 240.7 cents, an increase of 11.2% on FY17 (in line with an 11.2% increase in NPAT).
SHARE BUY-BACK PROGRAM
On 14 December 2017, 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 2017. No additional shares have been bought back under the 2017 buy-back program.
On 14 December 2018, CIMIC announced 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 2018. As at 5 February 2019, no additional shares had been bought back since
the commencement of the buy-back program. The timing and number of any shares purchased will depend on CIMIC’s share price
and market conditions.
rail and road developments in Australia, including Sydney Metro ‘Northwest’ and ‘City & Southwest’, WestConnex ‘M4 East’
and ‘New M5’ in New South Wales, the Level Crossing Removal projects and the West Gate Tunnel project in Victoria, and the
Logan Enhancement Project in Queensland;
social infrastructure projects including the Christchurch Hospital in New Zealand and Junee Correctional Centre in New South
Wales;
infrastructure projects in Hong Kong including the Passenger Clearance Building for the Hong Kong Boundary Crossing
Facilities, the Central Wanchai Bypass Tunnel, and the Liantang / Hueng Yuen Wai Boundary Control Point; and
several PPP projects, including Transmission Gully and New Zealand Schools in New Zealand, and Canberra Light Rail in
Australia Capital Territory.
During the period, the Group’s major projects included:
Construction PBT was $626.1 million for FY18. This result was driven by revenue growth of 4.8% and strong margins.
13 FY17 PBT comparative has been restated to include the results of the former BICC segment within the Corporate segment result.
27
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CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
MINING & MINERAL PROCESSING REVENUE
Mining & mineral processing revenue was $4.0 billion for FY18, an increase of 25.4%, or $802.5 million, compared to FY17. The
increase in revenue reflects a number of contract extensions, increased production levels and contributions from a diverse range of
mining & mineral processing contracts, due to the Group benefitting from its diversified portfolio across commodities and
geographic markets.
During the period, several of the Group’s significant projects, included:
Lake Vermont, Mount Owen, Curragh North, Solomon, Peak Downs and Caval Ridge mines in Australia;
Byerwen, Woodlawn and the New Century mineral processing projects in Australia;
Kaltim Prima Coal, Melak and Mahakam Sumber Jaya mines in Indonesia;
Ukhaa Khudag mine in Mongolia;
Pumpkin Hollow in United States;
Encuentro Oxides mine in Chile; and
Jwaneng mine in Botswana.
Mining and mineral processing PBT was $430.9 million for FY18, an increase of 27.2% or $92.1 million. This result is reflective of
25.4% revenue growth combined with an expanded PBT margin, from a continued focus on driving efficiencies and creating value
for clients.
SERVICES REVENUE
Services revenue was $2.7 billion for FY18, an increase of 2.7%, or $69.3 million compared to FY17, as the Group sustained its
competitive position in the operations and maintenance services market.
NET FINANCE COSTS
supports the growth of the business.
Facility fees, bonding and other costs
Finance cost detail
$m
Debt interest expenses
Total finance costs
Interest income
Net finance costs
Average cost of debt calculation
$m
Debt interest expenses (a)
Gross debt15
Gross debt average (b)
Average cost of debt (a/b)
INCOME TAX
2018
(73.1)
(50.1)
(123.2)
55.3
(67.9)
2017
(80.9)
(33.9)
(114.8)
71.6
(43.2)
chg. $
7.8
(16.2)
(8.4)
(16.3)
(24.7)
2018
(73.1)
522.8
1,938.7
3.8%
chg. %
(9.6)%
47.8%
7.3%
(22.8)%
57.2%
2017
(80.9)
903.4
1,959.0
4.1%
Net finance costs were $67.9 million for FY18, an increase of $24.7 million, compared to FY17. Higher net finance costs were
recorded due to a reduction in interest from shareholder loans to BICC14 and an increase in the total level of bonding which
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;
engineering, procurement and construction of multiple solar farms in several states across Australia;
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 resource companies including Chevron, BP, BHP, Rio Tinto, Woodside and Alcoa, across
Australia;
rail rolling stock maintenance works for Pacific National and Freightliner in New South Wales;
designing, building, testing and commissioning new waste water treatment plants, across Australia; and
asset management services for up to 15 years to support the Royal Australian Navy.
Income tax expense was $300.9 million for FY18, an increase of 12.0%, or $32.3 million, compared to FY17. This expense equates to
an effective tax rate of 28.0%, consistent with FY17. Affecting the effective tax rate are income tax differentials and foreign
currency relating to profits and losses from the various overseas jurisdictions in which the Group operates.
NON-CONTROLLING INTERESTS
Non-controlling interests were $6.8 million for FY18, a decrease of 40.9%, or $4.7 million, compared to FY17. This relates to losses
attributable to the shareholdings of minority owners for the period, including the Group’s investment in the listed entity Devine.
NPAT was $780.6 million for FY18, an increase of 11.2%, or $78.5 million, compared to FY17. Earnings per share (basic) were 240.7
NET PROFIT AFTER TAX
cents, an increase of 11.2% on FY17.
Services PBT was $159.5 million for FY18, in line with the development of the revenue.
CORPORATE
Corporate PBT was ($141.8) million for FY18, an improvement of 15.6% or $26.3 million. The FY18 Corporate segment mainly
includes contributions from Corporate, EIC Activities, Pacific Partnerships, the commercial & residential business and the former
BICC segment. The improvement was mainly driven by a reduction of BICC’s losses compared to the previous year.
REVENUE – JOINT VENTURES AND ASSOCIATES
Revenue from joint ventures and associates was $2.6 billion for FY18. The main contributors to this revenue were Ventia and BICC.
EXPENSES
Expenses were $13.6 billion for FY18, an increase of 9.8%, or $1.2 billion, compared to FY17, which was in line with the growth in
revenue. The major direct expenses were materials, subcontractors, plant costs, depreciation and personnel costs.
Depreciation and amortisation
Depreciation and amortisation was $559.2 million for FY18, an increase of 9.4%, or $47.9 million, compared to FY17. The revenue
growth in mining and increased tunnelling activity on a number of large infrastructure projects has driven the higher level of
depreciation in FY18.
EBIT
The Group’s EBIT was $1,142.6 million for FY18, an increase of 14.0% or $140.2 million compared to FY17. This solid result was
driven by growth in revenue and the Group’s ability to deliver stable margins, reflecting a diligent focus on project delivery and cost
discipline.
29
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14 Initial application of AASB 9, refer to the Financial Report, ‘Note 1: Summary of significant accounting policies – Basis of preparation’.
15 Total interest bearing liabilities.
30
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
NET FINANCE COSTS
Net finance costs were $67.9 million for FY18, an increase of $24.7 million, compared to FY17. Higher net finance costs were
recorded due to a reduction in interest from shareholder loans to BICC14 and an increase in the total level of bonding which
supports the growth of the business.
Finance cost detail
$m
Debt interest expenses
Facility fees, bonding and other costs
Total finance costs
Interest income
Net finance costs
Average cost of debt calculation
$m
Debt interest expenses (a)
Gross debt15
Gross debt average (b)
Average cost of debt (a/b)
2018
(73.1)
(50.1)
(123.2)
55.3
(67.9)
2017
(80.9)
(33.9)
(114.8)
71.6
(43.2)
chg. $
7.8
(16.2)
(8.4)
(16.3)
(24.7)
2018
(73.1)
522.8
1,938.7
3.8%
chg. %
(9.6)%
47.8%
7.3%
(22.8)%
57.2%
2017
(80.9)
903.4
1,959.0
4.1%
INCOME TAX
Income tax expense was $300.9 million for FY18, an increase of 12.0%, or $32.3 million, compared to FY17. This expense equates to
an effective tax rate of 28.0%, consistent with FY17. Affecting the effective tax rate are income tax differentials and foreign
currency relating to profits and losses from the various overseas jurisdictions in which the Group operates.
NON-CONTROLLING INTERESTS
Non-controlling interests were $6.8 million for FY18, a decrease of 40.9%, or $4.7 million, compared to FY17. This relates to losses
attributable to the shareholdings of minority owners for the period, including the Group’s investment in the listed entity Devine.
NET PROFIT AFTER TAX
NPAT was $780.6 million for FY18, an increase of 11.2%, or $78.5 million, compared to FY17. Earnings per share (basic) were 240.7
cents, an increase of 11.2% on FY17.
MINING & MINERAL PROCESSING REVENUE
Mining & mineral processing revenue was $4.0 billion for FY18, an increase of 25.4%, or $802.5 million, compared to FY17. The
increase in revenue reflects a number of contract extensions, increased production levels and contributions from a diverse range of
mining & mineral processing contracts, due to the Group benefitting from its diversified portfolio across commodities and
geographic markets.
During the period, several of the Group’s significant projects, included:
Lake Vermont, Mount Owen, Curragh North, Solomon, Peak Downs and Caval Ridge mines in Australia;
Byerwen, Woodlawn and the New Century mineral processing projects in Australia;
Kaltim Prima Coal, Melak and Mahakam Sumber Jaya mines in Indonesia;
Ukhaa Khudag mine in Mongolia;
Pumpkin Hollow in United States;
Encuentro Oxides mine in Chile; and
Jwaneng mine in Botswana.
for clients.
SERVICES REVENUE
Mining and mineral processing PBT was $430.9 million for FY18, an increase of 27.2% or $92.1 million. This result is reflective of
25.4% revenue growth combined with an expanded PBT margin, from a continued focus on driving efficiencies and creating value
Services revenue was $2.7 billion for FY18, an increase of 2.7%, or $69.3 million compared to FY17, as the Group sustained its
competitive 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;
engineering, procurement and construction of multiple solar farms in several states across Australia;
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 resource companies including Chevron, BP, BHP, Rio Tinto, Woodside and Alcoa, across
rail rolling stock maintenance works for Pacific National and Freightliner in New South Wales;
designing, building, testing and commissioning new waste water treatment plants, across Australia; and
asset management services for up to 15 years to support the Royal Australian Navy.
Services PBT was $159.5 million for FY18, in line with the development of the revenue.
Corporate PBT was ($141.8) million for FY18, an improvement of 15.6% or $26.3 million. The FY18 Corporate segment mainly
includes contributions from Corporate, EIC Activities, Pacific Partnerships, the commercial & residential business and the former
BICC segment. The improvement was mainly driven by a reduction of BICC’s losses compared to the previous year.
REVENUE – JOINT VENTURES AND ASSOCIATES
Revenue from joint ventures and associates was $2.6 billion for FY18. The main contributors to this revenue were Ventia and BICC.
Expenses were $13.6 billion for FY18, an increase of 9.8%, or $1.2 billion, compared to FY17, which was in line with the growth in
revenue. The major direct expenses were materials, subcontractors, plant costs, depreciation and personnel costs.
Depreciation and amortisation
Depreciation and amortisation was $559.2 million for FY18, an increase of 9.4%, or $47.9 million, compared to FY17. The revenue
growth in mining and increased tunnelling activity on a number of large infrastructure projects has driven the higher level of
Australia;
CORPORATE
EXPENSES
depreciation in FY18.
EBIT
discipline.
The Group’s EBIT was $1,142.6 million for FY18, an increase of 14.0% or $140.2 million compared to FY17. This solid result was
driven by growth in revenue and the Group’s ability to deliver stable margins, reflecting a diligent focus on project delivery and cost
14 Initial application of AASB 9, refer to the Financial Report, ‘Note 1: Summary of significant accounting policies – Basis of preparation’.
15 Total interest bearing liabilities.
29
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CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
FINANCIAL POSITION
CIMIC further strengthened the balance sheet during 2018, as the company maintained its strict focus on managing working capital
and generating sustainable cash-backed profits.
Net cash was $1,618.9 million at 31 December 2018, an increase of 77.8%, or $708.5 million, compared to 31 December 2017. The
increase is mainly driven by the strong operating cash flows during the year less dividends paid to shareholders and expenditure on
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 (comparable)
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
Deferred tax liability
Total non-current liabilities
Total liabilities
Equity
December
2018
2,141.7
(50.7)
(472.1)
1,618.9
(807.8)
811.1
December
2018
1,098.9
December
2018
2,141.7
3,125.4
-
315.1
1.5
5,583.7
777.4
111.1
136.6
105.4
49.8
1,292.7
1,093.5
3,566.5
December
2017
1,813.8
(265.6)
(637.8)
910.4
(538.6)
371.8
December
2017
717.9
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
9,150.2
9,571.5
December
2018
December
2017
5,701.0
68.4
326.0
50.7
6,146.1
113.4
62.4
472.1
19.4
667.3
4,737.4
40.4
311.8
265.6
5,355.2
152.0
69.3
637.8
-
859.1
6,813.4
6,214.3
chg. $
327.9
214.9
165.7
708.5
(269.2)
439.3
chg. $
381.0
chg. $
327.9
(90.9)
(29.0)
104.3
(30.7)
281.6
(313.4)
(56.5)
(246.1)
(63.8)
(95.6)
68.7
3.8
(702.9)
(421.3)
chg. $
963.6
28.0
14.2
(214.9)
790.9
(38.6)
(6.9)
(165.7)
19.4
(191.8)
599.1
chg. %
18.1%
(80.9)%
(26.0)%
77.8%
50.0%
118.2%
chg. %
53.1%
chg. %
18.1%
(2.8)%
-
49.5%
(95.3)%
5.3%
(28.7)%
(33.7)%
(64.3)%
(37.7)%
(65.7)%
5.6%
0.3%
(16.5)%
(4.4)%
chg. %
20.3%
69.3%
4.6%
(80.9)%
14.8%
(25.4)%
(10.0)%
(26.0)%
-
(22.3)%
9.6%
2,336.8
3,357.2
(1,020.4)
(30.4)%
31
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NET CASH/(DEBT)
capital items.
Interest bearing liabilities
Bonding
clients.
Credit ratings
Current and non-current interest bearing liabilities were $522.8 million at 31 December 2018, a reduction of 42.1%, or $380.6
million, compared to 31 December 2017 and at the lowest level since 2007.
At 31 December 2018, the Group financed $807.8 million worth of equipment under operating leases. The increase reflects the
growth in the mining business, and is in line with the Group’s fleet management strategy.
CIMIC has significant bonding and guarantee facilities available. These bonds and guarantees are integral to the successful
tendering and delivery of projects, and the ability to provide them is an important element of the Group’s competitive offering to
Bonds and guarantees outstanding at 31 December 2018 were $4.5 billion (31 December 2017: $3.6 billion). An additional $1.5
billion (31 December 2017: $1.6 billion) was undrawn of which $1.1 billion (31 December 2017: $839.6 million) was committed and
$419.3 million (31 December 2017: $735.1 million) was uncommitted. The undrawn and uncommitted bonds and guarantees
provide significant capacity for the Group to tender for, and take on, more projects in the future.
In May 2018, Standard & Poor’s upgraded CIMIC’s outlook to stable and affirmed its investment grade rating at ‘BBB /A-2’. Moody’s
Investor Services has maintained its investment grade rating of ‘Baa2’ for CIMIC with a stable outlook. These ratings reflect the
strength of the Group’s financial position.
CURRENT ASSETS
Trade and other receivables
Trade and other receivables were $3,125.4 million at 31 December 2018, a decrease of 2.8%, or $90.9 million, compared to
31 December 2017. The reduction in the balance is mainly due to the initial impact of applying AASB 1516. The figure includes
$2,297.1 million (31 December 2017: $2,495.9 million) of total contract debtors – trade and other receivables (refer to net contract
debtors below). The remaining balance relates to sundry debtors, joint venture and other receivables.
Net contract debtors
growth.
The Group’s net contract debtors were $1,098.9 million at 31 December 2018, with its development broadly in line with revenue
The Group’s $675.0 million contract debtors portfolio provision remains unchanged as at 31 December 2018.
Inventories: consumables and development properties
Inventories: consumables and development properties were $315.1 million at 31 December 2018, an increase of $104.3 million,
compared to 31 December 2017. The increase was mainly driven by job-costed inventories held for large infrastructure projects.
Trade and other receivables were $777.4 million at 31 December 2018, a decrease of 28.7%, or $313.4 million, compared to
31 December 2017. This figure includes $640.7 million (31 December 2017: $1,046.3 million) of non-current loan receivables owed
by BICC, the decrease mainly due to the initial impact of applying AASB 916. For more details, refer to the Financial Report, ‘Note 8:
NON-CURRENT ASSETS
Trade and other receivables
Trade and other receivables’.
Inventories: development properties
Inventories: development properties were $111.1 million at 31 December 2018, a decrease of 33.7%, or $56.5 million, compared to
$167.6 million at 31 December 2017. The movement is mainly driven by the sale of certain development properties.
Investments accounted for using the equity method
Equity accounted investments include project-related associates, joint ventures and PPP projects.
16 The Group has applied AASB 15 and AASB 9 respectively with the cumulative effect of initially applying the standards as an adjustment to
the opening balance of equity and comparative figures are therefore not restated. Refer to the Financial Report ‘Note 1: Summary of
significant accounting policies – Basis of preparation’’ for details.
32
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC further strengthened the balance sheet during 2018, as the company maintained its strict focus on managing working capital
Net contract debtors
December
December
FINANCIAL POSITION
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 (comparable)
$m
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
Deferred tax liability
Total non-current liabilities
Total liabilities
Equity
December
December
December
2018
December
2017
2018
2,141.7
(50.7)
(472.1)
1,618.9
(807.8)
811.1
2018
1,098.9
2,141.7
3,125.4
-
315.1
1.5
5,583.7
777.4
111.1
136.6
105.4
49.8
1,292.7
1,093.5
3,566.5
5,701.0
68.4
326.0
50.7
6,146.1
113.4
62.4
472.1
19.4
667.3
2017
1,813.8
(265.6)
(637.8)
910.4
(538.6)
371.8
2017
717.9
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
9,150.2
9,571.5
December
2018
December
2017
chg. $
327.9
214.9
165.7
708.5
(269.2)
439.3
chg. $
381.0
chg. $
327.9
(90.9)
(29.0)
104.3
(30.7)
281.6
(313.4)
(56.5)
(246.1)
(63.8)
(95.6)
68.7
3.8
(702.9)
(421.3)
chg. $
963.6
28.0
14.2
(214.9)
790.9
(38.6)
(6.9)
(165.7)
19.4
(191.8)
599.1
chg. %
18.1%
(80.9)%
(26.0)%
77.8%
50.0%
118.2%
chg. %
53.1%
chg. %
18.1%
(2.8)%
-
49.5%
(95.3)%
5.3%
(28.7)%
(33.7)%
(64.3)%
(37.7)%
(65.7)%
5.6%
0.3%
(16.5)%
(4.4)%
chg. %
20.3%
69.3%
4.6%
(80.9)%
14.8%
(25.4)%
(10.0)%
(26.0)%
-
(22.3)%
9.6%
6,813.4
6,214.3
2,336.8
3,357.2
(1,020.4)
(30.4)%
NET CASH/(DEBT)
Net cash was $1,618.9 million at 31 December 2018, an increase of 77.8%, or $708.5 million, compared to 31 December 2017. The
increase is mainly driven by the strong operating cash flows during the year less dividends paid to shareholders and expenditure on
capital items.
Interest bearing liabilities
Current and non-current interest bearing liabilities were $522.8 million at 31 December 2018, a reduction of 42.1%, or $380.6
million, compared to 31 December 2017 and at the lowest level since 2007.
At 31 December 2018, the Group financed $807.8 million worth of equipment under operating leases. The increase reflects the
growth in the mining business, and is in line with the Group’s fleet management strategy.
Bonding
CIMIC has significant bonding and guarantee facilities available. These bonds and guarantees are integral to the successful
tendering and delivery of projects, and the ability to provide them is an important element of the Group’s competitive offering to
clients.
Bonds and guarantees outstanding at 31 December 2018 were $4.5 billion (31 December 2017: $3.6 billion). An additional $1.5
billion (31 December 2017: $1.6 billion) was undrawn of which $1.1 billion (31 December 2017: $839.6 million) was committed and
$419.3 million (31 December 2017: $735.1 million) was uncommitted. The undrawn and uncommitted bonds and guarantees
provide significant capacity for the Group to tender for, and take on, more projects in the future.
Credit ratings
In May 2018, Standard & Poor’s upgraded CIMIC’s outlook to stable and affirmed its investment grade rating at ‘BBB /A-2’. Moody’s
Investor Services has maintained its investment grade rating of ‘Baa2’ for CIMIC with a stable outlook. These ratings reflect the
strength of the Group’s financial position.
CURRENT ASSETS
Trade and other receivables
Trade and other receivables were $3,125.4 million at 31 December 2018, a decrease of 2.8%, or $90.9 million, compared to
31 December 2017. The reduction in the balance is mainly due to the initial impact of applying AASB 1516. The figure includes
$2,297.1 million (31 December 2017: $2,495.9 million) of total contract debtors – trade and other receivables (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 $1,098.9 million at 31 December 2018, with its development broadly in line with revenue
growth.
The Group’s $675.0 million contract debtors portfolio provision remains unchanged as at 31 December 2018.
Inventories: consumables and development properties
Inventories: consumables and development properties were $315.1 million at 31 December 2018, an increase of $104.3 million,
compared to 31 December 2017. The increase was mainly driven by job-costed inventories held for large infrastructure projects.
NON-CURRENT ASSETS
Trade and other receivables
Trade and other receivables were $777.4 million at 31 December 2018, a decrease of 28.7%, or $313.4 million, compared to
31 December 2017. This figure includes $640.7 million (31 December 2017: $1,046.3 million) of non-current loan receivables owed
by BICC, the decrease mainly due to the initial impact of applying AASB 916. For more details, refer to the Financial Report, ‘Note 8:
Trade and other receivables’.
Inventories: development properties
Inventories: development properties were $111.1 million at 31 December 2018, a decrease of 33.7%, or $56.5 million, compared to
$167.6 million at 31 December 2017. The movement is mainly driven by the sale of certain development properties.
Investments accounted for using the equity method
Equity accounted investments include project-related associates, joint ventures and PPP projects.
16 The Group has applied AASB 15 and AASB 9 respectively with the cumulative effect of initially applying the standards as an adjustment to
the opening balance of equity and comparative figures are therefore not restated. Refer to the Financial Report ‘Note 1: Summary of
significant accounting policies – Basis of preparation’’ for details.
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CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
Investments accounted for using the equity method were $136.6 million at 31 December 2018, a decrease of 64.3%, or $246.1
million, compared to 31 December 2017. This is largely due to the reduction in the carrying value of the Group’s investment in BICC
after the initial application of AASB 15. For further details on the valuation of BICC refer to the Financial Report, ‘Note 26: Joint
Venture Entities’.
Property, plant and equipment
Property, plant and equipment was $1,292.7 million at 31 December 2018, an increase of 5.6%, or $68.7 million, compared to
31 December 2017. Additions to property, plant and equipment during the period included investment in job-costed tunnelling
machines for major road and rail projects and ongoing investment in mining equipment, driven by revenue growth. The variation
also includes the effect of foreign exchange rate fluctuations in the period on the value of these assets.
Intangibles
Intangibles were $1,093.5 million at 31 December 2018, an increase of 0.3%, or $3.8 million, compared to 31 December 2017. The
balance mainly consists of goodwill in relation to the construction and services businesses.
CURRENT LIABILITIES
Trade and other payables
Trade and other payables were $5,701.0 million at 31 December 2018, an increase of 20.3%, or $963.6 million, compared to
31 December 2017, driven by the growth of the business. This figure includes $1,198.2 million (31 December 2017: $1,112.1
million) of total contract liabilities – trade and other payables. The remaining balance includes trade creditors and accruals, joint
venture payables and other creditors.
Current tax liabilities
Current tax liabilities were $68.4 million at 31 December 2018, an increase of $28.0 million, compared to 31 December 2017.
Changes in tax liabilities are driven by the timing of the various income tax payments as required to be made across the numerous
jurisdictions in which the Group operates.
Provisions
Provisions were $326.0 million at 31 December 2018, an increase of 4.6%, or $14.2 million, compared to 31 December 2017. 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 $113.4 million at 31 December 2018, a reduction of $38.6 million, compared to 31 December 2017.
Provisions
Provisions were $62.4 million at 31 December 2018, a decrease of 10.0%, or $6.9 million, compared to 31 December 2017. This
figure includes employee benefits relating to long service leave, retirement benefits and deferred bonuses.
EQUITY
Equity was $2,336.8 million as at 31 December 2018, a decrease of 30.4%, or $1,020.4 million, compared to 31 December 2017. The
reduction in equity in the period is primarily due to the initial impact of applying AASB 15 and AASB 9 as well as the dividends
declared during the period, partially offset by profits earned during FY18.
CASH FLOWS
Cash flows from operating activities
Cash flows from operating activities
Interest, finance costs and taxes
Net cash from operating activities
Cash flows from investing activities
$m
$m
Payments for intangibles
Payments for property, plant and equipment
Payments for investments in controlled entities
and businesses
equipment
Proceeds from sale of property, plant and
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
Cash payments in relation to employee share plans
Proceeds from borrowings
Repayment of borrowings
Repayment of finance leases
Dividends paid to shareholders of the Company
Payments to acquire non-controlling interests
Net cash from financing activities
2018
1,858.9
(150.4)
1,708.5
2018
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
-
(53.1)
(1.1)
(545.2)
2018
-
-
-
407.7
(835.6)
(470.2)
(898.1)
2017
1,523.4
(161.0)
1,362.4
2017
(14.2)
(424.1)
-
-
118.6
46.9
(59.0)
(60.1)
(40.9)
(432.8)
2017
(8.6)
1,517.0
(1,705.9)
(21.2)
(395.6)
(29.3)
(643.6)
chg. $
335.5
10.6
346.1
chg. $
8.8
(123.3)
(22.7)
(36.0)
(45.7)
0.7
59.0
7.0
39.8
(112.4)
chg. $
8.6
(1,109.3)
870.3
21.2
(74.6)
29.3
(254.5)
chg. %
22.0%
(6.6)%
25.4%
chg. %
(62.0)%
29.1%
(30.4)%
(97.4)%
(11.6)%
(97.3)%
26.0%
chg. %
(73.1)%
(51.0)%
18.9%
39.5%
-
-
-
-
-
-
CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities were $1,858.9 million for FY18, an increase of 22.0% or $335.5 million over FY17. The Group
has maintained its strict focus on managing working capital and generating sustainable cash-backed profits. This continued focus
has helped to deliver another strong EBITDA conversion rate of 109% during FY18 versus 101% in FY17.
Net cash from operating activities increased by 25.4% or $346.1 million to $1,708.5 million in FY18, compared to FY17.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash outflows from investing activities were $545.2 million for FY18, compared to an outflow of $432.8 million in FY17.
The outflow of cash was mainly due to gross capital expenditure of $547.4 million for FY18, an increase of $123.3 million compared
to FY17. This increase reflects a sustained level of investment in tunnelling equipment to support the delivery of large transport
related infrastructure projects with ongoing investment in mining equipment driven by revenue growth in that market.
Income tax paid in relation to the proceeds from the sale of investments in controlled entities and businesses was nil in FY18 while
the FY17 figure of $59.0 million related to proceeds from the divestments of the Nextgen assets in FY16.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash outflows from financing activities were $898.1 million for FY18 compared to $643.6 million in FY17. This outflow mainly
represents a reduction in the Group’s net borrowings as well as dividends paid during the year.
33
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34
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
Investments accounted for using the equity method were $136.6 million at 31 December 2018, a decrease of 64.3%, or $246.1
million, compared to 31 December 2017. This is largely due to the reduction in the carrying value of the Group’s investment in BICC
after the initial application of AASB 15. For further details on the valuation of BICC refer to the Financial Report, ‘Note 26: Joint
Property, plant and equipment was $1,292.7 million at 31 December 2018, an increase of 5.6%, or $68.7 million, compared to
31 December 2017. Additions to property, plant and equipment during the period included investment in job-costed tunnelling
machines for major road and rail projects and ongoing investment in mining equipment, driven by revenue growth. The variation
also includes the effect of foreign exchange rate fluctuations in the period on the value of these assets.
Intangibles were $1,093.5 million at 31 December 2018, an increase of 0.3%, or $3.8 million, compared to 31 December 2017. The
balance mainly consists of goodwill in relation to the construction and services businesses.
Trade and other payables were $5,701.0 million at 31 December 2018, an increase of 20.3%, or $963.6 million, compared to
31 December 2017, driven by the growth of the business. This figure includes $1,198.2 million (31 December 2017: $1,112.1
million) of total contract liabilities – trade and other payables. The remaining balance includes trade creditors and accruals, joint
Current tax liabilities were $68.4 million at 31 December 2018, an increase of $28.0 million, compared to 31 December 2017.
Changes in tax liabilities are driven by the timing of the various income tax payments as required to be made across the numerous
Provisions were $326.0 million at 31 December 2018, an increase of 4.6%, or $14.2 million, compared to 31 December 2017. The
provision is for employee benefits and relates to wages and salaries, annual leave, long service leave, retirement benefits and
Venture Entities’.
Property, plant and equipment
Intangibles
CURRENT LIABILITIES
Trade and other payables
venture payables and other creditors.
Current tax liabilities
jurisdictions in which the Group operates.
Provisions
deferred bonuses.
NON-CURRENT LIABILITIES
Trade and other payables
Provisions
EQUITY
Trade and other payables were $113.4 million at 31 December 2018, a reduction of $38.6 million, compared to 31 December 2017.
Provisions were $62.4 million at 31 December 2018, a decrease of 10.0%, or $6.9 million, compared to 31 December 2017. This
figure includes employee benefits relating to long service leave, retirement benefits and deferred bonuses.
Equity was $2,336.8 million as at 31 December 2018, a decrease of 30.4%, or $1,020.4 million, compared to 31 December 2017. The
reduction in equity in the period is primarily due to the initial impact of applying AASB 15 and AASB 9 as well as the dividends
declared during the period, partially offset by profits earned during FY18.
2018
2017
CASH FLOWS
Cash flows from operating activities
$m
Cash flows from operating activities
Interest, finance costs and taxes
Net cash from operating activities
Cash flows from investing activities
$m
Payments for intangibles
Payments for property, plant and equipment
Payments for investments in controlled entities
and businesses
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
Cash payments in relation to employee share plans
Proceeds from borrowings
Repayment of borrowings
Repayment of finance leases
Dividends paid to shareholders of the Company
Payments to acquire non-controlling interests
Net cash from financing activities
1,858.9
(150.4)
1,708.5
2018
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
-
(53.1)
(1.1)
(545.2)
2018
-
407.7
(835.6)
-
(470.2)
-
(898.1)
1,523.4
(161.0)
1,362.4
2017
(14.2)
(424.1)
-
118.6
46.9
-
(59.0)
(60.1)
(40.9)
(432.8)
chg. $
335.5
10.6
346.1
chg. $
8.8
(123.3)
(22.7)
(36.0)
(45.7)
0.7
59.0
7.0
39.8
(112.4)
chg. %
22.0%
(6.6)%
25.4%
chg. %
(62.0)%
29.1%
-
(30.4)%
(97.4)%
-
-
(11.6)%
(97.3)%
26.0%
2017
chg. $
chg. %
(8.6)
1,517.0
(1,705.9)
(21.2)
(395.6)
(29.3)
(643.6)
8.6
(1,109.3)
870.3
21.2
(74.6)
29.3
(254.5)
-
(73.1)%
(51.0)%
-
18.9%
-
39.5%
CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities were $1,858.9 million for FY18, an increase of 22.0% or $335.5 million over FY17. The Group
has maintained its strict focus on managing working capital and generating sustainable cash-backed profits. This continued focus
has helped to deliver another strong EBITDA conversion rate of 109% during FY18 versus 101% in FY17.
Net cash from operating activities increased by 25.4% or $346.1 million to $1,708.5 million in FY18, compared to FY17.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash outflows from investing activities were $545.2 million for FY18, compared to an outflow of $432.8 million in FY17.
The outflow of cash was mainly due to gross capital expenditure of $547.4 million for FY18, an increase of $123.3 million compared
to FY17. This increase reflects a sustained level of investment in tunnelling equipment to support the delivery of large transport
related infrastructure projects with ongoing investment in mining equipment driven by revenue growth in that market.
Income tax paid in relation to the proceeds from the sale of investments in controlled entities and businesses was nil in FY18 while
the FY17 figure of $59.0 million related to proceeds from the divestments of the Nextgen assets in FY16.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash outflows from financing activities were $898.1 million for FY18 compared to $643.6 million in FY17. This outflow mainly
represents a reduction in the Group’s net borrowings as well as dividends paid during the year.
33
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CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
NEW WORK AND WORK IN HAND
CIMIC was awarded $17.9 billion worth of new work in FY18. This new work helps to maintain the Group’s position as a leading
international contractor and the world’s largest mining service provider, and supports the delivery of sustainable returns to
shareholders.
The Group’s total work in hand was $36.7 billion at 31 December 2018, equivalent to more than two years’ worth of revenue. Work
in hand in the Group’s Operating Companies was $33.8 billion, up 5.6%, or $1.8 billion, compared to 31 December 2017.
Work in hand
$m
Work in hand beginning of period
New work
Acquisitions / (divestments)
Executed work
Total work in hand end of period
Operating Companies’ work in hand
Corporate work in hand
Total work in hand end of period
December
2018
36,009.9
17,949.0
-
(17,252.8)
36,706.1
33,833.1
2,873.0
36,706.1
December
2017
34,012.0
18,369.5
(260.9)
(16,110.7)
36,009.9
32,037.0
3,972.9
36,009.9
chg. $
chg. %
1,997.9
(420.5)
260.9
(1,142.1)
696.2
1,796.1
(1,099.9)
696.2
5.9%
(2.3)%
-
7.1%
1.9%
5.6%
(27.7)%
1.9%
In FY18, work in hand was split 78:22 between the Group’s domestic and international markets, compared with 73:27 in FY17.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 2018
CIMIC’s work in hand continues to be broadly diversified by segment as well as by activity and geography.
Work in hand by segment17
$m
Construction
Mining & mineral processing
Services
Total Operating Companies’ work
in hand
Corporate work in hand
Total work in hand
December
2018
15,254.3
11,159.3
7,419.5
33,833.1
2,873.0
36,706.1
%
42%
30%
20%
92%
December
2017
14,929.0
10,445.4
6,662.6
32,037.0
%
chg. $
chg. %
41%
29%
19%
89%
325.3
713.9
756.9
1,796.1
2.2%
6.8%
11.4%
5.6%
8%
100%
3,972.9
36,009.9
11%
100%
(1,099.9)
696.2
(27.7)%
1.9%
Corporate work in hand was $2.9 billion at 31 December 2018, a decrease of 27.7%, or $1.1 billion compared to 31 December 2017.
Corporate work in hand includes CIMIC’s share of work in hand from investments such as Ventia and BICC.
CONSTRUCTION WORK IN HAND
Construction work in hand was $15.3 billion at 31 December 2018, an increase of 2.2%, or $325.3 million compared to
31 December 2017. Construction work in hand is broadly diversified across a range of markets and sectors in Australia, New
Zealand and the Asia-Pacific region.
MINING & MINERAL PROCESSING WORK IN HAND
Mining & mineral processing work in hand was $11.2 billion at 31 December 2018, an increase of 6.8%, or $713.9 million compared
to 31 December 2017. Over the course of FY18, CIMIC continued to diversify its mining & mineral processing portfolio by
commodity and geography.
A number of significant mining & mineral processing contracts were awarded during the year, including:
$1.4 billion to provide mining services at the Mt Arthur Coal operation, New South Wales;
$830 million of contract extensions at the QCoal Northern Hub, Dawson South and Curragh coal mines, Queensland;
$670 million of contract extensions at the Wahana, Satui and Senakin coal mines, Indonesia;
$420 million contract extension at the Encuentro Oxides open pit copper mine, Chile;
$365 million to provide additional mining services at the Rocky’s Reward nickel mine and Mt Owen coal mines, Western
Australia and New South Wales respectively;
$190 million contract extension at the Leinster Underground nickel mine, Western Australia;
$184 million to design, procure, construct and commission a coal handling and preparation plant (CHPP) at the Olive Downs
Coking Coal project, Queensland ($92m, Sedgman); and
$155 million for the engineering, procurement and construction of the Pumpkin Hollow Copper concentrator and associated
infrastructure in Nevada, United States.
SERVICES WORK IN HAND
Services work in hand was $7.4 billion at 31 December 2018, up 11.4%, or $756.9 million compared to 31 December 2017. The
services work in hand is diversified across a range of markets in Australia and Asia-Pacific.
A number of significant services contracts were awarded during the year, including:
$1.5 billion to provide asset management services to the Royal Australian Navy’s Landing Helicopter Dock and Landing Craft
Vessels, Western Australia ($750 million, UGL);
$600 million to design and construct regional water infrastructure for TasWater, Tasmania ($300 million, UGL); and
$180 million to design, build and commission high voltage substations and transmission lines at the Prominent Hill Mine, South
Australia.
CORPORATE WORK IN HAND
A number of significant construction projects were awarded during the year, including:
$3.9 billion to design and construct the Westconnex Rozelle interchange project, New South Wales ($1.95 billion, CPB
Contractors);
$1.4 billion to design, construct and commission the Line-wide works package in support of the Sydney Metro City &
Southwest project, New South Wales;
$1.0 billion to design and construct rail infrastructure for Metro Trains Melbourne’s Tunnel Project, Victoria ($400 million, CPB
Contractors);
$840 million to design and construct stage 1 of the Parramatta Light Rail project, New South Wales ($420 million, CPB
Contractors);
$687 million to design and construct the Waikeria Corrections and Treatments Facility PPP project, New Zealand;
$600 million to design and construct regional water infrastructure for TasWater, Tasmania ($300 million, CPB Contractors);
$380 million to design and construct the tunnel and infrastructure works as part of the North-South Transport Corridor
project, Singapore;
$260 million to construct infrastructure works for the South Flank project, Western Australia;
$184 million to design, procure, construct and commission a coal handling and preparation plant (CHPP) at the Olive Downs
Coking Coal project, Queensland ($92m, CPB Contractors);
$182 million to construct the Cavite Laguna Expressway project (Cavite section), Philippines; and
$170 million to construct the next stage of the Northern Road upgrade project, New South Wales.
17 FY17 comparatives have been restated to include the former BICC segment within the Corporate segment.
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36
NEW WORK AND WORK IN HAND
CIMIC was awarded $17.9 billion worth of new work in FY18. This new work helps to maintain the Group’s position as a leading
international contractor and the world’s largest mining service provider, and supports the delivery of sustainable returns to
shareholders.
The Group’s total work in hand was $36.7 billion at 31 December 2018, equivalent to more than two years’ worth of revenue. Work
in hand in the Group’s Operating Companies was $33.8 billion, up 5.6%, or $1.8 billion, compared to 31 December 2017.
Work in hand
$m
New work
Work in hand beginning of period
Acquisitions / (divestments)
Executed work
Total work in hand end of period
Operating Companies’ work in hand
Corporate work in hand
Total work in hand end of period
December
December
chg. $
chg. %
(17,252.8)
(16,110.7)
2018
36,009.9
17,949.0
-
36,706.1
33,833.1
2,873.0
36,706.1
2017
34,012.0
18,369.5
(260.9)
36,009.9
32,037.0
3,972.9
36,009.9
1,997.9
(420.5)
260.9
(1,142.1)
696.2
1,796.1
(1,099.9)
696.2
5.9%
(2.3)%
-
7.1%
1.9%
5.6%
(27.7)%
1.9%
In FY18, work in hand was split 78:22 between the Group’s domestic and international markets, compared with 73:27 in FY17.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 2018
CIMIC’s work in hand continues to be broadly diversified by segment as well as by activity and geography.
Work in hand by segment17
%
December
%
chg. $
chg. %
December
2018
15,254.3
11,159.3
7,419.5
33,833.1
2,873.0
36,706.1
42%
30%
20%
92%
8%
100%
2017
14,929.0
10,445.4
6,662.6
32,037.0
3,972.9
36,009.9
41%
29%
19%
89%
325.3
713.9
756.9
1,796.1
2.2%
6.8%
11.4%
5.6%
11%
100%
(1,099.9)
696.2
(27.7)%
1.9%
$m
Construction
Services
in hand
Mining & mineral processing
Total Operating Companies’ work
Corporate work in hand
Total work in hand
CONSTRUCTION WORK IN HAND
Zealand and the Asia-Pacific region.
Construction work in hand was $15.3 billion at 31 December 2018, an increase of 2.2%, or $325.3 million compared to
31 December 2017. Construction work in hand is broadly diversified across a range of markets and sectors in Australia, New
A number of significant construction projects were awarded during the year, including:
$3.9 billion to design and construct the Westconnex Rozelle interchange project, New South Wales ($1.95 billion, CPB
Contractors);
Contractors);
Contractors);
project, Singapore;
$1.4 billion to design, construct and commission the Line-wide works package in support of the Sydney Metro City &
Southwest project, New South Wales;
$1.0 billion to design and construct rail infrastructure for Metro Trains Melbourne’s Tunnel Project, Victoria ($400 million, CPB
$840 million to design and construct stage 1 of the Parramatta Light Rail project, New South Wales ($420 million, CPB
$687 million to design and construct the Waikeria Corrections and Treatments Facility PPP project, New Zealand;
$600 million to design and construct regional water infrastructure for TasWater, Tasmania ($300 million, CPB Contractors);
$380 million to design and construct the tunnel and infrastructure works as part of the North-South Transport Corridor
$260 million to construct infrastructure works for the South Flank project, Western Australia;
$184 million to design, procure, construct and commission a coal handling and preparation plant (CHPP) at the Olive Downs
Coking Coal project, Queensland ($92m, CPB Contractors);
$182 million to construct the Cavite Laguna Expressway project (Cavite section), Philippines; and
$170 million to construct the next stage of the Northern Road upgrade project, New South Wales.
17 FY17 comparatives have been restated to include the former BICC segment within the Corporate segment.
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
MINING & MINERAL PROCESSING WORK IN HAND
Mining & mineral processing work in hand was $11.2 billion at 31 December 2018, an increase of 6.8%, or $713.9 million compared
to 31 December 2017. Over the course of FY18, CIMIC continued to diversify its mining & mineral processing portfolio by
commodity and geography.
A number of significant mining & mineral processing contracts were awarded during the year, including:
$1.4 billion to provide mining services at the Mt Arthur Coal operation, New South Wales;
$830 million of contract extensions at the QCoal Northern Hub, Dawson South and Curragh coal mines, Queensland;
$670 million of contract extensions at the Wahana, Satui and Senakin coal mines, Indonesia;
$420 million contract extension at the Encuentro Oxides open pit copper mine, Chile;
$365 million to provide additional mining services at the Rocky’s Reward nickel mine and Mt Owen coal mines, Western
Australia and New South Wales respectively;
$190 million contract extension at the Leinster Underground nickel mine, Western Australia;
$184 million to design, procure, construct and commission a coal handling and preparation plant (CHPP) at the Olive Downs
Coking Coal project, Queensland ($92m, Sedgman); and
$155 million for the engineering, procurement and construction of the Pumpkin Hollow Copper concentrator and associated
infrastructure in Nevada, United States.
SERVICES WORK IN HAND
Services work in hand was $7.4 billion at 31 December 2018, up 11.4%, or $756.9 million compared to 31 December 2017. The
services work in hand is diversified across a range of markets in Australia and Asia-Pacific.
A number of significant services contracts were awarded during the year, including:
$1.5 billion to provide asset management services to the Royal Australian Navy’s Landing Helicopter Dock and Landing Craft
Vessels, Western Australia ($750 million, UGL);
$600 million to design and construct regional water infrastructure for TasWater, Tasmania ($300 million, UGL); and
$180 million to design, build and commission high voltage substations and transmission lines at the Prominent Hill Mine, South
Australia.
CORPORATE WORK IN HAND
Corporate work in hand was $2.9 billion at 31 December 2018, a decrease of 27.7%, or $1.1 billion compared to 31 December 2017.
Corporate work in hand includes CIMIC’s share of work in hand from investments such as Ventia and BICC.
35
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Risk management approach
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.
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.
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
RISK MANAGEMENT
CIMIC defines risk management as the identification, assessment and treatment of risks that have the potential to materially
impact 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 2017 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.
SIGNIFICANT CHANGES
SIGNIFICANT CHANGES DURING FY18
2017) ended on 28 December 2018.
SHAREHOLDERS
On 23 May 2018, Standard & Poor’s upgraded CIMIC’s outlook to stable and affirmed its credit rating at ‘BBB/A-2’.
On 14 December 2018, CIMIC announced 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 2018. The previous share buy-back (announced 14 December
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 2018. HOCHTIEF AG is listed on the Frankfurt Stock Exchange. The largest shareholder in
HOCHTIEF AG is Spanish based company Actividades de Construcción y Servicios, SA (ACS), which held 50.41% of the shares in
HOCHTIEF as at 31 December 2018.
STRATEGY AND OPERATING ENVIRONMENT OUTLOOK
CIMIC is an engineering-led construction, mining, services and PPP leader with a history dating back to 1899 and around 50,000
people delivering services in 20 countries. Our mission is to generate sustainable shareholder returns by delivering innovative and
competitive solutions for clients, and safe, fulfilling careers for our people. 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
CIMIC operates through activity-based businesses in construction, mining and mineral processing, operation and maintenance
services, PPPs and engineering. These businesses deliver services in Australia and select markets in Asia, the near Pacific, Southern
foreseeable future.
OPERATING MODEL AND STRATEGY
Africa, and the Americas.
CIMIC’s strategy has the following key elements:
to be an engineering-led, industry-leading group with a balanced portfolio diversified by market sector, activity, geography,
type of client, contract type, volume and duration. This diversification and our scale, reduces earnings volatility, facilitates the
management of risk and helps to create sustainable returns;
to offer integrated solutions through a complementary suite of capabilities for the entire life-cycle of assets - from
development and financing to engineering, construction, mining, operations and maintenance;
to selectively export the Group’s capabilities and expand in other markets which meet our governance, risk, and return
requirements, either organically or through acquisition; and
to utilise common systems and processes to facilitate the sharing of innovation and knowledge.
Underpinning the strategy is the pursuit of operational excellence in terms of:
identifying value-adding engineering solutions;
applying a disciplined approach to risk management;
rigorously managing cash;
maintaining a tight control on costs; and
ensuring an uncompromising focus on safety.
Fundamental to the delivery of the strategy is the sustainment of a strong balance sheet, which supports organic growth and
provides flexibility in capital expenditure, investments into PPPs, as well as strategic capital allocation opportunities including
acquisitions.
CONSTRUCTION MARKET
Historic under-spending, growing populations, increasing urbanisation and the demands of economic development are driving
governments, across Australia and the Asia-Pacific region, to invest increasingly larger amounts of capital in social and economic
infrastructure projects. Those projects are aimed at driving economic growth, raising the living standards of their populations and
improving the competitiveness of economies. A growing level of government spending – on infrastructure such as roads, railways,
ports, airports, water, health, education and defence – is expected to be supplemented by sustained levels of private sector
investment in oil and gas, mining, renewable energy generation and transmission, telecommunications and commercial property
projects. These projects will underpin a range of construction opportunities that suit the Group’s capabilities and experience.
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. Governance of environmental performance is over seen by the Ethics,
Compliance and Sustainability Committee.
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.
37
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38
RISK MANAGEMENT
CIMIC defines risk management as the identification, assessment and treatment of risks that have the potential to materially
impact 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 2017 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. Governance of environmental performance is over seen by the Ethics,
External factors may affect the Group’s markets and growth plans.
Compliance and Sustainability Committee.
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.
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
SIGNIFICANT CHANGES
SIGNIFICANT CHANGES DURING FY18
On 23 May 2018, Standard & Poor’s upgraded CIMIC’s outlook to stable and affirmed its credit rating at ‘BBB/A-2’.
On 14 December 2018, CIMIC announced 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 2018. The previous share buy-back (announced 14 December
2017) ended on 28 December 2018.
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 2018. HOCHTIEF AG is listed on the Frankfurt Stock Exchange. The largest shareholder in
HOCHTIEF AG is Spanish based company Actividades de Construcción y Servicios, SA (ACS), which held 50.41% of the shares in
HOCHTIEF as at 31 December 2018.
STRATEGY AND OPERATING ENVIRONMENT OUTLOOK
CIMIC is an engineering-led construction, mining, services and PPP leader with a history dating back to 1899 and around 50,000
people delivering services in 20 countries. Our mission is to generate sustainable shareholder returns by delivering innovative and
competitive solutions for clients, and safe, fulfilling careers for our people. 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.
OPERATING MODEL AND STRATEGY
CIMIC operates through activity-based businesses in construction, mining and mineral processing, operation and maintenance
services, PPPs and engineering. These businesses deliver services in Australia and select markets in Asia, the near Pacific, Southern
Africa, and the Americas.
CIMIC’s strategy has the following key elements:
to be an engineering-led, industry-leading group with a balanced portfolio diversified by market sector, activity, geography,
type of client, contract type, volume and duration. This diversification and our scale, reduces earnings volatility, facilitates the
management of risk and helps to create sustainable returns;
to offer integrated solutions through a complementary suite of capabilities for the entire life-cycle of assets - from
development and financing to engineering, construction, mining, operations and maintenance;
to selectively export the Group’s capabilities and expand in other markets which meet our governance, risk, and return
requirements, either organically or through acquisition; and
to utilise common systems and processes to facilitate the sharing of innovation and knowledge.
identifying value-adding engineering solutions;
applying a disciplined approach to risk management;
rigorously managing cash;
Underpinning the strategy is the pursuit of operational excellence in terms of:
maintaining a tight control on costs; and
ensuring an uncompromising focus on safety.
Fundamental to the delivery of the strategy is the sustainment of a strong balance sheet, which supports organic growth and
provides flexibility in capital expenditure, investments into PPPs, as well as strategic capital allocation opportunities including
acquisitions.
CONSTRUCTION MARKET
Historic under-spending, growing populations, increasing urbanisation and the demands of economic development are driving
governments, across Australia and the Asia-Pacific region, to invest increasingly larger amounts of capital in social and economic
infrastructure projects. Those projects are aimed at driving economic growth, raising the living standards of their populations and
improving the competitiveness of economies. A growing level of government spending – on infrastructure such as roads, railways,
ports, airports, water, health, education and defence – is expected to be supplemented by sustained levels of private sector
investment in oil and gas, mining, renewable energy generation and transmission, telecommunications and commercial property
projects. These projects will underpin a range of construction opportunities that suit the Group’s capabilities and experience.
37
CIMIC AR 20 - Main Text.indd 38
38
38
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CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
In Australia, investment in infrastructure is expected to be a significant driver of the non-residential construction market over the
next five years, supported primarily by substantial funding commitments from the Federal and various State Governments, and
complemented by collaboration with the private sector on PPP projects18.
In the 2018-19 Budget, the Federal Government maintained its commitment to prioritising investment in transport infrastructure,
providing funding for nation-building roads, rail and other public transport projects. The Budget included $24.5 billion for major
new transport projects and initiatives, including funding for further upgrades to the Bruce Highway in Queensland and a
commitment to fund the Melbourne Airport Rail Link in Victoria. These initiatives form part of the Federal Government’s proposal
to invest $75 billion in nationally significant transport infrastructure over the next decade 19.
The State and Territory Governments are also progressing substantial infrastructure investment programs in their own right. In the
most recent Victorian Budget20, the State Government proposed the investment of $42.5 billion in infrastructure over the next four
years.
The New South Wales Government remains focused on delivering its own infrastructure agenda, with the State Budget21 outlining
an infrastructure program worth $87.2 billion over the next four years. Of this planned spend, $51.2 billion is earmarked for the
delivery of over 3,500 road and rail projects across the State.
In Queensland, the State Budget22 proposes more than $45.8 billion of expenditure dedicated to essential infrastructure and capital
works including road, rail, school, and hospital projects over the next four years.
The New Zealand Government remains focused on improving the nation’s infrastructure and demonstrated its commitment to
investing for the future in the 2018 Budget 23. In the Budget, the Government outlined a commitment to spend NZ$42 billion of net
new capital over the five years to 2022, predominantly on transport, housing and regional infrastructure projects, as well as
investing in health and education.
Across the Group’s international construction markets similar macroeconomic and demographic trends are continuing to provide a
broad range of opportunities for the Group.
MINING AND MINERAL PROCESSING MARKET
In the long-term, rising living standards across much of the developing world, along with continued population growth and
increasing urbanisation, will continue to underpin demand for energy, metals and minerals. After a period of underinvestment by
resources companies in new green-field developments, and the relative exploitation of existing brown-field assets, there is also a
growing need for the sector to invest in new and expanded sources of supply 27.
The Australian Government’s Resources and Energy Quarterly reported in September 2018 that exports, by volume, of
metallurgical coal, thermal coal and iron ore are expected to grow by a compound annual growth rate of 5.1%, 1.2% and 1.7% per
annum, respectively, from 2017-18 until 2019-20 28. Strong levels of demand for coal and iron ore, copper and nickel, are expected
to underpin a good level of mining activity for the Group for the foreseeable future. Meanwhile, an accelerating transition to
renewable energy sources, such as solar and wind, as well as the need for storage in the form of batteries, is increasing demand –
and therefore mining opportunities – for the metals and minerals used in this infrastructure. For more detail, see the sub-chapter
‘Changes to the energy mix’ in the ‘Innovation’ chapter of the Sustainability Report.
Looking further ahead, the fundamental elements of our positive view for our core commodity exposures in the longer-term
remain in place. Population growth, continued urbanisation and industrialisation, improving living standards, and the limited ability
to substitute metallurgical coal in the steel production process, should all underpin mining opportunities in the long term.
Additionally, the growing demand for other minerals, driven by the transition to a lower carbon future, will necessitate substantial
investments by resources companies into a range of new processing facilities. The ability to collaboratively provide construction,
mining and mineral processing services means CIMIC is well placed to support clients in the future.
SERVICES MARKET
The outlook for the Group’s maintenance services market continues to improve, as the market continues to grow and offer new
opportunities. The Australian maintenance market, which includes the: transport; oil and gas; mining; power, utilities and other;
social building and commercial building sectors, is expected to grow by more than 6% per annum from 2018 to 2023 and by almost
50% over the next seven years from an estimated $25.5 billion in 2018 to around $38 billion in 2025.
A substantial level of investment in the infrastructure and resources sectors, combined with the further ageing of existing
infrastructure, is driving demand for maintenance services. In addition, an increasing number of asset owners are seeing the
benefit of outsourcing their maintenance services. Currently in Australia, around 56% of the infrastructure maintenance service
market is outsourced – however this number is expected to gradually increase over time.
CIMIC’s strong position in the maintenance services market and ability to deliver smart management and maintenance service
solutions for clients places us in a good position to capitalise on these growing opportunities.
PPP MARKET
Across Australia, New Zealand and the Asia-Pacific region, governments are turning to PPPs to implement infrastructure programs
as they aim to balance constrained budgets with the need to facilitate economic growth and meet the needs of their growing
populations. In turning to the private sector, as an alternative additional source of funding to meet budgetary gaps, PPPs also offer
other advantages to governments which can include:
incentivising the private sector to deliver projects on time and within budget;
imposing budgetary certainty by setting the present and future costs of infrastructure projects over time;
introducing private sector technology and innovation to provide better public services through improved operational
efficiency; and
extracting long-term value-for-money through appropriate risk transfer to the private sector over the life of a project – from
design and construction to operations and maintenance24.
Governments in Australia, both Federal and State, have seen these advantages of PPPs and turned to them for procurement. This
growing demand is reflected in the National PPP Policy Framework, agreed to by the Coalition of Australian Governments, where all
projects valued at over $50 million may be considered for PPP agreements25. Furthermore, new PPP contracting models are
enabling greater flexibility in allocating risk between the public and private sector, leading to better outcomes for all parties
involved26. This is creating a growing pipeline of PPPs for the Group with an estimated pipeline of relevant tenders worth $120
billion to be bid in the coming years.
In New Zealand, the Government is actively pursuing non-traditional procurement options, and specifically PPP approaches
involving greater private sector involvement in the provision of both infrastructure and services, where these can demonstrate
greater value for money to the public sector.
18 Macromonitor, Australian Construction Outlook Overview, June 2018, p. 7-20.
19 Commonwealth of Australia, Budget Statement 1: Budget Overview, May 2018, p. 1-18 to 19.
20 Victorian State Government, Pre-Election Budget Update, November 2018, p. 10.
21 New South Wales Budget Paper No. 2, Infrastructure Statement, 2018-19, p. 1-1 to 2, 2-9.
22 Queensland Budget, Budget Strategy and Outlook, Budget Paper No. 2, 2018-19, May 2018, p. 5.
23 New Zealand Treasury, Fiscal Strategy Report, 2018, May 2018, p. 22-24.
24 World Bank Group, Government Objectives: Benefits and Risks of PPPs, 31 October, 2016 - https://ppp.worldbank.org/public-private-
partnership/overview/ppp-objectives
25 Department of Infrastructure and Regional Development, National PPP Policy Framework, October 2015, p. 7.
26 Macromonitor, Australian Construction Outlook Overview, June 2018, p. 20.
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27 BHP. “BHP’s economic and commodity outlook”, August 2018, p. 2.
28 Australian Government (Office of the Chief Economist) Department of Industry, Innovation and Science: Resources and Energy Quarterly,
September 2018, p. 7.
40
In Australia, investment in infrastructure is expected to be a significant driver of the non-residential construction market over the
next five years, supported primarily by substantial funding commitments from the Federal and various State Governments, and
complemented by collaboration with the private sector on PPP projects18.
In the 2018-19 Budget, the Federal Government maintained its commitment to prioritising investment in transport infrastructure,
providing funding for nation-building roads, rail and other public transport projects. The Budget included $24.5 billion for major
new transport projects and initiatives, including funding for further upgrades to the Bruce Highway in Queensland and a
commitment to fund the Melbourne Airport Rail Link in Victoria. These initiatives form part of the Federal Government’s proposal
to invest $75 billion in nationally significant transport infrastructure over the next decade 19.
The State and Territory Governments are also progressing substantial infrastructure investment programs in their own right. In the
most recent Victorian Budget20, the State Government proposed the investment of $42.5 billion in infrastructure over the next four
years.
The New South Wales Government remains focused on delivering its own infrastructure agenda, with the State Budget21 outlining
an infrastructure program worth $87.2 billion over the next four years. Of this planned spend, $51.2 billion is earmarked for the
delivery of over 3,500 road and rail projects across the State.
In Queensland, the State Budget22 proposes more than $45.8 billion of expenditure dedicated to essential infrastructure and capital
works including road, rail, school, and hospital projects over the next four years.
The New Zealand Government remains focused on improving the nation’s infrastructure and demonstrated its commitment to
investing for the future in the 2018 Budget 23. In the Budget, the Government outlined a commitment to spend NZ$42 billion of net
new capital over the five years to 2022, predominantly on transport, housing and regional infrastructure projects, as well as
investing in health and education.
Across the Group’s international construction markets similar macroeconomic and demographic trends are continuing to provide a
broad range of opportunities for the Group.
PPP MARKET
Across Australia, New Zealand and the Asia-Pacific region, governments are turning to PPPs to implement infrastructure programs
as they aim to balance constrained budgets with the need to facilitate economic growth and meet the needs of their growing
populations. In turning to the private sector, as an alternative additional source of funding to meet budgetary gaps, PPPs also offer
other advantages to governments which can include:
incentivising the private sector to deliver projects on time and within budget;
imposing budgetary certainty by setting the present and future costs of infrastructure projects over time;
introducing private sector technology and innovation to provide better public services through improved operational
efficiency; and
extracting long-term value-for-money through appropriate risk transfer to the private sector over the life of a project – from
design and construction to operations and maintenance24.
Governments in Australia, both Federal and State, have seen these advantages of PPPs and turned to them for procurement. This
growing demand is reflected in the National PPP Policy Framework, agreed to by the Coalition of Australian Governments, where all
projects valued at over $50 million may be considered for PPP agreements25. Furthermore, new PPP contracting models are
enabling greater flexibility in allocating risk between the public and private sector, leading to better outcomes for all parties
involved26. This is creating a growing pipeline of PPPs for the Group with an estimated pipeline of relevant tenders worth $120
billion to be bid in the coming years.
In New Zealand, the Government is actively pursuing non-traditional procurement options, and specifically PPP approaches
involving greater private sector involvement in the provision of both infrastructure and services, where these can demonstrate
greater value for money to the public sector.
18 Macromonitor, Australian Construction Outlook Overview, June 2018, p. 7-20.
19 Commonwealth of Australia, Budget Statement 1: Budget Overview, May 2018, p. 1-18 to 19.
20 Victorian State Government, Pre-Election Budget Update, November 2018, p. 10.
21 New South Wales Budget Paper No. 2, Infrastructure Statement, 2018-19, p. 1-1 to 2, 2-9.
22 Queensland Budget, Budget Strategy and Outlook, Budget Paper No. 2, 2018-19, May 2018, p. 5.
23 New Zealand Treasury, Fiscal Strategy Report, 2018, May 2018, p. 22-24.
24 World Bank Group, Government Objectives: Benefits and Risks of PPPs, 31 October, 2016 - https://ppp.worldbank.org/public-private-
partnership/overview/ppp-objectives
25 Department of Infrastructure and Regional Development, National PPP Policy Framework, October 2015, p. 7.
26 Macromonitor, Australian Construction Outlook Overview, June 2018, p. 20.
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
MINING AND MINERAL PROCESSING MARKET
In the long-term, rising living standards across much of the developing world, along with continued population growth and
increasing urbanisation, will continue to underpin demand for energy, metals and minerals. After a period of underinvestment by
resources companies in new green-field developments, and the relative exploitation of existing brown-field assets, there is also a
growing need for the sector to invest in new and expanded sources of supply 27.
The Australian Government’s Resources and Energy Quarterly reported in September 2018 that exports, by volume, of
metallurgical coal, thermal coal and iron ore are expected to grow by a compound annual growth rate of 5.1%, 1.2% and 1.7% per
annum, respectively, from 2017-18 until 2019-20 28. Strong levels of demand for coal and iron ore, copper and nickel, are expected
to underpin a good level of mining activity for the Group for the foreseeable future. Meanwhile, an accelerating transition to
renewable energy sources, such as solar and wind, as well as the need for storage in the form of batteries, is increasing demand –
and therefore mining opportunities – for the metals and minerals used in this infrastructure. For more detail, see the sub-chapter
‘Changes to the energy mix’ in the ‘Innovation’ chapter of the Sustainability Report.
Looking further ahead, the fundamental elements of our positive view for our core commodity exposures in the longer-term
remain in place. Population growth, continued urbanisation and industrialisation, improving living standards, and the limited ability
to substitute metallurgical coal in the steel production process, should all underpin mining opportunities in the long term.
Additionally, the growing demand for other minerals, driven by the transition to a lower carbon future, will necessitate substantial
investments by resources companies into a range of new processing facilities. The ability to collaboratively provide construction,
mining and mineral processing services means CIMIC is well placed to support clients in the future.
SERVICES MARKET
The outlook for the Group’s maintenance services market continues to improve, as the market continues to grow and offer new
opportunities. The Australian maintenance market, which includes the: transport; oil and gas; mining; power, utilities and other;
social building and commercial building sectors, is expected to grow by more than 6% per annum from 2018 to 2023 and by almost
50% over the next seven years from an estimated $25.5 billion in 2018 to around $38 billion in 2025.
A substantial level of investment in the infrastructure and resources sectors, combined with the further ageing of existing
infrastructure, is driving demand for maintenance services. In addition, an increasing number of asset owners are seeing the
benefit of outsourcing their maintenance services. Currently in Australia, around 56% of the infrastructure maintenance service
market is outsourced – however this number is expected to gradually increase over time.
CIMIC’s strong position in the maintenance services market and ability to deliver smart management and maintenance service
solutions for clients places us in a good position to capitalise on these growing opportunities.
27 BHP. “BHP’s economic and commodity outlook”, August 2018, p. 2.
28 Australian Government (Office of the Chief Economist) Department of Industry, Innovation and Science: Resources and Energy Quarterly,
September 2018, p. 7.
39
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CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Remuneration Report
FUTURE DEVELOPMENTS
GROUP PROSPECTS
CIMIC’s core markets – in construction, PPPs, mining and mineral processing, operations and maintenance services, and
engineering – continue to offer a broad range of opportunities. CIMIC’s work in hand and a substantial pipeline of future project
opportunities support our positive outlook.
North East Link - Primary Package (Kempston Street to Southern Portal PPP) for North East Link Authority, Victoria;
Inland Rail - Gowrie to Kagaru PPP for Australian Rail Track Corporation (ARTC), Queensland;
F6 Extension Stage 1 - Arncliffe to Kogarah for Roads and Maritime Services, New South Wales;
Auckland Light Rail Stage 1 - Main Works for NZTA (New Zealand Transport Agency), New Zealand;
Third Runway Concourse - Main Works for Airport Authority Hong Kong, Hong Kong;
Five Year Outage Alliance for Cs Energy Ltd, Queensland;
Auckland CRL-C3 Stations and Tunnel for Auckland Transport, New Zealand;
Perth Metronet Rolling Stock for Public Transport Authority, Western Australia;
Olive Downs South and Meandu Mining Services in the coal sector together with other coal opportunities, Queensland;
CIMIC is currently bidding on, or has been shortlisted for, projects including:
Minera Centinela Esperanza Sur copper mine, Chile;
Suburban Roads Upgrade projects PPP, Victoria;
Cross River Rail PPP project, Queensland;
Cross River Rail - Rail, integration & Systems Alliance, Queensland;
North-South Corridor, Singapore;
Mining and processing opportunities in New South Wales, Queensland and Western Australia; and
Various projects in Canada and Chile including additional mining works in the oil sands and AMSA Minera Centinelas as well as
the Jwaneng expansion project in Botswana.
The Group has an extensive pipeline with at least $130 billion of tenders relevant to CIMIC to be bid and/or awarded in 2019, and
around $300 billion of projects are coming to the market in 2020 and beyond, including about $120 billion worth of PPP projects.
CIMIC continues to consider opportunities to diversify and expand into new regions and markets by leveraging its existing
capabilities. The Group is also continuing to analyse opportunities to make acquisitions which broaden the service offering.
The Group’s positive outlook is founded on a disciplined focus of sustaining a strong balance sheet, generating cash, and rigorous
approach to tendering and project delivery. This focus, combined with the Group’s strong competitive position and the range of
opportunities across the core markets, provides a solid base for the generation of sustainable returns.
GUIDANCE
CIMIC expects 2019 NPAT to be in the range of $790 million to $840 million, subject to market conditions.
41
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42
Remuneration Report
SCOPE
Corporations Act.
set out below.
The information provided in this Remuneration Report has been audited and is in accordance with the requirements of the
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 2018) are
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
the following table.
Fixed
Senior Executive remuneration for the 2018 Financial Year was delivered as a mix of fixed and variable remuneration as set out in
Fixed remuneration
Short-Term Incentive
(STI)
Base salary, non-monetary benefits and superannuation (as applicable).
Annual cash incentive paid to eligible Senior Executives for performance against
approved and measurable objectives.
Variable
Long-Term Incentive (LTI)
An option plan vesting 2 years after award and available to exercise over 3 years.
Awards are provided to select Senior Executives on a periodic basis and at the
discretion of the Company.
APPROACH TO SETTING REMUNERATION
Individual remuneration is determined by reference to:
Group policy regarding the mix of fixed and variable remuneration;
performance and experience of the individual;
comparable jobs within the Group; and
remuneration for comparable jobs amongst peer companies.
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 2018 are identified in the table below.
Executive Directors
Marcelino Fernández Verdes
Executive Chairman
Appointed as CEO on 13 March 2014. Elected Executive
Chairman on 11 June 2014. Previously a Non-executive Director
from 10 October 2012 to 13 March 2014. On 18 October 2016,
Mr Fernández Verdes stepped down as CEO. Mr Fernández
Verdes has continued in his capacity as Executive Chairman.
On 1 December 2017, Mr Wright was appointed as CEO and
Managing Director.
Michael Wright
CEO and Managing Director
Appointed as Deputy CEO and became KMP on 24 August 2017.
Executives
Ignacio Segura Suriñach
Deputy CEO and Chief
Appointed to the role of Deputy CEO and Chief Operating Officer
Operating Officer
on 1 November 2017, subject to the approval of his Temporary
Stefan Camphausen
CFO
Work (Skilled) (subclass 457) Visa. Mr Segura Suriñach
commenced employment and became KMP on 9 April 2018.
Appointed as CFO and became KMP on 1 June 2017.
The remuneration components described in this section apply to Mr Wright, Mr Segura Suriñach and Mr Camphausen. The
remuneration arrangements applicable to Mr Fernández Verdes are described separately in the ‘Remuneration – Executive
Chairman’ section of this Remuneration Report.
CIMIC Group Limited Annual Report 2018 | Operating and Financial Review
CIMIC Group Limited Annual Report 2018 | Remuneration Report
FUTURE DEVELOPMENTS
GROUP PROSPECTS
CIMIC’s core markets – in construction, PPPs, mining and mineral processing, operations and maintenance services, and
engineering – continue to offer a broad range of opportunities. CIMIC’s work in hand and a substantial pipeline of future project
opportunities support our positive outlook.
CIMIC is currently bidding on, or has been shortlisted for, projects including:
North East Link - Primary Package (Kempston Street to Southern Portal PPP) for North East Link Authority, Victoria;
Inland Rail - Gowrie to Kagaru PPP for Australian Rail Track Corporation (ARTC), Queensland;
F6 Extension Stage 1 - Arncliffe to Kogarah for Roads and Maritime Services, New South Wales;
Auckland Light Rail Stage 1 - Main Works for NZTA (New Zealand Transport Agency), New Zealand;
Third Runway Concourse - Main Works for Airport Authority Hong Kong, Hong Kong;
Five Year Outage Alliance for Cs Energy Ltd, Queensland;
Auckland CRL-C3 Stations and Tunnel for Auckland Transport, New Zealand;
Perth Metronet Rolling Stock for Public Transport Authority, Western Australia;
Olive Downs South and Meandu Mining Services in the coal sector together with other coal opportunities, Queensland;
Minera Centinela Esperanza Sur copper mine, Chile;
Suburban Roads Upgrade projects PPP, Victoria;
Cross River Rail PPP project, Queensland;
Cross River Rail - Rail, integration & Systems Alliance, Queensland;
North-South Corridor, Singapore;
Mining and processing opportunities in New South Wales, Queensland and Western Australia; and
Various projects in Canada and Chile including additional mining works in the oil sands and AMSA Minera Centinelas as well as
the Jwaneng expansion project in Botswana.
The Group has an extensive pipeline with at least $130 billion of tenders relevant to CIMIC to be bid and/or awarded in 2019, and
around $300 billion of projects are coming to the market in 2020 and beyond, including about $120 billion worth of PPP projects.
CIMIC continues to consider opportunities to diversify and expand into new regions and markets by leveraging its existing
capabilities. The Group is also continuing to analyse opportunities to make acquisitions which broaden the service offering.
The Group’s positive outlook is founded on a disciplined focus of sustaining a strong balance sheet, generating cash, and rigorous
approach to tendering and project delivery. This focus, combined with the Group’s strong competitive position and the range of
opportunities across the core markets, provides a solid base for the generation of sustainable returns.
GUIDANCE
CIMIC expects 2019 NPAT to be in the range of $790 million to $840 million, 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 2018) are
set out below.
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 2018 Financial Year was delivered as a mix of fixed and variable remuneration as set out in
the following table.
Fixed
Variable
Fixed remuneration
Short-Term Incentive
(STI)
Long-Term Incentive (LTI)
Base salary, non-monetary benefits and superannuation (as applicable).
Annual cash incentive paid to eligible Senior Executives for performance against
approved and measurable objectives.
An option plan vesting 2 years after award and available to exercise over 3 years.
Awards are provided to select Senior Executives on a periodic basis and at the
discretion of the Company.
APPROACH TO SETTING REMUNERATION
Individual remuneration is determined by reference to:
Group policy regarding the mix of fixed and variable remuneration;
performance and experience of the individual;
comparable jobs within the Group; and
remuneration for comparable jobs amongst peer companies.
The Remuneration and Nomination Committee considers and proposes the remuneration of the CEO (including any incentive
awards) to the Board for approval, and receives and reviews the remuneration (including any incentive awards) approved by the
CEO for any other Senior Executives.
SENIOR EXECUTIVE REMUNERATION – COMPONENTS IN DETAIL
The Senior Executives as at 31 December 2018 are identified in the table below.
Executive Directors
Marcelino Fernández Verdes
Executive Chairman
Appointed as CEO on 13 March 2014. Elected Executive
Chairman on 11 June 2014. Previously a Non-executive Director
from 10 October 2012 to 13 March 2014. On 18 October 2016,
Mr Fernández Verdes stepped down as CEO. Mr Fernández
Verdes has continued in his capacity as Executive Chairman.
Michael Wright
CEO and Managing Director Appointed as Deputy CEO and became KMP on 24 August 2017.
Executives
Ignacio Segura Suriñach
Deputy CEO and Chief
Operating Officer
Stefan Camphausen
CFO
On 1 December 2017, Mr Wright was appointed as CEO and
Managing Director.
Appointed to the role of Deputy CEO and Chief Operating Officer
on 1 November 2017, subject to the approval of his Temporary
Work (Skilled) (subclass 457) Visa. Mr Segura Suriñach
commenced employment and became KMP on 9 April 2018.
Appointed as CFO and became KMP on 1 June 2017.
The remuneration components described in this section apply to Mr Wright, Mr Segura Suriñach and Mr Camphausen. The
remuneration arrangements applicable to Mr Fernández Verdes are described separately in the ‘Remuneration – Executive
Chairman’ section of this Remuneration Report.
41
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CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
FIXED REMUNERATION
Fixed remuneration received by Senior Executives comprises base salary, non-monetary benefits and superannuation (as
applicable).
STI outcomes for the 2018 Financial Year
STI payments for the 2018 Financial Year were determined based on Senior Executive performance against the applicable financial
and non-financial KPIs, as described above. In general, during the 2018 Financial Year, the Group focused on continuing its strong
operating performance whilst maintaining a sound balance sheet to provide flexibility to pursue strategic growth initiatives, capital
Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time.
appreciation opportunities and to sustain shareholder returns.
Effective 9 April 2018, the fixed remuneration for Mr Segura Suriñach was set at $1,175,000 per annum upon his commencement
as Deputy CEO and Chief Operating Officer.
Effective 1 April 2019, an increase will be made to the fixed remuneration for Mr Wright from $1,200,000 per annum to $1,320,000
per annum, Mr Segura Suriñach from $1,175,000 per annum to $1,200,000 per annum plus an allowance of $400,000 for a 12
month period starting from 1 April 2019, and Mr Camphausen from $750,000 per annum to $825,000 per annum in line with
market positioning.
STI
Summary of 2018 STI
Senior Executive
participation
Mr Wright, Mr Segura Suriñach and Mr Camphausen participated in the 2018 STI. Mr Fernández
Verdes did not participate in the STI.
How much could Senior
Executives earn under
the 2018 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 2018 were:
Percentage of Total Fixed Remuneration (TFR)
Threshold
36% (ie, 60% of the
target STI opportunity
of 60% of TFR)
Target
60% (ie, 100% of the
target STI opportunity
of 60% of TFR)
Stretch
90% (ie, 150% of the
target STI opportunity
of 60% of TFR)
The 2018 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 2018, 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 2018 Financial
Year.
Performance against financial and non-financial key performance indicators (KPIs) was assessed
following the end of the 2018 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.
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?
The following table sets out the outcomes for the 2018 Financial Year for each Senior Executive who participated in the 2018 STI.
Percentage of available STI earned1
Senior Executives
Current
M Wright
I Segura Suriñach
S Camphausen
approved by the Executive Chairman.
2019 and is payable in April 2019.
STI earned (A$)
Percentage of target STI
Percentage of maximum STI
1,000,0002
500,0003
607,5004
138.9
96.7
135.0
92.6
64.5
90.0
1.
In consultation with the Remuneration and Nomination Committee, the threshold, target and stretch values for all of the financial KPIs are
2. Mr Wright’s STI award was approved by the Board, on the recommendation of the Remuneration and Nomination Committee, on 5 February
3. Mr Segura Suriñach commenced as Deputy CEO and Chief Operating Officer on 9 April 2018. This amount represents the STI earned from this
date. Mr Segura Suriñach’s STI award was approved by the CEO, in consultation with the Executive Chairman, endorsed by the Remuneration
and Nomination Committee on 5 February 2019 and is payable in April 2019.
4. Mr Camphausen’s STI award was approved by the CEO, in consultation with the Executive Chairman, endorsed by the Remuneration and
Nomination Committee on 5 February 2019 and is payable in April 2019.
There was no LTI grant in the 2018 Financial Year. The table below provides a summary of the 2015 LTI currently on foot.
LTI
Summary of 2015 LTI grants
participation
What are the
vesting conditions
and why were they
chosen?
Senior Executive
Mr Wright and Mr Camphausen participated in the 2015 LTI. Mr Fernández Verdes and Mr Segura
Suriñach did not participate in the LTI.
Options 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.
When are the
The options vest 2 years after the grant date, and are available to be exercised for a period of 3 years
options available to
subject to the discretion of the Remuneration and Nomination Committee. The Senior Executive is
exercise?
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. In October 2018, the Company determined that the vested
options available to be exercised in years 2 and 3 of the exercise window will also be settled in cash in
lieu of an allocation of shares as described above.
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.
there is a change of
which, any unvested options will vest or cease to be subject to restrictions (as applicable), having regard
If a change of control occurs, the Company in its discretion may determine whether, and the extent to
to all relevant circumstances including performance to-date and the nature of the change of control.
If a Senior Executive resigns or is summarily terminated, any vested but unexercised and any unvested
option grants will lapse. Generally, if a Senior Executive leaves due to any other circumstances (eg,
retrenchment, 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.
What are the
methods of
exercise?
Do the options
attract dividends
and voting rights?
What happens if
control?
What if a Senior
Executive ceases
employment?
43
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44
CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | 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 2018 Financial Year
STI payments for the 2018 Financial Year were determined based on Senior Executive performance against the applicable financial
and non-financial KPIs, as described above. In general, during the 2018 Financial Year, the Group focused on continuing its strong
operating performance whilst maintaining a sound balance sheet to provide flexibility to pursue strategic growth initiatives, capital
appreciation opportunities and to sustain shareholder returns.
Effective 9 April 2018, the fixed remuneration for Mr Segura Suriñach was set at $1,175,000 per annum upon his commencement
The following table sets out the outcomes for the 2018 Financial Year for each Senior Executive who participated in the 2018 STI.
as Deputy CEO and Chief Operating Officer.
Effective 1 April 2019, an increase will be made to the fixed remuneration for Mr Wright from $1,200,000 per annum to $1,320,000
per annum, Mr Segura Suriñach from $1,175,000 per annum to $1,200,000 per annum plus an allowance of $400,000 for a 12
month period starting from 1 April 2019, and Mr Camphausen from $750,000 per annum to $825,000 per annum in line with
market positioning.
STI
Summary of 2018 STI
Senior Executive
participation
Mr Wright, Mr Segura Suriñach and Mr Camphausen participated in the 2018 STI. Mr Fernández
Verdes did not participate in the STI.
How much could Senior
The STI opportunity provides a reward for threshold, target and stretch performance based on
Executives earn under
performance conditions referred to below. The table reflects the potential earnings as a percentage
the 2018 STI?
of fixed remuneration for the relevant executive.
The STI opportunities for 2018 were:
Percentage of Total Fixed Remuneration (TFR)
Threshold
Target
Stretch
36% (ie, 60% of the
60% (ie, 100% of the
90% (ie, 150% of the
target STI opportunity
target STI opportunity
target STI opportunity
of 60% of TFR)
of 60% of TFR)
of 60% of TFR)
Over what period was
The 2018 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 STI
based on performance against financial measures
was based on performance against safety
and targets applicable to the relevant role.
For Senior Executives in 2018, this financial
component was based on NPAT and operating cash
targets and/or other non-financial measures
relevant to the role.
flow.
Year.
Why were those
The financial measures are designed to encourage
The non-financial measures are designed to
performance measures
Senior Executives to focus on the key financial
encourage a direct relationship between the
chosen?
objectives of the Group consistent with the
measures set and the individual Senior
business plan for the relevant year and the Group’s
Executive’s role. They also ensure that
strategic objectives.
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 2018 Financial
How was performance
Performance against financial and non-financial key performance indicators (KPIs) was assessed
against targets
assessed?
following the end of the 2018 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.
Percentage of available STI earned1
Senior Executives
Current
M Wright
I Segura Suriñach
S Camphausen
STI earned (A$)
Percentage of target STI
Percentage of maximum STI
1,000,0002
500,0003
607,5004
138.9
96.7
135.0
92.6
64.5
90.0
1.
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’s STI award was approved by the Board, on the recommendation of the Remuneration and Nomination Committee, on 5 February
2019 and is payable in April 2019.
3. Mr Segura Suriñach commenced as Deputy CEO and Chief Operating Officer on 9 April 2018. This amount represents the STI earned from this
date. Mr Segura Suriñach’s STI award was approved by the CEO, in consultation with the Executive Chairman, endorsed by the Remuneration
and Nomination Committee on 5 February 2019 and is payable in April 2019.
4. Mr Camphausen’s STI award was approved by the CEO, in consultation with the Executive Chairman, endorsed by the Remuneration and
Nomination Committee on 5 February 2019 and is payable in April 2019.
LTI
There was no LTI grant in the 2018 Financial Year. 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?
What if a Senior
Executive ceases
employment?
Mr Wright and Mr Camphausen participated in the 2015 LTI. Mr Fernández Verdes and Mr Segura
Suriñach did not participate in the LTI.
Options 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. In October 2018, the Company determined that the vested
options available to be exercised in years 2 and 3 of the exercise window will also be settled in cash in
lieu of an allocation of shares as described above.
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.
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.
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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.
No SARs were exercised in the 2018 Financial Year.
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)
30-day
Test date
Vested
Forfeited
(%)
(%)
Exercised
(number)
(vesting
date)
VWAP at
start of
vesting
period
(A$)
17.71
Fair
value
per
SAR1
(A$)
Outstanding
as at 31 Dec
2018
(number)
Total
maximum
potential
value of
remaining
grant2 (A$)
7,749,600
10 June
1,200,000
13 March
100
-
960,0003
25.26
240,000
2014
2016
1.
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 2018. 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.
2.
3.
The maximum potential value is calculated as the number of outstanding SARs multiplied by the maximum payment per SAR ($32.29).
These SARs were exercised in the 2017 Financial Year. Refer to page 65 of the 2017 Annual Report for further information.
As required by the Corporations Act, the 5 year financial performance of the Group has been set out in the following table.
COMPANY PERFORMANCE
Year-on-year performance snapshot
TSR3
(%)
EPS
(A$)
PBT
(A$M)
NPAT
(A$M)
Return
Cash flow
on
from
equity
operations
Gross
debt to
equity
FY 2018
96.2
2.41
1,075
Opening
share
price -
Jan1
(A$)
51.45
Closing
share
Dec2
(A$)
43.41
price -
appreci-
Dividend
per
share
paid
(A$)
1.45
Share
price
ation
(%)
(15.6)
45.4
46.0
FY 2017
35.38
51.45
1.22
154.3
2.17
FY 2016
23.93
34.94
0.98
148.0
1.77
FY 2015
22.51
24.30
8.0
1.14
58.2
1.54
FY 20145
16.28
22.50
38.2
1.17
36.3
2.00
1,131
959
740
735
781
702
580
520
677
(%)
374
274
16
13
19
(A$M)
1,859
1,523
1,201
1,920
1,410
ratio
(%)
22.4
26.9
35.2
25.7
79.2
1.
2.
3.
4.
5.
Opening share price is determined as the market open price traded on the first trading day of the relevant financial year.
Closing share price is determined as the market close price traded on the last trading day of the relevant financial year.
TSR is determined over a rolling 3 year period.
The reported equity of $3,357.2 million as at 31 December 2017 has been reduced by $1,442.2 million to $1,915.0 million to reflect the impact
of the new accounting standards AASB 9 and AASB 15 and ensure comparability in the calculation.
The December 2014 amounts shown above include both continuing and discontinued operations.
CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
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 prohibits Senior Executives from entering into hedging
arrangements regarding both vested and unvested securities, which includes options.
Can Senior
Executives hedge
their risk under the
option plan?
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 of the Executive Board 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. As per Mr Fernández Verdes’ ESA the allowance amount is to be
indexed in line with CPI changes. Prior to 2019, Mr Fernández Verdes was paid an allowance on which Fringe Benefits Tax
(FBT) was payable due to his travel patterns and living away from home arrangements while in Australia. From January 2019,
Pay As You Go (PAYG) withholding tax is payable rather than FBT to reflect a change in his travel patterns. This change in tax
treatment results in a decrease in the gross amount payable in order to maintain the net allowance (subject to CPI changes
noted above):
Year
2017
2018
2019
Gross allowance amount (A$)
Reason
Effective 1 January 2017 to accommodate 1.3% CPI increase
Effective 1 April 2017 to accommodate a reduction in FBT
528,920
508,855
518,124 Effective 1 January 2018 to accommodate 1.8% CPI increase
475,243 Effective 1 January 2019 to accommodate 1.9% CPI increase to the net
allowance amount and change to PAYG withholding tax payable. The change in
tax treatment results in a lower gross allowance amount.
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 Chairman of the Executive
Board of HOCHTIEF AG, 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.
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
45
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46
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 prohibits Senior Executives from entering into hedging
arrangements regarding both vested and unvested securities, which includes options.
Can Senior
Executives hedge
their risk under the
option plan?
POLICY AND APPROACH
Nomination Committee.
COMPONENTS
remuneration are:
noted above):
Year
2017
2018
2019
REMUNERATION – EXECUTIVE CHAIRMAN
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 of the Executive Board 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. As per Mr Fernández Verdes’ ESA the allowance amount is to be
indexed in line with CPI changes. Prior to 2019, Mr Fernández Verdes was paid an allowance on which Fringe Benefits Tax
(FBT) was payable due to his travel patterns and living away from home arrangements while in Australia. From January 2019,
Pay As You Go (PAYG) withholding tax is payable rather than FBT to reflect a change in his travel patterns. This change in tax
treatment results in a decrease in the gross amount payable in order to maintain the net allowance (subject to CPI changes
Gross allowance amount (A$)
Reason
528,920
508,855
Effective 1 January 2017 to accommodate 1.3% CPI increase
Effective 1 April 2017 to accommodate a reduction in FBT
518,124 Effective 1 January 2018 to accommodate 1.8% CPI increase
475,243 Effective 1 January 2019 to accommodate 1.9% CPI increase to the net
allowance amount and change to PAYG withholding tax payable. The change in
tax treatment results in a lower gross allowance amount.
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 Chairman of the Executive
Board of HOCHTIEF AG, 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/.
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 $32.29.
The SARs vested in full on 13 March 2016 and are exercisable for 3 years from the date of vesting. No more than 40% of the SARs
can be exercised each year for the first 2 years after vesting, and any remaining SARs can be exercised in the final year of the
exercise period.
The SARs will lapse on 13 March 2019 unless they have been exercised or forfeited before that date.
Mr Fernández Verdes would have forfeited any unvested or vested but unexercised SARs if he had ceased to be the CEO of CIMIC
before 31 December 2014. Further, Mr Fernández Verdes would have forfeited any unvested or vested but unexercised SARs if he
did not remain a member of either the Executive Board or the Supervisory Board of HOCHTIEF AG for the period from appointment
to 13 March 2017. Mr Fernández Verdes will forfeit any unvested or vested but unexercised SARs if his employment is summarily
terminated. If Mr Fernández Verdes had ceased employment with CIMIC prior to vesting but after 31 December 2014 in any other
CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
circumstance (ie, he was not summarily terminated) but remained a member of either the Executive Board or the Supervisory
Board of HOCHTIEF AG, any unvested SARs would have remained on foot and vested and become exercisable in the ordinary
course.
No SARs were exercised in the 2018 Financial Year.
The current position with respect to the one-off award of SARs granted to Mr Fernández Verdes in the 2014 Financial Year are set
out in the following table.
Grant
date
Granted
(number)
10 June
2014
1,200,000
30-day
VWAP at
start of
vesting
period
(A$)
17.71
Test date
(vesting
date)
13 March
2016
Vested
(%)
Forfeited
(%)
Exercised
(number)
Fair
value
per
SAR1
(A$)
Outstanding
as at 31 Dec
2018
(number)
100
-
960,0003
25.26
240,000
Total
maximum
potential
value of
remaining
grant2 (A$)
7,749,600
1.
2.
3.
The fair value of the SARs is determined at the date of grant (in accordance with AASB 2 Share-based payment) and was re-evaluated on
31 December 2018. 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 ($32.29).
These SARs were exercised in the 2017 Financial Year. Refer to page 65 of the 2017 Annual Report for further information.
COMPANY PERFORMANCE
As required by the Corporations Act, the 5 year financial performance of the Group has been set out in the following table.
Year-on-year performance snapshot
Opening
share
price -
Jan1
(A$)
51.45
Closing
share
price -
Dec2
(A$)
43.41
FY 2018
Share
price
appreci-
ation
(%)
(15.6)
Dividend
per
share
paid
(A$)
1.45
TSR3
(%)
EPS
(A$)
PBT
(A$M)
NPAT
(A$M)
Return
on
equity
(%)
Cash flow
from
operations
(A$M)
96.2
2.41
1,075
781
1,859
Gross
debt to
equity
ratio
(%)
22.4
FY 2017
35.38
51.45
45.4
1.22
154.3
2.17
959
702
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 20145
16.28
22.50
38.2
1.17
36.3
2.00
1,131
677
374
274
16
13
19
1,523
26.9
1,201
35.2
1,920
25.7
1,410
79.2
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.
5.
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 reported equity of $3,357.2 million as at 31 December 2017 has been reduced by $1,442.2 million to $1,915.0 million to reflect the impact
of the new accounting standards AASB 9 and AASB 15 and ensure comparability in the calculation.
The December 2014 amounts shown above include both continuing and discontinued operations.
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CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
STATUTORY SENIOR EXECUTIVE REMUNERATION TABLE
SHORT-TERM EMPLOYEE BENEFITS
POST-EMPLOYMENT
Cash
salary
(A$)
Cash
bonuses
(STI)
(A$)(a)
Non-
monetary
benefits
(A$)(b)
Other
(A$)(c)(d)(e)
Super-
annuation
benefits
(A$)
Termination
benefits
(A$)
SUBTOTAL
(A$)
Senior Executives
M Fernández Verdes
2018 Financial Year
2017 Financial Year
M Wright*
2018 Financial Year
2017 Financial Year1
I Segura Suriñach2*
2018 Financial Year
2017 Financial Year
S Camphausen*
2018 Financial Year
2017 Financial Year3
-
-
-
-
6,446
6,288
518,124
517,218
-
-
1,278,172
538,068
1,000,000
363,117
46,530
-
72,000
6,000
20,290
7,119
866,012
-
500,000
-
753,743
465,856
607,500
395,753
-
-
-
-
400,000
-
-
-
-
-
20,290
11,659
-
-
-
-
-
-
-
-
524,570
523,506
2,416,992
914,304
1,766,012
-
1,381,533
873,268
This table sets out the payments and benefits to each Senior Executive from the date they were appointed as a Senior Executive.
*
1. Mr Wright was appointed as Deputy CEO on 24 August 2017, and then CEO and Managing Director on 1 December 2017.
2. Mr Segura Suriñach commenced as Deputy CEO and Chief Operating Officer on 9 April 2018.
3. Mr Camphausen was appointed as CFO on 1 June 2017.
-
-
-
-
-
-
(1,281,600)
9,845,536
-
-
-
-
-
-
duties.
(respectively).
LONG-TERM EMPLOYEE BENEFITS
SARs fair value
(A$)(f)
Share rights fair
value (LTI) (A$)(f)
Options fair
value (A$)(f)
TOTAL
PAYMENTS
PERCENTAGE OF
BONUSES (%)(g)
PERCENTAGE OF
SHARE-BASED
INCENTIVE (%)(h)
(48,279)
104,486 (cash-settled)
12,080 (equity-settled)
281,514
2,698,506
982,591
ACCRUALS
AND
(A$)
(757,030)
10,369,042
1,766,012
-
1,451,140
894,710
-
-
-
-
-
-
37.1
37.0
28.3
-
41.9
44.2
10.4
7.0
-
-
-
-
4.8
2.4
(18,706)
69,607
35,987 (cash-settled)
4,161 (equity-settled)
(a)
Amounts for the 2018 Financial Year represent cash STI payments to the Senior Executives for the 2018 Financial Year to be paid in April 2019.
(b) Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time. For Mr
Fernández Verdes and Mr Wright, these amounts pertain to transport benefits considered necessary by the Company in the execution of their
(c)
For Mr Fernández Verdes, the 2018 and 2017 Financial Year amounts pertain to the annual allowance amount approved for 2018 and 2017
(d)
For Mr Wright, this amount pertains to the living away from home allowance amount for 2018 and 2017. Refer to the ‘Summary of Executive
Services Agreements’ section of this Remuneration Report for further information.
(e)
For Mr Segura Suriñach, this amount pertains to the one off relocation payment in 2018. Refer to the ‘Summary of Executive Services
Agreements’ section of this Remuneration Report for further information.
(f)
In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the fair value of equity
compensation granted or outstanding during the 2018 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.
(g)
(h)
The percentage calculation is based on the cash STI received in the 2018 Financial Year as a percentage of total payments and accruals.
The percentage of each Senior Executive’s remuneration for the 2018 Financial Year that consisted of equity as a percentage of total payments
and accruals.
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48
STATUTORY SENIOR EXECUTIVE REMUNERATION TABLE
Cash
salary
(A$)
-
-
-
Senior Executives
M Fernández Verdes
2018 Financial Year
2017 Financial Year
M Wright*
2018 Financial Year
2017 Financial Year1
I Segura Suriñach2*
2018 Financial Year
2017 Financial Year
S Camphausen*
2018 Financial Year
2017 Financial Year3
1,278,172
538,068
1,000,000
363,117
46,530
72,000
6,000
20,290
7,119
866,012
500,000
400,000
-
-
-
-
-
-
-
-
-
-
20,290
11,659
-
-
-
-
-
753,743
465,856
607,500
395,753
-
-
-
-
-
-
-
-
524,570
523,506
2,416,992
914,304
1,766,012
-
1,381,533
873,268
*
This table sets out the payments and benefits to each Senior Executive from the date they were appointed as a Senior Executive.
1. Mr Wright was appointed as Deputy CEO on 24 August 2017, and then CEO and Managing Director on 1 December 2017.
2. Mr Segura Suriñach commenced as Deputy CEO and Chief Operating Officer on 9 April 2018.
3. Mr Camphausen was appointed as CFO on 1 June 2017.
CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
SHORT-TERM EMPLOYEE BENEFITS
POST-EMPLOYMENT
SUBTOTAL
Cash
Non-
Other
Super-
Termination
(A$)
bonuses
monetary
(A$)(c)(d)(e)
(STI)
(A$)(a)
benefits
(A$)(b)
annuation
benefits
(A$)
benefits
(A$)
LONG-TERM EMPLOYEE BENEFITS
SARs fair value
(A$)(f)
Share rights fair
value (LTI) (A$)(f)
Options fair
value (A$)(f)
PERCENTAGE OF
BONUSES (%)(g)
PERCENTAGE OF
SHARE-BASED
INCENTIVE (%)(h)
TOTAL
PAYMENTS
AND
ACCRUALS
(A$)
6,446
6,288
518,124
517,218
(1,281,600)
9,845,536
-
-
-
-
(757,030)
10,369,042
-
-
-
-
-
-
-
(48,279)
281,514
104,486 (cash-settled)
12,080 (equity-settled)
2,698,506
982,591
-
-
-
-
1,766,012
-
-
(18,706)
69,607
35,987 (cash-settled)
4,161 (equity-settled)
1,451,140
894,710
-
-
37.1
37.0
28.3
-
41.9
44.2
-
-
10.4
7.0
-
-
4.8
2.4
(a) Amounts for the 2018 Financial Year represent cash STI payments to the Senior Executives for the 2018 Financial Year to be paid in April 2019.
(b) Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time. For Mr
Fernández Verdes and Mr Wright, these amounts pertain to transport benefits considered necessary by the Company in the execution of their
duties.
For Mr Fernández Verdes, the 2018 and 2017 Financial Year amounts pertain to the annual allowance amount approved for 2018 and 2017
(respectively).
(c)
(d) For Mr Wright, this amount pertains to the living away from home allowance amount for 2018 and 2017. Refer to the ‘Summary of Executive
Services Agreements’ section of this Remuneration Report for further information.
(e) For Mr Segura Suriñach, this amount pertains to the one off relocation payment in 2018. Refer to the ‘Summary of Executive Services
(f)
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 2018 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.
(g) The percentage calculation is based on the cash STI received in the 2018 Financial Year as a percentage of total payments and accruals.
(h) The percentage of each Senior Executive’s remuneration for the 2018 Financial Year that consisted of equity as a percentage of total payments
and accruals.
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CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
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
I Segura Suriñach
Yes
3 months
S Camphausen
Yes
3 months
No
No
No
No
No
No1
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
On the commencement
date of employment, a
‘one off’ relocation
payment of $400,000 as
a contribution to
meeting relocation
expenses
3 months
3 months
1.
For the purposes of calculating Mr Camphausen’s long service leave entitlement, his prior service at HOCHTIEF AG will be recognised.
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.
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NON-EXECUTIVE DIRECTOR REMUNERATION
The Non-executive Directors who held office during 2018 are set out in the following table.
Non-executive Directors during 2018
Name
Non-executive Directors
Russell Chenu
José-Luis del Valle Pérez
Trevor Gerber
Pedro López Jiménez
David Robinson
Peter-Wilhelm Sassenfeld
Kathryn Spargo
Alternate Directors
Robert Seidler AM
Adolfo Valderas
Ángel Muriel
Title (at 31 December 2018)
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
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.
On 6 February 2018 the Board approved an increase in all annual fees paid to Committee Chairs and members in line with the CPI
increase of 1.8% (all capital cities for September quarter 2016 to September quarter 2017) effective 1 January 2018. This remained
FEE LEVELS AND FEE POOL
unchanged during 2018.
Board and Committee fees for 2018
Name
Board
Audit and Risk Committee
Ethics, Compliance and Sustainability Committee
Remuneration and Nomination Committee
Board Sub-Committee2
Chair1 (A$)
Member (A$)
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. Details of his remuneration
for his role as Executive Chairman are set out in the ‘Remuneration – Executive Chairman’ section of this Remuneration Report.
2.
This fee is payable to all Non-executive Directors for each day of service on a Board Sub-Committee.
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 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
NON-EXECUTIVE DIRECTOR REMUNERATION
The Non-executive Directors who held office during 2018 are set out in the following table.
Non-executive Directors during 2018
Name
Non-executive Directors
Russell Chenu
José-Luis del Valle Pérez
Trevor Gerber
Pedro López Jiménez
David Robinson
Peter-Wilhelm Sassenfeld
Kathryn Spargo
Alternate Directors
Robert Seidler AM
Adolfo Valderas
Ángel Muriel
Title (at 31 December 2018)
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
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.
FEE LEVELS AND FEE POOL
On 6 February 2018 the Board approved an increase in all annual fees paid to Committee Chairs and members in line with the CPI
increase of 1.8% (all capital cities for September quarter 2016 to September quarter 2017) effective 1 January 2018. This remained
unchanged during 2018.
Board and Committee fees for 2018
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
Annual review of remuneration
Length of notice period where either party
6 months
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)
No
No
Senior Executives
M Wright
Yes
I Segura Suriñach
S Camphausen
Yes
3 months
No
No
Yes
3 months
No
No1
Any additional payments/allowances
Effective from 1 December
On the commencement
No
(apart from any fixed or variable
2017, a living away from
date of employment, a
remuneration)
home allowance of
‘one off’ relocation
$72,400 per annum to
payment of $400,000 as
cease on the earlier of 1
a contribution to
December 2019 or upon
meeting relocation
permanent relocation to
expenses
Sydney
3 months
3 months
3 months
Restraint period to apply following
termination
1.
For the purposes of calculating Mr Camphausen’s long service leave entitlement, his prior service at HOCHTIEF AG will be recognised.
The ESAs also specify the remuneration mix that applies to a Senior Executive’s remuneration package.
The entitlement of Senior Executives to unvested LTI awards on termination of their employment is dealt with under the plan rules
and the specific terms of grant.
ENGAGEMENT OF REMUNERATION CONSULTANTS
No remuneration recommendations (as defined by the Corporations Act) were provided by any advisor.
Member (A$)
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. Details of his remuneration
Name
Board
Audit and Risk Committee
Ethics, Compliance and Sustainability Committee
Remuneration and Nomination Committee
Board Sub-Committee2
Chair1 (A$)
nil
56,375
41,000
41,000
4,000
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 Board Sub-Committee.
2.
The aggregate annual fees payable to the Non-executive Directors for their services as Directors are limited to the maximum annual
amount approved by shareholders in general meeting. The maximum annual amount is currently $4.5 million (including
superannuation contributions), as approved by shareholders at the 2013 AGM.
ALTERNATE DIRECTORS
CIMIC does not pay fees for Board membership to Alternate Directors. Financial arrangements for Alternate Directors are a private
matter between the Non-executive Director and the relevant Alternate Director.
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CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
NON-EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non-executive Directors’ remuneration for the 2018 Financial Year and 2017 Financial Year are set out in the following
table.
ADDITIONAL EQUITY DISCLOSURES
Australian Accounting Standards.
This section provides additional information regarding KMP equity holdings as required by the Corporations Act and applicable
Non-executive Director Remuneration
SHORT-TERM BENEFITS
Board and
Committee fees
(A$)
Other (A$)
Extra service
fees1 (A$)
POST-EMPLOYMENT
BENEFITS
Superannuation
contributions (A$)
TOTAL
REMUNERATION FOR
SERVICES
AS A NON-EXECUTIVE
DIRECTOR (A$)
MOVEMENT IN KMP SHAREHOLDINGS (DIRECTORS AND SENIOR EXECUTIVES)
The following table sets out the movement in KMP shareholdings (either direct or indirect) during the 2018 Financial Year.
Balance at 31
Dec 2017
Purchases
Received on
exercise of
options/rights
Sales
Closing
Balance1
Non-executive Directors
R Chenu
2018 Financial Year
2017 Financial Year
J del Valle Pérez
2018 Financial Year
2017 Financial Year
T Gerber
2018 Financial Year
2017 Financial Year
P López Jiménez
2018 Financial Year
2017 Financial Year
D Robinson2
2018 Financial Year
2017 Financial Year
P Sassenfeld5
2018 Financial Year
2017 Financial Year
K Spargo
2018 Financial Year
2017 Financial Year
287,375
280,000
231,000
225,000
282,000
275,000
231,000
225,000
210,000
221,667
220,000
215,000
230,000
58,609
-
-
-
-
-
-
-
-
95,8903
95,8903
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,290
19,832
-
-
20,290
19,832
-
-
29,0604
28,9424
-
-
20,290
5,553
307,665
299,832
231,000
225,000
302,290
294,832
231,000
225,000
334,950
346,499
220,000
215,000
250,290
64,162
These amounts represent additional service fees payable to Non-executive Directors for service on a Board Sub-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.
These amounts are inclusive of $9,110 in 2018 and $9,110 in 2017 from Devine in respect of his services as non-executive director.
4.
5. Mr Sassenfeld received no Director fees directly from CIMIC in respect of his services as Non-executive Director. The amounts in the table
represent the payment by CIMIC to HOCHTIEF AG in respect of Mr Sassenfeld’s services.
Name
Directors
M Wright
R Chenu
M Fernández Verdes
J del Valle Pérez
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
R Seidler AM
A Valderas
Á Muriel
Senior Executive
I Segura Suriñach
S Camphausen
1.
2.
3.
and KMP.
2,7452
-
4,085
1,0002
2,000
1,1922
1,489
1,8582
2,000
2,341
31,863
14,991
-3
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000
600
-
-
-
-
-
-
-
-
-
-
-
-
-
29,363
2,7452
-
4,085
1,0002
2,000
1,1922
1,489
1,8582
3,000
2,941
2,500
14,991
-
-
The closing balance is at 31 December 2018.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
The opening balance is at 9 April 2018 which was Mr Segura Suriñach’s date of commencement as Deputy CEO and Chief Operating Officer
MOVEMENTS IN OPTIONS HELD BY KMP UNDER LTI
Grants of options under the LTI were approved to be made to eligible Senior Executives in February 2016 as their 2015 LTI. On
28 October 2015, the Board approved the replacement of the previous performance rights based plan with an options based plan.
The 2015 award represents the first grant under the new plan.
No options under the LTI were awarded for the 2018 Financial Year.
The following table sets out the movement of options granted in previous financial years under the current LTI.
Name
Award
Balance at
Vested
year
31 Dec
(number)
Exercised
(number)
Exercised1
Lapsed
(value)
(number)
Vested
(value)
(A$)
(A$)
Senior Executives
M Wright
S Camphausen
A Valderas
Á Muriel
2015
2015
2015
2015
2017
(number)
23,537
4,925
62,768
36,377
Former Senior Executives, now Alternate Directors
-
-
-
-
-
-
-
-
3,283
63,503
41,844
809,388
-
-
Lapsed
(value)
(A$)
Balance at
31 Dec
20182
(number)
-
-
-
-
-
-
-
-
23,537
1,642
20,924
36,377
1.
2.
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 2018.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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CIMIC Group Limited Annual Report 2018 | Remuneration Report
CIMIC Group Limited Annual Report 2018 | Remuneration Report
NON-EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non-executive Directors’ remuneration for the 2018 Financial Year and 2017 Financial Year are set out in the following
table.
Non-executive Director Remuneration
SHORT-TERM BENEFITS
POST-EMPLOYMENT
Board and
Other (A$)
Extra service
fees1 (A$)
Superannuation
contributions (A$)
Committee fees
(A$)
BENEFITS
REMUNERATION FOR
TOTAL
SERVICES
AS A NON-EXECUTIVE
DIRECTOR (A$)
Non-executive Directors
R Chenu
2018 Financial Year
2017 Financial Year
J del Valle Pérez
2018 Financial Year
2017 Financial Year
T Gerber
2018 Financial Year
2017 Financial Year
P López Jiménez
2018 Financial Year
2017 Financial Year
D Robinson2
2018 Financial Year
2017 Financial Year
P Sassenfeld5
2018 Financial Year
2017 Financial Year
K Spargo
2018 Financial Year
2017 Financial Year
287,375
280,000
231,000
225,000
282,000
275,000
231,000
225,000
210,000
221,667
220,000
215,000
230,000
58,609
-
-
-
-
-
-
-
-
-
-
-
-
95,8903
95,8903
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,290
19,832
20,290
19,832
29,0604
28,9424
20,290
5,553
-
-
-
-
-
-
307,665
299,832
231,000
225,000
302,290
294,832
231,000
225,000
334,950
346,499
220,000
215,000
250,290
64,162
1.
These amounts represent additional service fees payable to Non-executive Directors for service on a Board Sub-Committee.
2. Mr Robinson will receive a maximum benefit on retirement limited to his entitlement under the Non-executive Director Retirement Plan as if
he had retired on 1 July 2008. This entitlement totals $363,495.
3. Mr Robinson received Director fees from a related party, Devine, in respect of his services as non-executive director of Devine.
4.
These amounts are inclusive of $9,110 in 2018 and $9,110 in 2017 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.
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 2018 Financial Year.
Name
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 Valderas
Á Muriel
Senior Executive
I Segura Suriñach
S Camphausen
Balance at 31
Dec 2017
Purchases
Received on
exercise of
options/rights
Sales
Closing
Balance1
2,7452
-
4,085
1,0002
2,000
1,1922
1,489
1,8582
2,000
2,341
31,863
14,991
-3
-
-
-
-
-
-
-
-
-
1,000
600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29,363
-
-
-
2,7452
-
4,085
1,0002
2,000
1,1922
1,489
1,8582
3,000
2,941
2,500
14,991
-
-
1.
2.
3.
The closing balance is at 31 December 2018.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
The opening balance is at 9 April 2018 which was Mr Segura Suriñach’s date of commencement as Deputy CEO and Chief Operating Officer
and KMP.
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.
No options under the LTI were awarded for the 2018 Financial 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
2017
(number)
Vested
(number)
Vested
(value)
(A$)
Exercised
(number)
Exercised1
(value)
(A$)
Lapsed
(number)
Lapsed
(value)
(A$)
Balance at
31 Dec
20182
(number)
Senior Executives
-
M Wright
S Camphausen
-
Former Senior Executives, now Alternate Directors
-
A Valderas
-
Á Muriel
62,768
36,377
23,537
4,925
2015
2015
2015
2015
-
-
-
-
-
3,283
-
63,503
41,844
-
809,388
-
-
-
-
-
-
-
-
-
23,537
1,642
20,924
36,377
1.
2.
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 2018.
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CIMIC Group Limited Annual Report 2018 | Remuneration Report
SHARES PURCHASED ON MARKET
No shares were purchased on market in the 2018 Financial Year for the purpose of satisfying vested awards under the EIP.
The CIMIC Group Limited Directors’ Report for the 2018 Financial Year is signed at Sydney on 5 February 2019 in accordance with
a resolution of the Directors.
Marcelino Fernández Verdes
Executive Chairman
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CIMIC Group I Annual Report 2018
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CIMIC Group I Annual Report 2018
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innovative
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Western Treatment Plant UGL and CPB Contractors, supported by EIC Activities, Victoria, AustraliaWith an existing wastewater treatment plant at capacity, UGL and CPB Contractors are delivering and operating a nutrient removal plant in Victoria for Melbourne Water.Expansion was needed to meet forecast growth in influent flows and loads, to comply with environment protection requirements and to continue to reliably supply recycled water to users.Our clients increasingly consider commissioning and performance reliability in evaluation, so the team’s tender demonstrated a whole-of-life solution, including commissioning.The new plant includes innovative use of pre-cast concrete for the combined bioreactor and clarifier and an optimised plant feed system, and provides treatment facilities for a catchment area of 700,000 people. t
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e
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i
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CIMIC Group I Annual Report 2018
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
Sustainability Report
MEASURING PERFORMANCE AGAINST OUR SUSTAINABILITY COMMITMENTS AND TARGETS
Performance Commentary
FY18
result
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 material breaches of Code of
Conduct
Maintain Group-wide Code training
CULTURE
Roll out ‘One’ leadership program
Train and develop future leaders
Promote gender equity
Promote diversity
Foster female participation
INNOVATION
Delivering sustainable returns
Increase IS2 rated projects
Further develop knowledge capture
Utilise technology in the delivery of
projects
ENVIRONMENT
No Level 1 or 2 environmental
incidents
No legal breaches, fines or penalties
Environmental management systems in
place
Target
Date
Annual
Annual
Annual
Annual
Annual
Annual
Ongoing
Ongoing
▪ One fatality recorded
▪ One Class 1 injury versus two in 2017
▪
▪
▪
Reduced from 103 to 97
Increased from 2.64 to 2.82
All Operating Companies certified to ISO 18001 and/or
AS/NZ 4801
▪
▪
▪
▪
No material breaches recorded
80% of direct employees (23,837 people) completed Code
of Conduct training, required every 2 years
Frontline development program - conducted workshops in
all Australian key states and Hong Kong for 467
participants (1,926 participants have completed since
rollout commenced in 2017)
Leading Managers Program - launched pilot and
commenced rollout of program with 75 leaders attending
programs in Australia
▪ Graduate Program cohort intake increased from 174 to
Ongoing
208
▪
▪
▪ Graduate Program features an above-industry female
participation rate of ~25% for the 2018 cohort
Conducted Group-wide pay equity review as part of the
annual remuneration review and implemented
remediation actions as appropriate
6,755 employees undertook face-to-face Equal
Employment Opportunity (EEO), Discrimination, Anti-
Bullying and Harassment training during the year
744 staff employees completed unconscious bias training
in Australia
Female share of total workforce up to 10.3% (v 9.3% in
FY17)
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Economic value retained of $737m in 2018
22 cumulative certifications (v 19 in FY17)
Interactive Project Knowledge Library (iPKL) increased to
include more than 1,963 projects
Continued to increase use of BIM and GIS3
CPB Contractors, Leighton Asia, UGL, Sedgman, Pacific
Partnerships and EIC Activities covered by BSI Kitemark
certification
Zero Level 1 incidents reported
14 Level 2 incidents reported
Five legal breaches resulting in fines
100% of Operating Company management systems
certified to ISO 14001
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Annual
Annual
Ongoing
Achieved
Partly achieved
Not achieved
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
3 Building Information Modelling (BIM) and Geographic Information System (GIS).
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
ABOUT THIS SUSTAINABILITY REPORT
Sustainability is embedded in the Group’s mission which is to maximise long-term value for shareholders by sustainably delivering
projects for our clients while providing safe, rewarding and fulfilling careers for our people.
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
This Sustainability Report (“the Report”) section of the Annual Report is structured around five sustainability themes:
▪
▪
▪
▪
safety - support safe communities and provide safe, supportive and positive workplaces for our people;
integrity - act with integrity, operate honestly and respectfully, and seek sustainable supply chain outcomes;
culture - promote a culture that builds capability and supports opportunities for sustainability, diversity and inclusion;
innovation - target innovation through knowledge sharing and collaboration, and seek competitive advantage with a focus on
the future; and
environment - promote environmentally responsible outcomes by using resources efficiently, minimising waste and building
resilience to climate risks.
▪
These themes provide the framework for addressing CIMIC’s sustainability commitments and performance.
Our approach is derived from, and based on, our Principles - Integrity, Accountability, Innovation and Delivery - underpinned by
Safety. The Principles provide a common unifying bond and set the framework for the behaviours of our people.
CIMIC’s sustainability objectives are to:
▪
set targets and report on the Group’s sustainable performance so as to promote confidence with investors, clients and other
stakeholders;
develop a culture of collaboration and knowledge sharing enabling opportunities for sustainability and innovation;
be recognised as a leader in sustainability and contractor of choice by clients, employees and industry;
seek environmentally and socially responsible supply chain solutions;
deliver safe and resilient communities and workplaces; and
leaving a positive legacy.
▪
▪
▪
▪
▪
These objectives help - individually and/or in combination - to deliver value by growing revenue, reducing costs, mitigating risk and
building our reputation.
STRUCTURE OF THE SUSTAINABILITY REPORT
REPORTING APPROACH
CIMIC Group is committed to operating sustainably and reporting on our ESG performance and progress. This unaudited Report,
integrated into our Annual Report, demonstrates both that commitment and how deeply embedded sustainability is in our
business. The Report utilises a number of case studies which are highlighted as breakout boxes in the text. These case studies
provide current examples of sustainability practices, to demonstrate the diversity of the Group’s activities, and to reinforce that
acting sustainably does create value.
For the 2018 Financial Year, we have utilised the Global Reporting Initiative (GRI) Sustainability Reporting Standards framework for
the preparation of the 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 124 - 128. The Report has not been externally assured.
REPORT BOUNDARY AND SCOPE
The Report is for the 2018 Financial Year, unless otherwise noted. The scope of the Report covers CIMIC Group and its Operating
Companies which include, amongst others:
▪
▪
▪
▪
▪
▪
▪
▪
CPB Contractors;
Leighton Asia, including Leighton India and Leighton Offshore;
Thiess;
Sedgman;
UGL;
Pacific Partnerships;
EIC Activities; and
Leighton Properties.
The scope of the Report does not include the operations of CIMIC Group’s investments where CIMIC Group does not have 100%
ownership.
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Goals”.
Annual Report.
The SDGs are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.
The 17 ‘Global Goals’ with their 169 identified targets4 were reviewed in 2017, based on CIMIC’s exposure to, or ability to directly
or indirectly influence, these goals and targets. This review and the results were published in the Sustainability Report in the 2017
In 2018, CIMIC reviewed each of its construction, mining and mineral processing, and operations and maintenance (O&M) services
contracts to determine their alignment with the SDGs. The analysis shows that around 57% of the Group’s revenue is earned from
contracts that are directly aligned with one (or more) of the SDGs. The relevant SDGs, and the type of CIMIC projects that align with
them, are set out in the table below.
Sustainable Development Goal
3) Ensure healthy lives and promote well-being for all at all ages
Construction and/or O&M of hospitals and health facilities.
4) Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
Construction and/or O&M of schools and educational facilities.
6) Ensure availability and sustainable management of water and sanitation for all
Construction and/or O&M of water facilities, waste treatment plants, etc.
7) Ensure access to affordable, reliable, sustainable and modern energy for all
Construction and/or O&M of renewable energy plants such as solar, wind, etc.
Construction and/or O&M of electricity transmissions lines.
Mining of, and/or construction or O&M of minerals processing facilities for use in, renewables such as
lithium, cobalt, manganese, rare earths, etc.
9) Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
Construction and/or O&M of ‘green rated’5 infrastructure and buildings.
Construction and/or O&M of telecommunications infrastructure that facilitates broadband or mobile network
Construction and/or O&M of technology promoting facilities such as research centres.
11) Make cities and human settlements inclusive, safe, resilient and sustainable
Construction and/or O&M of public transport infrastructure such as busways, and passenger and light rail
access.
projects.
Construction and/or O&M of public buildings such as cultural facilities or public housing.
13) Take urgent action to combat climate change and its impacts
Construction and/or O&M of projects specifically addressing climate change, i.e. sea walls.
16) Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and
build effective, accountable and inclusive institutions at all levels
Construction and/or O&M of projects that promote the rule of law such as courts and correctional facilities.
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
The Report references the SDGs, with their relevant logos, when the goals and targets align with CIMIC’s sustainability themes,
commitments and reporting. For example, CIMIC’s commitment to ‘Minimising harm in workplaces’ on page 66 aligns with SDG 3 -
‘Ensure healthy lives and promote well-being for all ages’ and SDG 8 - ‘Promote sustained, inclusive and sustainable economic
growth, full and productive employment and decent work for all’.
4 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’.
5 Includes projects with a nationally or internationally recognised sustainability rating such as Green Star, LEED, ISCA, Greenoads, etc.
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | 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.
The 17 ‘Global Goals’ with their 169 identified targets4 were reviewed in 2017, based on CIMIC’s exposure to, or ability to directly
or indirectly influence, these goals and targets. This review and the results were published in the Sustainability Report in the 2017
Annual Report.
In 2018, CIMIC reviewed each of its construction, mining and mineral processing, and operations and maintenance (O&M) services
contracts to determine their alignment with the SDGs. The analysis shows that around 57% of the Group’s revenue is earned from
contracts that are directly aligned with one (or more) of the SDGs. The relevant SDGs, and the type of CIMIC projects that align with
them, are set out in the table below.
Sustainable Development Goal
3) Ensure healthy lives and promote well-being for all at all ages
▪
Construction and/or O&M of hospitals and health facilities.
4) Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
▪
Construction and/or O&M of schools and educational facilities.
6) Ensure availability and sustainable management of water and sanitation for all
▪
Construction and/or O&M of water facilities, waste treatment plants, etc.
7) Ensure access to affordable, reliable, sustainable and modern energy for all
▪
▪
▪
Construction and/or O&M of renewable energy plants such as solar, wind, etc.
Construction and/or O&M of electricity transmissions lines.
Mining of, and/or construction or O&M of minerals processing facilities for use in, renewables such as
lithium, cobalt, manganese, rare earths, etc.
9) Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
▪
▪
Construction and/or O&M of ‘green rated’5 infrastructure and buildings.
Construction and/or O&M of telecommunications infrastructure that facilitates broadband or mobile network
access.
Construction and/or O&M of technology promoting facilities such as research centres.
▪
ABOUT THIS SUSTAINABILITY REPORT
Sustainability is embedded in the Group’s mission which is to maximise long-term value for shareholders by sustainably delivering
projects for our clients while providing safe, rewarding and fulfilling careers for our people.
This Sustainability Report (“the Report”) section of the Annual Report is structured around five sustainability themes:
safety - support safe communities and provide safe, supportive and positive workplaces for our people;
integrity - act with integrity, operate honestly and respectfully, and seek sustainable supply chain outcomes;
culture - promote a culture that builds capability and supports opportunities for sustainability, diversity and inclusion;
innovation - target innovation through knowledge sharing and collaboration, and seek competitive advantage with a focus on
environment - promote environmentally responsible outcomes by using resources efficiently, minimising waste and building
the future; and
resilience to climate risks.
These themes provide the framework for addressing CIMIC’s sustainability commitments and performance.
Our approach is derived from, and based on, our Principles - Integrity, Accountability, Innovation and Delivery - underpinned by
Safety. The Principles provide a common unifying bond and set the framework for the behaviours of our people.
CIMIC’s sustainability objectives are to:
stakeholders;
set targets and report on the Group’s sustainable performance so as to promote confidence with investors, clients and other
develop a culture of collaboration and knowledge sharing enabling opportunities for sustainability and innovation;
be recognised as a leader in sustainability and contractor of choice by clients, employees and industry;
seek environmentally and socially responsible supply chain solutions;
deliver safe and resilient communities and workplaces; and
These objectives help - individually and/or in combination - to deliver value by growing revenue, reducing costs, mitigating risk and
leaving a positive legacy.
building our reputation.
STRUCTURE OF THE SUSTAINABILITY REPORT
REPORTING APPROACH
CIMIC Group is committed to operating sustainably and reporting on our ESG performance and progress. This unaudited Report,
integrated into our Annual Report, demonstrates both that commitment and how deeply embedded sustainability is in our
business. The Report utilises a number of case studies which are highlighted as breakout boxes in the text. These case studies
provide current examples of sustainability practices, to demonstrate the diversity of the Group’s activities, and to reinforce that
acting sustainably does create value.
For the 2018 Financial Year, we have utilised the Global Reporting Initiative (GRI) Sustainability Reporting Standards framework for
the preparation of the 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 124 - 128. The Report has not been externally assured.
The Report is for the 2018 Financial Year, unless otherwise noted. The scope of the Report covers CIMIC Group and its Operating
REPORT BOUNDARY AND SCOPE
Companies which include, amongst others:
CPB Contractors;
Leighton Asia, including Leighton India and Leighton Offshore;
Thiess;
Sedgman;
UGL;
Pacific Partnerships;
EIC Activities; and
Leighton Properties.
ownership.
The scope of the Report does not include the operations of CIMIC Group’s investments where CIMIC Group does not have 100%
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
59
13) Take urgent action to combat climate change and its impacts
▪
Construction and/or O&M of projects specifically addressing climate change, i.e. sea walls.
16) Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and
build effective, accountable and inclusive institutions at all levels
▪
Construction and/or O&M of projects that promote the rule of law such as courts and correctional facilities.
The Report references the SDGs, with their relevant logos, when the goals and targets align with CIMIC’s sustainability themes,
commitments and reporting. For example, CIMIC’s commitment to ‘Minimising harm in workplaces’ on page 66 aligns with SDG 3 -
‘Ensure healthy lives and promote well-being for all ages’ and SDG 8 - ‘Promote sustained, inclusive and sustainable economic
growth, full and productive employment and decent work for all’.
4 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’.
5 Includes projects with a nationally or internationally recognised sustainability rating such as Green Star, LEED, ISCA, Greenoads, etc.
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Construction and/or O&M of public transport infrastructure such as busways, and passenger and light rail
projects.
Construction and/or O&M of public buildings such as cultural facilities or public housing.
11) Make cities and human settlements inclusive, safe, resilient and sustainable
▪
▪
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
MATERIAL ISSUES
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 (DJSI) 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 the 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 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
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
▪
▪
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
▪
▪
▪
▪
▪
▪
▪
▪
General Disclosures
General Disclosures
OFR6
OFR
Customer Health and Safety
General Disclosures
Innovation, 108 -
109; Safety, 72 - 73
OFR
General Disclosures OFR; Environment,
120 - 121
General Disclosures
General Disclosures
General Disclosures
Environment, 120 -
121
OFR
OFR
Emissions, Economic
Performance
Environmental Compliance,
Effluents and Waste
Energy
Materials
Biodiversity
Effluents and Waste
Water, Effluents and Waste
General Disclosures,
Employment
Public Policy, Marketing
and Labelling, Customer
Privacy
General Disclosures
Environment, 114,
120 - 121,
Environment, 113 -
114
Environment, 114 -
115
Environment, 118 -
119
Environment, 119 -
120
Environment, 116
Environment, 117 -
118
Culture, 97
Integrity, 78
Innovation, 106 -
107
Integrity, 79
Encouraging free, fair and open competition, and complying with all
applicable competition laws
Anti-competitive Behaviour
6 OFR - Operating and Financial Review section of this Annual Report
61
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▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Material issues (by ESG factors)
Applicable GRI Standard
Section/Page
Ensuring compliance in overseas markets when operating across
Anti-corruption, Anti-
Integrity, 75 - 76,
different cultures and languages
Ensuring environmentally and socially responsible sourcing and
Supplier Environmental
Integrity, 80 - 81
governance factors are integrated into procurement processes
Assessment, Supplier Social
competitive 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
OFR; Innovation,
▪ Maintain integrity of the Company’s tax payment and disclosure
Economic Performance OFR; Integrity, 78 -
number
79
108 - 109
79
geographies
regime
Social
▪
fairly and with respect
needs of the business
and manage the business
payments
Application of appropriate labour standards where people are treated
Non-discrimination,
Culture, 86 - 89
Freedom of Association and
Collective Bargaining,
Human Rights Assessment
Management Relations,
Training and Education
Attracting, developing and retaining employees to meet the evolving
Employment, Labour/
Culture, 86 - 97
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
Avoidance of all forms of child or forced labour in the supply chain
Education
Policy
Culture, 86;
Innovation, 104
Integrity, 75 - 79
Culture, 87
Child labour, Forced or
compulsory labour, Human
Rights Assessment
General Disclosures
OFR
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
Local Communities, Indirect
Integrity, 81
or be affected by the Group's activities
employees and all those in the Group's care
Economic Impacts
Safety
Creating safer and healthier workplaces for the well-being of
Occupational Health and
Safety, 65 - 73
Encouraging a culture of innovation where people are continually
Training and Education
looking for new and better ways of doing things
Ensuring the safety of the public while delivering projects
Customer Health and Safety
Fostering a more diverse workforce that reflects the communities in
Employment, Diversity and
which the Group operates
Equal Opportunity
Innovation, 99;
Culture, 89 - 97
Safety, 72 - 73
Culture, 92 - 97
Providing local communities with full, fair and reasonable opportunity
General Disclosures,
Integrity, 81 - 84
to participate in the economic benefits (i.e. employment,
procurement, or as subcontractors) of the Group’s activities
Procurement Practices,
Indirect Economic Impacts
Promoting gender equity in remuneration and promotion decisions
Employment, Diversity and
Culture, 92 - 94
Respecting the rights of local communities when delivering projects
Rights of Indigenous
Integrity, 83 - 84
Supporting corporate community investment (i.e. sponsorship,
Indirect Economic Impacts
Integrity, 81 - 83
donations and corporate partnerships) in local communities and
Equal Opportunity
Peoples, Local Communities
for clients
society
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 the 2015 year. Where comparable data is available, it has been
provided.
Additionally, in 2016 CIMIC acquired Sedgman and, in early 2017, completed the acquisition of 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.
62
MATERIAL ISSUES
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 (DJSI) 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 the 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 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
Economic
Availability of funding for future infrastructure projects given
government budget constraints and competing demands
General Disclosures
Changes in economic factors (regulation, government policy, new
General Disclosures
technology, availability of capital, etc.) that could impact capital
CIMIC Group’s ability to deliver projects that meet the needs of its
Customer Health and Safety
Innovation, 108 -
109; Safety, 72 - 73
Continuing population growth, greater urbanisation, and the future
General Disclosures
OFR
▪ Growth in renewable energy supply potentially leading to a decline in
General Disclosures OFR; Environment,
demand for thermal coal and the impact on contract mining
120 - 121
▪ Growth in demand for renewable energy and the impact on
General Disclosures
Environment, 120 -
Increased globalisation and a more competitive business environment
Increased sovereign/political risk and Australia’s attractiveness as an
General Disclosures
General Disclosures
productivity
clients
growth of China and India
opportunities
construction opportunities
investment destination
Environment
Dealing with climate change threats and opportunities, developments
Emissions, Economic
Environment, 114,
in government’s emissions policies and reducing carbon emissions
Performance
120 - 121,
Ensuring legal compliance with all environmental regulations and
Environmental Compliance,
Environment, 113 -
avoiding reputational liabilities
Effluents and Waste
Improving energy efficiency on projects, in the supply chain and in
Energy
Environment, 114 -
corporate activities
▪ Minimising the use of materials (e.g. concrete, steel, packaging) and
working with the supply chain to reduce environmental impacts
Materials
Environment, 118 -
Protecting biodiversity and ecosystem health (including erosion and
Biodiversity
Environment, 119 -
sediment management) when delivering projects
Reducing the production of hazardous and non-hazardous waste
Effluents and Waste
Environment, 116
Reducing the consumption and wastage of water
Water, Effluents and Waste
Environment, 117 -
Governance
the creation of shareholder value
not giving away commercial advantage
Aligning remuneration with performance to encourage and reward
General Disclosures,
Culture, 97
Balancing transparency in disclosing information for investors while
Integrity, 78
Employment
Public Policy, Marketing
and Labelling, Customer
Privacy
Collaborating with industry not-for-profits to generate shared value
General Disclosures
Innovation, 106 -
Encouraging free, fair and open competition, and complying with all
Anti-competitive Behaviour
Integrity, 79
applicable competition laws
number
OFR6
OFR
121
OFR
OFR
114
115
119
120
118
107
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
6 OFR - Operating and Financial Review section of this Annual Report
61
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
Material issues (by ESG factors)
Applicable GRI Standard
▪
▪
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
▪ Maintain integrity of the Company’s tax payment and disclosure
regime
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
Anti-corruption, Anti-
competitive Behaviour,
Socioeconomic Compliance
Supplier Environmental
Assessment, Supplier Social
Assessment
General Disclosures
Section/Page
number
Integrity, 75 - 76,
79
Integrity, 80 - 81
OFR
General Disclosures
OFR; Innovation,
108 - 109
Economic Performance OFR; Integrity, 78 -
79
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
Local Communities, Indirect
Economic Impacts
Occupational Health and
Safety
Training and Education
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
Culture, 86 - 89
Culture, 86 - 97
Culture, 86;
Innovation, 104
Integrity, 75 - 79
Culture, 87
OFR
Integrity, 81
Safety, 65 - 73
Innovation, 99;
Culture, 89 - 97
Safety, 72 - 73
Culture, 92 - 97
Integrity, 81 - 84
Culture, 92 - 94
Integrity, 83 - 84
Integrity, 81 - 83
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 the 2015 year. Where comparable data is available, it has been
provided.
Additionally, in 2016 CIMIC acquired Sedgman and, in early 2017, completed the acquisition of 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.
62
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
SUMMARY OF GROUP PERFORMANCE
CREATING SHAREHOLDER VALUE
Human Capital Return on Investment7
Revenue per employee
Labour (revenue) productivity
#
$k
$m/MhW
SAFETY
Total fatalities
Of which: Australia
International
Total Class 1 Actual events
Of which: Australia
International
Total Recordable Injury (TRI)
Frequency Rate
Lost Time Injury (LTI) 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 employees8
Personnel costs
Payroll ratio9
Average tenure of employment
Number of new hires
Of which: Male
Female
Total turnover rate10
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 Australia12
Local participation in International
workforce
#
#
$m
$k/emp’e
years
#
#
#
%
%
%
%
%
# / %
%
%
#
%
2018
1.30
381.8
92.2
1
1
0
1
1
0
2.82
1.27
97
159.1
2018
23,837
0
0
2018
38,423
46,959
3,634
94.6
3.4
20,245
18,584
1,661
51.3
13.2
4.2
4.5
1.2
1 / 12.5
10.3
12.1
1,346
94.2
2017
1.30
355.5
85.1
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
56.0
11.8
4.0
7.6
2.0
1 / 12.5
9.3
10.5
889
93.9
2016
1.33
380.1
88.6
3
1
2
3
1
2
2.74
1.00
138
122.4
2016
9,624
0
0
2016
35,394
50,874
2,432
85.2
3.1
12,564
11,816
748
46.0
9.7
3.4
12.6
3.0
011 / 0
9.3
9.1
161
97.7
2015
1.28
475.0
101.3
1
1
0
2
1
1
3.33
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
96.8
2014
1.01
459.6
66.5
3
3
0
5
1
4
3.80
1.08
333
252.5
2014
N/A
0
-
2014
36,512
-
4,363
119.5
3.9
-
-
-
56.5
-
-
-
-
1 / 12.5
12.5
10.2
72013
-
INNOVATION
Cumulative green buildings completed
Cumulative ISCA14 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
Violations with fines >$10k
Value of fines related to above
EIFR15
Energy consumption - Diesel
Energy consumption - Electricity
Energy consumption - Other
Total energy consumption
Energy intensity16
Water: Withdrawals
Discharges
Water consumption
Water reuse
Recycled/reuse17
Water intensity18
GHG emissions - Scope 119
GHG emissions - Scope 2
GHG emissions - Scope 320
Carbon intensity21
Total material volumes22
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
$k
# / MhW
GWH
GWH
GWH
GWH
GWH / $m
ML
ML
ML
ML
%
ML / $m
kt. CO2-e
kt. CO2-e
kt. CO2-e
kt. CO2-e
/ $m
kT
2018
2017
2016
2015
2014
2018
2017
2016
2015
2014
76
22
5
8
76
0
14
12
2
693
567
126
21
13
8
1
15
0.09
10,627
153
65
10,846
0.74
8,121
9,022
(901)
9,200
53.1
-0.06
2,689
125
1,047
0.19
65
19
5
7
54
0
10
8
2
497
462
35
15
9
6
2
30
0.06
8,569
145
75
8,790
0.65
7,414
476
6,938
4,052
35.3
0.52
2,202
128
1,653
0.17
63
16
7
19
57
520
493
27
10
0
6
5
1
9
1
0
0
0.05
7,722
94
13
7,820
0.72
7,239
1,668
5,571
5,425
42.8
0.51
1,964
89
2,666
0.19
57
12
14
14
41
820
782
38
0
4
2
2
4
2
2
0
0
0.03
7,477
109
75
7,661
0.58
6,837
3,957
2,880
5,098
42.7
0.22
1,913
93
3,497
0.15
46
6
27
29
-
0
18
16
2
12
11
1
0
0
-
-
-
-
-
-
1787
1528
259
0.14
12,224
269
233
12,726
0.76
3,191
219
4,731
0.20
4,970
3,990
4,842
4,077
5,951
7 Total Revenue less Total Operating Expenses less Total Employee Related Costs (TERC) divided by TERC. As reported to DJSI.
8 Total employees includes both direct employees of CIMIC Group and a proportion of the headcount of indirect employees from investments as
follows: BICC (45%), Devine (59%) and Ventia (47%) as at 31 December 2018.
9 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.
10 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.
11 This figure is measured at year end, CIMIC had one female for most of the 2016 year.
12 Number for, and from, 2017 includes employees and subcontractors reflecting increased data capture.
13 Includes Indigenous employees of the John Holland Group and Services businesses, which were divested in 2014.
63
14 Infrastructure Sustainability Council of Australia.
excludes John Holland Group and Ventia for comparison.
15 Environmental Incident Frequency Rate (EIFR) is total number of Level 1 and Level 2 environmental incidents per million hours worked. 2014 EIFR
16 Energy intensity is ‘Total energy consumption’ divided by ‘Total revenue from continuing operations’.
17 Recycled/reused % equals total water recycled and reused divided by total water recycled and reused plus total water withdrawals.
18 Water intensity is ‘Total water consumption divided by ‘Total revenue from continuing operations’.
19 For 2014, period is to 30 June and includes John Holland Group and Ventia. For 2015, the period is to 31 December and includes internal reporting
of emissions regardless of who has operational control of facilities.
20 Scope 3 emissions have been adjusted for the 2016 year when they were previously over-stated.
21 Carbon intensity is ‘Total Scope 1’ and ‘Total Scope 2’ emissions divided by ‘Revenue from external customers’.
22 Materials includes John Holland Group and Ventia for 2014.
64
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
Total Recordable Injury (TRI)
TRIs/MhW
2.82
2.64
2.74
3.33
3.80
SUMMARY OF GROUP PERFORMANCE
CREATING SHAREHOLDER VALUE
Human Capital Return on Investment7
Revenue per employee
#
$k
Labour (revenue) productivity
$m/MhW
2018
1.30
381.8
92.2
2016
1.33
380.1
88.6
2015
1.28
475.0
101.3
2014
1.01
459.6
66.5
SAFETY
Total fatalities
Of which: Australia
International
Total Class 1 Actual events
Of which: Australia
International
Frequency Rate
Lost Time Injury (LTI) Frequency Rate
LTI/MhW
Potential Class 1 incidents
Million hours worked
#
MhW
INTEGRITY
Code training
Employees undertaking formal, on-line
Continuous Disclosure breaches
Significant breaches of Code
CULTURE
Total direct employees
Total employees8
Personnel costs
Payroll ratio9
Number of new hires
Of which: Male
Female
Total turnover rate10
Average tenure of employment
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 Australia12
Local participation in International
workforce
#
#
#
#
#
#
#
#
#
#
#
#
#
#
%
%
%
%
%
%
%
#
%
$m
$k/emp’e
years
1
1
0
1
1
0
0
0
1.27
97
159.1
2018
23,837
2018
38,423
46,959
3,634
94.6
3.4
20,245
18,584
1,661
51.3
13.2
4.2
4.5
1.2
10.3
12.1
1,346
94.2
2017
1.30
355.5
85.1
0
0
0
2
1
1
0
0
1.07
103
157.8
2017
18,870
2017
37,779
51,001
3,530
93.4
3.4
23,511
22,324
1,187
56.0
11.8
4.0
7.6
2.0
9.3
10.5
889
93.9
3
1
2
3
1
2
1.00
138
122.4
2016
9,624
0
0
2016
35,394
50,874
2,432
85.2
3.1
12,564
11,816
748
46.0
9.7
3.4
12.6
3.0
9.3
9.1
161
97.7
0.92
192
131.0
2015
4,334
2015
28,078
3,059
109.5
3.0
1
1
0
2
1
1
0
0
-
-
-
-
-
-
-
-
1.08
333
252.5
2014
N/A
2014
36,512
4,363
119.5
3.9
3
3
0
5
1
4
0
-
-
-
-
-
-
-
-
-
42.7
56.5
9.4
14.3
294
96.8
12.5
10.2
72013
-
# / %
1 / 12.5
1 / 12.5
011 / 0
1 / 12.5
1 / 12.5
INNOVATION
Cumulative green buildings completed
Cumulative ISCA14 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
Violations with fines >$10k
Value of fines related to above
EIFR15
Energy consumption - Diesel
Energy consumption - Electricity
Energy consumption - Other
Total energy consumption
Energy intensity16
Water: Withdrawals
Discharges
Water consumption
Water reuse
Recycled/reuse17
Water intensity18
GHG emissions - Scope 119
GHG emissions - Scope 2
GHG emissions - Scope 320
Carbon intensity21
Total material volumes22
#
#
#
#
#
#
#
#
#
#
#
$k
# / MhW
GWH
GWH
GWH
GWH
GWH / $m
ML
ML
ML
ML
%
ML / $m
kt. CO2-e
kt. CO2-e
kt. CO2-e
kt. CO2-e
/ $m
kT
2018
76
22
5
8
76
2018
0
14
12
2
693
567
126
21
13
8
1
15
0.09
10,627
153
65
10,846
0.74
8,121
9,022
(901)
9,200
53.1
-0.06
2,689
125
1,047
0.19
2017
65
19
5
7
54
2017
0
10
8
2
497
462
35
15
9
6
2
30
0.06
8,569
145
75
8,790
0.65
7,414
476
6,938
4,052
35.3
0.52
2,202
128
1,653
0.17
2016
63
16
7
19
57
2016
0
6
5
1
520
493
27
10
9
1
0
0
0.05
7,722
94
13
7,820
0.72
7,239
1,668
5,571
5,425
42.8
0.51
1,964
89
2,666
0.19
2015
57
12
14
14
41
2015
0
4
2
2
820
782
38
4
2
2
0
0
0.03
7,477
109
75
7,661
0.58
6,837
3,957
2,880
5,098
42.7
0.22
1,913
93
3,497
0.15
2014
46
6
27
29
-
2014
0
18
16
2
1787
1528
259
12
11
1
0
0
0.14
12,224
269
233
12,726
0.76
-
-
-
-
-
-
3,191
219
4,731
0.20
4,970
3,990
4,842
4,077
5,951
7 Total Revenue less Total Operating Expenses less Total Employee Related Costs (TERC) divided by TERC. As reported to DJSI.
8 Total employees includes both direct employees of CIMIC Group and a proportion of the headcount of indirect employees from investments as
follows: BICC (45%), Devine (59%) and Ventia (47%) as at 31 December 2018.
9 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
10 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.
11 This figure is measured at year end, CIMIC had one female for most of the 2016 year.
12 Number for, and from, 2017 includes employees and subcontractors reflecting increased data capture.
13 Includes Indigenous employees of the John Holland Group and Services businesses, which were divested in 2014.
inflating the ratio.
63
14 Infrastructure Sustainability Council of Australia.
15 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 Group and Ventia for comparison.
16 Energy intensity is ‘Total energy consumption’ divided by ‘Total revenue from continuing operations’.
17 Recycled/reused % equals total water recycled and reused divided by total water recycled and reused plus total water withdrawals.
18 Water intensity is ‘Total water consumption divided by ‘Total revenue from continuing operations’.
19 For 2014, period is to 30 June and includes John Holland Group and Ventia. For 2015, the period is to 31 December and includes internal reporting
of emissions regardless of who has operational control of facilities.
20 Scope 3 emissions have been adjusted for the 2016 year when they were previously over-stated.
21 Carbon intensity is ‘Total Scope 1’ and ‘Total Scope 2’ emissions divided by ‘Revenue from external customers’.
22 Materials includes John Holland Group and Ventia for 2014.
64
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CIMIC Draft Sustainability Report 15.2.19 5PM.indd 64
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
SAFETY
OUR APPROACH
At CIMIC, our safety commitments include minimising harm in workplaces, promoting physical and mental health, and protecting
the public. Providing a safe and healthy workplace underpins the core values of the CIMIC Group and is fundamental to, and
integrated with, our operations.
We are entirely dependent on our people. For that reason, creating and supporting work environments and systems that enhance
the health safety and wellbeing, both physical and mental, of our teams is at the core of everything we do. This commitment
extends to our subcontractors, our suppliers and any other person who is impacted by the work we deliver.
We hold ourselves to a consistently high standard of health and safety, wherever in the world we operate, regardless of the
culture, the regulatory requirements or the operating environments in which we work. In order to achieve this standard, we must
strive to continually improve our performance, applying the learnings and best practice from our business - or others - to minimise
harm.
Health and safety is an absolute priority for CIMIC Group's Board and Executive Leadership Team23, and we continue to invest in the
culture, systems and innovations to keep our people safe.
Minimising harm in workplaces
Measures in place
▪
▪
▪
▪
▪
▪
Actions taken during 2018
Performance
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 critical
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 and Mongolian representing the main languages across the global mining business
Safety materials at Leighton Asia 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
The CIMIC One HSE Culture was introduced across the Group
▪
▪ Quarterly Managing Director Health & Safety Reviews in which Managing Directors
▪
▪
▪
▪
▪
individually report performance in face-to-face meetings to the CIMIC CEO
All Operating Companies maintained management system certification
Thiess introduced a series of 60+ videos addressing critical controls for the Thiess Safety
Essentials
Lighthouse Club International Design for Safety Award for excellence in mitigating
significant health and safety risks awarded to the Hong Kong-Zhuhai-Macau (HKZMB)
Passenger Clearance Building (PCB) project team
Hong Kong Construction Association’s Proactive Safety Contractor Award
Chilean government’s ‘National Geology and Mining Service Award’ for safety
performance to the Thiess Centinela operations
Promote physical and mental health
Measures in place
▪
▪
Actions taken during 2018
▪
▪
▪
▪
▪
Health and Safety Policy which promotes employee physical and mental well-being
Employee Assistance Program is in place for all Australian based operations, and globally
for Thiess
International medical program implemented through International SOS to provide routine
and emergency medical support to international travellers and expatriates
Free health checks, influenza vaccinations and skin cancer checks provided across large
parts of the business
Sedgman have initiated pre-mobilisation, one-on-one discussions between employees and
our EAP provider for new fly-in, fly-out projects
AIA Vitality program which promotes preventative health strategies and physical fitness
launched across the Australian mainland offices and projects with 3,210 eligible
employees (or 42%) activating their accounts
Developed a Group-wide Occupational Hygiene standard, implementation will commence
in 2019
23 Refers to CIMIC’s Board and all Operating Company Boards, and all individuals holding the position of Executive General Managers within the
Group.
65
24 Controls used to eliminate, substitute, isolate or engineer out the risk from causing harm.
66
65
CIMIC Draft Sustainability Report 15.2.19 5PM.indd 65
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Performance
Delivered a Group-wide webinar, in collaboration with EIC Activities, on ‘Looking after
Enhanced fatigue controls implemented over Ramadan period in Thiess Indonesia,
including 100% fatigue checks day and night, fit for work campaign, and additional
operators for rotations
your mind - practical tools to support good mental health’
Thiess’ Mt Owen mine was awarded ‘Best Health Initiative’ at the NSW Mining Conference
for their Positively Healthy program
Protect the public
Measures in place
Actions taken during 2018
Numerous, project-by-project initiatives tailored to manage risks as appropriate
Performance
A range of initiatives undertaken to protect the public
Public safety integrated into Safety Essentials and at the design phase of projects
▪
▪
▪
▪
▪
▪
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. All workers on our sites are treated equally - be they our own employees, subcontractors, suppliers or
representatives of our business partners - irrespective of their role.
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.
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 where practicable through ‘hard’ controls24.
Launch of our One HSE health and safety culture
In 2018, CIMIC launched its One HSE Culture program, a common and consistent set of behaviours our employees share - across the
Group - which places safety at the centre of everything we do. The program’s framework guides our behaviours and defines what
each of us can do to build and maintain One HSE Culture.
The behaviours are defined for three groups; managers, supervisors, and everyone, with the ‘everyone’ behaviours applying to all
people regardless of their role. In addition, employees in leadership roles should also demonstrate the ‘supervisor’ or ‘manager’
behaviours.
The behaviours underpinning our One HSE Culture framework are grouped into four broad themes: risk management; standards;
communication; and involvement. Each theme is supported by a set of positive (‘I will’) behaviours. Some examples of how the
framework can be used include:
Inductions - to communicate expected behaviours to staff, workforce and subcontractors;
Audits and reviews - to identify and close gaps in our existing culture;
Leadership programs - to build and reinforce the skills needed to achieve our desired culture;
Reward and recognition programs - to recognise people or projects that are demonstrating positive behaviours and making a
contribution to achieving excellence; and
Incident reviews - to ensure the behavioural aspects of our incidents are captured and addressed.
Given the changing nature of our work and the diversity of our workplaces, maintaining high safety standards and awareness is
essential for 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.
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.
We also monitor the potential for any occupational illnesses that the Group's activities may cause and seek to mitigate any impacts.
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
Performance
Protect the public
Measures in place
Actions taken during 2018
Performance
▪
▪
▪
▪
▪
▪
Enhanced fatigue controls implemented over Ramadan period in Thiess Indonesia,
including 100% fatigue checks day and night, fit for work campaign, and additional
operators for rotations
Delivered a Group-wide webinar, in collaboration with EIC Activities, on ‘Looking after
your mind - practical tools to support good mental health’
Thiess’ Mt Owen mine was awarded ‘Best Health Initiative’ at the NSW Mining Conference
for their Positively Healthy program
Public safety integrated into Safety Essentials and at the design phase of projects
Numerous, project-by-project initiatives tailored to manage risks as appropriate
A range of initiatives undertaken to protect the public
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. All workers on our sites are treated equally - be they our own employees, subcontractors, suppliers or
representatives of our business partners - irrespective of their role.
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.
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 where practicable through ‘hard’ controls24.
Launch of our One HSE health and safety culture
In 2018, CIMIC launched its One HSE Culture program, a common and consistent set of behaviours our employees share - across the
Group - which places safety at the centre of everything we do. The program’s framework guides our behaviours and defines what
each of us can do to build and maintain One HSE Culture.
The behaviours are defined for three groups; managers, supervisors, and everyone, with the ‘everyone’ behaviours applying to all
people regardless of their role. In addition, employees in leadership roles should also demonstrate the ‘supervisor’ or ‘manager’
behaviours.
SAFETY
OUR APPROACH
At CIMIC, our safety commitments include minimising harm in workplaces, promoting physical and mental health, and protecting
the public. Providing a safe and healthy workplace underpins the core values of the CIMIC Group and is fundamental to, and
integrated with, our operations.
We are entirely dependent on our people. For that reason, creating and supporting work environments and systems that enhance
the health safety and wellbeing, both physical and mental, of our teams is at the core of everything we do. This commitment
extends to our subcontractors, our suppliers and any other person who is impacted by the work we deliver.
We hold ourselves to a consistently high standard of health and safety, wherever in the world we operate, regardless of the
culture, the regulatory requirements or the operating environments in which we work. In order to achieve this standard, we must
strive to continually improve our performance, applying the learnings and best practice from our business - or others - to minimise
harm.
Health and safety is an absolute priority for CIMIC Group's Board and Executive Leadership Team23, and we continue to invest in the
culture, systems and innovations to keep our people safe.
Minimising harm in workplaces
Measures in place
100% of Operating Company management systems certified to ISO 18001 and/or AS/NZS
Actions taken during 2018
The CIMIC One HSE Culture was introduced across the Group
Performance
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
4801
risk activities
risk
program
Essentials
Safety Essentials (or similar) in place across CPB Contractors, Leighton Asia, Thiess,
Sedgman and UGL, providing the systems, procedures and knowledge to manage critical
Focus on ‘above-the-line’ controls used to eliminate, substitute, isolate or engineer out
Thiess’ Health Safety & Security management system is available in Spanish, English,
Bahasa and Mongolian representing the main languages across the global mining business
Safety materials at Leighton Asia 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’
▪ Quarterly Managing Director Health & Safety Reviews in which Managing Directors
individually report performance in face-to-face meetings to the CIMIC CEO
All Operating Companies maintained management system certification
Thiess introduced a series of 60+ videos addressing critical controls for the Thiess Safety
Lighthouse Club International Design for Safety Award for excellence in mitigating
significant health and safety risks awarded to the Hong Kong-Zhuhai-Macau (HKZMB)
Passenger Clearance Building (PCB) project team
Hong Kong Construction Association’s Proactive Safety Contractor Award
Chilean government’s ‘National Geology and Mining Service Award’ for safety
performance to the Thiess Centinela operations
for Thiess
International medical program implemented through International SOS to provide routine
and emergency medical support to international travellers and expatriates
Free health checks, influenza vaccinations and skin cancer checks provided across large
parts of the business
Sedgman have initiated pre-mobilisation, one-on-one discussions between employees and
our EAP provider for new fly-in, fly-out projects
launched across the Australian mainland offices and projects with 3,210 eligible
employees (or 42%) activating their accounts
Developed a Group-wide Occupational Hygiene standard, implementation will commence
in 2019
Promote physical and mental health
Measures in place
Health and Safety Policy which promotes employee physical and mental well-being
Employee Assistance Program is in place for all Australian based operations, and globally
Actions taken during 2018
AIA Vitality program which promotes preventative health strategies and physical fitness
We also monitor the potential for any occupational illnesses that the Group's activities may cause and seek to mitigate any impacts.
Given the changing nature of our work and the diversity of our workplaces, maintaining high safety standards and awareness is
essential for 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.
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.
23 Refers to CIMIC’s Board and all Operating Company Boards, and all individuals holding the position of Executive General Managers within the
Group.
65
24 Controls used to eliminate, substitute, isolate or engineer out the risk from causing harm.
66
66
CIMIC Draft Sustainability Report 15.2.19 5PM.indd 66
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The behaviours underpinning our One HSE Culture framework are grouped into four broad themes: risk management; standards;
communication; and involvement. Each theme is supported by a set of positive (‘I will’) behaviours. Some examples of how the
framework can be used include:
▪
▪
▪
▪
Inductions - to communicate expected behaviours to staff, workforce and subcontractors;
Audits and reviews - to identify and close gaps in our existing culture;
Leadership programs - to build and reinforce the skills needed to achieve our desired culture;
Reward and recognition programs - to recognise people or projects that are demonstrating positive behaviours and making a
contribution to achieving excellence; and
Incident reviews - to ensure the behavioural aspects of our incidents are captured and addressed.
▪
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
Fatalities
The Board, management and employees of CIMIC are deeply saddened by the death of a colleague at the West Gate Tunnel (WGT)
project in Melbourne. He was a long-term employee of a company subcontracted to undertake piling operations on the site. We
extend our deepest condolences to his family, friends and co-workers. The WGT project team, assisted by staff from CPB
Contractors and CIMIC, has been working with the relevant authorities to investigate the cause of this tragic event.
In addition, CPB Contractors has engaged with the Piling & Foundation Specialist Federation (PFSF) to encourage an industry wide
review to identify safety improvement opportunities. This included attending and presenting at a recent PFSF Safety Forum and
ongoing support for a range of new initiatives designed to improve safety in piling operations.
Across the Group, we remain focussed on identification and the implementation of management strategies to deal with critical
risks. 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 risks.
The aforementioned fatality was also recorded as a Class 1 Actual (C1I) event.
Other injuries
The Group’s preferred lag measure for reporting is Recordable Injuries (RIs)25 and we calculate the Total Recordable Injury
Frequency Rate (TRIFR)26, which reflects the average number of recordable injuries per million hours worked (MhW). RIs capture a
higher level and a wider range of injuries, including medically treated injuries (MTIs), restricted work injuries (RWIs), lost time
injuries (LTIs)27, permanent disabilities (PDs) and fatalities which impact our workers. The Group is committed to applying the same
safety standards to everyone who works on one of our projects and accordingly, all our lag indicators, including TRIFR and LTIFR,
reflect both direct employee and contractor performance.
The Group recorded a TRIFR in 2018 of 2.82, which represents a 7% increase from the 2017 result of 2.64.
Group TRIFR (TRIs/MhW)
2018
2.82
2017
2.64
2016
2.74
The Group also tracks the number of LTIs, a widely-recognised safety metric, and Lost Time Injury Frequency Rate (LTIFR)28. LTIFR is
a commonly used lag indicator of both injury prevention and management performance. Like TRIFR it is often benchmarked across
industries. In 2018, the Group’s LTIFR increased from 1.07 to 1.27.
Group29 LTIFR (accidents/MhW)
Employee LTIFR (accidents/MhW)
Contractor LTIFR (accidents/MhW)
2018
1.27
0.53
2.46
2017
1.07
0.74
1.72
2016
1.00
0.47
2.04
The Group also tracks a number of other safety measures - for both employees and contractors - which are used to drive
improvements in the management of safety. These measures include the total number of:
▪
▪
▪
▪ MTIs and the MTI frequency rate; and
▪
fatalities and permanent disabilities;
days lost to LTIs and the LTI severity rate;
Restricted Work Injuries (RWIs), the number of days lost to RWIs, the RWI frequency rate and the RWI severity rate;
First Aid Injuries (FAIs) and the All Injury Frequency Rate (AIFR).
Compliance
During 2018, the Group recorded one fatality (Class 1 Actual) as described above. There were no other material incidents of non-
compliance with regulations and/or voluntary codes.
The Group has acquired ten LiDAR sensor units and trialled these on CPB Contractors and Thiess sites during the year. Trials have
been staggered so as to incorporate improvements and lessons learned from each site as they progress. Our goal is to develop the
solution to the point where it could be successfully manufactured and improve safety for our sites and the wider industry.
During 2018, Leighton Asia incurred five fines totalling $22,499 for health and safety infringements that primarily related to not
taking adequate steps to keep employees safe when working at heights. All of these matters were dealt with internally and no
external investigations were required.
With operations in countries as diverse as India, Hong Kong, Philippines, Singapore, Indonesia and Malaysia, Leighton Asia faces a
significant challenge in the communication of safety standards and process controls to nationals. Employees from across these
countries may communicate in different languages, including English, Chinese (Cantonese & Mandarin), Hindi, Tamil, Bahasa and
Tagalog. In addition to the challenges with language, there are often relatively low literacy rates across many of the regions in
25 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.
26 For the purposes of this report, TRIFR is calculated on a base of 1,000,000 hours worked (MhW). 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.
27 An occurrence that results in a fatality, permanent disability or time lost from work of one day/shift or more.
28 Accidents (defined as LTIs on the current page) per MhW.
29 Includes employees and contractors.
67
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The Group uses a number of lead indicators of safety performance to identify and help prioritise where effort is needed in order to
reduce the potential for injury to our people. Lead indicators, used in this way, become important tools for risk avoidance and
Lead indicators
minimisation across any business.
A key lead indicator that the Group measures is identifying and investigating Potential Class 1 injuries (PC1). A PC1 is an incident
that may have, but did not, result in a fatality or a permanent disabling injury. The total number of PC1 injuries decreased by six in
2018 to 97.
Group PC1 (#)
these include:
A range of other lead indicators are used across the Operating Companies which are tailored to their specialist businesses. Some of
2018
97
2017
103
2016
138
▪
▪
▪
▪
▪
The number of Project Systems Audits - planned versus actual;
The number of Critical Risk Reviews - planned versus actual;
In field critical control verifications - planned versus actual;
The number of Incident Actions Closed Out on time; and
The number of Leadership Reviews/Walks completed versus scheduled.
Looking forward, the Group is investigating ways that it can use the large amounts of data that it generates to develop better
predictive indicators of potential incidents. Preliminary work in this area is now complete with pilot programs planned for a number
of Thiess projects in early 2019.
Safety in construction
Each of CIMIC’s Operating Companies has safety management systems that, while similar in their approach, are tailored to meet
each Operating Company’s risks and hazards. The most commonly reported critical risks giving rise to safety incidents in the
Group’s construction businesses are currently: working in and around mobile plant; working near live services; working at heights;
crane and lifting operations; working near live traffic; tunnelling and excavation; and temporary works.
For the Group’s construction company in Australia and New Zealand - CPB Contractors - critical risks are managed through the
Safety Essentials, a collection of minimum requirements focused on providing projects with the standards, procedures and
knowledge to manage activities that pose the greatest risk to our people. The Group’s Leighton Asia business has developed a
similar set of minimum requirements, the Class One Practices (COPs). Details of the activities covered by the Safety Essentials and
the COPs were set out in the 2017 Sustainability Report.
Taking up the challenge to make scissor lift elevating work platforms safer to use, EIC Activities, CPB Contractors, Thiess and UGL
are leading the industry, trialling new technology to protect operators. Scissor lifts are mechanical devices that provide temporary
Using technology to improve safety
access to work areas at height.
To make scissor lifts safer, the Group has partnered with a technology company to design and test a new type of safety device that
provides a hard engineering control when using these platforms in complex construction and mining environments. With LiDAR
(light detection) sensors, the solution can detect and prevent the machine from impacting obstacles, or entrapping the operator,
therefore improving the safety of the operator and other workers on the platform.
which we operate.
wording.
In order to overcome this communication challenge, Leighton Asia has been active in simplifying 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 they now use simple illustrations, diagrams and more simplified
68
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
Fatalities
The Board, management and employees of CIMIC are deeply saddened by the death of a colleague at the West Gate Tunnel (WGT)
project in Melbourne. He was a long-term employee of a company subcontracted to undertake piling operations on the site. We
extend our deepest condolences to his family, friends and co-workers. The WGT project team, assisted by staff from CPB
Contractors and CIMIC, has been working with the relevant authorities to investigate the cause of this tragic event.
In addition, CPB Contractors has engaged with the Piling & Foundation Specialist Federation (PFSF) to encourage an industry wide
review to identify safety improvement opportunities. This included attending and presenting at a recent PFSF Safety Forum and
ongoing support for a range of new initiatives designed to improve safety in piling operations.
Across the Group, we remain focussed on identification and the implementation of management strategies to deal with critical
risks. 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 risks.
The aforementioned fatality was also recorded as a Class 1 Actual (C1I) event.
Other injuries
The Group’s preferred lag measure for reporting is Recordable Injuries (RIs)25 and we calculate the Total Recordable Injury
Frequency Rate (TRIFR)26, which reflects the average number of recordable injuries per million hours worked (MhW). RIs capture a
higher level and a wider range of injuries, including medically treated injuries (MTIs), restricted work injuries (RWIs), lost time
injuries (LTIs)27, permanent disabilities (PDs) and fatalities which impact our workers. The Group is committed to applying the same
safety standards to everyone who works on one of our projects and accordingly, all our lag indicators, including TRIFR and LTIFR,
reflect both direct employee and contractor performance.
The Group recorded a TRIFR in 2018 of 2.82, which represents a 7% increase from the 2017 result of 2.64.
The Group also tracks the number of LTIs, a widely-recognised safety metric, and Lost Time Injury Frequency Rate (LTIFR)28. LTIFR is
a commonly used lag indicator of both injury prevention and management performance. Like TRIFR it is often benchmarked across
industries. In 2018, the Group’s LTIFR increased from 1.07 to 1.27.
Group TRIFR (TRIs/MhW)
Group29 LTIFR (accidents/MhW)
Employee LTIFR (accidents/MhW)
Contractor LTIFR (accidents/MhW)
2018
2.82
2018
1.27
0.53
2.46
2017
2.64
2017
1.07
0.74
1.72
2016
2.74
2016
1.00
0.47
2.04
The Group also tracks a number of other safety measures - for both employees and contractors - which are used to drive
improvements in the management of safety. These measures include the total number of:
fatalities and permanent disabilities;
days lost to LTIs and the LTI severity rate;
▪
▪
▪
▪
Compliance
Restricted Work Injuries (RWIs), the number of days lost to RWIs, the RWI frequency rate and the RWI severity rate;
▪ MTIs and the MTI frequency rate; and
First Aid Injuries (FAIs) and the All Injury Frequency Rate (AIFR).
During 2018, the Group recorded one fatality (Class 1 Actual) as described above. There were no other material incidents of non-
compliance with regulations and/or voluntary codes.
During 2018, Leighton Asia incurred five fines totalling $22,499 for health and safety infringements that primarily related to not
taking adequate steps to keep employees safe when working at heights. All of these matters were dealt with internally and no
external investigations were required.
25 Any occurrence that results in a fatality, permanent disability, lost time injury, restricted work injury, and medical treatment injuries. It does not
26 For the purposes of this report, TRIFR is calculated on a base of 1,000,000 hours worked (MhW). 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
27 An occurrence that results in a fatality, permanent disability or time lost from work of one day/shift or more.
28 Accidents (defined as LTIs on the current page) per MhW.
29 Includes employees and contractors.
include first aid injuries.
reported by 5.
67
Lead indicators
The Group uses a number of lead indicators of safety performance to identify and help prioritise where effort is needed in order to
reduce the potential for injury to our people. Lead indicators, used in this way, become important tools for risk avoidance and
minimisation across any business.
A key lead indicator that the Group measures is identifying and investigating Potential Class 1 injuries (PC1). A PC1 is an incident
that may have, but did not, result in a fatality or a permanent disabling injury. The total number of PC1 injuries decreased by six in
2018 to 97.
Group PC1 (#)
2018
97
2017
103
2016
138
A range of other lead indicators are used across the Operating Companies which are tailored to their specialist businesses. Some of
these include:
▪
▪
▪
▪
▪
The number of Project Systems Audits - planned versus actual;
The number of Critical Risk Reviews - planned versus actual;
In field critical control verifications - planned versus actual;
The number of Incident Actions Closed Out on time; and
The number of Leadership Reviews/Walks completed versus scheduled.
Looking forward, the Group is investigating ways that it can use the large amounts of data that it generates to develop better
predictive indicators of potential incidents. Preliminary work in this area is now complete with pilot programs planned for a number
of Thiess projects in early 2019.
Safety in construction
Each of CIMIC’s Operating Companies has safety management systems that, while similar in their approach, are tailored to meet
each Operating Company’s risks and hazards. The most commonly reported critical risks giving rise to safety incidents in the
Group’s construction businesses are currently: working in and around mobile plant; working near live services; working at heights;
crane and lifting operations; working near live traffic; tunnelling and excavation; and temporary works.
For the Group’s construction company in Australia and New Zealand - CPB Contractors - critical risks are managed through the
Safety Essentials, a collection of minimum requirements focused on providing projects with the standards, procedures and
knowledge to manage activities that pose the greatest risk to our people. The Group’s Leighton Asia business has developed a
similar set of minimum requirements, the Class One Practices (COPs). Details of the activities covered by the Safety Essentials and
the COPs were set out in the 2017 Sustainability Report.
Using technology to improve safety
Taking up the challenge to make scissor lift elevating work platforms safer to use, EIC Activities, CPB Contractors, Thiess and UGL
are leading the industry, trialling new technology to protect operators. Scissor lifts are mechanical devices that provide temporary
access to work areas at height.
To make scissor lifts safer, the Group has partnered with a technology company to design and test a new type of safety device that
provides a hard engineering control when using these platforms in complex construction and mining environments. With LiDAR
(light detection) sensors, the solution can detect and prevent the machine from impacting obstacles, or entrapping the operator,
therefore improving the safety of the operator and other workers on the platform.
The Group has acquired ten LiDAR sensor units and trialled these on CPB Contractors and Thiess sites during the year. Trials have
been staggered so as to incorporate improvements and lessons learned from each site as they progress. Our goal is to develop the
solution to the point where it could be successfully manufactured and improve safety for our sites and the wider industry.
With operations in countries as diverse as India, Hong Kong, Philippines, Singapore, Indonesia and Malaysia, Leighton Asia faces a
significant challenge in the communication of safety standards and process controls to nationals. Employees from across these
countries may communicate in different languages, including English, Chinese (Cantonese & Mandarin), Hindi, Tamil, Bahasa and
Tagalog. In addition to the challenges with language, there are often relatively low literacy rates across many of the regions in
which we operate.
In order to overcome this communication challenge, Leighton Asia has been active in simplifying 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 they now use simple illustrations, diagrams and more simplified
wording.
CIMIC Draft Sustainability Report 15.2.19 5PM.indd 68
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68
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
Building safely in Hong Kong
Leighton Asia has been awarded the prestigious Lighthouse Club International Design for Safety Award for their excellence in
mitigating significant health and safety risks through an innovative roof erection method for the internal roof at the Passenger
Clearance Building (PCB) for the Hong Kong-Zhuhai-Macao Bridge (HKZMB) project. The project involved the construction of an
architectural steel roof covering an area of 60,000 square metres, the size of eight soccer fields, at a height of 30 metres.
The project team modularised the roof structure into sections of up to 60m x 25m in size and weighing up to 690 tonnes. The
modules were then prefabricated and assembled off site with 85% of the cladding, features and services installed in controlled
factory conditions. The modules were then transported and erected on site by using strand jacking and launching methods with
Building Information Modelling (BIM) used to check interfaces to avoid changes on site.
UGL has developed the Critical Risk Control (CRC) Protocol which 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. Again, CRC Protocols
covering these risks were outlined in the 2017 Sustainability Report and are specific to the services that UGL delivers.
Driving safety delivers the competitive edge
In an effort to reduce manual handling risks in their rail workshop, the UGL Overhauls team at Ballarat in Victoria has
simultaneously improved safety while creating a competitive new ‘brake centre of excellence’ for its clients. The Ballarat-based
team in Victoria was experiencing an increasing number of manual handling injuries when upgrading component parts. In an effort
to reduce these injuries, the team reviewed its component upgrade methods and has implemented a semi-automated process that
uses waist-high benches and site-designed machinery to assemble components.
Leighton Asia operates their ‘Strive for L.I.F.E.’ training centres, with the objective of providing staff and workers with a world-class
program of training that is interactive and dynamic, whilst also being informative. Since opening in 2010, over 140,000 Leighton
Asia employees have completed training courses through the Strive for L.I.F.E. training centres.
By introducing the new methodology, mechanical controls and an altered working environment, the team achieved its safety
objective and has positioned itself to better compete in the very competitive field of brake cylinder repair. The team’s safety
initiative has significantly improved safety and greatly reduced the time required to overhaul and upgrade brake cylinders and
Safety in mining and mineral processing
The critical risks most frequently reported in the Group’s mining and mineral processing businesses are currently: mine traffic;
working at heights; isolation of energy sources; geotechnical; lifting operations; explosives; and working with tyres.
Thiess has its own non-negotiable, mandatory Safety Essentials which describe clear minimum requirements, and provide critical
controls and core procedures, for high-risk activities in mining. These Safety Essentials are produced in English, Spanish, Bahasa and
Mongolian, reflecting Thiess’ areas of operation.
Thiess’ safety performance recognised in Chile
In 2018, Thiess’ Encuentro open pit mine operation in Northern Chile was awarded the National Mining Service Safety Award by the
Chilean government for best overall safety performance in 2017. The annual award, run by the National Geology and Mining
Service Agency, singles out mine owners and service providers who excel in meeting industry safety standards in eight categories.
The categories reflect company size and the number of hours worked with safety data collected over a calendar year to assess the
best performing companies, with Thiess winning Category B30.
Thiess has operated in Chile since 2015, employing over 350 people and working more than 50,000 hours each month. Thiess
currently provides mining services at Encuentro for Antofagasta Minerals (AMSA) with a scope of works comprising drilling, load
and haul, mobile equipment and mine services.
Sedgman has also adopted Safety Essentials which were rolled out in 2016. These describe clear minimum requirements for high
risk activities and are mandatory for all Sedgman sites.
Group Occupational illnesses or injuries (#)
Group OIFR (# / MhW)
2018
4833
0.30
2017
15
0.09
Good housekeeping makes for safer sites
Regular site inspections and independent internal audits are key elements of Sedgman’s commitment to safe and sustainable
workplaces. They fulfil two important functions, providing opportunities to highlight best practices for sharing within Sedgman and
across the Group, and they identify opportunities for site and system improvements.
A health, safety, environment and quality (HSEQ) mobilisation audit of the Byerwen coal handling preparation plant (CHPP) project
in Queensland achieved both of these outcomes. The audit provided the opportunity to share an example of effective materials
laydown and handling practices. 160 tonnes of steel work, fabricated in China for the CHPP, was delivered to the site in shipping
containers and unpacked. Every section has its own call-up board with contact details and section-specific hazard identification. By
ensuring the material laydown areas are setup and utilised correctly, risk to our people and plant working in the area is reduced.
The Safety Essentials of Thiess and Sedgman, identifying their materials risk activities, were described in the 2017 Sustainability
Report.
Safety in services
The critical risks occurring most often in the Group’s services business are currently: isolation of energy sources; working at heights;
working with electricity sources; excavation and trenching; cranes and lifting operations; operation of mobile plant; and managing
traffic.
30 Working between 200 thousand and 1 million man-hours with up to 400 people.
69
69
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component parts.
Occupational illnesses
metals such as lead.
CIMIC is committed to monitoring the potential for occupational illnesses31 that Group activities may cause, and seeks to mitigate
any impacts. The most common types of occupational hygiene risks experienced by 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,
and dust-related diseases. In certain circumstances, Sedgman employees are required to manage the risk of exposure to heavy
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. In addition, all Operating Companies
worked with CIMIC in 2018 to develop an Occupational Hygiene standard to ensure a high level of consistency is applied across the
Group, regardless of where we operate in the world. This standard will be implemented in 2019.
Each project and/or workplace is required to maintain a record of all new cases of injury or occupational illnesses that are work
related. In 2018, Group Operating Companies reported 48 instances of occupational illnesses which related to issues including
musculoskeletal disorders, dermatitis, hearing impairment, mental health, respiratory conditions and allergies. This generated an
occupational illness frequency rate (OIFR)32 of 0.30 for CIMIC Group.
Skin cancer is a potential risk for employees due to the outdoor nature of construction and mining activity. Each of the Group’s
Operating Companies provides personal protective equipment (PPE) aimed at reducing the risk. Based on the risk profile of the
operation, PPE may include long sleeve shirts, broad-brimmed hats, UV-rated safety glasses and sunscreen. CIMIC has also worked
with, and supported, the Cancer Council of Australia to promote sun awareness and maintaining a healthy lifestyle, and has
provided access to free skin checks as part of the AIA Vitality program in Australia.
Each of the Group’s Operating 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
Rehabilitation
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, undertaking alternate duties, working reduced hours or moving into another role. All of these options will be
considered as part of an injury management strategy.
31 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).
32 Occupational Illness Frequency Rate: the number of occupational illnesses reported per million hours worked.
33 For 2018, this included 43 employee reported occupational illnesses and 5 for subcontractors. The requirement to disclose the number of
occupational illnesses is leading to greater accuracy in reporting. Some occupational illnesses were likely classified as injuries in 2017.
70
Building safely in Hong Kong
Leighton Asia has been awarded the prestigious Lighthouse Club International Design for Safety Award for their excellence in
mitigating significant health and safety risks through an innovative roof erection method for the internal roof at the Passenger
Clearance Building (PCB) for the Hong Kong-Zhuhai-Macao Bridge (HKZMB) project. The project involved the construction of an
architectural steel roof covering an area of 60,000 square metres, the size of eight soccer fields, at a height of 30 metres.
The project team modularised the roof structure into sections of up to 60m x 25m in size and weighing up to 690 tonnes. The
modules were then prefabricated and assembled off site with 85% of the cladding, features and services installed in controlled
factory conditions. The modules were then transported and erected on site by using strand jacking and launching methods with
Building Information Modelling (BIM) used to check interfaces to avoid changes on site.
Leighton Asia operates their ‘Strive for L.I.F.E.’ training centres, with the objective of providing staff and workers with a world-class
program of training that is interactive and dynamic, whilst also being informative. Since opening in 2010, over 140,000 Leighton
Asia employees have completed training courses through the Strive for L.I.F.E. training centres.
Safety in mining and mineral processing
The critical risks most frequently reported in the Group’s mining and mineral processing businesses are currently: mine traffic;
working at heights; isolation of energy sources; geotechnical; lifting operations; explosives; and working with tyres.
Thiess has its own non-negotiable, mandatory Safety Essentials which describe clear minimum requirements, and provide critical
controls and core procedures, for high-risk activities in mining. These Safety Essentials are produced in English, Spanish, Bahasa and
Mongolian, reflecting Thiess’ areas of operation.
Thiess’ safety performance recognised in Chile
In 2018, Thiess’ Encuentro open pit mine operation in Northern Chile was awarded the National Mining Service Safety Award by the
Chilean government for best overall safety performance in 2017. The annual award, run by the National Geology and Mining
Service Agency, singles out mine owners and service providers who excel in meeting industry safety standards in eight categories.
The categories reflect company size and the number of hours worked with safety data collected over a calendar year to assess the
best performing companies, with Thiess winning Category B30.
Thiess has operated in Chile since 2015, employing over 350 people and working more than 50,000 hours each month. Thiess
currently provides mining services at Encuentro for Antofagasta Minerals (AMSA) with a scope of works comprising drilling, load
and haul, mobile equipment and mine services.
Good housekeeping makes for safer sites
Regular site inspections and independent internal audits are key elements of Sedgman’s commitment to safe and sustainable
workplaces. They fulfil two important functions, providing opportunities to highlight best practices for sharing within Sedgman and
across the Group, and they identify opportunities for site and system improvements.
A health, safety, environment and quality (HSEQ) mobilisation audit of the Byerwen coal handling preparation plant (CHPP) project
in Queensland achieved both of these outcomes. The audit provided the opportunity to share an example of effective materials
laydown and handling practices. 160 tonnes of steel work, fabricated in China for the CHPP, was delivered to the site in shipping
containers and unpacked. Every section has its own call-up board with contact details and section-specific hazard identification. By
ensuring the material laydown areas are setup and utilised correctly, risk to our people and plant working in the area is reduced.
The Safety Essentials of Thiess and Sedgman, identifying their materials risk activities, were described in the 2017 Sustainability
Report.
Safety in services
traffic.
The critical risks occurring most often in the Group’s services business are currently: isolation of energy sources; working at heights;
working with electricity sources; excavation and trenching; cranes and lifting operations; operation of mobile plant; and managing
30 Working between 200 thousand and 1 million man-hours with up to 400 people.
69
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
UGL has developed the Critical Risk Control (CRC) Protocol which 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. Again, CRC Protocols
covering these risks were outlined in the 2017 Sustainability Report and are specific to the services that UGL delivers.
Driving safety delivers the competitive edge
In an effort to reduce manual handling risks in their rail workshop, the UGL Overhauls team at Ballarat in Victoria has
simultaneously improved safety while creating a competitive new ‘brake centre of excellence’ for its clients. The Ballarat-based
team in Victoria was experiencing an increasing number of manual handling injuries when upgrading component parts. In an effort
to reduce these injuries, the team reviewed its component upgrade methods and has implemented a semi-automated process that
uses waist-high benches and site-designed machinery to assemble components.
By introducing the new methodology, mechanical controls and an altered working environment, the team achieved its safety
objective and has positioned itself to better compete in the very competitive field of brake cylinder repair. The team’s safety
initiative has significantly improved safety and greatly reduced the time required to overhaul and upgrade brake cylinders and
component parts.
Occupational illnesses
CIMIC is committed to monitoring the potential for occupational illnesses31 that Group activities may cause, and seeks to mitigate
any impacts. The most common types of occupational hygiene risks experienced by 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,
and dust-related diseases. In certain circumstances, Sedgman employees are required to manage the risk of exposure to heavy
metals such as lead.
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. In addition, all Operating Companies
worked with CIMIC in 2018 to develop an Occupational Hygiene standard to ensure a high level of consistency is applied across the
Group, regardless of where we operate in the world. This standard will be implemented in 2019.
Each project and/or workplace is required to maintain a record of all new cases of injury or occupational illnesses that are work
related. In 2018, Group Operating Companies reported 48 instances of occupational illnesses which related to issues including
musculoskeletal disorders, dermatitis, hearing impairment, mental health, respiratory conditions and allergies. This generated an
occupational illness frequency rate (OIFR)32 of 0.30 for CIMIC Group.
Sedgman has also adopted Safety Essentials which were rolled out in 2016. These describe clear minimum requirements for high
risk activities and are mandatory for all Sedgman sites.
Group Occupational illnesses or injuries (#)
Group OIFR (# / MhW)
2018
4833
0.30
2017
15
0.09
Skin cancer is a potential risk for employees due to the outdoor nature of construction and mining activity. Each of the Group’s
Operating Companies provides personal protective equipment (PPE) aimed at reducing the risk. Based on the risk profile of the
operation, PPE may include long sleeve shirts, broad-brimmed hats, UV-rated safety glasses and sunscreen. CIMIC has also worked
with, and supported, the Cancer Council of Australia to promote sun awareness and maintaining a healthy lifestyle, and has
provided access to free skin checks as part of the AIA Vitality program in Australia.
Rehabilitation
Each of the Group’s Operating 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, undertaking alternate duties, working reduced hours or moving into another role. All of these options will be
considered as part of an injury management strategy.
31 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).
32 Occupational Illness Frequency Rate: the number of occupational illnesses reported per million hours worked.
33 For 2018, this included 43 employee reported occupational illnesses and 5 for subcontractors. The requirement to disclose the number of
occupational illnesses is leading to greater accuracy in reporting. Some occupational illnesses were likely classified as injuries in 2017.
70
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
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)34 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.
CIMIC launches a range of benefits to promote employee health and wellbeing
CIMIC Group now offers salary continuance insurance (SCI) automatically, at no cost and without a medical assessment for eligible
employees35 in Australia. This provides up to 75% of an employee’s Total Fixed Remuneration for up to two years, with a 90 day
waiting period, if they are unable to work due to long term injury or illness. In Australia, CIMIC Group also provides all employees
and their families with access to discounted private health insurance via an industry leading provider.
CIMIC has also launched the AIA Vitality program which promotes positive health and wellbeing behaviours by rewarding eligible
employees in Australia with points for making healthy choices like completing a health check or nutrition assessment, or setting
and following through on a physical activity target. The AIA Vitality program is designed to help employees:
▪
▪
Know their health - offering a range of online and offline health assessments to help them to find out more about their health;
Improve their health - support to set goals and maintain good health through discounts on gym memberships, fitness devices
and more; and
Enjoy the rewards - encouragement to stay motivated with ongoing rewards for all their efforts, including discounts on flights,
movie tickets, shopping vouchers, spa treatments and more.
▪
Employees in other countries also benefit from a range of health and wellbeing benefits. For example, in many of our overseas
locations the Group provides medical, dental and hospital insurance in line with what is customary for the market in those
countries.
‘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 physical and mental health topics and how to get support. It includes links to the Group's health related
policies, the EAP, and information about specialist mental health training and support provided by organisations including Beyond
Blue, Lifeline, Mates in Construction and Mates in Mining.
Also, as a part of the 2018 CIMIC Graduate Induction, all 208 graduates attended a mental health resilience program. This was
designed to provide the graduates with the skills to identify early warning signals, build their resilience and to know how to seek
assistance if necessary. This program was well received and is seen an essential element in their preparation, as many moved from
education to their first experience with full-time employment.
Thiess joins the fight against cervical cancer in Indonesia
Thiess is leading the charge in the fight against the human papillomavirus (HPV) with the team implementing an HPV vaccination
program for all female employees across Indonesian projects and offices. Cervical cancer is the second leading cause of female
cancer in Indonesia despite it being preventable through access to this vaccine
The HPV vaccine protects against two high-risk HPV, types 16 and 18, which cause cervical cancer in women, the most common
type of cancer caused by HPV.
executive briefings with Beyond Blue, one of Australia’s leading mental health support specialists;
Australian managers training in physical and mental health protective factors;
peer support training;
Across the Group in 2018, other physical and mental health initiatives have included:
▪
▪
▪
▪ Group-wide ‘Looking after your Brain’ mental health webinar; and
▪
promoting campaigns such as R U OK and White Ribbon Day.
34 Provided to all Australian employees and all of Thiess’ international employees.
35 Eligible employees are Australian permanent salaried employees and maximum term employees with expected tenure greater than 12 months,
who are working more than 15 hours per week.
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Health checks save lives
A mix of teams at sites and offices at Sedgman, Thiess and CIMIC have shone a spotlight on why health and skin checks are a smart
move for everyone. At Sedgman and CIMIC, 15-minute health checks measured cholesterol, blood glucose, blood pressure, body
mass index (height and weight) and waist measurement - testing for risks of diabetes, stroke and cardiovascular disease. At both
companies an average of 30 per cent of participants were referred to their GP when their results in any area fell outside desirable
ranges, indicating a possible health risk.
At Thiess’ Leinster Underground project in Western Australia, 40 people took up the opportunity to receive a full head-to-toe skin
check examination by a qualified doctor. For more than 50 per cent of the participants, this was their first skin check and 20 per
cent of participants had a suspicious lesion requiring urgent GP referral.
CIMIC continues to offer access to an EAP, a free, voluntary and confidential employee assistance program available 24/7 to CIMIC
Group employees and their immediate families. The aim of the EAP 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.
Positively healthy program recognised as an industry leader
For the past five years, Thiess’ team at the Mt Owen coal mine in New South Wales’ Hunter Valley has been running an annual
Positively Healthy program. With the support of Ethos Health, the program aims to achieve real weight loss and positive overall
health outcomes across the mine’s workforce. The program has continued to make in-roads such that 312 employees, or 82% of
the Mt Owen team, participated in the program this year, losing over 500 kilograms collectively.
Employees and contractors began the program undertaking an InBody Composition scan which measures body fat, muscle mass,
visceral fat and mineral content, and provides an overall health score out of 100. Individual and collective scores were produced
with a collective baseline recorded. Once the assessment was conducted, the program introduced prevention and treatment
strategies to manage modifiable health and lifestyle risks, such as nutrition and diet, physical activity, smoking, sleep, alcohol and
stress. Action plans targeted high need areas and supported the participants throughout the program with one-on-one sessions,
workshops and team challenges.
This year, the Positively Healthy initiative at Mt Owen was recognised with the New South Wales Mineral Council (NSWMC) Health
Excellence Award at the NSW Mining Health, Safety, Environment and Community Awards dinner which showcases innovation
across the mining industry.
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.
Many infrastructure and building projects are being developed in densely populated urban areas. Safety is incorporated into the
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 to provide enhanced protection include variable speed signs, realigned traffic lanes, auto flaggers,
physical barrier guards and truck mounted attenuators.
Making sure that Canberra is Rail Ready
The Canberra Metro consortium, which includes CPB Contractors, UGL and Pacific Partnerships, is delivering the first stage of
Canberra’s 12km Light Rail project as a PPP. With construction nearly completed and the start of operations fast approaching, a
significant safety campaign - Rail Ready - was launched to ensure that residents of Australia’s capital city were provided with
helpful advice about staying safe when walking, cycling or driving near the light rail corridor.
The consortium worked with ACT Policing's Constable Kenny Koala program which aims to educate child care and primary-aged
school children on a range of safety themes, including traffic and road safety. Schools were encouraged to book a traffic and road
safety presentation by Constable Kenny Koala. A range of safety education-resources were provided for primary school students in
conjunction with the TrackSAFE Foundation, an Australia-wide, registered harm prevention charity. Other resources included: radio
commercials; posters for cyclists, drivers and pedestrians; factsheets in English and Mandarin; quizzes, crossword puzzles and
colouring sheets; and safety videos and brochures.
72
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
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)34 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;
provide care and support for ourselves and others.
avoid or better manage both physical and mental health conditions such as fatigue, depression and anxiety; and
CIMIC launches a range of benefits to promote employee health and wellbeing
CIMIC Group now offers salary continuance insurance (SCI) automatically, at no cost and without a medical assessment for eligible
employees35 in Australia. This provides up to 75% of an employee’s Total Fixed Remuneration for up to two years, with a 90 day
waiting period, if they are unable to work due to long term injury or illness. In Australia, CIMIC Group also provides all employees
and their families with access to discounted private health insurance via an industry leading provider.
CIMIC has also launched the AIA Vitality program which promotes positive health and wellbeing behaviours by rewarding eligible
employees in Australia with points for making healthy choices like completing a health check or nutrition assessment, or setting
and following through on a physical activity target. The AIA Vitality program is designed to help employees:
Know their health - offering a range of online and offline health assessments to help them to find out more about their health;
Improve their health - support to set goals and maintain good health through discounts on gym memberships, fitness devices
and more; and
Enjoy the rewards - encouragement to stay motivated with ongoing rewards for all their efforts, including discounts on flights,
movie tickets, shopping vouchers, spa treatments and more.
Employees in other countries also benefit from a range of health and wellbeing benefits. For example, in many of our overseas
locations the Group provides medical, dental and hospital insurance in line with what is customary for the market in those
countries.
‘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 physical and mental health topics and how to get support. It includes links to the Group's health related
policies, the EAP, and information about specialist mental health training and support provided by organisations including Beyond
Blue, Lifeline, Mates in Construction and Mates in Mining.
Also, as a part of the 2018 CIMIC Graduate Induction, all 208 graduates attended a mental health resilience program. This was
designed to provide the graduates with the skills to identify early warning signals, build their resilience and to know how to seek
assistance if necessary. This program was well received and is seen an essential element in their preparation, as many moved from
education to their first experience with full-time employment.
Thiess joins the fight against cervical cancer in Indonesia
Thiess is leading the charge in the fight against the human papillomavirus (HPV) with the team implementing an HPV vaccination
program for all female employees across Indonesian projects and offices. Cervical cancer is the second leading cause of female
cancer in Indonesia despite it being preventable through access to this vaccine
The HPV vaccine protects against two high-risk HPV, types 16 and 18, which cause cervical cancer in women, the most common
type of cancer caused by HPV.
Across the Group in 2018, other physical and mental health initiatives have included:
executive briefings with Beyond Blue, one of Australia’s leading mental health support specialists;
Australian managers training in physical and mental health protective factors;
peer support training;
▪ Group-wide ‘Looking after your Brain’ mental health webinar; and
promoting campaigns such as R U OK and White Ribbon Day.
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
34 Provided to all Australian employees and all of Thiess’ international employees.
35 Eligible employees are Australian permanent salaried employees and maximum term employees with expected tenure greater than 12 months,
who are working more than 15 hours per week.
71
Health checks save lives
A mix of teams at sites and offices at Sedgman, Thiess and CIMIC have shone a spotlight on why health and skin checks are a smart
move for everyone. At Sedgman and CIMIC, 15-minute health checks measured cholesterol, blood glucose, blood pressure, body
mass index (height and weight) and waist measurement - testing for risks of diabetes, stroke and cardiovascular disease. At both
companies an average of 30 per cent of participants were referred to their GP when their results in any area fell outside desirable
ranges, indicating a possible health risk.
At Thiess’ Leinster Underground project in Western Australia, 40 people took up the opportunity to receive a full head-to-toe skin
check examination by a qualified doctor. For more than 50 per cent of the participants, this was their first skin check and 20 per
cent of participants had a suspicious lesion requiring urgent GP referral.
CIMIC continues to offer access to an EAP, a free, voluntary and confidential employee assistance program available 24/7 to CIMIC
Group employees and their immediate families. The aim of the EAP 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.
Positively healthy program recognised as an industry leader
For the past five years, Thiess’ team at the Mt Owen coal mine in New South Wales’ Hunter Valley has been running an annual
Positively Healthy program. With the support of Ethos Health, the program aims to achieve real weight loss and positive overall
health outcomes across the mine’s workforce. The program has continued to make in-roads such that 312 employees, or 82% of
the Mt Owen team, participated in the program this year, losing over 500 kilograms collectively.
Employees and contractors began the program undertaking an InBody Composition scan which measures body fat, muscle mass,
visceral fat and mineral content, and provides an overall health score out of 100. Individual and collective scores were produced
with a collective baseline recorded. Once the assessment was conducted, the program introduced prevention and treatment
strategies to manage modifiable health and lifestyle risks, such as nutrition and diet, physical activity, smoking, sleep, alcohol and
stress. Action plans targeted high need areas and supported the participants throughout the program with one-on-one sessions,
workshops and team challenges.
This year, the Positively Healthy initiative at Mt Owen was recognised with the New South Wales Mineral Council (NSWMC) Health
Excellence Award at the NSW Mining Health, Safety, Environment and Community Awards dinner which showcases innovation
across the mining industry.
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.
Many infrastructure and building projects are being developed in densely populated urban areas. Safety is incorporated into the
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 to provide enhanced protection include variable speed signs, realigned traffic lanes, auto flaggers,
physical barrier guards and truck mounted attenuators.
Making sure that Canberra is Rail Ready
The Canberra Metro consortium, which includes CPB Contractors, UGL and Pacific Partnerships, is delivering the first stage of
Canberra’s 12km Light Rail project as a PPP. With construction nearly completed and the start of operations fast approaching, a
significant safety campaign - Rail Ready - was launched to ensure that residents of Australia’s capital city were provided with
helpful advice about staying safe when walking, cycling or driving near the light rail corridor.
The consortium worked with ACT Policing's Constable Kenny Koala program which aims to educate child care and primary-aged
school children on a range of safety themes, including traffic and road safety. Schools were encouraged to book a traffic and road
safety presentation by Constable Kenny Koala. A range of safety education-resources were provided for primary school students in
conjunction with the TrackSAFE Foundation, an Australia-wide, registered harm prevention charity. Other resources included: radio
commercials; posters for cyclists, drivers and pedestrians; factsheets in English and Mandarin; quizzes, crossword puzzles and
colouring sheets; and safety videos and brochures.
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During 2018, there was one incident resulting in an injury to a member of the public. This involved some loose fabric on a building
hoarding blowing loose, resulting in a cyclist falling. The project team supported the injured cyclist, organised an ambulance,
returned the bicycle to the cyclist’s home and helped to transport the injured person’s partner to hospital. Over time, the project
team has remained in contact with the cyclist offering assistance as required.
INTEGRITY
OUR APPROACH
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.
OUTLOOK AND FUTURE PLANS
We are committed to our people returning home safely at the end of a day’s work. In 2019, 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:
continuously improving the quality of the C1 and PC1 investigation process;
developing and implementing hard controls where possible;
reviewing the controls put in place in response to C1 and PC1 incidents to measure their effectiveness;
implement a CIMIC wide occupational hygiene standard to identify and manage the risk of occupational illnesses;
continue to build functionality in the Group-wide Health & Safety Database, introducing mobile applications for inspection,
observation, audit and incident modules;
mine safety and business performance data to develop and improve lead indicators with the aim of improving business
resilience;
drive improvement to the Group’s contractor management program, including increasing capacity to assist in the consistent
application of contractor pre-qualifications, approvals and performance assessments; and
continue to consolidate and simplify our safety systems across the CIMIC Group.
▪
▪
▪
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One of our four Principles is integrity which is based on respect and honesty. We believe that we must respect ourselves, and our
colleagues, clients, suppliers and shareholders.
Setting the foundation for the way we work every day is the Group Code of Conduct (‘the Code’). The Code applies to all employees
of the Group, directors, third parties engaged by the Group, and all alliances and joint ventures in all jurisdictions. The Code
outlines the standards of behaviour we expect, regardless of Operating Company, role or country. Where the Code or a policy sets
higher standards of behaviour than local laws, rules, customs or norms, those higher standards will apply.
We expect that everyone will:
▪
▪
▪
▪
act in accordance with the Code and the Group’s Principles;
comply with all Group and Operating Company policies and procedures;
comply with all applicable laws wherever we operate; and
seek advice if they have any doubt about the right course of action.
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. 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.
While the Code provides a framework for decision-making, it 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. The Code is supported by
training and the CIMIC Ethics Line, and has been translated into local languages to reflect the numerous 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 enshrines 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, independently operated, confidential Ethics Line available for reporting
concerns
Actions taken during 2018
23,837 employees (or 80%) completed formal Code training as part of a requirement to be
Performance
▪ No instances of significant fines or sanctions for non-compliance with Australian and
trained within 3 months of joining and, thereafter, every 2 years
Implemented a third party due diligence solution to screen third parties
international laws and regulations during the year
▪ No significant breaches of the Code
121 potential ethical issues reported to the CIMIC Board’s Ethics, Compliance &
Sustainability Committee (ECSC), all matters were dealt with internally by the Reportable
Conduct Group, under the supervision of the ECSC
Operate honestly and transparently
Measures in place
▪ Market Disclosure and Communications Framework; Privacy Policy; Record Retention
Actions taken during 2018
▪
Made 74 announcements and disclosures via ASX
Performance
▪ No breaches of continuous disclosure
Policy; Securities Trading Policy
▪ Group is unaware of any substantial complaints regarding breaches of privacy or other
matters by clients or other stakeholders
Support sustainable procurement
Measures in place
Procurement Policy which integrates the Group’s commitment to sustainability; Dealing
Actions taken during 2018
▪ UGL hosted an Aboriginal and Torres Strait Supplier Showcase
with Third Parties Procedure
Sustainability Policy commits the Group to integrating environmentally and socially
responsible sourcing into procurement
Thiess Supplier Diversity Strategy launched
Continued roll out of Early Payment Program
Thiess participated in the Upper Hunter Mining Dialogue Forum focused on procurement
Performance
Broad Construction awarded the WA Government’s Department of Finance Supplier
and rehabilitation
Performance Award
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
INTEGRITY
OUR APPROACH
One of our four Principles is integrity which is based on respect and honesty. We believe that we must respect ourselves, and our
colleagues, clients, suppliers and shareholders.
Setting the foundation for the way we work every day is the Group Code of Conduct (‘the Code’). The Code applies to all employees
of the Group, directors, third parties engaged by the Group, and all alliances and joint ventures in all jurisdictions. The Code
outlines the standards of behaviour we expect, regardless of Operating Company, role or country. Where the Code or a policy sets
higher standards of behaviour than local laws, rules, customs or norms, those higher standards will apply.
We expect that everyone will:
act in accordance with the Code and the Group’s Principles;
comply with all Group and Operating Company policies and procedures;
comply with all applicable laws wherever we operate; and
seek advice if they have any doubt about the right course of action.
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. 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.
While the Code provides a framework for decision-making, it 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. The Code is supported by
training and the CIMIC Ethics Line, and has been translated into local languages to reflect the numerous 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 enshrines comprehensive
protection for whistleblowers
Anti-Bribery and Corruption Policy; Gifts and Hospitality Policy; Dealing with Third Parties
Policy; Approval to Operate Internationally Policy
Actions taken during 2018
Performance
Group-wide, independently operated, confidential Ethics Line available for reporting
concerns
23,837 employees (or 80%) completed formal Code training as part of a requirement to be
trained within 3 months of joining and, thereafter, every 2 years
Implemented a third party due diligence solution to screen third parties
No instances of significant fines or sanctions for non-compliance with Australian and
international laws and regulations during the year
No significant breaches of the Code
121 potential ethical issues reported to the CIMIC Board’s Ethics, Compliance &
Sustainability Committee (ECSC), all matters were dealt with internally by the Reportable
Conduct Group, under the supervision of the ECSC
Operate honestly and transparently
Measures in place
Market Disclosure and Communications Framework; Privacy Policy; Record Retention
Actions taken during 2018
Performance
Policy; Securities Trading Policy
Made 74 announcements and disclosures via ASX
No breaches of continuous disclosure
Group is unaware of any substantial complaints regarding breaches of privacy or other
matters by clients or other stakeholders
Support sustainable procurement
Measures in place
Procurement Policy which integrates the Group’s commitment to sustainability; Dealing
with Third Parties Procedure
Sustainability Policy commits the Group to integrating environmentally and socially
responsible sourcing into procurement
During 2018, there was one incident resulting in an injury to a member of the public. This involved some loose fabric on a building
hoarding blowing loose, resulting in a cyclist falling. The project team supported the injured cyclist, organised an ambulance,
returned the bicycle to the cyclist’s home and helped to transport the injured person’s partner to hospital. Over time, the project
team has remained in contact with the cyclist offering assistance as required.
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.
OUTLOOK AND FUTURE PLANS
We are committed to our people returning home safely at the end of a day’s work. In 2019, 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:
continuously improving the quality of the C1 and PC1 investigation process;
developing and implementing hard controls where possible;
reviewing the controls put in place in response to C1 and PC1 incidents to measure their effectiveness;
implement a CIMIC wide occupational hygiene standard to identify and manage the risk of occupational illnesses;
continue to build functionality in the Group-wide Health & Safety Database, introducing mobile applications for inspection,
mine safety and business performance data to develop and improve lead indicators with the aim of improving business
observation, audit and incident modules;
resilience;
drive improvement to the Group’s contractor management program, including increasing capacity to assist in the consistent
application of contractor pre-qualifications, approvals and performance assessments; and
continue to consolidate and simplify our safety systems across the CIMIC Group.
▪
▪
▪
▪
-
-
-
▪
▪
▪
▪
▪
73
UGL hosted an Aboriginal and Torres Strait Supplier Showcase
Thiess Supplier Diversity Strategy launched
Continued roll out of Early Payment Program
Thiess participated in the Upper Hunter Mining Dialogue Forum focused on procurement
and rehabilitation
Broad Construction awarded the WA Government’s Department of Finance Supplier
Performance Award
Performance
Actions taken during 2018
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Leave a positive legacy
Measures in place
▪
Diversity & Inclusion Policy which promotes Indigenous employment and Indigenous
suppliers in the supply chain, national inclusion in the workforce and gender equity
Sustainability Policy which commits Group to leaving positive legacies
Thiess has a 2017-2020 Reconciliation Action Plan (RAP)
Actions taken during 2018
Performance
CPB Contractors’ supports CareerSeekers New Australian Internship Program
Numerous, project-by-project initiatives tailored to meet the needs of local communities
Thiess awarded Coal Mongolia’s prestigious Best Contractor Award
▪
▪
▪ UGL has a RAP in place
▪
▪
▪
ZERO TOLERANCE FOR BRIBERY AND CORRUPTION
The Group prohibits, and has zero tolerance for, all forms of bribery and corruption. Our people must
obey all relevant laws and regulations, and must not participate in any arrangement which gives any
person an improper benefit in return for an unfair advantage to any party, directly or through an intermediary. This includes
facilitation payments36 even if allowed under local laws or customs. We are committed to the prevention, detection and initiatives
to eliminate bribery and corruption in accordance with the Code.
The Code is supported by additional governance documents including: a Group Code of Conduct - Management, Monitoring and
Reporting Policy; an explicit Anti-Bribery and Corruption Policy; a Dealing with Third Parties Policy; and a Third Party Anti-Bribery,
Corruption and Business Integrity Declaration. Collectively, these documents:
▪
▪
▪
-
-
-
identify roles, responsibilities and obligations of leadership and employees;
prescribe training requirements of various roles in the Group; and
detail related processes, including:
the 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 and ensuring it is confidential, objective, independent and
fair; and
setting out key contacts and details.
-
Dealing with third parties
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. We define third parties as entities and individuals outside of CIMIC Group, and
they may include clients, joint venture partners, subcontractors, consultants and suppliers, agents or intermediaries (as defined by
our Dealing with Third Parties Policy). In many cases, the Group’s Operating Companies deliver work in joint venture or enter into
alliance relationships. 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, employees will remain bound by the Code and will seek to have business partners adopt the Code.
Before entering into a commercial relationship with a third party on behalf of the Group, appropriate due diligence must be
conducted in accordance with the Dealing with Third Parties Policy. 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.
All contracts entered into must be approved in accordance with the Group Delegations of Authority.
Implementation of Group-wide Supplier Due Diligence solution
In 2018, CIMIC undertook a process to identify its requirements for a third party due diligence solution and the services available in
the market that would best address these needs. The following criteria were identified as functional requirements for an ongoing
third party due diligence solution:
▪
▪
distributed access via licenses accessible across the Group as required;
the ability to screen third parties (including vendors, suppliers and business partners) against sanctions, watch-lists, adverse
litigation and Politically-Exposed-People (PEP) lists;
adverse media (print media and social media) screening for all jurisdictions in which CIMIC operates;
financial information including company ownership, structure, credit rating and financial strength;
searches that address Modern Slavery, bribery and corruption due diligence requirements;
▪
▪
▪
▪ workflow capabilities that reduce manual review and handling when on-boarding new vendors and business partners. That
workflow should include electronically automated escalation and approval processes, and an electronic and automated
process for distribution and risk assessment of on-boarding, pre-qualification and qualification questionnaires.
CIMIC is in the process of implementing the internationally recognised third party due diligence solution provider’s platform.
36 Facilitation payments are payments of cash or in kind made to secure or expedite a routine service, or to ‘facilitate’ a routine Government action.
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The Group rates third parties as Low, Medium or High37 risk to ensure that risks are appropriately assessed before entering into
formal business relationships and managed during the course of those relationships. Appropriate due diligence must be carried out
on all third parties prior to formal engagement.
Approving managers are free to engage with Low Risk third parties subject to appropriate procurement/ tendering standards being
followed. Medium and High risk third parties may only be engaged after escalating integrity checks are completed and they have
completed and executed a Third Party Anti-Bribery and Corruption Declaration.
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 enquiries must be made.
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
jurisdictions.
The Policy mandates a traffic lights system whereby:
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. To this end, the Group has an Approval to Operate Internationally
Policy which applies to all employees of the Group, third parties engaged by the Group, and all alliances and joint ventures in all
▪
▪
▪
▪
a ‘Green Light’ country is one that has been approved for Group entity operations. Typically, these 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, these countries are defined as retaining a medium level of political, security, corruption or other business
risks. 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 the Australia Government (refer to
the Department of Foreign Affairs and Trade’s ‘Sanction regimes’ list).
The Policy also requires that, before operations commence in a new country, a comprehensive assessment of risks associated with
operating in that country is undertaken, documented and approved. 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 functional heads from across CIMIC including the CEO. CIMIC maintains a
Register of Approved Countries which is integrated with the Group Delegations of Authority and Group Tendering Policy.
In order to avoid the potential for bribery and corruption, CIMIC does not make donations, either in kind or directly, to political
organisations, political parties, politicians, or trade unions. Nor will CIMIC make or solicit payments to organisations which
predominantly act as conduits to fund political parties or individuals holding or standing for elective office. Other prohibited
political activities or contributions include free or discounted use of the Group’s premises or equipment as a donation to a political
Political donations
party.
In keeping with the Code, the Group did not make any donations, either directly or in-kind, to political organisations, political
parties, politicians, or trade unions between 2015 and 2018.
Supporting and protecting whistle-blowers
We encourage our employees, subcontractors and partners to voice their concerns should they identify potentially unethical
practices. People who speak up in good faith will be supported by CIMIC for doing the right thing and we are committed to
providing support and protection for whistle-blowers against any reprisal for reporting a breach or potential breach of the Code.
In some circumstances, people will prefer to speak to someone other than their manager about their ethical questions or concerns.
We provide access to the CIMIC Ethics Line39, at zero cost to our employees, subcontractors and partners, so they can raise issues
and have them investigated and remain anonymous should they wish to. Matters can be reported to the Ethics Line via phone, fax,
online, email or post.
37 The Dealing with Third Parties Policy has a detailed definition for ‘High Risk’.
38 With the exception of third parties designated as Low Risk, such as a government or state-owned enterprise ranked lower than 40 in the
Corruptions Perceptions, a client who has been rated in Band A or Band B of the Defence Companies Anti-Corruption Index published by
Transparency International UK (or any subsequent index published by Transparency International relating to companies), or an existing client
designated as Low Risk by the CEO.
39 http://cimic.stoplinereport.com/
76
Leave a positive legacy
Measures in place
Diversity & Inclusion Policy which promotes Indigenous employment and Indigenous
suppliers in the supply chain, national inclusion in the workforce and gender equity
Sustainability Policy which commits Group to leaving positive legacies
Thiess has a 2017-2020 Reconciliation Action Plan (RAP)
▪ UGL has a RAP in place
CPB Contractors’ supports CareerSeekers New Australian Internship Program
▪
▪
▪
▪
▪
▪
Actions taken during 2018
Numerous, project-by-project initiatives tailored to meet the needs of local communities
Performance
Thiess awarded Coal Mongolia’s prestigious Best Contractor Award
ZERO TOLERANCE FOR BRIBERY AND CORRUPTION
The Group prohibits, and has zero tolerance for, all forms of bribery and corruption. Our people must
obey all relevant laws and regulations, and must not participate in any arrangement which gives any
person an improper benefit in return for an unfair advantage to any party, directly or through an intermediary. This includes
facilitation payments36 even if allowed under local laws or customs. We are committed to the prevention, detection and initiatives
to eliminate bribery and corruption in accordance with the Code.
The Code is supported by additional governance documents including: a Group Code of Conduct - Management, Monitoring and
Reporting Policy; an explicit Anti-Bribery and Corruption Policy; a Dealing with Third Parties Policy; and a Third Party Anti-Bribery,
Corruption and Business Integrity Declaration. Collectively, these documents:
identify roles, responsibilities and obligations of leadership and employees;
prescribe training requirements of various roles in the Group; and
detail related processes, including:
the 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 and ensuring it is confidential, objective, independent and
fair; and
setting out key contacts and details.
Dealing with third parties
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. We define third parties as entities and individuals outside of CIMIC Group, and
they may include clients, joint venture partners, subcontractors, consultants and suppliers, agents or intermediaries (as defined by
our Dealing with Third Parties Policy). In many cases, the Group’s Operating Companies deliver work in joint venture or enter into
alliance relationships. 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, employees will remain bound by the Code and will seek to have business partners adopt the Code.
Before entering into a commercial relationship with a third party on behalf of the Group, appropriate due diligence must be
conducted in accordance with the Dealing with Third Parties Policy. 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.
All contracts entered into must be approved in accordance with the Group Delegations of Authority.
Implementation of Group-wide Supplier Due Diligence solution
In 2018, CIMIC undertook a process to identify its requirements for a third party due diligence solution and the services available in
the market that would best address these needs. The following criteria were identified as functional requirements for an ongoing
third party due diligence solution:
distributed access via licenses accessible across the Group as required;
the ability to screen third parties (including vendors, suppliers and business partners) against sanctions, watch-lists, adverse
litigation and Politically-Exposed-People (PEP) lists;
adverse media (print media and social media) screening for all jurisdictions in which CIMIC operates;
financial information including company ownership, structure, credit rating and financial strength;
searches that address Modern Slavery, bribery and corruption due diligence requirements;
▪ workflow capabilities that reduce manual review and handling when on-boarding new vendors and business partners. That
workflow should include electronically automated escalation and approval processes, and an electronic and automated
process for distribution and risk assessment of on-boarding, pre-qualification and qualification questionnaires.
CIMIC is in the process of implementing the internationally recognised third party due diligence solution provider’s platform.
36 Facilitation payments are payments of cash or in kind made to secure or expedite a routine service, or to ‘facilitate’ a routine Government action.
▪
▪
▪
-
-
-
-
▪
▪
▪
▪
▪
▪
▪
▪
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
The Group rates third parties as Low, Medium or High37 risk to ensure that risks are appropriately assessed before entering into
formal business relationships and managed during the course of those relationships. Appropriate due diligence must be carried out
on all third parties prior to formal engagement.
Approving managers are free to engage with Low Risk third parties subject to appropriate procurement/ tendering standards being
followed. Medium and High risk third parties may only be engaged after escalating integrity checks are completed and they have
completed and executed a Third Party Anti-Bribery and Corruption Declaration.
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 enquiries must be made.
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. To this end, the Group has an Approval to Operate Internationally
Policy which applies to all employees of the Group, third parties engaged by the Group, and all alliances and joint ventures in all
jurisdictions.
The Policy mandates a traffic lights system whereby:
▪
a ‘Green Light’ country is one that has been approved for Group entity operations. Typically, these 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, these countries are defined as retaining a medium level of political, security, corruption or other business
risks. 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 the Australia Government (refer to
the Department of Foreign Affairs and Trade’s ‘Sanction regimes’ list).
▪
▪
▪
The Policy also requires that, before operations commence in a new country, a comprehensive assessment of risks associated with
operating in that country is undertaken, documented and approved. 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 functional heads from across CIMIC including the CEO. CIMIC maintains a
Register of Approved Countries which is integrated with the Group Delegations of Authority and Group Tendering Policy.
Political donations
In order to avoid the potential for bribery and corruption, CIMIC does not make donations, either in kind or directly, to political
organisations, political parties, politicians, or trade unions. Nor will CIMIC make or solicit payments to organisations which
predominantly act as conduits to fund political parties or individuals holding or standing for elective office. Other prohibited
political activities or contributions include free or discounted use of the Group’s premises or equipment as a donation to a political
party.
In keeping with the Code, the Group did not make any donations, either directly or in-kind, to political organisations, political
parties, politicians, or trade unions between 2015 and 2018.
Supporting and protecting whistle-blowers
We encourage our employees, subcontractors and partners to voice their concerns should they identify potentially unethical
practices. People who speak up in good faith will be supported by CIMIC for doing the right thing and we are committed to
providing support and protection for whistle-blowers against any reprisal for reporting a breach or potential breach of the Code.
In some circumstances, people will prefer to speak to someone other than their manager about their ethical questions or concerns.
We provide access to the CIMIC Ethics Line39, at zero cost to our employees, subcontractors and partners, so they can raise issues
and have them investigated and remain anonymous should they wish to. Matters can be reported to the Ethics Line via phone, fax,
online, email or post.
37 The Dealing with Third Parties Policy has a detailed definition for ‘High Risk’.
38 With the exception of third parties designated as Low Risk, such as a government or state-owned enterprise ranked lower than 40 in the
Corruptions Perceptions, a client who has been rated in Band A or Band B of the Defence Companies Anti-Corruption Index published by
Transparency International UK (or any subsequent index published by Transparency International relating to companies), or an existing client
designated as Low Risk by the CEO.
39 http://cimic.stoplinereport.com/
76
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
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 in which we operate and the languages our people speak. All reports
made to the Ethics Line are treated confidentially and are anonymous.
As per the Code, all business concerns raised are taken seriously and treated confidentially, and the identity of the whistleblower
who has raised a business concern is only revealed on a ‘need-to-know’ basis. Any employee raising a genuinely held business
concern has the option to do so on the basis that their identity will be known only by the individual to whom the concern was
raised or the Ethics Line provider (as the case may be).
Any employee who feels they have been victimised after raising a concern should contact their Business Conduct Representative, or
the Ethics Line. The Group will not tolerate victimisation of a whistleblower. Any Employee found to have victimised another will be
subject to disciplinary action.
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 and respond appropriately to
matters investigated and brought before it; and to report to the ECSC on a regular basis about matters reported, actions taken, and
the success or otherwise of systems in place to support compliance with the Code.
On behalf of the Board, the 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 matters considered by the RCG of each Operating Company including matters referred to those RCGs from
all sources including calls to the Ethics Line. Any serious matters are also reported to the ECSC.
The nature of the matters considered by Operating Company RCGs in 2018 have been as follows:
Issues reported to the ECSC (#)
Conflicts
Breaches of code/procedures
Misappropriation/theft
Fraud
Human resources related
Other
Total
2018
16
30
11
5
47
12
121
Of the matters reported in 2018, all were investigated by the respective Operating Company’s RCG and the ECSC apprised of the
details.
Communication and training
All employees are provided with a copy of the Code and supporting documents upon induction to the Group. The Code is to be
accessible in each office and project site, and available on the intranets of CIMIC and each of the Operating Companies. Any
updates to the Code are promptly communicated to all employees.
It is mandatory for all decision-makers in senior management, as well as ‘high risk’40 roles, to undertake a 2 hour standardised face-
to-face training session delivered by a CIMIC or Operating Company General Counsel or delegate. This training outlines the
importance of the Code, and bribery and corruption prevention and control. In addition, all of these employees are required to
complete an on-line training module which includes an assessment.
All other salaried employees are to complete the on-line training module (with assessment). The mode of delivery is dependent on
where employees are located and their role in the organisation. Staff complete an online training module and wages employees
complete a face-to-face module as part of their induction. Where on-line training is not available, training will be provided by
alternative delivery methods (such as via CD or paper). Human Resources employees complete a one day face-to-face training
course.
All training must be completed within three months of commencement in the role (either as a new hire or by promotion to a
relevant role) and then at least once every two years. Training records must be maintained. Across the Group, 23,837 employees
completed training on the Code in 2018 versus 18,870 in 2017.
OPERATE HONESTLY AND TRANSPARENTLY
We expect all of our people to operate and communicate honestly and transparently, so as to build and maintain the
confidence and trust of shareholders and other stakeholders. This includes building open and transparent relationships,
and seeking to work collaboratively with the communities that we impact. 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
As a publicly listed company, CIMIC undertakes to comply with all of the continuous disclosure obligations set out in the ASX Listing
Rules and the Corporations Act. This is essential for the maintenance of shareholder confidence and market trust. To facilitate this
obligation, CIMIC’s comprehensive Market Disclosure and Communications Framework41 sets out the principles, policy and
procedures which have been adopted.
CIMIC also maintains a comprehensive Securities Trading Policy which sets out the requirements and responsibilities of officers,
executives and certain contractors of CIMIC Group regarding dealings in CIMIC Securities. The Policy seeks to ensure that CIMIC
Group officers and executives comply with the law prohibiting insider trading. This Policy also contains obligations to keep CIMIC
Group information confidential.
CIMIC Group people must comply with the law at all times when they are in possession of inside information and they must not
engage in insider trading. All of those people referred to in the Securities Trading Policy may only deal in the Company’s securities
within designated trading windows (and providing they are not in possession of inside information) which are six-week periods
commencing on the next trading day after the release of the Group’s quarterly/half year/full year results. Even within these
windows, employees must still obtain prior approval from the CIMIC Company Secretary before trading and a record of these
approvals is maintained.
During 2018, 74 announcements and disclosures were made via ASX and there were no breaches of continuous disclosure.
Privacy and record retention
CIMIC only collects, holds, uses or discloses personal information where it is reasonably necessary to:
enable CIMIC to deliver services or information to individuals or to an organisation;
▪ maintain or establish a business relationship, including as a customer, supplier, contractor, or employee;
enable CIMIC to assist to provide services; or to improve, and better understand preferences in respect of CIMIC services; and
fulfil legal or regulatory obligations.
▪
▪
▪
Our commitments are enshrined in the Group’s Privacy Policy42 which applies to all employees, third parties engaged by the Group,
and all alliances and joint ventures in all jurisdictions. This Policy is available on the Group’s website.
In 2018, CIMIC was required to respond to a vendor security incident which threatened the privacy of potential employees. CIMIC
Group uses a human resources technology provider to manage job applications and candidate information. During the year, that
provider investigated a global security incident related to its systems. While this investigation was underway, CIMIC suspended use
of their services, disabled all external users and reset all passwords.
Information from the provider, their external cybersecurity advisors and government authorities indicated there was no evidence
of an active threat. The provider has informed CIMIC that the incident has been contained and the platform is secure. Based on this
information, CIMIC has re-established connections with the provider. Job applicants were prompted to reset passwords upon
logging into the system and all contacts in our system were sent an email from CIMIC to notify them that, regretfully, some of their
personal data may have been accessed by an unauthorised third party.
The Group is unaware of any other substantiated complaints regarding breaches of privacy by employees, clients or other
stakeholders.
The Group also has a Record Retention Policy which integrates with an Information Management Policy. These policies set the
requirements for the identification, retention or destruction of all records containing Group Information.
Tax payment and disclosure
As per our Code, CIMIC is committed to complying with all applicable rules, laws and regulations governing business reporting. All
information created and maintained, as a result of the Group’s business activities, must accurately reflect the underlying
transactions and events, and follow Group reporting policies and procedures. Financial officers and others responsible for the
accuracy of financial reporting have an additional responsibility to ensure that adequate internal controls exist to achieve truthful,
accurate, complete, consistent, timely and understandable financial and management reports that are prepared in accordance with
relevant laws, accounting standards, policies and procedures.
40 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.
77
41 https://www.cimic.com.au/en/our-group/governance/continuous-disclosure
42 https://www.cimic.com.au/en/our-group/governance/policies
78
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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 in which we operate and the languages our people speak. All reports
made to the Ethics Line are treated confidentially and are anonymous.
As per the Code, all business concerns raised are taken seriously and treated confidentially, and the identity of the whistleblower
who has raised a business concern is only revealed on a ‘need-to-know’ basis. Any employee raising a genuinely held business
concern has the option to do so on the basis that their identity will be known only by the individual to whom the concern was
raised or the Ethics Line provider (as the case may be).
Any employee who feels they have been victimised after raising a concern should contact their Business Conduct Representative, or
the Ethics Line. The Group will not tolerate victimisation of a whistleblower. Any Employee found to have victimised another will be
subject to disciplinary action.
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 and respond appropriately to
matters investigated and brought before it; and to report to the ECSC on a regular basis about matters reported, actions taken, and
the success or otherwise of systems in place to support compliance with the Code.
On behalf of the Board, the 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 matters considered by the RCG of each Operating Company including matters referred to those RCGs from
all sources including calls to the Ethics Line. Any serious matters are also reported to the ECSC.
The nature of the matters considered by Operating Company RCGs in 2018 have been as follows:
2018
16
30
11
5
47
12
121
Issues reported to the ECSC (#)
Conflicts
Breaches of code/procedures
Misappropriation/theft
Human resources related
Fraud
Other
Total
details.
Of the matters reported in 2018, all were investigated by the respective Operating Company’s RCG and the ECSC apprised of the
Communication and training
All employees are provided with a copy of the Code and supporting documents upon induction to the Group. The Code is to be
accessible in each office and project site, and available on the intranets of CIMIC and each of the Operating Companies. Any
updates to the Code are promptly communicated to all employees.
It is mandatory for all decision-makers in senior management, as well as ‘high risk’40 roles, to undertake a 2 hour standardised face-
to-face training session delivered by a CIMIC or Operating Company General Counsel or delegate. This training outlines the
importance of the Code, and bribery and corruption prevention and control. In addition, all of these employees are required to
complete an on-line training module which includes an assessment.
All other salaried employees are to complete the on-line training module (with assessment). The mode of delivery is dependent on
where employees are located and their role in the organisation. Staff complete an online training module and wages employees
complete a face-to-face module as part of their induction. Where on-line training is not available, training will be provided by
alternative delivery methods (such as via CD or paper). Human Resources employees complete a one day face-to-face training
course.
All training must be completed within three months of commencement in the role (either as a new hire or by promotion to a
relevant role) and then at least once every two years. Training records must be maintained. Across the Group, 23,837 employees
completed training on the Code in 2018 versus 18,870 in 2017.
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
OPERATE HONESTLY AND TRANSPARENTLY
We expect all of our people to operate and communicate honestly and transparently, so as to build and maintain the
confidence and trust of shareholders and other stakeholders. This includes building open and transparent relationships,
and seeking to work collaboratively with the communities that we impact. 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
As a publicly listed company, CIMIC undertakes to comply with all of the continuous disclosure obligations set out in the ASX Listing
Rules and the Corporations Act. This is essential for the maintenance of shareholder confidence and market trust. To facilitate this
obligation, CIMIC’s comprehensive Market Disclosure and Communications Framework41 sets out the principles, policy and
procedures which have been adopted.
CIMIC also maintains a comprehensive Securities Trading Policy which sets out the requirements and responsibilities of officers,
executives and certain contractors of CIMIC Group regarding dealings in CIMIC Securities. The Policy seeks to ensure that CIMIC
Group officers and executives comply with the law prohibiting insider trading. This Policy also contains obligations to keep CIMIC
Group information confidential.
CIMIC Group people must comply with the law at all times when they are in possession of inside information and they must not
engage in insider trading. All of those people referred to in the Securities Trading Policy may only deal in the Company’s securities
within designated trading windows (and providing they are not in possession of inside information) which are six-week periods
commencing on the next trading day after the release of the Group’s quarterly/half year/full year results. Even within these
windows, employees must still obtain prior approval from the CIMIC Company Secretary before trading and a record of these
approvals is maintained.
During 2018, 74 announcements and disclosures were made via ASX and there were no breaches of continuous disclosure.
enable CIMIC to deliver services or information to individuals or to an organisation;
Privacy and record retention
CIMIC only collects, holds, uses or discloses personal information where it is reasonably necessary to:
▪
▪ maintain or establish a business relationship, including as a customer, supplier, contractor, or employee;
▪
▪
enable CIMIC to assist to provide services; or to improve, and better understand preferences in respect of CIMIC services; and
fulfil legal or regulatory obligations.
Our commitments are enshrined in the Group’s Privacy Policy42 which applies to all employees, third parties engaged by the Group,
and all alliances and joint ventures in all jurisdictions. This Policy is available on the Group’s website.
In 2018, CIMIC was required to respond to a vendor security incident which threatened the privacy of potential employees. CIMIC
Group uses a human resources technology provider to manage job applications and candidate information. During the year, that
provider investigated a global security incident related to its systems. While this investigation was underway, CIMIC suspended use
of their services, disabled all external users and reset all passwords.
Information from the provider, their external cybersecurity advisors and government authorities indicated there was no evidence
of an active threat. The provider has informed CIMIC that the incident has been contained and the platform is secure. Based on this
information, CIMIC has re-established connections with the provider. Job applicants were prompted to reset passwords upon
logging into the system and all contacts in our system were sent an email from CIMIC to notify them that, regretfully, some of their
personal data may have been accessed by an unauthorised third party.
The Group is unaware of any other substantiated complaints regarding breaches of privacy by employees, clients or other
stakeholders.
The Group also has a Record Retention Policy which integrates with an Information Management Policy. These policies set the
requirements for the identification, retention or destruction of all records containing Group Information.
Tax payment and disclosure
As per our Code, CIMIC is committed to complying with all applicable rules, laws and regulations governing business reporting. All
information created and maintained, as a result of the Group’s business activities, must accurately reflect the underlying
transactions and events, and follow Group reporting policies and procedures. Financial officers and others responsible for the
accuracy of financial reporting have an additional responsibility to ensure that adequate internal controls exist to achieve truthful,
accurate, complete, consistent, timely and understandable financial and management reports that are prepared in accordance with
relevant laws, accounting standards, policies and procedures.
40 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.
77
41 https://www.cimic.com.au/en/our-group/governance/continuous-disclosure
42 https://www.cimic.com.au/en/our-group/governance/policies
78
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
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 (ATO) Risk Differentiation Framework and participates in the ATO’s annual Pre-lodgement 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.
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 is committed to 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 this commitment is supported by strong corporate
governance policies.
Thiess recognised by Mongolia’s mining industry
The contribution of Thiess’ team to Mongolia has been recognised at the annual Coal Mongolia International Trade and Investment
Conference, held in Mongolia’s capital city Ulaanbaatar, where they were awarded the prestigious Best Contractor Award. The
Award recognises the safety achievements, tax contribution and social responsibility demonstrated by contractors in the industry.
The nominations were reviewed by a panel of industry experts and community representatives.
The Group reports an aggregate amount of tax paid in the Operating and Financial Review with more detail provided in this Annual
Report. In 2018, the Group’s effective tax rate was 28.0% (versus 28.0% in 2017), compared to the Australian corporate tax rate of
30%. The difference between the effective tax rate and the Australian corporate 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 divestments43.
The Group has continued to maintain an average effective tax rate of approximately 30% over the past four years. Our historic
performance is set out in the Financial Reports in the prior Annual Reports. We note that, in addition to corporate tax payable, the
Group is a substantial generator of payroll taxes, and other taxes and duties, which contribute substantially to the revenue of
various State and National governments. For example, in the 2017/18 year CIMIC paid more than $123 million of State payroll tax in
Australia.
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 allowances.44
Open and transparent relationships
As outlined in the Code, the Group is committed to the principles of free and fair competition, and avoiding any anti-competitive
conduct. Our approach is always to compete vigorously but fairly, whilst always complying with all applicable competition laws.
The Group is committed to complying with all applicable national and international laws, regulations and restrictions relating to the
movement of materials, goods and services. In 2018, there were no instances of significant fines or sanctions for non-compliance
with Australian and international laws and regulations. Similarly, during the year, no legal actions were commenced or are
outstanding with respect to anti-competitive, anti-trust or monopoly behaviour, and 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.45, 46
The Group does not sell banned or disputed products or services.
43 The amounts of which are disclosed in Note 6: Income tax expense in the Financial Report within the Annual Report.
44 Governments at local, State and National 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.
45 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 conclude.
46 During 2018, ASIC brought proceedings against a former CFO of the Company relating to falsification of company records in the 2010/11 financial
year. The Australian Securities and Investment Commission has not alleged that the falsification has misstated the accounts of the Company in the
relevant period, nor has the Company been charged with any offence.
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SUPPORT SUSTAINABLE PROCUREMENT
Procurement is a key element of the Group’s operations which is crucial for project delivery, cost
control, sustainability and financial performance - for the Group and for our clients.
CIMIC’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. The Policy sets
out that 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 ratings as per the
approved supplier list.
$30 million in Indigenous and social inclusion contracts to benefit communities
During National Reconciliation Week 2018, CPB Contractors celebrated the generation, through the project supply chain, of more
than $30 million in work for Indigenous and social enterprises. This includes the award of a $17 million contract for construction
works and services at the Junee Correction Centre upgrade project in NSW to a 100% Indigenous-owned company.
During the Week, CPB Contractors also invited its Indigenous CareerTrackers interns to talk about their experiences. Since signing a
10-year partnership with CareerTrackers in 2010, more than 100 Indigenous university students have completed internships with
CPB Contractors. The company is proud to have such a talented and growing alumni group.
We seek to encourage support for local suppliers where this makes commercial sense and they are able to meet all expectations.
Locally sourced goods and services can 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 the associated greenhouse gas emissions.
Indigenous and Social Inclusion Forum fosters new opportunities
CPB Contractors has hosted its first NSW Indigenous and Social Inclusion Forum in Sydney to create stronger partnerships with local
suppliers and subcontractors. The forum brought together the company’s NSW-based leadership with more than 60
representatives from Aboriginal businesses and social enterprises to better connect project supply chain opportunities with high-
quality providers.
There were positive interactions and ‘Q&A’ sessions where suppliers and subcontractors learned more about what pre-
qualifications and assessments are required to work with CPB Contractors, and how they can be assisted through the process. Key
stakeholders at the Forum included Supply Nation, Social Traders, the NSW Indigenous Chamber of Commerce and NSW
Ombudsman’s Office, and the Department of Prime Minister and Cabinet.
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.
T2T wins Australian Steel Institute Award
The Torrens Road to River Torrens Alliance (T2T) project in Adelaide, South Australia, has been awarded an Australian Steel
Institute (ASI) Excellence Award (SA) for Steel Excellence in Engineering Projects. The $800 million T2T project includes a 4km non-
stop roadway (incorporating a 3km lowered motorway) in Adelaide's inner western suburbs.
The ASI Awards recognise projects that have predominantly used Australian steel and steelwork manufactured/fabricated in
Australia and celebrates high standards across all elements of the Australian steel supply chain. Steel from Liberty OneSteel in
Whyalla, South Australia was used in the pile reinforcement, rail tracks and concrete deck reinforcement.
A steel twin through-girder bridge was used on the project to construct the Outer Harbour rail line overpass which carries the rail
line's twin tracks and a shared use path. The Award recognises the team's successful delivery of a challenging and critical element
of the T2T project. The rail bridge was meticulously planned, constructed, commissioned and handed back in the 21 day
occupation. The grade separation of this rail line has greatly improved traffic flows on Adelaide's North-South rail corridor.
Some of the measures utilised to minimise the impact of construction materials 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.
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
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 (ATO) Risk Differentiation Framework and participates in the ATO’s annual Pre-lodgement 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.
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 is committed to 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 this commitment is supported by strong corporate
governance policies.
Thiess recognised by Mongolia’s mining industry
The contribution of Thiess’ team to Mongolia has been recognised at the annual Coal Mongolia International Trade and Investment
Conference, held in Mongolia’s capital city Ulaanbaatar, where they were awarded the prestigious Best Contractor Award. The
Award recognises the safety achievements, tax contribution and social responsibility demonstrated by contractors in the industry.
The nominations were reviewed by a panel of industry experts and community representatives.
The Group reports an aggregate amount of tax paid in the Operating and Financial Review with more detail provided in this Annual
Report. In 2018, the Group’s effective tax rate was 28.0% (versus 28.0% in 2017), compared to the Australian corporate tax rate of
30%. The difference between the effective tax rate and the Australian corporate 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 divestments43.
The Group has continued to maintain an average effective tax rate of approximately 30% over the past four years. Our historic
performance is set out in the Financial Reports in the prior Annual Reports. We note that, in addition to corporate tax payable, the
Group is a substantial generator of payroll taxes, and other taxes and duties, which contribute substantially to the revenue of
various State and National governments. For example, in the 2017/18 year CIMIC paid more than $123 million of State payroll tax in
▪
▪
▪
Australia.
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 allowances.44
Open and transparent relationships
As outlined in the Code, the Group is committed to the principles of free and fair competition, and avoiding any anti-competitive
conduct. Our approach is always to compete vigorously but fairly, whilst always complying with all applicable competition laws.
The Group is committed to complying with all applicable national and international laws, regulations and restrictions relating to the
movement of materials, goods and services. In 2018, there were no instances of significant fines or sanctions for non-compliance
with Australian and international laws and regulations. Similarly, during the year, no legal actions were commenced or are
outstanding with respect to anti-competitive, anti-trust or monopoly behaviour, and 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.45, 46
The Group does not sell banned or disputed products or services.
43 The amounts of which are disclosed in Note 6: Income tax expense in the Financial Report within the Annual Report.
44 Governments at local, State and National 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.
45 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 conclude.
46 During 2018, ASIC brought proceedings against a former CFO of the Company relating to falsification of company records in the 2010/11 financial
year. The Australian Securities and Investment Commission has not alleged that the falsification has misstated the accounts of the Company in the
relevant period, nor has the Company been charged with any offence.
79
SUPPORT SUSTAINABLE PROCUREMENT
Procurement is a key element of the Group’s operations which is crucial for project delivery, cost
control, sustainability and financial performance - for the Group and for our clients.
CIMIC’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. The Policy sets
out that 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 ratings as per the
approved supplier list.
$30 million in Indigenous and social inclusion contracts to benefit communities
During National Reconciliation Week 2018, CPB Contractors celebrated the generation, through the project supply chain, of more
than $30 million in work for Indigenous and social enterprises. This includes the award of a $17 million contract for construction
works and services at the Junee Correction Centre upgrade project in NSW to a 100% Indigenous-owned company.
During the Week, CPB Contractors also invited its Indigenous CareerTrackers interns to talk about their experiences. Since signing a
10-year partnership with CareerTrackers in 2010, more than 100 Indigenous university students have completed internships with
CPB Contractors. The company is proud to have such a talented and growing alumni group.
We seek to encourage support for local suppliers where this makes commercial sense and they are able to meet all expectations.
Locally sourced goods and services can 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 the associated greenhouse gas emissions.
Indigenous and Social Inclusion Forum fosters new opportunities
CPB Contractors has hosted its first NSW Indigenous and Social Inclusion Forum in Sydney to create stronger partnerships with local
suppliers and subcontractors. The forum brought together the company’s NSW-based leadership with more than 60
representatives from Aboriginal businesses and social enterprises to better connect project supply chain opportunities with high-
quality providers.
There were positive interactions and ‘Q&A’ sessions where suppliers and subcontractors learned more about what pre-
qualifications and assessments are required to work with CPB Contractors, and how they can be assisted through the process. Key
stakeholders at the Forum included Supply Nation, Social Traders, the NSW Indigenous Chamber of Commerce and NSW
Ombudsman’s Office, and the Department of Prime Minister and Cabinet.
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.
T2T wins Australian Steel Institute Award
The Torrens Road to River Torrens Alliance (T2T) project in Adelaide, South Australia, has been awarded an Australian Steel
Institute (ASI) Excellence Award (SA) for Steel Excellence in Engineering Projects. The $800 million T2T project includes a 4km non-
stop roadway (incorporating a 3km lowered motorway) in Adelaide's inner western suburbs.
The ASI Awards recognise projects that have predominantly used Australian steel and steelwork manufactured/fabricated in
Australia and celebrates high standards across all elements of the Australian steel supply chain. Steel from Liberty OneSteel in
Whyalla, South Australia was used in the pile reinforcement, rail tracks and concrete deck reinforcement.
A steel twin through-girder bridge was used on the project to construct the Outer Harbour rail line overpass which carries the rail
line's twin tracks and a shared use path. The Award recognises the team's successful delivery of a challenging and critical element
of the T2T project. The rail bridge was meticulously planned, constructed, commissioned and handed back in the 21 day
occupation. The grade separation of this rail line has greatly improved traffic flows on Adelaide's North-South rail corridor.
Some of the measures utilised to minimise the impact of construction materials 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.
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CIMIC promotes the fair treatment of suppliers and payment within negotiated and contractually agreed terms. The Group is aware
of the Federal Government’s intention to develop an annual reporting framework, requiring large businesses with over $100 million
of turnover to publish payment information on how they engage with small businesses47, and will comply with the Government’s
initiative.
Recognising the importance of cashflow to all businesses, CIMIC’s Operating Companies offer 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. It is free to join the program and there are no costs other than the pre-agreed early payment discount. The EPP provides
suppliers with inexpensive financing as the program is backed by CIMIC’s strong credit rating. The EPP improves a 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, 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.
Supplier information
Absolute number of
suppliers (#)
Share of total
procurement spend
(%)
Total Tier 1 suppliers
36,58348
100
Percentage of
suppliers assessed
for risk in the last 3
years (%)
7549
LEAVE A POSITIVE LEGACY
CIMIC seeks to leave positive legacies by identifying the potential impacts of projects and seeking ways to
minimise harm to those potentially impacted.
Minimise community disruption
When delivering projects and services, CIMIC’s Operating Companies work to minimise disruption, as much as practically possible,
to those communities impacted by the Group's activities. Sometimes these activities may impinge on local communities as we
deliver infrastructure, mining, services and public private partnership projects for our clients. When they do, the Group tries to
minimise the effect by engaging proactively, being approachable and developing positive relationships with potentially impacted
community members.
Award for community relations on Gold Coast Light Rail
CPB Contractors’ community and stakeholder relations campaign for the Gold Coast Light Rail Stage 2 Project has won a state and
national award from the Public Relations Institute of Australia (PRIA). The campaign received a ‘Highly Commended’ award in the
Community Relations category at both the Queensland event and the national awards.
CPB Contractors was the only construction company selected as a state and national finalist. The PRIA Queensland President, Helen
Hutchings, acknowledged this as “an extremely high achievement”.
The Gold Coast Light Rail 2 Project was an 18-month project delivered for the 2018 Commonwealth Games. The project involved
extensive works undertaken in the heart of the northern Gold Coast, impacting many stakeholders, which included the local
community, project neighbours, Griffith University, and the Gold Coast Hospital Health and Knowledge precinct.
Mobile visitor centre helps educate at Transmission Gully
In New Zealand, CPB Contractors is constructing the 27km, 4-lane (2 in each direction) Transmission Gully project, which forms one
segment of the 110km Wellington Northern Corridor Road. The new motorway will bypass the existing coastal route, increase road
safety and improve network reliability while improving levels of seismic resilience.
A substantial degree of community consultation has been undertaken and one of the features has been the use of a mobile visitor
centre. Using a specifically purposed 20-foot container, the visitor centre can be easily re-located to engage with different
communities and address their specific issues.
47 Joint Media Release Wed 21 Nov 2018: ‘Paying Small Business in Time’, The Hon Scott Morrison MP, Prime Minister and Senator The Hon
Michaelia Cash, Minister for Small and Family Business, Skills and Vocational Education.
48 Each of CIMIC’s Operating Companies maintains its own supplier database and the cumulative number of suppliers is currently 36,583. However,
it is acknowledged that without duplications and inactive suppliers, the total number of Tier 1 suppliers would be approximately 33,000.
49 75% is a conservative estimate as, although there are currently a range of processes in place across our Operating Companies that ensure
suppliers are risk assessed prior to engagement, reporting metrics against these processes have not yet been adopted. The implementation of the
third party due diligence solution and supporting processes across all Operating Companies, outlined on page 75, will enable the confirmation of
100% of all suppliers being assessed. The implementation started late in 2018, and will be completed mid-2019. All existing suppliers will be risk
assessed as part of this implementation before July 2019.
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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 Stakeholder Engagement Plans in the planning process for many projects, which include
the recording and tracking of community concerns. Some of the tools used to support communities include: hosting community
meetings and forums; presenting to schools; establishing information centres; providing community notice boards; mailing or
emailing progress updates; offering community information lines; sending SMS updates; etc.
Project life cycle
Many of the infrastructure, building and resources projects the Group delivers have a life that will extend for many years beyond
our construction involvement. This is why our Operating Companies work with clients to evaluate the lifecycle consequences of
their projects and, where possible, seek to deliver solutions that add value in the long-term.
Innovative design leads to improved lifecycle costing
In Victoria, CPB Contractors successfully completed the Australian Government’s new $300 million Post Entry Quarantine Facility
(PEQF) where imported animals and plants are held for a specified period in a quarantined environment before release. The new
PEQF plays a critical role in keeping Australia safe from exotic pests and diseases.
To ensure the PEQF design met all operational requirements, the team constructed and tested complete facility prototypes
including the concept of a poured concrete structure to better withstand the intense cleaning regime of the Avian Quarantine
Containment Level 3 (QC3) spaces. A number of innovative design opportunities were identified and tested through theoretical
modelling, as well as a sample mock-up and a complete scaled-down prototype. The resulting Avian QC3 facilities were not only
more robust and easier to clean and maintain, but saved $300,000 in capital costs and delivered improved lifecycle costing over the
30 year forecast life of the facility.
Increasingly, CIMIC Operating Companies are engaging with clients to undertake climate risk assessments which consider all the
lifecycle phases of a project under a range of scenarios. We can often provide a value adding engineering solution which may well
deliver a more cost effective project for clients in the long-run.
Sedgman delivers value over life of resources asset
In North Queensland, Sedgman has worked with New Century Resources on the restarting of operations at the Century zinc mine,
formerly one of the largest zinc mines in the world. Although closed in 2016, substantial mineral assets remained on site in a
tailings dam and other in situ deposits have proven viable.
In 2017, Sedgman completed a feasibility study on the restarting of the mine, concentrate pipeline and Karumba port. Sedgman
subsequently commenced engineering, procurement and construction works for the refurbishment and reconfiguration of the
plant and port, and was awarded a contract to operate and maintain the Lawn Hill processing plant, concentrate pipeline and port
facility. Sedgman’s work is leading to a more efficient extraction of the existing resources and will also assist New Century to deliver
a significant reduction in the overall footprint of disturbance at the mining operations.
Community investment
CIMIC seeks to deliver shared value for those communities impacted by our activities. We do so by supporting local charities and
community groups impacted by our projects and services, and by facilitating employee volunteering and charity support. For those
communities that we interface with, we support initiatives that aim to make a tangible, genuine and lasting improvement to the
quality of people’s lives.
Illuminating futures, one light at a time
As part of the Graduate Program induction, EIC Activities hosted a session for the current cohort of graduates, introducing the
concept of social innovation. The session also demonstrated how working as a team, to put an innovative idea into action, can help
to tackle a global challenge and make an important difference.
The graduates were introduced to SolarBuddy, a registered Australian charity which aims to help improve - by 2030 - the
educational opportunities of 6 million children living in energy poverty throughout the South Pacific, South East Asia and Africa. The
charity helps by providing children with a SolarBuddy solar light to study with after dusk. The CEO of SolarBuddy, Simon Dobble,
spoke to the graduates about energy poverty and renewable energy, and joined the graduates in building 220 SolarBuddy lights
which have been distributed to a community living in the Asia Pacific region.
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC promotes the fair treatment of suppliers and payment within negotiated and contractually agreed terms. The Group is aware
of the Federal Government’s intention to develop an annual reporting framework, requiring large businesses with over $100 million
of turnover to publish payment information on how they engage with small businesses47, and will comply with the Government’s
initiative.
Recognising the importance of cashflow to all businesses, CIMIC’s Operating Companies offer 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. It is free to join the program and there are no costs other than the pre-agreed early payment discount. The EPP provides
suppliers with inexpensive financing as the program is backed by CIMIC’s strong credit rating. The EPP improves a 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, 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.
Supplier information
Absolute number of
Share of total
Percentage of
suppliers (#)
procurement spend
suppliers assessed
Total Tier 1 suppliers
36,58348
100
(%)
for risk in the last 3
years (%)
7549
CIMIC seeks to leave positive legacies by identifying the potential impacts of projects and seeking ways to
LEAVE A POSITIVE LEGACY
minimise harm to those potentially impacted.
Minimise community disruption
When delivering projects and services, CIMIC’s Operating Companies work to minimise disruption, as much as practically possible,
to those communities impacted by the Group's activities. Sometimes these activities may impinge on local communities as we
deliver infrastructure, mining, services and public private partnership projects for our clients. When they do, the Group tries to
minimise the effect by engaging proactively, being approachable and developing positive relationships with potentially impacted
community members.
Award for community relations on Gold Coast Light Rail
CPB Contractors’ community and stakeholder relations campaign for the Gold Coast Light Rail Stage 2 Project has won a state and
national award from the Public Relations Institute of Australia (PRIA). The campaign received a ‘Highly Commended’ award in the
Community Relations category at both the Queensland event and the national awards.
CPB Contractors was the only construction company selected as a state and national finalist. The PRIA Queensland President, Helen
Hutchings, acknowledged this as “an extremely high achievement”.
The Gold Coast Light Rail 2 Project was an 18-month project delivered for the 2018 Commonwealth Games. The project involved
extensive works undertaken in the heart of the northern Gold Coast, impacting many stakeholders, which included the local
community, project neighbours, Griffith University, and the Gold Coast Hospital Health and Knowledge precinct.
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 Stakeholder Engagement Plans in the planning process for many projects, which include
the recording and tracking of community concerns. Some of the tools used to support communities include: hosting community
meetings and forums; presenting to schools; establishing information centres; providing community notice boards; mailing or
emailing progress updates; offering community information lines; sending SMS updates; etc.
Project life cycle
Many of the infrastructure, building and resources projects the Group delivers have a life that will extend for many years beyond
our construction involvement. This is why our Operating Companies work with clients to evaluate the lifecycle consequences of
their projects and, where possible, seek to deliver solutions that add value in the long-term.
Innovative design leads to improved lifecycle costing
In Victoria, CPB Contractors successfully completed the Australian Government’s new $300 million Post Entry Quarantine Facility
(PEQF) where imported animals and plants are held for a specified period in a quarantined environment before release. The new
PEQF plays a critical role in keeping Australia safe from exotic pests and diseases.
To ensure the PEQF design met all operational requirements, the team constructed and tested complete facility prototypes
including the concept of a poured concrete structure to better withstand the intense cleaning regime of the Avian Quarantine
Containment Level 3 (QC3) spaces. A number of innovative design opportunities were identified and tested through theoretical
modelling, as well as a sample mock-up and a complete scaled-down prototype. The resulting Avian QC3 facilities were not only
more robust and easier to clean and maintain, but saved $300,000 in capital costs and delivered improved lifecycle costing over the
30 year forecast life of the facility.
Increasingly, CIMIC Operating Companies are engaging with clients to undertake climate risk assessments which consider all the
lifecycle phases of a project under a range of scenarios. We can often provide a value adding engineering solution which may well
deliver a more cost effective project for clients in the long-run.
Sedgman delivers value over life of resources asset
In North Queensland, Sedgman has worked with New Century Resources on the restarting of operations at the Century zinc mine,
formerly one of the largest zinc mines in the world. Although closed in 2016, substantial mineral assets remained on site in a
tailings dam and other in situ deposits have proven viable.
In 2017, Sedgman completed a feasibility study on the restarting of the mine, concentrate pipeline and Karumba port. Sedgman
subsequently commenced engineering, procurement and construction works for the refurbishment and reconfiguration of the
plant and port, and was awarded a contract to operate and maintain the Lawn Hill processing plant, concentrate pipeline and port
facility. Sedgman’s work is leading to a more efficient extraction of the existing resources and will also assist New Century to deliver
a significant reduction in the overall footprint of disturbance at the mining operations.
Community investment
CIMIC seeks to deliver shared value for those communities impacted by our activities. We do so by supporting local charities and
community groups impacted by our projects and services, and by facilitating employee volunteering and charity support. For those
communities that we interface with, we support initiatives that aim to make a tangible, genuine and lasting improvement to the
quality of people’s lives.
Mobile visitor centre helps educate at Transmission Gully
In New Zealand, CPB Contractors is constructing the 27km, 4-lane (2 in each direction) Transmission Gully project, which forms one
segment of the 110km Wellington Northern Corridor Road. The new motorway will bypass the existing coastal route, increase road
safety and improve network reliability while improving levels of seismic resilience.
Illuminating futures, one light at a time
As part of the Graduate Program induction, EIC Activities hosted a session for the current cohort of graduates, introducing the
concept of social innovation. The session also demonstrated how working as a team, to put an innovative idea into action, can help
to tackle a global challenge and make an important difference.
A substantial degree of community consultation has been undertaken and one of the features has been the use of a mobile visitor
centre. Using a specifically purposed 20-foot container, the visitor centre can be easily re-located to engage with different
communities and address their specific issues.
The graduates were introduced to SolarBuddy, a registered Australian charity which aims to help improve - by 2030 - the
educational opportunities of 6 million children living in energy poverty throughout the South Pacific, South East Asia and Africa. The
charity helps by providing children with a SolarBuddy solar light to study with after dusk. The CEO of SolarBuddy, Simon Dobble,
spoke to the graduates about energy poverty and renewable energy, and joined the graduates in building 220 SolarBuddy lights
which have been distributed to a community living in the Asia Pacific region.
47 Joint Media Release Wed 21 Nov 2018: ‘Paying Small Business in Time’, The Hon Scott Morrison MP, Prime Minister and Senator The Hon
Michaelia Cash, Minister for Small and Family Business, Skills and Vocational Education.
48 Each of CIMIC’s Operating Companies maintains its own supplier database and the cumulative number of suppliers is currently 36,583. However,
it is acknowledged that without duplications and inactive suppliers, the total number of Tier 1 suppliers would be approximately 33,000.
49 75% is a conservative estimate as, although there are currently a range of processes in place across our Operating Companies that ensure
suppliers are risk assessed prior to engagement, reporting metrics against these processes have not yet been adopted. The implementation of the
third party due diligence solution and supporting processes across all Operating Companies, outlined on page 75, will enable the confirmation of
100% of all suppliers being assessed. The implementation started late in 2018, and will be completed mid-2019. All existing suppliers will be risk
assessed as part of this implementation before July 2019.
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In 2018, CIMIC directly invested $715,000 in corporate community investment programs, up from $500,000 in 2017. This figure
only represents CIMIC’s direct spend and does not reflect the dollar value, or extent of, the many initiatives that are undertaken by
individuals and teams from across the Group.
Partnering to help Indigenous students
UGL and Thiess have entered into a partnership with the Clontarf Foundation, a not-for-profit organisation that improves the
education, self-esteem and employment prospects of young Aboriginal and Torres Strait Islander men.
Thiess team cycling for a worthy cause
Thiess’ Mt Owen cycling team - known as the Soft Cogs - raised more than $59,000 for multiple sclerosis (MS) as part of the 82km
2018 MS Sydney Wollongong charity ride. Thiess has been a proud supporter of the team and the event for over 10 years,
contributing $3,000 to the charity in 2018.
In 13 years, the Soft Cogs team has raised more than $1.2 million to support the cause.
Each Operating Company develops its own program which underpins their social licence to operate and empowers our clients to
achieve their community objectives.
Leighton Asia helps communities rebuild in Hong Kong
In September, Super Typhoon Mangkhut, one of the fiercest storms on record, lashed the Hong Kong region. It caused significant
damage and disruption, flooding large areas, blocking hundreds of roads and felling more than 17,000 trees.
Leighton Asia’s project teams from across Hong Kong volunteered to assist the Police and Government Departments to speed up
the recovery of the city. Their contributions were recognised by the Hong Kong Government and letters of appreciation were issued
by the Transport and Housing Bureau and the North District Council, applauding Leighton Asia’s support for the local community.
Thiess partners with Hear & Say
Nearly 1,000 students throughout Queensland’s Bowen Basin have participated in the Hear & Say Centre’s Hear to Learn - School
Hearing Screening Program as a direct result of Thiess’ 23-year partnership with the Centre. Hear to Learn seeks to identify
students with hearing and ear health issues that may otherwise go undiagnosed and provides information on local referral pathway
options. Thiess, as the program’s founding regional partner, is taking the program directly to regional schools helping to overcome
the barriers of distance many families face when accessing health services in remote areas.
In 2018, the program identified that more than 23% of students screened required referral for further medical advice highlighting
the need within these communities for prevention and early intervention services.
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 helps Mongolian herders to access water
Herders in one of Mongolia’s sparsely populated areas can now easily access water thanks to a partnership between Thiess, Oyu
Tolgoi, local government agencies and the community. Traditionally, the herders in this region have used small, hand-made buckets
to raise water from wells by hand for their animals and homes.
As one of the key contractors at the Oyu Tolgoi copper-gold project in the Mongolian territory of Khanbogd Soum, Thiess installed
solar-powered pumps on 10 strategically located wells that are vital sources of water for the region’s pasture land and remote
households. The new solar-powered pumps are making the task less labour intensive and provide a long-term, eco-friendly solution
for the local community.
Thiess has developed a 2017-2020 Reconciliation Action Plan (RAP)50 to formalise the company’s support for Aboriginal and Torres
Strait Islander people. The RAP includes a range of actions, some specific targets, timelines for implementation and identifies the
person responsible for delivery. Thiess’ RAP has received an 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.
The Clontarf Foundation was founded in Perth in 2000 with just 25 boys by former Fremantle AFL club coach Gerard Neesham,
after he realised how many Indigenous boys were dropping out of school. Gerard launched the Clontarf Foundation with the lure of
a football training program - to keep students attending school and educationally engaged. Fast-forward to 2018 and there are
6,500 boys in 97 schools across Western Australia, Northern Territory, Victoria, New South Wales and Queensland. The academies
are typically one or two classrooms within a local high school.
Joining forces with the Foundation provides young Indigenous students with insights into UGL and the many career opportunities
that are on offer. Currently, UGL and Thiess have 17 projects or sites close to 22 of the Clontarf Academies. These sites can offer
the boys work experience, school-based apprenticeships, career and employment opportunities. The partnership also provides
opportunities for UGL employees to volunteer, attend local academy activities or football training sessions, and to do their bit for
reconciliation.
Thiess’ partnership with the Foundation aligns with its stretch Reconciliation Action Plan and will focus on understanding student
interests, building meaningful relationships and creating career pathways into the mining industry.
UGL has an innovative RAP which will be further developed into 2019-2020. UGL will focus its reconciliation efforts with Aboriginal
and Torres Strait Islander people on:
▪
▪
▪
▪
embedding existing relationships and partnerships with related organisations;
promoting awareness of culture amongst staff;
creating local employment opportunities in its workforce; and
promoting the procurement of goods and services from related businesses.
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.
Supporting local businesses in Mackay
Efforts by CPB Contractors’ team constructing the Mackay Ring Road project to allocate work to local subcontractors have been
recognised in the local community and media. Mackay’s Daily Mercury newspaper featured a story focused on work won by local
company Dog Gone Fencing to build 12km of fencing on the Mackay Ring Road Stage 1 project.
The owner of the company, Jack Mclean, said his work on the project was ‘quite vital for us… it is a link to get into bigger jobs. It
means we are continuing to work with big tier one companies which obviously is a stepping stone to bigger and better jobs’.
Work on the $215 million Mackay Ring Road Stage 1 project began in October 2017 and is scheduled to be complete in early 2020.
The 11.3km road will connect the existing Bruce Highway, bypassing the city of Mackay, improving safety and travel times by
avoiding 10 signalised intersections. CPB Contractors has worked closely with their client, Queensland’s Department of Transport
and Main Roads, and the business community to provide real opportunities for local companies.
OUTLOOK AND FUTURE PLANS
We are committed to acting with integrity and doing the right thing, regardless of where we operate. In 2019, we plan to:
continue to reinforce the Code through senior management roadshows and presentations;
implement legislative requirements 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.
▪
▪
▪
50 Can be accessed at: https://www.thiess.com/en/people-and-careers/working-at-thiess/diversity-and-inclusion
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Partnering to help Indigenous students
UGL and Thiess have entered into a partnership with the Clontarf Foundation, a not-for-profit organisation that improves the
education, self-esteem and employment prospects of young Aboriginal and Torres Strait Islander men.
The Clontarf Foundation was founded in Perth in 2000 with just 25 boys by former Fremantle AFL club coach Gerard Neesham,
after he realised how many Indigenous boys were dropping out of school. Gerard launched the Clontarf Foundation with the lure of
a football training program - to keep students attending school and educationally engaged. Fast-forward to 2018 and there are
6,500 boys in 97 schools across Western Australia, Northern Territory, Victoria, New South Wales and Queensland. The academies
are typically one or two classrooms within a local high school.
Joining forces with the Foundation provides young Indigenous students with insights into UGL and the many career opportunities
that are on offer. Currently, UGL and Thiess have 17 projects or sites close to 22 of the Clontarf Academies. These sites can offer
the boys work experience, school-based apprenticeships, career and employment opportunities. The partnership also provides
opportunities for UGL employees to volunteer, attend local academy activities or football training sessions, and to do their bit for
reconciliation.
Thiess’ partnership with the Foundation aligns with its stretch Reconciliation Action Plan and will focus on understanding student
interests, building meaningful relationships and creating career pathways into the mining industry.
UGL has an innovative RAP which will be further developed into 2019-2020. UGL will focus its reconciliation efforts with Aboriginal
and Torres Strait Islander people on:
▪
▪
▪
▪
embedding existing relationships and partnerships with related organisations;
promoting awareness of culture amongst staff;
creating local employment opportunities in its workforce; and
promoting the procurement of goods and services from related businesses.
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.
Supporting local businesses in Mackay
Efforts by CPB Contractors’ team constructing the Mackay Ring Road project to allocate work to local subcontractors have been
recognised in the local community and media. Mackay’s Daily Mercury newspaper featured a story focused on work won by local
company Dog Gone Fencing to build 12km of fencing on the Mackay Ring Road Stage 1 project.
The owner of the company, Jack Mclean, said his work on the project was ‘quite vital for us… it is a link to get into bigger jobs. It
means we are continuing to work with big tier one companies which obviously is a stepping stone to bigger and better jobs’.
Work on the $215 million Mackay Ring Road Stage 1 project began in October 2017 and is scheduled to be complete in early 2020.
The 11.3km road will connect the existing Bruce Highway, bypassing the city of Mackay, improving safety and travel times by
avoiding 10 signalised intersections. CPB Contractors has worked closely with their client, Queensland’s Department of Transport
and Main Roads, and the business community to provide real opportunities for local companies.
In 2018, CIMIC directly invested $715,000 in corporate community investment programs, up from $500,000 in 2017. This figure
only represents CIMIC’s direct spend and does not reflect the dollar value, or extent of, the many initiatives that are undertaken by
individuals and teams from across the Group.
Thiess team cycling for a worthy cause
Thiess’ Mt Owen cycling team - known as the Soft Cogs - raised more than $59,000 for multiple sclerosis (MS) as part of the 82km
2018 MS Sydney Wollongong charity ride. Thiess has been a proud supporter of the team and the event for over 10 years,
contributing $3,000 to the charity in 2018.
In 13 years, the Soft Cogs team has raised more than $1.2 million to support the cause.
Each Operating Company develops its own program which underpins their social licence to operate and empowers our clients to
achieve their community objectives.
Leighton Asia helps communities rebuild in Hong Kong
In September, Super Typhoon Mangkhut, one of the fiercest storms on record, lashed the Hong Kong region. It caused significant
damage and disruption, flooding large areas, blocking hundreds of roads and felling more than 17,000 trees.
Leighton Asia’s project teams from across Hong Kong volunteered to assist the Police and Government Departments to speed up
the recovery of the city. Their contributions were recognised by the Hong Kong Government and letters of appreciation were issued
by the Transport and Housing Bureau and the North District Council, applauding Leighton Asia’s support for the local community.
Thiess partners with Hear & Say
Nearly 1,000 students throughout Queensland’s Bowen Basin have participated in the Hear & Say Centre’s Hear to Learn - School
Hearing Screening Program as a direct result of Thiess’ 23-year partnership with the Centre. Hear to Learn seeks to identify
students with hearing and ear health issues that may otherwise go undiagnosed and provides information on local referral pathway
options. Thiess, as the program’s founding regional partner, is taking the program directly to regional schools helping to overcome
the barriers of distance many families face when accessing health services in remote areas.
In 2018, the program identified that more than 23% of students screened required referral for further medical advice highlighting
the need within these communities for prevention and early intervention services.
CIMIC is committed to respecting local cultures and Indigenous peoples, and supporting opportunities to aid national development
Respect local cultures and peoples
in overseas markets.
Thiess helps Mongolian herders to access water
Herders in one of Mongolia’s sparsely populated areas can now easily access water thanks to a partnership between Thiess, Oyu
Tolgoi, local government agencies and the community. Traditionally, the herders in this region have used small, hand-made buckets
to raise water from wells by hand for their animals and homes.
As one of the key contractors at the Oyu Tolgoi copper-gold project in the Mongolian territory of Khanbogd Soum, Thiess installed
solar-powered pumps on 10 strategically located wells that are vital sources of water for the region’s pasture land and remote
households. The new solar-powered pumps are making the task less labour intensive and provide a long-term, eco-friendly solution
for the local community.
Thiess has developed a 2017-2020 Reconciliation Action Plan (RAP)50 to formalise the company’s support for Aboriginal and Torres
Strait Islander people. The RAP includes a range of actions, some specific targets, timelines for implementation and identifies the
person responsible for delivery. Thiess’ RAP has received an 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.
OUTLOOK AND FUTURE PLANS
We are committed to acting with integrity and doing the right thing, regardless of where we operate. In 2019, we plan to:
▪
▪
continue to reinforce the Code through senior management roadshows and presentations;
implement legislative requirements 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.
▪
50 Can be accessed at: https://www.thiess.com/en/people-and-careers/working-at-thiess/diversity-and-inclusion
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CULTURE
OUR APPROACH
As a service organisation, our success is dependent on the quality of the services we deliver which are driven largely by the skills,
passion and expertise of our people. We aspire to build a culture that encourages a can-do attitude, and harnesses the talents of
our people to deliver results for our clients.
At CIMIC, we are committed to: providing supportive workplaces; training and developing our people; encouraging diversity; and
rewarding 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. This approach fosters 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
our people
Actions taken during 2018
Performance
Train and develop people
Measures in place
Actions taken during 2018
Performance
Encourage diversity
Measures in place
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪ Measuring employee experience through onboarding, engagement and exit surveys
▪
Conducted a Neuro-diversity program on the inclusion of people on the Autism Spectrum
in our workforce
Continued focus and work around ensuring pay equity
Implemented onboarding and exit surveys to understand the end-to-end employee
experience
Conducted a wages engagement survey in Leighton Asia’s Hong Kong operations and
selected UGL sites
CIMIC Group recognised by LinkedIn as the 6th best place to work in Australia
Comprehensive learning and development plans in place across all Operating Companies
Professional Development Policy
Provided 222 (128 in 2017) 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, and career support
Presented at a number of university career fairs
▪
▪ Utilised GradConnection and Grad Australia 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 training topics (for graduates) run in 2018: Financial Management and
Business Acumen completed by 183 graduates, 100 graduates completed Client
Engagement and Risk Management and Self Leadership. Graduates also completed
webinars on a variety of technical topics to support development within their chosen
discipline
Established a graduate committee run by six graduate volunteers
Developed and commenced roll out of senior leadership program as part of the Program
One leadership development curriculum
Contract management training delivered to 1,269 employees
Increased the number of graduates to 208 (174 in 2017)
Ranked 44 in a survey of Top 100 Graduate Employer of 2018 by GradConnection51 /
Financial Review (versus 52 in 2017)
Recognised by AAGE52 as a top graduate employer 2018
Recognised as an Endorsed Employer of women by Work180
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
Actions taken during 2018
▪ Group’s Operating Companies are supporters of and registered employers on Work18053
▪
▪
Launched WINTR54, a women’s network on LinkedIn
Continued to deliver Equal Employment Opportunity (EEO), Discrimination, Anti-Bullying
and Harassment training
51 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.
52 Australian Association of Graduate Employers - the peak industry body representing organisations that recruit and develop Australian graduates.
53 WORK180 is an international jobs network that connects employers with talented women.
54 Women In Non-traditional Roles and Industries.
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Performance
Reward performance
Measures in place
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Acknowledged International Women’s Day across Australian and overseas businesses to
raise awareness of gender diversity issues
Continued to report workforce composition under the Workplace Gender Equality Act
2012 (Cth)
Rolled out Unconscious Bias training to 744 employees with priority given to those
involved in recruitment and human resources
Conducted Human Rights Impact Assessment in Indonesia
6,755 employees undertook EEO, Discrimination, Anti-Bullying and Harassment training
Sedgman supported programs such as METS STEM Career Pathways55 program supporting
women studying engineering and connecting them with work placements and experience
Remuneration Policy - promotes individual accountability and aims to fairly motivate,
recognise and fairly compensate without bias
Incentive schemes linked to the creation of sustainable returns for shareholders
implemented remediation actions as appropriate
▪ Undertook external benchmarking of remuneration approach to attract and retain talent
Continued to review performance management approach by focusing on areas such as
unconscious bias
‘meets expectations or above’ as a key input
Ensure gender pay equity issues are considered during any decisions made regarding
appointments, remuneration increases and bonus awards
▪ Group Executive leadership team (CEO & Managing Directors) announced as WGEA56 Pay
Ambassadors promoting pay equity
Actions taken during 2018
Conducted Group-wide pay equity review as part of the annual remuneration review and
Performance
All remuneration increases and bonuses have a recent performance review rating of
Employee details
As at 31 December 2018, the Group directly employed 38,423 people, 17,373 in Australia and 21,050 in international operations,
up from 37,779 last year (14,904 in Australia and 22,875 in international operations).
Direct Group employees (#)
Total Group employees (#)
2018
38,423
46,959
2017
37,779
51,001
2016
35,394
50,874
Based on a share of the employees in our investments as follows - BIC Contracting (45%), Ventia (46.96%) and Devine (59.11%) -
our Total Group employees is 46,959, down from 51,001 last year.
PROVIDE SUPPORTIVE WORKPLACES
CIMIC aspires to provide workplaces where people are supported, encouraged to reach their potential, and are
free from harassment and bullying. We encourage and seek to foster the innovation of our people and provide
support for new initiatives. At CIMIC, we promote a culture where, rather than punish any failures, we learn from them.
In 2018, the CIMIC Group was again named as one of the top 10 best companies in Australia for attracting and keeping top talent,
ranking sixth overall in LinkedIn’s Top Companies list57. This ranking is up from seven in 2017. The Top Companies list is based on
the actions taken by LinkedIn's more than 500 million members and looks at three main pillars: interest in a company's jobs;
interest in a company's brand and employees; and employee retention.
We encourage all of our leaders across the Group to provide open, honest, visible leadership and to demonstrate alignment with
Visible leadership
our mission and Principles.
CIMIC continued to build on its Group-wide leadership framework ‘Program One’ which was launched in 2016. A senior leadership
development program was launched in Australia. 75 participants from across the Australian operations commenced the program
which included undertaking a 180 degree assessment based on CIMIC’s leadership behaviours. The Group Frontline Leadership
program was implemented in Australia, Asia, Canada and Chile and has now trained 1,926 leaders.
55 METS - Mining Equipment Technology Services, STEM - science, technology, engineering and maths.
56 Australian Government’s Workplace Gender Equality Agency.
57 https://www.linkedin.com/pulse/linkedin-top-companies-2018-where-australia-wants-work-cayla-dengate/
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▪
▪
Performance
Reward performance
Measures in place
Actions taken during 2018
Performance
▪ Undertook external benchmarking of remuneration approach to attract and retain talent
▪
Continued to review performance management approach by focusing on areas such as
unconscious bias
All remuneration increases and bonuses have a recent performance review rating of
‘meets expectations or above’ as a key input
Ensure gender pay equity issues are considered during any decisions made regarding
appointments, remuneration increases and bonus awards
▪
▪
▪
▪
▪
▪
▪
▪
▪
Acknowledged International Women’s Day across Australian and overseas businesses to
raise awareness of gender diversity issues
Continued to report workforce composition under the Workplace Gender Equality Act
2012 (Cth)
Rolled out Unconscious Bias training to 744 employees with priority given to those
involved in recruitment and human resources
Conducted Human Rights Impact Assessment in Indonesia
6,755 employees undertook EEO, Discrimination, Anti-Bullying and Harassment training
Sedgman supported programs such as METS STEM Career Pathways55 program supporting
women studying engineering and connecting them with work placements and experience
Remuneration Policy - promotes individual accountability and aims to fairly motivate,
recognise and fairly compensate without bias
Incentive schemes linked to the creation of sustainable returns for shareholders
Conducted Group-wide pay equity review as part of the annual remuneration review and
implemented remediation actions as appropriate
CULTURE
OUR APPROACH
As a service organisation, our success is dependent on the quality of the services we deliver which are driven largely by the skills,
passion and expertise of our people. We aspire to build a culture that encourages a can-do attitude, and harnesses the talents of
our people to deliver results for our clients.
At CIMIC, we are committed to: providing supportive workplaces; training and developing our people; encouraging diversity; and
rewarding 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. This approach fosters 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 2018
Conducted a Neuro-diversity program on the inclusion of people on the Autism Spectrum
▪ Measuring employee experience through onboarding, engagement and exit surveys
our people
in our workforce
experience
selected UGL sites
Continued focus and work around ensuring pay equity
Implemented onboarding and exit surveys to understand the end-to-end employee
Conducted a wages engagement survey in Leighton Asia’s Hong Kong operations and
CIMIC Group recognised by LinkedIn as the 6th best place to work in Australia
Actions taken during 2018
Provided 222 (128 in 2017) intern/vacation positions which placed students into short-
Comprehensive learning and development plans in place across all Operating Companies
Professional Development Policy
Performance
Train and develop people
Measures in place
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, and career support
Presented at a number of university career fairs
▪ Utilised GradConnection and Grad Australia 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 training topics (for graduates) run in 2018: Financial Management and
Business Acumen completed by 183 graduates, 100 graduates completed Client
Engagement and Risk Management and Self Leadership. Graduates also completed
webinars on a variety of technical topics to support development within their chosen
discipline
Established a graduate committee run by six graduate volunteers
Developed and commenced roll out of senior leadership program as part of the Program
One leadership development curriculum
Contract management training delivered to 1,269 employees
Increased the number of graduates to 208 (174 in 2017)
Financial Review (versus 52 in 2017)
Recognised by AAGE52 as a top graduate employer 2018
Recognised as an Endorsed Employer of women by Work180
Ranked 44 in a survey of Top 100 Graduate Employer of 2018 by GradConnection51 /
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
▪ Group’s Operating Companies are supporters of and registered employers on Work18053
Continued to deliver Equal Employment Opportunity (EEO), Discrimination, Anti-Bullying
and Harassment training
Performance
Encourage diversity
Measures in place
Actions taken during 2018
Launched WINTR54, a women’s network on LinkedIn
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪ Group Executive leadership team (CEO & Managing Directors) announced as WGEA56 Pay
Ambassadors promoting pay equity
Employee details
As at 31 December 2018, the Group directly employed 38,423 people, 17,373 in Australia and 21,050 in international operations,
up from 37,779 last year (14,904 in Australia and 22,875 in international operations).
Direct Group employees (#)
Total Group employees (#)
2018
38,423
46,959
2017
37,779
51,001
2016
35,394
50,874
Based on a share of the employees in our investments as follows - BIC Contracting (45%), Ventia (46.96%) and Devine (59.11%) -
our Total Group employees is 46,959, down from 51,001 last year.
PROVIDE SUPPORTIVE WORKPLACES
CIMIC aspires to provide workplaces where people are supported, encouraged to reach their potential, and are
free from harassment and bullying. We encourage and seek to foster the innovation of our people and provide
support for new initiatives. At CIMIC, we promote a culture where, rather than punish any failures, we learn from them.
In 2018, the CIMIC Group was again named as one of the top 10 best companies in Australia for attracting and keeping top talent,
ranking sixth overall in LinkedIn’s Top Companies list57. This ranking is up from seven in 2017. The Top Companies list is based on
the actions taken by LinkedIn's more than 500 million members and looks at three main pillars: interest in a company's jobs;
interest in a company's brand and employees; and employee retention.
Visible leadership
We encourage all of our leaders across the Group 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. A senior leadership
development program was launched in Australia. 75 participants from across the Australian operations commenced the program
which included undertaking a 180 degree assessment based on CIMIC’s leadership behaviours. The Group Frontline Leadership
program was implemented in Australia, Asia, Canada and Chile and has now trained 1,926 leaders.
51 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.
52 Australian Association of Graduate Employers - the peak industry body representing organisations that recruit and develop Australian graduates.
53 WORK180 is an international jobs network that connects employers with talented women.
54 Women In Non-traditional Roles and Industries.
85
55 METS - Mining Equipment Technology Services, STEM - science, technology, engineering and maths.
56 Australian Government’s Workplace Gender Equality Agency.
57 https://www.linkedin.com/pulse/linkedin-top-companies-2018-where-australia-wants-work-cayla-dengate/
86
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Frontline leadership workshops building skills
Frontline leaders in Leighton Asia are getting out of their offices and project sites to enhance their skills to manage, lead and
coordinate teamwork in the Group’s Frontline Leadership Workshop. The Frontline Leadership Workshop is part of CIMIC’s ‘One’
Leadership program series designed to support our people across the business to reach new levels of performance.
Further to the ‘One’ Leadership program for Leighton Asia’s senior leaders last year, the workshop focuses on the development of
our frontline leaders based on our Group-wide leadership framework. The workshop provides practical tools and techniques for
participants to develop the appropriate approach to engage, delegate, make better decisions and manage change within their
team.
Over 260 frontline leaders across Leighton Asia’s project in India attended the workshop and are currently developing action plans
with their managers. In Hong Kong and Singapore, around 240 and 24 participants took part respectively. The workshop will
progressively be rolled out in Leighton Asia’s Philippines operation.
An important tool of visible leadership is the Group’s internal newsletter ‘Pulse’ which was launched in 2016. Pulse is used to
engage our global workforce and to deliver consistent messaging and communication. Pulse is a forum for bringing news to our
nearly 47,000 employees across 20 countries, to share ideas and information, and is a means of communication for our leaders.
Pulse is an important initiative in building and solidifying 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. A summary of the participation details and results were outlined in the 2017 Sustainability Report. In 2018, the
Group expanded the measurement of employee’s satisfaction with the implementation of on-boarding and exit surveys to better
understand the employee experience across CIMIC.
Human rights and forced/child labour
CIMIC is committed to abiding by the ten principles of the United Nations Global Compact which explicitly identify, amongst other
things that business should:
▪
▪
▪
▪
▪
Principle 1 - support and respect the protection of internationally proclaimed human rights;
Principle 2 - make sure that they are not complicit in human rights abuses;
Principle 4 - uphold the elimination of all forms of forced and compulsory labour;
Principle 5 - uphold the effective abolition of child labour; and
Principle 6 - uphold the elimination of discrimination in respect of employment and occupation.
CIMIC explicitly rejects all forms of forced labour and will not tolerate child labour or any form of exploitation of children or young
people. The Group is committed to complying with the International Labour Organisation (ILO) with respect to under-age workers.
In addition, “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”58.
These commitments are enshrined in the Code 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?”
In 2017, CIMIC conducted a pilot Human Rights Impact Assessment (HRIA) in our construction business in India. In 2018, a HRIA was
undertaken across the Group’s mining operations in Indonesia. With its more than 14,800 direct employees in India and Indonesia
as at 31 December 2018, these HRIAs represent more than 38% of the Group’s direct workforce.
The aim of the HRIAs 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: engagement of employees; 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.
Encourage innovation and support new initiatives
The CIMIC Group’s Operating Companies are undertaking some of the largest and most complex projects across the region. The
bespoke nature of these projects means that, to be successful - both in tendering and delivery - we need to encourage innovation
and provide support for new initiatives.
The HRIAs have identified a number of areas where the Group 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.
CIMIC is closely monitoring and preparing to comply with the Modern Slavery new reporting frameworks being introduced by the
Australian Federal Government and, separately, the New South Wales State Government.
CIMIC notes that, while undertaking the design and construction of correctional facilities, the Group does not operate or provide
custodial or corrective services for those facilities or for immigration detention centres.
58 CIMIC Group Code of Conduct.
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Freedom from harassment
CIMIC is committed to a workplace free from harassment, one with a supportive and positive working environment where
employees are treated fairly and with respect. Our commitment is enshrined in the Code of Conduct, the Diversity & Inclusion
Policy, the Anti-Bullying, Harassment and Discrimination Policy, and our Workplace Behaviour Policy. The Code and Policies
explicitly state that 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.
CIMIC Group is committed to raising awareness of family and domestic violence, and supporting our people and their families
experiencing family and domestic violence. Across CIMIC Group our commitment to safety, health and wellbeing includes rejecting
violence in all of its forms and supporting our people and their families. Our support to eligible employees and their families
experiencing family and domestic violence includes:
access to leave including five days of unpaid leave. All employees may be eligible to access paid or further unpaid leave
including annual leave, personal leave or long service leave to attend to matters arising from family and domestic violence in
the right to request flexible working arrangements or to change working arrangements such as days, hours of work or their
access to counselling and referral services for employees and their families who are experiencing family and domestic
violence. This support is also available to those who are providing care or support to a colleague or family member.
▪
▪
▪
accordance with Group policies;
work location; and
Support for White Ribbon Day
November).
To raise awareness of family and domestic violence in 2018, the Group supported a range of activities to mark Australia’s White
Ribbon Day (23 November) and the United Nations International Day for the Elimination of Violence against Women (25
Safety and Human Resources leads from across CPB Contractors, Thiess, Sedgman, UGL, Pacific Partnerships and EIC Activities also
worked with CIMIC’s Human Resources team to trial a new training program. The training session was led by Australia’s CEO
Challenge59, an award-winning charity that supports the business sector to help break the silence surrounding family and domestic
violence. The session provided employees with the tools to recognise, respond and refer colleagues to appropriate support.
Freedom of association and collective bargaining
As per Principle 3 of the UN Global Compact, CIMIC is committed to upholding the rights of employees to the freedom of
association and the effective recognition of the right to collective bargaining. We aim to fairly, consultatively and constructively
engage with workers, union representatives and regulators.
Given the diverse nature of our market focused Operating Companies, responsibility for managing workplace relations is delegated
to these Companies. Managing employee relations in this way helps to ensure that any industrial relations matters that arise on a
project - be they construction, mining or operations and maintenance - can be quickly identified and resolved in the field by our
dedicated teams in a way that is appropriate for those projects, Companies and industries.
Of the Group’s Australian employees, approximately 53% are covered by collective bargaining agreements; 25% at CPB Contractors,
71% at Thiess, 23% at Sedgman and 67% at UGL. In overseas markets, CIMIC complies with all of the industrial relations laws and
obligations of the jurisdictions in which our Companies operate.
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.
Innovation is one of the Group’s Principles and more detail is provided on our approach in the ‘Innovation’ chapter of this
Sustainability Report on pages 99 to 111.
59 Australia’s CEO Challenge aims to make sure workplaces are aware and responsive to domestic violence, and have in place a strategy to raise
awareness and support their staff who may be living with violence, abuse and control at home.
88
An important tool of visible leadership is the Group’s internal newsletter ‘Pulse’ which was launched in 2016. Pulse is used to
engage our global workforce and to deliver consistent messaging and communication. Pulse is a forum for bringing news to our
nearly 47,000 employees across 20 countries, to share ideas and information, and is a means of communication for our leaders.
Pulse is an important initiative in building and solidifying a unified culture across the Group.
▪
▪
CIMIC Group is committed to raising awareness of family and domestic violence, and supporting our people and their families
experiencing family and domestic violence. Across CIMIC Group our commitment to safety, health and wellbeing includes rejecting
violence in all of its forms and supporting our people and their families. Our support to eligible employees and their families
experiencing family and domestic violence includes:
▪
access to leave including five days of unpaid leave. All employees may be eligible to access paid or further unpaid leave
including annual leave, personal leave or long service leave to attend to matters arising from family and domestic violence in
accordance with Group policies;
the right to request flexible working arrangements or to change working arrangements such as days, hours of work or their
work location; and
access to counselling and referral services for employees and their families who are experiencing family and domestic
violence. This support is also available to those who are providing care or support to a colleague or family member.
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
Freedom from harassment
CIMIC is committed to a workplace free from harassment, one with a supportive and positive working environment where
employees are treated fairly and with respect. Our commitment is enshrined in the Code of Conduct, the Diversity & Inclusion
Policy, the Anti-Bullying, Harassment and Discrimination Policy, and our Workplace Behaviour Policy. The Code and Policies
explicitly state that 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.
Frontline leadership workshops building skills
Frontline leaders in Leighton Asia are getting out of their offices and project sites to enhance their skills to manage, lead and
coordinate teamwork in the Group’s Frontline Leadership Workshop. The Frontline Leadership Workshop is part of CIMIC’s ‘One’
Leadership program series designed to support our people across the business to reach new levels of performance.
Further to the ‘One’ Leadership program for Leighton Asia’s senior leaders last year, the workshop focuses on the development of
our frontline leaders based on our Group-wide leadership framework. The workshop provides practical tools and techniques for
participants to develop the appropriate approach to engage, delegate, make better decisions and manage change within their
team.
Over 260 frontline leaders across Leighton Asia’s project in India attended the workshop and are currently developing action plans
with their managers. In Hong Kong and Singapore, around 240 and 24 participants took part respectively. The workshop will
progressively be rolled out in Leighton Asia’s Philippines operation.
In 2017, CIMIC introduced an anonymous, Group-wide employee survey of staff to better understand the experience of our people
in the workplace. A summary of the participation details and results were outlined in the 2017 Sustainability Report. In 2018, the
Group expanded the measurement of employee’s satisfaction with the implementation of on-boarding and exit surveys to better
understand the employee experience across CIMIC.
CIMIC is committed to abiding by the ten principles of the United Nations Global Compact which explicitly identify, amongst other
Human rights and forced/child labour
things that business should:
▪
▪
▪
▪
▪
Principle 1 - support and respect the protection of internationally proclaimed human rights;
Principle 2 - make sure that they are not complicit in human rights abuses;
Principle 4 - uphold the elimination of all forms of forced and compulsory labour;
Principle 5 - uphold the effective abolition of child labour; and
Principle 6 - uphold the elimination of discrimination in respect of employment and occupation.
CIMIC explicitly rejects all forms of forced labour and will not tolerate child labour or any form of exploitation of children or young
people. The Group is committed to complying with the International Labour Organisation (ILO) with respect to under-age workers.
In addition, “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”58.
These commitments are enshrined in the Code 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?”
In 2017, CIMIC conducted a pilot Human Rights Impact Assessment (HRIA) in our construction business in India. In 2018, a HRIA was
undertaken across the Group’s mining operations in Indonesia. With its more than 14,800 direct employees in India and Indonesia
as at 31 December 2018, these HRIAs represent more than 38% of the Group’s direct workforce.
The HRIAs have identified a number of areas where the Group 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.
CIMIC is closely monitoring and preparing to comply with the Modern Slavery new reporting frameworks being introduced by the
Australian Federal Government and, separately, the New South Wales State Government.
CIMIC notes that, while undertaking the design and construction of correctional facilities, the Group does not operate or provide
custodial or corrective services for those facilities or for immigration detention centres.
58 CIMIC Group Code of Conduct.
87
Support for White Ribbon Day
To raise awareness of family and domestic violence in 2018, the Group supported a range of activities to mark Australia’s White
Ribbon Day (23 November) and the United Nations International Day for the Elimination of Violence against Women (25
November).
Safety and Human Resources leads from across CPB Contractors, Thiess, Sedgman, UGL, Pacific Partnerships and EIC Activities also
worked with CIMIC’s Human Resources team to trial a new training program. The training session was led by Australia’s CEO
Challenge59, an award-winning charity that supports the business sector to help break the silence surrounding family and domestic
violence. The session provided employees with the tools to recognise, respond and refer colleagues to appropriate support.
Freedom of association and collective bargaining
As per Principle 3 of the UN Global Compact, CIMIC is committed to upholding the rights of employees to the freedom of
association and the effective recognition of the right to collective bargaining. We aim to fairly, consultatively and constructively
engage with workers, union representatives and regulators.
Given the diverse nature of our market focused Operating Companies, responsibility for managing workplace relations is delegated
to these Companies. Managing employee relations in this way helps to ensure that any industrial relations matters that arise on a
project - be they construction, mining or operations and maintenance - can be quickly identified and resolved in the field by our
dedicated teams in a way that is appropriate for those projects, Companies and industries.
Of the Group’s Australian employees, approximately 53% are covered by collective bargaining agreements; 25% at CPB Contractors,
71% at Thiess, 23% at Sedgman and 67% at UGL. In overseas markets, CIMIC complies with all of the industrial relations laws and
obligations of the jurisdictions in which our Companies operate.
The Group is not aware of any instances where its operations, or those of its suppliers, have seen workers’ rights to exercise
freedom of association or collective bargaining violated or at significant risk.
The aim of the HRIAs 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: engagement of employees; 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.
Encourage innovation and support new initiatives
The CIMIC Group’s Operating Companies are undertaking some of the largest and most complex projects across the region. The
bespoke nature of these projects means that, to be successful - both in tendering and delivery - we need to encourage innovation
and provide support for new initiatives.
Innovation is one of the Group’s Principles and more detail is provided on our approach in the ‘Innovation’ chapter of this
Sustainability Report on pages 99 to 111.
59 Australia’s CEO Challenge aims to make sure workplaces are aware and responsive to domestic violence, and have in place a strategy to raise
awareness and support their staff who may be living with violence, abuse and control at home.
88
88
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
Use Methods and Lean for continuous improvement and innovation
Construction, mining and services projects are teaming up with EIC Activities’ Methods and Lean experts for training and services to
eliminate waste and make sure every step in their workflow is adding value. ‘Methods’ study is the process of subjecting work to
systematic, critical scrutiny to make it more effective and/or more efficient. It is one of the keys to achieving productivity
improvement. ‘Lean’ is an improvement and problem solving methodology that strives to reduce or eliminate activities that don’t
add value to the customer.
The Methods and Lean team consulted with UGL’s Utilities and Resource business on process improvement using Lean and robotic
solutions. Together they built a better business process model for solar field assembly by removing bottle necks, managing supply
variation and improving resource management. Now they are working together on two new innovations using field automation to
increase the safety, efficiency and reliability of execution.
EIC Activities has also been assisting Thiess to continue improving scheduled servicing, sharing Lean techniques to minimise
variation in service delivery and improve resource utilisation in a safer working environment. As part of the initiative the Methods
and Lean team delivered practical training to Thiess maintenance fitters and workshop managers. The training helps participants to
identify and remove waste, and understand how flow and variability are related to overall performance.
TRAIN AND DEVELOP PEOPLE
We invest significantly in the training and development of our people, so as to equip our workforce for the
future, and so that we can maintain our position as a leader in the industries in which we operate. We must
ensure that the knowledge and expertise of our people grows as this is critical for our success.
We identify skill gaps, train and develop our people, and share knowledge across the Company. By doing so, we improve employee
attraction, retention and engagement, all of which ensures that we have the skills to execute on our strategy.
operate.
Investing in training
CIMIC invests in a range of different types of training - including skills-based, vocational and technical. This training supports our
business requirements and the development of our employees. CIMIC values its employees and aims to contribute on an ongoing
basis to each employee’s learning and development journey.
CIMIC has developed a Group-wide ‘Capability Framework’ based on the core capabilities that are a priority for our business. The
‘Capability Framework’ is designed to deliver consistent training across the Group. Each of our Operating Companies conducts
regular skills-based training and programs, designed to support each businesses market specific requirements, and includes
technical and vocational training, as well as dedicated health and safety programs.
In 2018, we delivered 810,015 hours of training across the Group, which equates to more than 21 hours per annum for each direct
employee. The average amount spent per FTE60 on training and development was $337 (up from $180 in 2017). Training courses
included:
▪
▪
▪
▪
▪
▪
▪
anti-bullying, harassment and discrimination;
unconscious bias training;
equal employment opportunity discrimination;
foundation topics (for Graduates) which included applied technical and engineering training across a range of disciplines;
contract management;
online financial management (EIS61) training modules; and
Program One leadership training.
Unpacking your natural bias for better results
CIMIC Group is committed to achieving an inclusive workplace and is running unconscious bias training workshops across the
Group. By definition, a bias is an inclination or prejudice for or against a person or group. By being aware of inherent biases,
managers can make clearer decisions that yield better results for teams and projects.
The information we accumulate and process unconsciously has a significant impact on the decisions we make. The more we are
aware of these unconscious biases, the more we can optimise their influence and make better decisions to ensure safe, high
performing work environments, free of harassment, bullying and discrimination.
Sessions have been run across the Group’s operating companies with more than 928 leaders completing the training throughout
the business. These people are acting as important cultural ambassadors across offices and projects. Looking forward, training will
be progressively delivered to a broader range of people to further the Group’s commitment to diversity and inclusion.
The 2018 ARA Future Leaders Program commenced in Melbourne, bringing 37 emerging leaders from throughout the Australasian
rail industry together to develop their leadership skills and build networks across the sector. In 2018, the Group had 2 participants:
Ryan Kumar, Service Delivery Manager on the UGL Unipart Joint Venture and Ryan Cush, a Project Engineer with CPB Contractors.
60 Full-time equivalent.
61 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.
89
89
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Invest in future leaders
CIMIC is dedicated to developing its workforce for the future and continues to invest in creating future leaders by recruiting our
own graduates. CIMIC has created and offers 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. This program provides graduates with
exposure to a global organisation across multiple industries.
The 2018 graduate intake commenced in February, with an induction held in Sydney. This year, 208 graduates (up from 174 in
2017), 157 males and 51 females, commenced with CPB Contractors, Leighton Asia, Broad, Thiess, Sedgman, UGL and EIC Activities,
with opportunity for exposure to Pacific Partnerships and CIMIC.
Total graduates, trainees and apprentices employed at end of 2018 (#)
Graduates
Trainees and apprentices
Male
255
474
Female
87
137
This is a global program that currently involves graduates from Australia, New Zealand, Indonesia, Hong Kong, Chile, Canada,
Botswana, Mongolia and we will be expanding to include the rest of the countries in which we operate over the coming 12 months.
Welcoming our new graduate intake
The induction program had a focus on culture - understanding the culture of CIMIC Group and the Operating Companies, as well as
Australian Indigenous culture - with graduates participating in a traditional ochre ceremony, welcome to country, and cultural
dancing ceremony. There was an educative focus on safety and wellbeing, with insights provided on the Group’s safety culture and
practices, including the importance of personal resilience and how to be ‘fit for work and fit for life’. We also started work on
building an innovation mindset in our graduates, and expanding how they can positively impact the communities in which we
The graduate group move through 3 eight-month rotations, with placements in roles and projects across the business. Through on-
the-job training, structured learning, technical training, and day-to-day interaction with our people, the graduates experience first-
hand the Group’s culture. With encouragement, they will achieve technical, professional and personal growth and develop into the
next wave of the Group’s future leaders.
CIMIC also engages with a number of other university focused programs that aim to develop skills and equip our workforce for the
future. Some of the programs that CIMIC promotes include:
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 during 2018 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;
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;
utilising the 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.
▪
▪
▪
▪
▪
Thiess continued to offer scholarship opportunities to university students in Australia 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 working
environment. Vacation students have the opportunity to work on site and to experience living in remote locations, while building
relationships and network with industry contacts early in their career, and they also receive the opportunity to be fast-tracked into
the CIMIC Group Graduate Program.
Joining forces to create the leaders of the future
When industry associations and businesses join forces the outcomes benefit our people, our company and the wider industry.
A good example is UGL’s support for the Future Leaders program, run by the Australasian Railway Association (ARA).
The six month program provides a holistic view of the rail industry and its future direction, develops leadership and management
skills of the participants, and sees group projects completed with assistance from industry mentors.
90
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
Invest in future leaders
CIMIC is dedicated to developing its workforce for the future and continues to invest in creating future leaders by recruiting our
own graduates. CIMIC has created and offers 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. This program provides graduates with
exposure to a global organisation across multiple industries.
The 2018 graduate intake commenced in February, with an induction held in Sydney. This year, 208 graduates (up from 174 in
2017), 157 males and 51 females, commenced with CPB Contractors, Leighton Asia, Broad, Thiess, Sedgman, UGL and EIC Activities,
with opportunity for exposure to Pacific Partnerships and CIMIC.
Total graduates, trainees and apprentices employed at end of 2018 (#)
Graduates
Trainees and apprentices
Male
255
474
Female
87
137
This is a global program that currently involves graduates from Australia, New Zealand, Indonesia, Hong Kong, Chile, Canada,
Botswana, Mongolia and we will be expanding to include the rest of the countries in which we operate over the coming 12 months.
Welcoming our new graduate intake
The induction program had a focus on culture - understanding the culture of CIMIC Group and the Operating Companies, as well as
Australian Indigenous culture - with graduates participating in a traditional ochre ceremony, welcome to country, and cultural
dancing ceremony. There was an educative focus on safety and wellbeing, with insights provided on the Group’s safety culture and
practices, including the importance of personal resilience and how to be ‘fit for work and fit for life’. We also started work on
building an innovation mindset in our graduates, and expanding how they can positively impact the communities in which we
operate.
The graduate group move through 3 eight-month rotations, with placements in roles and projects across the business. Through on-
the-job training, structured learning, technical training, and day-to-day interaction with our people, the graduates experience first-
hand the Group’s culture. With encouragement, they will achieve technical, professional and personal growth and develop into the
next wave of the Group’s future leaders.
Use Methods and Lean for continuous improvement and innovation
Construction, mining and services projects are teaming up with EIC Activities’ Methods and Lean experts for training and services to
eliminate waste and make sure every step in their workflow is adding value. ‘Methods’ study is the process of subjecting work to
systematic, critical scrutiny to make it more effective and/or more efficient. It is one of the keys to achieving productivity
improvement. ‘Lean’ is an improvement and problem solving methodology that strives to reduce or eliminate activities that don’t
add value to the customer.
The Methods and Lean team consulted with UGL’s Utilities and Resource business on process improvement using Lean and robotic
solutions. Together they built a better business process model for solar field assembly by removing bottle necks, managing supply
variation and improving resource management. Now they are working together on two new innovations using field automation to
increase the safety, efficiency and reliability of execution.
EIC Activities has also been assisting Thiess to continue improving scheduled servicing, sharing Lean techniques to minimise
variation in service delivery and improve resource utilisation in a safer working environment. As part of the initiative the Methods
and Lean team delivered practical training to Thiess maintenance fitters and workshop managers. The training helps participants to
identify and remove waste, and understand how flow and variability are related to overall performance.
TRAIN AND DEVELOP PEOPLE
We invest significantly in the training and development of our people, so as to equip our workforce for the
future, and so that we can maintain our position as a leader in the industries in which we operate. We must
ensure that the knowledge and expertise of our people grows as this is critical for our success.
We identify skill gaps, train and develop our people, and share knowledge across the Company. By doing so, we improve employee
attraction, retention and engagement, all of which ensures that we have the skills to execute on our strategy.
Investing in training
CIMIC invests in a range of different types of training - including skills-based, vocational and technical. This training supports our
business requirements and the development of our employees. CIMIC values its employees and aims to contribute on an ongoing
basis to each employee’s learning and development journey.
CIMIC has developed a Group-wide ‘Capability Framework’ based on the core capabilities that are a priority for our business. The
‘Capability Framework’ is designed to deliver consistent training across the Group. Each of our Operating Companies conducts
regular skills-based training and programs, designed to support each businesses market specific requirements, and includes
technical and vocational training, as well as dedicated health and safety programs.
In 2018, we delivered 810,015 hours of training across the Group, which equates to more than 21 hours per annum for each direct
employee. The average amount spent per FTE60 on training and development was $337 (up from $180 in 2017). Training courses
included:
anti-bullying, harassment and discrimination;
unconscious bias training;
equal employment opportunity discrimination;
contract management;
online financial management (EIS61) training modules; and
Program One leadership training.
▪
▪
▪
▪
▪
▪
▪
foundation topics (for Graduates) which included applied technical and engineering training across a range of disciplines;
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 during 2018 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;
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;
utilising the 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.
CIMIC also engages with a number of other university focused programs that aim to develop skills and equip our workforce for the
future. Some of the programs that CIMIC promotes include:
▪
Thiess continued to offer scholarship opportunities to university students in Australia 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.
Unpacking your natural bias for better results
CIMIC Group is committed to achieving an inclusive workplace and is running unconscious bias training workshops across the
Group. By definition, a bias is an inclination or prejudice for or against a person or group. By being aware of inherent biases,
managers can make clearer decisions that yield better results for teams and projects.
Thiess also offers a two-week vacation program aimed at providing real, on-the-job experience in a structured working
environment. Vacation students have the opportunity to work on site and to experience living in remote locations, while building
relationships and network with industry contacts early in their career, and they also receive the opportunity to be fast-tracked into
the CIMIC Group Graduate Program.
The information we accumulate and process unconsciously has a significant impact on the decisions we make. The more we are
aware of these unconscious biases, the more we can optimise their influence and make better decisions to ensure safe, high
performing work environments, free of harassment, bullying and discrimination.
Joining forces to create the leaders of the future
When industry associations and businesses join forces the outcomes benefit our people, our company and the wider industry.
A good example is UGL’s support for the Future Leaders program, run by the Australasian Railway Association (ARA).
Sessions have been run across the Group’s operating companies with more than 928 leaders completing the training throughout
the business. These people are acting as important cultural ambassadors across offices and projects. Looking forward, training will
be progressively delivered to a broader range of people to further the Group’s commitment to diversity and inclusion.
The 2018 ARA Future Leaders Program commenced in Melbourne, bringing 37 emerging leaders from throughout the Australasian
rail industry together to develop their leadership skills and build networks across the sector. In 2018, the Group had 2 participants:
Ryan Kumar, Service Delivery Manager on the UGL Unipart Joint Venture and Ryan Cush, a Project Engineer with CPB Contractors.
The six month program provides a holistic view of the rail industry and its future direction, develops leadership and management
skills of the participants, and sees group projects completed with assistance from industry mentors.
61 EIS is a set of processes, business rules, tools and standardised reports for the management, control, and reporting of key project activities,
60 Full-time equivalent.
revenue, cost, margin and working capital.
89
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90
90
▪
▪
▪
▪
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
In 2018, the Australian Association of Graduate Employers survey of over 2,500 graduates ranked CIMIC as the 75th top graduate
employer62. The survey recognises those organisations - including public and private companies, as well as government
departments - that provide the most positive experience for their new graduates as determined by the graduates themselves.
CIMIC also placed 44th in GradConnection’s Top 100 Graduate Employers which is conducted annually in conjunction with the
Financial Review. GradConnection is the biggest and most popular student and graduate careers website in Australia63.
During 2018, CIMIC continued to conduct ‘Program One’ workshops for members of frontline leadership across all Australian key
states and Hong Kong. Training was provided for 1,926 participants and delivered across other countries in Asia, as well as in
Canada and Chile.
The Group continued to conduct talent reviews and succession planning for critical roles across all Operating Companies in 2018.
The outcomes of these reviews will be used for development planning in 2019.
Recruit internally
The CIMIC Group’s preference to recruit internal candidates, and to provide existing staff with opportunities to fill vacancies before
looking externally, is enshrined in our Recruitment Policy. This commitment is premised on our belief that we have an obligation to
develop opportunities for our own people before looking at external recruitment. We hope that our commitment engenders loyalty
and we believe that it makes good commercial sense.
Selection for those roles to be filled 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, and in line with
our Code and other policies.
Advancing female nationals through mentorship
More women are moving into senior roles in Papua New Guinea (PNG) thanks to informal career pathways and strong support
networks. Fundamental to this environment is the respect and promotion of the traditional culture of PNG’s national workforce,
while also creating a strong desire to safely deliver world-class construction projects.
The success of these networks means we are at a stage where the women who were mentored some years ago are now coaching
new female employees. Safety Coordinator Catherine Malangen had been mentored by a senior manager while working on the
Permanent Facilities Compound, and most recently, began mentoring Environmental Officer Nathleen Bangi on the successful APEC
Haus project. Working with CPB Contractors since 2014, Administration Manager, Bevelyn Urulu began her career managing
payroll. Through internal up-skilling and the support of informal mentoring, Bevelyn was promoted to Administration Manager for
the PNG office.
In 2017, we launched a Group-wide CIMIC ‘Jobs Board’ where employees can search for job opportunities across 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 email when a position becomes available that matches their search criteria. The
Jobs Board is promoted through Pulse and each Operating Companies intranet.
In 2018, the Group recruited 20,245 new employees, 18,584 male and 1,661 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 many other industries are not relevant. CIMIC believes that a more appropriate turnover rate to use should
reflect the departures of white collar employees (staff).
Voluntary and involuntary departures (%) - staff
only64
Overall
Male
Female
2018
23.2
17.7
5.5
2017
25.5
19.5
6.0
The turnover rate, across most of the Group’s entities, has remained static or declined markedly since 2016.
The relatively short duration of many of the Group’s projects also manifests itself in the length of service - or tenure - of employees.
The average tenure of our employees is 3.4 years (unchanged versus 3.4 years in 2017) with men having an annual tenure of 3.4
years and women of 4.0 years. However, as the table overleaf shows, the Group has many experienced and long serving
employees, many with management experience, which includes key operational roles such as project managers, foremen and site
superintendents.
62 https://www.topgraduateemployers.com/
63 https://au.gradconnection.com/
64 Percentages are based on total voluntary and involuntary departures for the year divided by the total number of employees at the start of the
year.
91
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Length of service with the Group in years (% of workforce)
Less than 1 year
Greater than or equal to 1 year and less than 3 years
Greater than or equal to 3 years and less than 5 years
Greater than or equal to 5 years and less than 10 years
Greater than or equal to 10 years and less than 15 years
Greater than or equal to 15 years
Male
35.5
28.0
5.4
12.9
5.1
2.7
Female
3.4
2.9
1.0
1.9
0.7
0.4
CIMIC understands that diversity - of employees and teams - helps to promote innovation, performance and
productivity. We also believe that our workforces should be inclusive and reflect the diverse communities in
ENCOURAGE DIVERSITY
which we work.
Our goal is to be a diverse and socially inclusive employer of choice where all employees are able to bring and deliver their best to
achieve our mission of generating sustainable returns for our shareholders by delivering projects to our clients. The Group’s 2020
Strategy is guided by our commitment to human rights and the belief that diversity and social inclusion are achieved through living
our Principles.
promotion;
The CIMIC Group Diversity & Social Inclusion strategy includes the following strategic priorities:
Gender Equality: Promote equal opportunity for women in the CIMIC Group including remuneration, attraction, retention and
Indigenous Participation: Value and recognise Indigenous nations, peoples and cultures and to create an equitable opportunity
for participation in employment and business supply chain;
National Inclusion: Invest in local employment, leadership development and succession planning to ensure the future of work
Inclusive workplace culture: Embed and progress a socially inclusive workplace through the elimination of discrimination, bias,
is reflective of the country in which we operate;
harassment and violence in the workplace; and
drive and be accountable for progress.
Accountable Leadership: Lead and advocate for a diverse and inclusive culture with a focus on leadership to set expectations,
Our workforce is predominantly composed of permanently employed full time and fixed term employees. This structure reflects the
bespoke project nature of much of the Group’s work. Many of the Group’s construction projects utilise employees with specialist
skills that are recruited for defined roles, and therefore fixed periods of time, on a project. These skills encompass trades such as
excavator and crane operators, scaffolders, surveyors, shotcreters, electricians, glaziers, plumbers and more.
It should also be noted that reliance on ‘trades’ to deliver many of the Group’s projects has historically skewed employment
towards men rather than women. Despite the historic skew, which is evident in the table below, the Group is committed to greater
female participation and diversity.
Workforce composition (%)
Permanent full time
Permanent part time
Fixed term
Casual
Male
59.7
0.2
21.6
8.2
Female
7.9
0.5
1.2
0.7
Female participation and gender equity
CIMIC is committed to, and actively promotes and seeks to improve, female participation and to achieve gender equity, including
pay equity. While we understand that it takes time, a key objective of the CIMIC Group is to increase the number of females
employed at all levels of the business.
CIMIC has a Diversity & Inclusion Executive Council which provides leadership to the Group on fostering a diverse and inclusive
culture. The Council has supported initiatives including:
supporting and endorsing the CIMIC Group 2020 Diversity & Social Inclusion strategy;
focusing on understanding the issues faced by women in operational/project based roles, and addressing opportunities and
barriers to attraction and retention raised;
focusing on gaining an understanding of cultural differences when mobilising and operating globally; and
seeking continual improvement of workforce reporting to track diversity participation.
▪
▪
▪
▪
▪
▪
▪
▪
▪
92
In 2018, the Australian Association of Graduate Employers survey of over 2,500 graduates ranked CIMIC as the 75th top graduate
employer62. The survey recognises those organisations - including public and private companies, as well as government
departments - that provide the most positive experience for their new graduates as determined by the graduates themselves.
CIMIC also placed 44th in GradConnection’s Top 100 Graduate Employers which is conducted annually in conjunction with the
Financial Review. GradConnection is the biggest and most popular student and graduate careers website in Australia63.
During 2018, CIMIC continued to conduct ‘Program One’ workshops for members of frontline leadership across all Australian key
states and Hong Kong. Training was provided for 1,926 participants and delivered across other countries in Asia, as well as in
The Group continued to conduct talent reviews and succession planning for critical roles across all Operating Companies in 2018.
The outcomes of these reviews will be used for development planning in 2019.
Canada and Chile.
Recruit internally
The CIMIC Group’s preference to recruit internal candidates, and to provide existing staff with opportunities to fill vacancies before
looking externally, is enshrined in our Recruitment Policy. This commitment is premised on our belief that we have an obligation to
develop opportunities for our own people before looking at external recruitment. We hope that our commitment engenders loyalty
and we believe that it makes good commercial sense.
Selection for those roles to be filled 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, and in line with
our Code and other policies.
Advancing female nationals through mentorship
More women are moving into senior roles in Papua New Guinea (PNG) thanks to informal career pathways and strong support
networks. Fundamental to this environment is the respect and promotion of the traditional culture of PNG’s national workforce,
while also creating a strong desire to safely deliver world-class construction projects.
The success of these networks means we are at a stage where the women who were mentored some years ago are now coaching
new female employees. Safety Coordinator Catherine Malangen had been mentored by a senior manager while working on the
Permanent Facilities Compound, and most recently, began mentoring Environmental Officer Nathleen Bangi on the successful APEC
Haus project. Working with CPB Contractors since 2014, Administration Manager, Bevelyn Urulu began her career managing
payroll. Through internal up-skilling and the support of informal mentoring, Bevelyn was promoted to Administration Manager for
the PNG office.
In 2017, we launched a Group-wide CIMIC ‘Jobs Board’ where employees can search for job opportunities across 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 email when a position becomes available that matches their search criteria. The
Jobs Board is promoted through Pulse and each Operating Companies intranet.
In 2018, the Group recruited 20,245 new employees, 18,584 male and 1,661 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 many other industries are not relevant. CIMIC believes that a more appropriate turnover rate to use should
reflect the departures of white collar employees (staff).
Voluntary and involuntary departures (%) - staff
only64
Overall
Male
Female
The turnover rate, across most of the Group’s entities, has remained static or declined markedly since 2016.
The relatively short duration of many of the Group’s projects also manifests itself in the length of service - or tenure - of employees.
The average tenure of our employees is 3.4 years (unchanged versus 3.4 years in 2017) with men having an annual tenure of 3.4
years and women of 4.0 years. However, as the table overleaf shows, the Group has many experienced and long serving
employees, many with management experience, which includes key operational roles such as project managers, foremen and site
superintendents.
64 Percentages are based on total voluntary and involuntary departures for the year divided by the total number of employees at the start of the
62 https://www.topgraduateemployers.com/
63 https://au.gradconnection.com/
year.
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Length of service with the Group in years (% of workforce)
Less than 1 year
Greater than or equal to 1 year and less than 3 years
Greater than or equal to 3 years and less than 5 years
Greater than or equal to 5 years and less than 10 years
Greater than or equal to 10 years and less than 15 years
Greater than or equal to 15 years
Male
35.5
28.0
5.4
12.9
5.1
2.7
Female
3.4
2.9
1.0
1.9
0.7
0.4
ENCOURAGE DIVERSITY
CIMIC understands that diversity - of employees and teams - helps to promote innovation, performance and
productivity. We also believe that our workforces should be inclusive and reflect the diverse communities in
which we work.
Our goal is to be a diverse and socially inclusive employer of choice where all employees are able to bring and deliver their best to
achieve our mission of generating sustainable returns for our shareholders by delivering projects to our clients. The Group’s 2020
Strategy is guided by our commitment to human rights and the belief that diversity and social inclusion are achieved through living
our Principles.
The CIMIC Group Diversity & Social Inclusion strategy includes the following strategic priorities:
▪
Gender Equality: Promote equal opportunity for women in the CIMIC Group including remuneration, attraction, retention and
promotion;
Indigenous Participation: Value and recognise Indigenous nations, peoples and cultures and to create an equitable opportunity
for participation in employment and business supply chain;
National Inclusion: Invest in local employment, leadership development and succession planning to ensure the future of work
is reflective of the country in which we operate;
Inclusive workplace culture: Embed and progress a socially inclusive workplace through the elimination of discrimination, bias,
harassment and violence in the workplace; and
Accountable Leadership: Lead and advocate for a diverse and inclusive culture with a focus on leadership to set expectations,
drive and be accountable for progress.
▪
▪
▪
▪
Our workforce is predominantly composed of permanently employed full time and fixed term employees. This structure reflects the
bespoke project nature of much of the Group’s work. Many of the Group’s construction projects utilise employees with specialist
skills that are recruited for defined roles, and therefore fixed periods of time, on a project. These skills encompass trades such as
excavator and crane operators, scaffolders, surveyors, shotcreters, electricians, glaziers, plumbers and more.
It should also be noted that reliance on ‘trades’ to deliver many of the Group’s projects has historically skewed employment
towards men rather than women. Despite the historic skew, which is evident in the table below, the Group is committed to greater
female participation and diversity.
Workforce composition (%)
Permanent full time
Permanent part time
Fixed term
Casual
Male
59.7
0.2
21.6
8.2
Female
7.9
0.5
1.2
0.7
2018
23.2
17.7
5.5
2017
25.5
19.5
6.0
Female participation and gender equity
CIMIC is committed to, and actively promotes and seeks to improve, female participation and to achieve gender equity, including
pay equity. While we understand that it takes time, a key objective of the CIMIC Group is to increase the number of females
employed at all levels of the business.
CIMIC has a Diversity & Inclusion Executive Council which provides leadership to the Group on fostering a diverse and inclusive
culture. The Council has supported initiatives including:
▪
▪
supporting and endorsing the CIMIC Group 2020 Diversity & Social Inclusion strategy;
focusing on understanding the issues faced by women in operational/project based roles, and addressing opportunities and
barriers to attraction and retention raised;
focusing on gaining an understanding of cultural differences when mobilising and operating globally; and
seeking continual improvement of workforce reporting to track diversity participation.
▪
▪
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Diversity indicators (%)65
Female share of total workforce
Females in management positions (as % of total management workforce)
Females in junior management positions (as % of total junior management
positions)
Females in top management positions (as % of total top management
positions)
2018
10.3
12.8
13.0
12.1
2017
9.3
13.3
14.0
11.9
New women’s network launched to encourage career development
CIMIC Group has launched a women’s network on LinkedIn named WINTR - Women In Non-traditional Roles and Industries. The
network provides opportunities for women in non-traditional roles and industries (and the men and women who support them) to
network, share experiences and encourage one another in their career development.
WINTR was originally founded in 2017 by two senior women working in non-traditional roles at tunnelling sites across the
WestConnex New M5 project in Sydney. The women used the group to promote diversity and to encourage women to be involved
in construction. Today, our concept is broader: providing opportunities to women across all our businesses and operations. Women
and men everywhere, who want to support the success of women in our industries, are encouraged to join.
A key challenge for the industry is to overcome the relatively small numbers of women entering the engineering trades and
profession. CIMIC understands the limitation this imposes and supports groups like The National Association of Women in
Construction to empower women in the construction and related industries to reach their full potential.
CPB Contractors’ employees win Victorian Government scholarships
The Victorian Government, as part of its gender equality strategy, is delivering a Women in Transport program which aims to
increase the number of women working in the sector from 16 per cent to 25 per cent by 2020. The achievements of two of CPB
Contractors’ women have been recognised with their acceptance into the program. Marielle Salom was part of the engineering
team on the Blackburn Road Level Crossing Project and is now working with the Early Investigations team on the West Gate Tunnel
Project. Dominique Carydias is currently working on the Caulfield to Dandenong Level Crossing Removal Project.
The program includes scholarships for women to enter transport-related university degrees, access to mentors to provide guidance
and motivation, and the chance to connect with and learn from senior female role models in the transport sector of construction.
Part of Sedgman’s commitment to greater gender equity is ensuring that all employees know they are supported when their
circumstances change. As a tangible reminder of this support, Sedgman now sends all employees and their families a Sedgman bib
Sedgman support for families
to welcome new additions to the Sedgman family.
One way that CIMIC can directly influence the participation rate is via recruitment into our Graduate Program. For the 2018
graduate cohort, the female participation rate was ~25%, which is above the average participation rate of the industry.
Another key focus of female participation is retention. CIMIC understands that, once we have attracted women to the Group, we
need to make sure that - where possible - we retain them. In some cases, this involves preparing professional development plans so
that we can build a career for these women.
Leighton Asia promotes opportunities for women in construction
Tam Kit Choi is a building engineer on the Hong Kong Zhuhai Macao Bridge - Remaining Ancillary Buildings and Facilities project in
Hong Kong but her first career was as a wedding gown maker. This change was promoted by Tam’s desire to work in a more stable
profession and to be able to spend more time with her family.
Tam responded to an advertisement and enrolled in the Construction Industry Council’s (CIC) Apprentice Program. She joined
Leighton Asia as a technician after graduating from the Program five years ago, completed her Higher Diploma in Building Studies,
and a top-up degree in construction management to strengthen her skills and knowledge in different aspects of construction work.
Leighton Asia has been a long-term supporter of CIC’s apprentice program, which nurtures new talent for the construction industry.
The program equips apprentices with skills and knowledge through a structured curriculum with a combination of classroom
learning and on site practice.
CIMIC and each of its Operating Companies have an obligation to report certain gender related information to the Australian
Government’s Workplace Gender Equality Agency (WGEA) each year66. These comprehensive submissions provide a substantial
amount of gender related data, segmented by occupational types, graduates and apprentices, full-time and part-time, parental
leave accessed, etc. They also include details of and policies for: employer action on pay equity; gender equality strategies and
consultation; flexible working arrangements; support for carers and paid parental leave; sex-based harassment; and family and
domestic violence.
The 2017/18 WGEA submissions show that, for the larger contracting entities of CPB Contractors, Thiess, Sedgman and UGL, which
have substantial employee numbers, females accounted for between 11.6% - 17.2% of management positions and 10.4% - 19.7% of
non-management positions.
All managers
All non-managers
Female participation (% of each Operating Company’s workforce)
2017/18
13.2
15.3
2016/17
13.5
15.1
Although these results are relatively low by the standards of many other industries, they do reflect the traditionally male
dominated nature of the construction and mining industries. It is pleasing to note that, over time, the WGEA submissions are
demonstrating gradual improvements in female participation across the Group’s Operating Companies. Importantly, the Group is
focused on ensuring that the increased participation rates are broadly based - including in trade, engineering and leadership roles -
and not limited to administrative and professional service roles.
Breaking down gender barriers in Chile
In Chile, Valeria Millacaris Salinas is breaking down gender barriers as Thiess’ first female truck operator at the Encuentro
Oxides open pit copper mine in northern Chile. Valeria’s first role in mining was an administration role with Thiess, where she
quickly set her goals on moving into operations. She joined the operations team at Centinela in January 2018 and works a 7x7 shift
allowing her to spend quality time at home with her children.
Located at an altitude of 2,300 meters above sea level, the Encuentro Oxides project will contribute to the production of 50,000
tonnes of copper cathode per year and has a planned mine life of approximately 15 years.
CIMIC is committed to work diligently to close any pay gaps and making efforts to ensure gender equity to produce positive change.
In 2018, CIMIC’s Operating Companies used an in-house developed gender pay equity tool to review gender pay equity issues at
any point in time. The Companies were specifically encouraged to apply the tool prior to the annual remuneration review and with
respect to bonus proposals, and then as a follow up to review any issues and to ensure that any gaps were being addressed.
Sedgman hopes this encourages all employees to have more conversations about the flexible options available to them. By
providing flexible options for men and women, Sedgman seeks to break down the barriers for everyone, regardless of gender or the
stage in their life or career. This support is reflected in Sedgman’s commitment to #TackleFlexism.67
Analysis post the 2018 remuneration review showed the Group total fixed remuneration pay gap has reduced by 2.9% compared to
the 2017 review, and each Operating Company has decreased their overall pay gap by between 1 - 5%. Looking into the data in
greater detail we also found decreases in some specifically male dominated job families; for example, in our Engineering job family,
there was a decrease of 4.6% in the overall pay gap.
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.
65 As per disclosure requirements of DJSI.
66 https://www.wgea.gov.au/report/public-reports
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93
67 http://www.flexibleworkingday.com/flexism/
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Diversity indicators (%)65
Female share of total workforce
Females in management positions (as % of total management workforce)
Females in junior management positions (as % of total junior management
Females in top management positions (as % of total top management
positions)
positions)
2018
10.3
12.8
13.0
12.1
2017
9.3
13.3
14.0
11.9
New women’s network launched to encourage career development
CIMIC Group has launched a women’s network on LinkedIn named WINTR - Women In Non-traditional Roles and Industries. The
network provides opportunities for women in non-traditional roles and industries (and the men and women who support them) to
network, share experiences and encourage one another in their career development.
WINTR was originally founded in 2017 by two senior women working in non-traditional roles at tunnelling sites across the
WestConnex New M5 project in Sydney. The women used the group to promote diversity and to encourage women to be involved
in construction. Today, our concept is broader: providing opportunities to women across all our businesses and operations. Women
and men everywhere, who want to support the success of women in our industries, are encouraged to join.
A key challenge for the industry is to overcome the relatively small numbers of women entering the engineering trades and
profession. CIMIC understands the limitation this imposes and supports groups like The National Association of Women in
Construction to empower women in the construction and related industries to reach their full potential.
CPB Contractors’ employees win Victorian Government scholarships
The Victorian Government, as part of its gender equality strategy, is delivering a Women in Transport program which aims to
increase the number of women working in the sector from 16 per cent to 25 per cent by 2020. The achievements of two of CPB
Contractors’ women have been recognised with their acceptance into the program. Marielle Salom was part of the engineering
team on the Blackburn Road Level Crossing Project and is now working with the Early Investigations team on the West Gate Tunnel
Project. Dominique Carydias is currently working on the Caulfield to Dandenong Level Crossing Removal Project.
The program includes scholarships for women to enter transport-related university degrees, access to mentors to provide guidance
and motivation, and the chance to connect with and learn from senior female role models in the transport sector of construction.
One way that CIMIC can directly influence the participation rate is via recruitment into our Graduate Program. For the 2018
graduate cohort, the female participation rate was ~25%, which is above the average participation rate of the industry.
Another key focus of female participation is retention. CIMIC understands that, once we have attracted women to the Group, we
need to make sure that - where possible - we retain them. In some cases, this involves preparing professional development plans so
that we can build a career for these women.
Leighton Asia promotes opportunities for women in construction
Tam Kit Choi is a building engineer on the Hong Kong Zhuhai Macao Bridge - Remaining Ancillary Buildings and Facilities project in
Hong Kong but her first career was as a wedding gown maker. This change was promoted by Tam’s desire to work in a more stable
profession and to be able to spend more time with her family.
Tam responded to an advertisement and enrolled in the Construction Industry Council’s (CIC) Apprentice Program. She joined
Leighton Asia as a technician after graduating from the Program five years ago, completed her Higher Diploma in Building Studies,
and a top-up degree in construction management to strengthen her skills and knowledge in different aspects of construction work.
Leighton Asia has been a long-term supporter of CIC’s apprentice program, which nurtures new talent for the construction industry.
The program equips apprentices with skills and knowledge through a structured curriculum with a combination of classroom
learning and on site practice.
CIMIC and each of its Operating Companies have an obligation to report certain gender related information to the Australian
Government’s Workplace Gender Equality Agency (WGEA) each year66. These comprehensive submissions provide a substantial
amount of gender related data, segmented by occupational types, graduates and apprentices, full-time and part-time, parental
leave accessed, etc. They also include details of and policies for: employer action on pay equity; gender equality strategies and
consultation; flexible working arrangements; support for carers and paid parental leave; sex-based harassment; and family and
domestic violence.
The 2017/18 WGEA submissions show that, for the larger contracting entities of CPB Contractors, Thiess, Sedgman and UGL, which
have substantial employee numbers, females accounted for between 11.6% - 17.2% of management positions and 10.4% - 19.7% of
non-management positions.
Female participation (% of each Operating Company’s workforce)
All managers
All non-managers
2017/18
13.2
15.3
2016/17
13.5
15.1
Although these results are relatively low by the standards of many other industries, they do reflect the traditionally male
dominated nature of the construction and mining industries. It is pleasing to note that, over time, the WGEA submissions are
demonstrating gradual improvements in female participation across the Group’s Operating Companies. Importantly, the Group is
focused on ensuring that the increased participation rates are broadly based - including in trade, engineering and leadership roles -
and not limited to administrative and professional service roles.
Breaking down gender barriers in Chile
In Chile, Valeria Millacaris Salinas is breaking down gender barriers as Thiess’ first female truck operator at the Encuentro
Oxides open pit copper mine in northern Chile. Valeria’s first role in mining was an administration role with Thiess, where she
quickly set her goals on moving into operations. She joined the operations team at Centinela in January 2018 and works a 7x7 shift
allowing her to spend quality time at home with her children.
Located at an altitude of 2,300 meters above sea level, the Encuentro Oxides project will contribute to the production of 50,000
tonnes of copper cathode per year and has a planned mine life of approximately 15 years.
CIMIC is committed to work diligently to close any pay gaps and making efforts to ensure gender equity to produce positive change.
In 2018, CIMIC’s Operating Companies used an in-house developed gender pay equity tool to review gender pay equity issues at
any point in time. The Companies were specifically encouraged to apply the tool prior to the annual remuneration review and with
respect to bonus proposals, and then as a follow up to review any issues and to ensure that any gaps were being addressed.
Sedgman support for families
Part of Sedgman’s commitment to greater gender equity is ensuring that all employees know they are supported when their
circumstances change. As a tangible reminder of this support, Sedgman now sends all employees and their families a Sedgman bib
to welcome new additions to the Sedgman family.
Sedgman hopes this encourages all employees to have more conversations about the flexible options available to them. By
providing flexible options for men and women, Sedgman seeks to break down the barriers for everyone, regardless of gender or the
stage in their life or career. This support is reflected in Sedgman’s commitment to #TackleFlexism.67
Analysis post the 2018 remuneration review showed the Group total fixed remuneration pay gap has reduced by 2.9% compared to
the 2017 review, and each Operating Company has decreased their overall pay gap by between 1 - 5%. Looking into the data in
greater detail we also found decreases in some specifically male dominated job families; for example, in our Engineering job family,
there was a decrease of 4.6% in the overall pay gap.
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.
65 As per disclosure requirements of DJSI.
66 https://www.wgea.gov.au/report/public-reports
93
67 http://www.flexibleworkingday.com/flexism/
94
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Indigenous employment
A fundamental diversity objective is to increase Indigenous employment. 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.
CPB Contractors’ partnership with CareerTrackers continues to deliver
For the second year running, CPB Contractors’ partnership with non-profit Indigenous internship organisation, CareerTrackers, has
been formally recognised for excellence. Jasmine Ryan, a human resources (HR) undergraduate based in NSW, was named the
CareerTrackers 2018 Mark of Excellence winner for her contribution to the partnership, our Indigenous and Social Inclusion
strategy, and the broader CareerTrackers program.
CareerTrackers is a national non-profit with the goal of creating pathways and support systems for Indigenous young adults to
attend and graduate from university, with high marks, industry experience and bright professional futures. CareerTrackers students
complete university at higher rates than their non-Indigenous peers, and 95% of Alumni are in full-time employment in their field
within three months of graduation.
Since signing our 10-year partnership with CareerTrackers in 2010, more than 100 Indigenous university students have completed
internships with CPB Contractors. Over the summer vacation (2017-2018), CPB Contractors placed two pre-university and 19
university students into Indigenous internships at projects and in the corporate office, across disciplines including engineering, HR,
legal and finance.
Our Indigenous employment including subcontractors, is as follows:
Indigenous employment in Australia (total # in the workforce)
Group
2018
1,346
2017
889
The overall number and rate of Indigenous employees have 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.
Indigenous skills building Canberra’s Light Rail project
In Canberra, a team made up of CIMIC Group companies including Pacific Partnerships, CPB Contractors and UGL are part of the
Canberra Metro consortium delivering the new Light Rail project and creating a legacy by building the skills of local Indigenous
people.
The team has supported an Indigenous jobs initiative, originally partnering with Habitat Personnel and, more recently, connected
with CareerTrackers. These networks have seen the project employ nine Indigenous team members so far in traineeship,
apprenticeship and undergraduate roles.
Sisters in Mining program providing Indigenous employment opportunities
For almost a decade, Emma Richards worked with high school Indigenous students encouraging them to achieve the most from
their lives. She has now taken her own advice, swapping the school grounds for a mining site as a trainee truck operator in the
Sisters in Mining program.
Sisters in Mining is a program providing long-term employment opportunities for Indigenous women in Queensland’s mining
sector. The program has helped Emma transition from her job as a Community Education Counsellor to a trainee haul truck driver.
She has already completed her Certificate III in Surface Extraction Operations and hopes to continue with Thiess at the Curragh
mine at the completion of the 18-month program.
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. Numerous initiatives are undertaken across the
Operating Companies to foster cultural sensitivity and understanding.
Celebrating Indigenous female leaders and trailblazers
NAIDOC week has been celebrated across the country by CPB Contractors’ employees at a number of locations. In Sydney, a panel
paid tribute to CPB Contractors' Indigenous female leaders and trailblazers. Speaking to the NSW/ACT business unit in North
Sydney, attendees heard about the invaluable contributions Indigenous and Torres Strait Islander women have made - and
continue to make - to the lives of our panellists, their communities and our nation's rich history.
Celebrations also extended to other project sites, including Sydney's M4 East WestConnex and Melbourne's West Gate Tunnel
projects. In Sydney, the team invited local Aboriginal Elder and Founding Member of Boomalli Aboriginal Artists Co-operative
Euphemia Bostock to the Homebush Bay Drive and Burwood sites. Euphemia spoke about the history, culture and achievements of
Aboriginal and Torres Strait Islander peoples.
In Melbourne, employees warmly welcomed Aboriginal artist Emma Bamblett to the West Gate Tunnel where she told stories
about Aboriginal culture while teaching participants the different Indigenous art techniques. The CPB Contractors team also had
the opportunity to put their newly learnt art skills to work on a shared canvas which has been displayed on site.
NAIDOC Week was created from the acronym representing the National Aborigines and Islanders Day Observance Committee,
evolving to represent a week of celebrations held across Australia each July to celebrate the history, culture and achievements of
Aboriginal and Torres Strait Islander peoples.
Local employment
As an international company, operating as a guest in a number of countries, CIMIC understands the importance of investing in local
employment to ensure that our workforce is, or will be, reflective of the countries in which we operate. Exporting skills to some
countries is important for their economic development while developing a local workforce benefits the local economy by ensuring
that wages are retained in the country and not remitted elsewhere.
Engaging a local workforce in Papua New Guinea
In Port Moresby, PNG, CPB Contractors successfully delivered the landmark development, APEC Haus, a world-leading conference
facility used to host the Asia Pacific Economic Cooperation (APEC) Leaders’ Summit in November 2018.
Constructed in under 12 months by a diverse workforce consisting of 80% PNG Nationals, the impressive APEC Haus was built to
the highest standards on reclaimed land with a complex design. This achievement was even more impressive considering the
additional language and cultural challenges that were brought to the project.
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:
Nationals (as a % of workforce)
Group
2018
94
2017
94
Walking the talk with a diverse local workforce
Near Auckland, New Zealand, CPB Contractors is designing and constructing approximately 11km of additional lanes, upgrading 16
existing bridges and constructing 6 new bridges as part of the NZ$192 million Southern Corridor Improvements project on State
Highway 1.
On entering the team’s office, visitors can’t help but notice the many flags hung up around the wall. Empowering individuals is an
integral part of the project’s culture and the flags are just one way the culturally diverse team celebrates difference. The project’s
management are working closely with the team to empower a diverse workforce that includes 25% Māori, 10.9% Tongan, 7.8%
Samoan, 6.7% Indian and 5.6% Filipino. Individuals are encouraged to share their traditions with the group and Karakia (Māori
incantations or prayers) are frequently said on site along with regular discussions about what such practices mean.
The project’s location is of particular cultural significance as works will be delivered in an area covering eight different iwi, or Māori
tribes, that have been occupied for more than 1,000 years. By attending regular iwi liaison meetings, integrating iwi artwork on
site, and giving open invitations for community representatives to attend project meetings, the project has created strong and
respectful relationships, reflecting successfully on the project.
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Indigenous employment
A fundamental diversity objective is to increase Indigenous employment. 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.
CPB Contractors’ partnership with CareerTrackers continues to deliver
For the second year running, CPB Contractors’ partnership with non-profit Indigenous internship organisation, CareerTrackers, has
been formally recognised for excellence. Jasmine Ryan, a human resources (HR) undergraduate based in NSW, was named the
CareerTrackers 2018 Mark of Excellence winner for her contribution to the partnership, our Indigenous and Social Inclusion
strategy, and the broader CareerTrackers program.
Celebrating Indigenous female leaders and trailblazers
NAIDOC week has been celebrated across the country by CPB Contractors’ employees at a number of locations. In Sydney, a panel
paid tribute to CPB Contractors' Indigenous female leaders and trailblazers. Speaking to the NSW/ACT business unit in North
Sydney, attendees heard about the invaluable contributions Indigenous and Torres Strait Islander women have made - and
continue to make - to the lives of our panellists, their communities and our nation's rich history.
Celebrations also extended to other project sites, including Sydney's M4 East WestConnex and Melbourne's West Gate Tunnel
projects. In Sydney, the team invited local Aboriginal Elder and Founding Member of Boomalli Aboriginal Artists Co-operative
Euphemia Bostock to the Homebush Bay Drive and Burwood sites. Euphemia spoke about the history, culture and achievements of
Aboriginal and Torres Strait Islander peoples.
CareerTrackers is a national non-profit with the goal of creating pathways and support systems for Indigenous young adults to
attend and graduate from university, with high marks, industry experience and bright professional futures. CareerTrackers students
complete university at higher rates than their non-Indigenous peers, and 95% of Alumni are in full-time employment in their field
In Melbourne, employees warmly welcomed Aboriginal artist Emma Bamblett to the West Gate Tunnel where she told stories
about Aboriginal culture while teaching participants the different Indigenous art techniques. The CPB Contractors team also had
the opportunity to put their newly learnt art skills to work on a shared canvas which has been displayed on site.
within three months of graduation.
Since signing our 10-year partnership with CareerTrackers in 2010, more than 100 Indigenous university students have completed
internships with CPB Contractors. Over the summer vacation (2017-2018), CPB Contractors placed two pre-university and 19
university students into Indigenous internships at projects and in the corporate office, across disciplines including engineering, HR,
legal and finance.
Our Indigenous employment including subcontractors, is as follows:
Indigenous employment in Australia (total # in the workforce)
Group
2018
1,346
2017
889
The overall number and rate of Indigenous employees have 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.
Indigenous skills building Canberra’s Light Rail project
In Canberra, a team made up of CIMIC Group companies including Pacific Partnerships, CPB Contractors and UGL are part of the
Canberra Metro consortium delivering the new Light Rail project and creating a legacy by building the skills of local Indigenous
people.
The team has supported an Indigenous jobs initiative, originally partnering with Habitat Personnel and, more recently, connected
with CareerTrackers. These networks have seen the project employ nine Indigenous team members so far in traineeship,
apprenticeship and undergraduate roles.
Sisters in Mining program providing Indigenous employment opportunities
For almost a decade, Emma Richards worked with high school Indigenous students encouraging them to achieve the most from
their lives. She has now taken her own advice, swapping the school grounds for a mining site as a trainee truck operator in the
Sisters in Mining program.
Sisters in Mining is a program providing long-term employment opportunities for Indigenous women in Queensland’s mining
sector. The program has helped Emma transition from her job as a Community Education Counsellor to a trainee haul truck driver.
She has already completed her Certificate III in Surface Extraction Operations and hopes to continue with Thiess at the Curragh
mine at the completion of the 18-month program.
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. Numerous initiatives are undertaken across the
Operating Companies to foster cultural sensitivity and understanding.
NAIDOC Week was created from the acronym representing the National Aborigines and Islanders Day Observance Committee,
evolving to represent a week of celebrations held across Australia each July to celebrate the history, culture and achievements of
Aboriginal and Torres Strait Islander peoples.
Local employment
As an international company, operating as a guest in a number of countries, CIMIC understands the importance of investing in local
employment to ensure that our workforce is, or will be, reflective of the countries in which we operate. Exporting skills to some
countries is important for their economic development while developing a local workforce benefits the local economy by ensuring
that wages are retained in the country and not remitted elsewhere.
Engaging a local workforce in Papua New Guinea
In Port Moresby, PNG, CPB Contractors successfully delivered the landmark development, APEC Haus, a world-leading conference
facility used to host the Asia Pacific Economic Cooperation (APEC) Leaders’ Summit in November 2018.
Constructed in under 12 months by a diverse workforce consisting of 80% PNG Nationals, the impressive APEC Haus was built to
the highest standards on reclaimed land with a complex design. This achievement was even more impressive considering the
additional language and cultural challenges that were brought to the project.
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:
Nationals (as a % of workforce)
Group
2018
94
2017
94
Walking the talk with a diverse local workforce
Near Auckland, New Zealand, CPB Contractors is designing and constructing approximately 11km of additional lanes, upgrading 16
existing bridges and constructing 6 new bridges as part of the NZ$192 million Southern Corridor Improvements project on State
Highway 1.
On entering the team’s office, visitors can’t help but notice the many flags hung up around the wall. Empowering individuals is an
integral part of the project’s culture and the flags are just one way the culturally diverse team celebrates difference. The project’s
management are working closely with the team to empower a diverse workforce that includes 25% Māori, 10.9% Tongan, 7.8%
Samoan, 6.7% Indian and 5.6% Filipino. Individuals are encouraged to share their traditions with the group and Karakia (Māori
incantations or prayers) are frequently said on site along with regular discussions about what such practices mean.
The project’s location is of particular cultural significance as works will be delivered in an area covering eight different iwi, or Māori
tribes, that have been occupied for more than 1,000 years. By attending regular iwi liaison meetings, integrating iwi artwork on
site, and giving open invitations for community representatives to attend project meetings, the project has created strong and
respectful relationships, reflecting successfully on the project.
95
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Inclusive workplaces
We aim to cultivate inclusive workplaces, where fairness and equity are embedded, and which foster the unique skills and talent of
our people. A key element of this inclusiveness is ensuring that we have the right balance of age groups in our workforce with the
advantage that older workers can mentor younger employees.
Mentoring helps to develop young engineers
Earlier in 2018, three projects - WestConnex M4 East and New M5, and the Sydney Metro - joined forces for a combined Young
Engineers Networking event. Over 100 young engineers attended and took advantage of the networking opportunities that
promote relationship building, collaboration and knowledge sharing across the business.
Each of the three Project Directors presented on key topics such as their personal experiences as a young engineer, career
development and the important role mentors play during an engineer's career. The session was followed by both a formal and
informal Q&A session where our young engineers had the opportunity to interact with members of the Senior Leadership Teams
from all three projects.
Retaining the experience that mature age workers have gained from working in our industry and our Companies for long periods is
important in mitigating risk. We seek to leverage this experience and work actively to ensure that our younger workers can learn
from what others might have already done on earlier projects.
Age distribution of the Group’s workforce (%) - staff only
<30
30-40
41-50
51-60
>60
Male
21.3
34.4
20.9
10.2
2.8
Female
2.8
3.7
2.2
1.4
0.2
Celebrating the differences people bring to an organisation is key to building diverse and inclusive work environments. Retaining a
broad mix of people also enriches our companies and fosters greater creativity, performance and business growth.
Embracing the differences of neurodiversity
Recognising the diversity of its workforce is driving a new hiring approach being trialled at UGL. In partnership with Autism
Spectrum Australia, UGL is leading the drive for inclusion by recruiting a neurodiverse workforce. CPB Contractors also piloted the
program in early 2017, employing neurodiverse candidates on the Furlong Main Blackburn Heatherdale Level Crossing Removal
Project, and providing recruitment and disability awareness training.
Adopting this hiring approach provides multiple benefits. By doing so, our Operating Companies are able to attract talented
individuals to roles, raise greater awareness around diversity, and provide our people with additional training on autism awareness
that will enhance our inclusive team culture and benefit all employees.
The teams in UGL’s Melbourne office have been participating in Autism Spectrum Australia’s specialist training. This is key to the
hiring and onboarding process as it is designed to help UGL employees learn how to best support their new colleagues. Also built
into this approach is ongoing mentoring for the newly onboarded employees, upskilling training for line managers, and awareness
training for other UGL teams as the program expands to other areas across the UGL business.
REWARD PERFORMANCE
CIMIC encourages individual accountability and the rewarding of performance against clearly defined roles and goals. We
believe that the role of remuneration is to motivate, recognise and fairly compensate employees to achieve the Group’s
business objectives, for the benefit of shareholders. CIMIC encourages individuals to take responsibility for their role and to make
decisions aligned with the Group's mission, Principles and strategies.
The Remuneration Report in this Annual Report sets out the components and the Group’s approach to the remuneration of senior
and other executives.
CIMIC has no defined benefit superannuation plans and carries no pension liability as investors might find in many other countries.
Individual responsibility
At CIMIC, we encourage accountability which 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.
Accountability is one of our 4 Principles and we encourage individuals to take responsibility for their role and to make decisions
aligned with the Group's mission, Principles and strategies. This assists us to foster a culture of high performance.
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Measurable goals
At CIMIC, performance management aims to develop and evaluate the individual in line with the organisation’s strategic plans and
objectives. We set clearly defined and measurable goals aligned with the Group's Principles and objectives.
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. 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.
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.
We note the reporting requirement of DJSI to disclose the median or mean annual compensation for all employees except the CEO.
For the 2017 year, the median employee compensation was $113,095 and the mean compensation was $121,836, generating a
compensation ratio of 32.6 and 30.5 respectively. The mean ratio68 has decreased from 34.3 since 2016.
We also note that the management ownership of the CEO represents a multiple69 of his base salary of 0.31 times. The management
ownership average multiple of the other Key Management Personnel member is 0.03 times.
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 2019, we plan to:
continue to focus on talent and succession planning across the Group to build bench strength and deliver employee career
opportunities;
further improve and expand the graduate program, including inducting 233 employees in 2019;
continue to provide Human Rights assurance;
continue to undertake Group-wide employee engagement survey of employees to improve employee experience, and attract
and retain employees;
improve outcomes of our diversity and social inclusion programs;
continue to refine our performance management approach to provide more focus on setting objectives and targets that
deliver company performance, and seeking and giving effective feedback;
building the knowledge and expertise of our people through targeted training and development; and
upskilling leaders to provide support to employees experiencing family and domestic violence.
▪
▪
▪
▪
▪
▪
▪
▪
68 The median compensation ratio was not calculated or provided to DJSI in 2016.
69 Based on value of options held at 31 Dec 2018 (closing price of $43.41 less issue price of $27.53 multiplied by number of options) divided by Fixed
Remuneration, as per the disclosure provided in the 2018 Remuneration Report.
98
Inclusive workplaces
We aim to cultivate inclusive workplaces, where fairness and equity are embedded, and which foster the unique skills and talent of
our people. A key element of this inclusiveness is ensuring that we have the right balance of age groups in our workforce with the
advantage that older workers can mentor younger employees.
Mentoring helps to develop young engineers
Earlier in 2018, three projects - WestConnex M4 East and New M5, and the Sydney Metro - joined forces for a combined Young
Engineers Networking event. Over 100 young engineers attended and took advantage of the networking opportunities that
promote relationship building, collaboration and knowledge sharing across the business.
Each of the three Project Directors presented on key topics such as their personal experiences as a young engineer, career
development and the important role mentors play during an engineer's career. The session was followed by both a formal and
informal Q&A session where our young engineers had the opportunity to interact with members of the Senior Leadership Teams
from all three projects.
Retaining the experience that mature age workers have gained from working in our industry and our Companies for long periods is
important in mitigating risk. We seek to leverage this experience and work actively to ensure that our younger workers can learn
from what others might have already done on earlier projects.
Age distribution of the Group’s workforce (%) - staff only
Male
21.3
34.4
20.9
10.2
2.8
Female
2.8
3.7
2.2
1.4
0.2
<30
30-40
41-50
51-60
>60
Celebrating the differences people bring to an organisation is key to building diverse and inclusive work environments. Retaining a
broad mix of people also enriches our companies and fosters greater creativity, performance and business growth.
Embracing the differences of neurodiversity
Recognising the diversity of its workforce is driving a new hiring approach being trialled at UGL. In partnership with Autism
Spectrum Australia, UGL is leading the drive for inclusion by recruiting a neurodiverse workforce. CPB Contractors also piloted the
program in early 2017, employing neurodiverse candidates on the Furlong Main Blackburn Heatherdale Level Crossing Removal
Project, and providing recruitment and disability awareness training.
Adopting this hiring approach provides multiple benefits. By doing so, our Operating Companies are able to attract talented
individuals to roles, raise greater awareness around diversity, and provide our people with additional training on autism awareness
that will enhance our inclusive team culture and benefit all employees.
The teams in UGL’s Melbourne office have been participating in Autism Spectrum Australia’s specialist training. This is key to the
hiring and onboarding process as it is designed to help UGL employees learn how to best support their new colleagues. Also built
into this approach is ongoing mentoring for the newly onboarded employees, upskilling training for line managers, and awareness
training for other UGL teams as the program expands to other areas across the UGL business.
REWARD PERFORMANCE
CIMIC encourages individual accountability and the rewarding of performance against clearly defined roles and goals. We
believe that the role of remuneration is to motivate, recognise and fairly compensate employees to achieve the Group’s
business objectives, for the benefit of shareholders. CIMIC encourages individuals to take responsibility for their role and to make
decisions aligned with the Group's mission, Principles and strategies.
The Remuneration Report in this Annual Report sets out the components and the Group’s approach to the remuneration of senior
CIMIC has no defined benefit superannuation plans and carries no pension liability as investors might find in many other countries.
At CIMIC, we encourage accountability which 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.
Accountability is one of our 4 Principles and we encourage individuals to take responsibility for their role and to make decisions
aligned with the Group's mission, Principles and strategies. This assists us to foster a culture of high performance.
and other executives.
Individual responsibility
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
Measurable goals
At CIMIC, performance management aims to develop and evaluate the individual in line with the organisation’s strategic plans and
objectives. We set clearly defined and measurable goals aligned with the Group's Principles and objectives.
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. 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.
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.
We note the reporting requirement of DJSI to disclose the median or mean annual compensation for all employees except the CEO.
For the 2017 year, the median employee compensation was $113,095 and the mean compensation was $121,836, generating a
compensation ratio of 32.6 and 30.5 respectively. The mean ratio68 has decreased from 34.3 since 2016.
We also note that the management ownership of the CEO represents a multiple69 of his base salary of 0.31 times. The management
ownership average multiple of the other Key Management Personnel member is 0.03 times.
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 2019, we plan to:
▪
continue to focus on talent and succession planning across the Group to build bench strength and deliver employee career
opportunities;
further improve and expand the graduate program, including inducting 233 employees in 2019;
continue to provide Human Rights assurance;
continue to undertake Group-wide employee engagement survey of employees to improve employee experience, and attract
and retain employees;
improve outcomes of our diversity and social inclusion programs;
continue to refine our performance management approach to provide more focus on setting objectives and targets that
deliver company performance, and seeking and giving effective feedback;
building the knowledge and expertise of our people through targeted training and development; and
upskilling leaders to provide support to employees experiencing family and domestic violence.
▪
▪
▪
▪
▪
▪
▪
68 The median compensation ratio was not calculated or provided to DJSI in 2016.
69 Based on value of options held at 31 Dec 2018 (closing price of $43.41 less issue price of $27.53 multiplied by number of options) divided by Fixed
Remuneration, as per the disclosure provided in the 2018 Remuneration Report.
98
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INNOVATION
OUR APPROACH
Innovation is one of the Group’s Principles and is key to a sustainable business. We define innovations as repeatable, new and
better ways of doing things that create value for the Group.
Focus on the future
Measures in place
Actions taken during 2018
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 the Group’s risk matrix
▪
▪
▪
business
We aim to foster innovation, promoting a culture where employees are encouraged to adapt, innovate and be self-critical, and to
learn from, rather than punish failures.
Creating value
The Group delivers bespoke projects, each one is unique and often requires a pioneering solution to overcome challenges. By
working closely with clients, partners, suppliers and subcontractors, we can solve tomorrow’s problems today through bringing
together world-class expertise, management and quality.
Foster innovation
Measures in place
Actions taken during 2018
Performance
Capture knowledge
Measures in place
Actions taken during 2018
Performance
Encourage collaboration
Measures in place
Actions taken during 2018
Performance
Manage risk
Measures in place
Actions taken during 2018
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 spending 10% of their time on innovation projects
Spigit software platform to capture innovations
Launched an 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 659 employees in the use of BIM and GIS
In 2018 there was a 168% increase in the application of BIM and 300% increase in the use
of GIS
EIC Activities’ employees achieved innovation time of 12.1% and spent 19,498 hours on
innovation
Interactive Project Knowledge Library (iPKL)
EIC Activities provided training and webinars to over 4,846 participants during 2018
EIC Activities hosted fortnightly best practice ‘Webinar Wednesdays’ watched by 2,556
people, up from 1,449 in 2017
EIC Activities hosted Webinars for 1,083 Graduates and provided on-demand training for
1,207 employees across the Group
iPKL expanded to capturing details of over 1,963 projects with over 37,983 documents,
including 292 EIC Activities case studies
21 communities of practice established in iPKL to promote collaboration across the Group
Five green standard projects registered in 2018 and eight certifications received
Building projects have received 91 Green Star70 certifications since 2006
76 employees accredited to ‘green project’ standards
CPB Contractors is Australia’s leading sustainability contractor having 23 registrations or
certifications from Infrastructure Sustainability Council of Australia (ISCA)
$4.9 billion of revenue generated from CPB Contractors’ sustainably rated or ‘green’
projects
Risk Policy; Risk Management Policy; Business Resilience Policy; and Quality Management
Policy
Risk management framework based on ISO 31000
Quality management systems based on ISO 9001
Relevant aspects of the Risk Policy and procedures included in the Tender Policy to ensure
a more rigorous approach to risk management at tender stage.
Around 100 tender review management committee meetings were held across the Group
to assess tenders submitted to clients to ensure they complied with Policy and were
measured against the work being tendered.
Risk management framework embedded within existing processes and aligned to the
Group’s objectives, both short and longer term
The innovation practised by the Company helps to deliver solutions for the client and to generate sustainable cash-
backed profits which creates value for shareholders. The direct economic value, as defined by the GRI, generated and
distributed by CIMIC over the past 3 years is set out in the table below.
Economic value created (A$m)71
Economic value generated: Revenue
Economic value distributed
Of which: Operating costs
Employee wages and benefits
Payments to providers of capital
Payments to governments
Community investments
2018
14,670
(13,933)
2017
13,429
(12,650)
2016
10,847
(10,494)
(9,404)
(3,634)
(593)
(301)
(0.7)
(8,341)
(3,530)
(510)
(269)
(0.5)
(7,462)
(2,432)
(412)
(188)
(0.3)
Economic value retained
737
779
353
Other shareholder return metrics can be found in the Operating and Financial Review and Remuneration Report sections of this
Annual Report.
For CIMIC, 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.
Our companies construct, operate and maintain infrastructure and property projects (such as roads, railways, hospitals, schools,
offices, gas plants, wind farms, power stations, transmission lines, water recycling plants, telecommunications cables and towers,
etc.) which are fundamental to improving the productivity of economies and the quality of people’s lives. We undertake the mining
of resources (such as coal, iron ore, nickel, copper, gold, diamonds) which are critical for economic development and prosperity,
and often construct the supporting mine infrastructure such as the processing plants. The resources that we help produce generate
royalties and tax income for governments, and income for local communities.
The projects that we deliver provide well paid and secure employment for people and, by engaging many thousands of
subcontractors to provide services to our projects, we provide employment opportunities and foster local suppliers, many of them
in regional and remote communities. Additionally, 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 necessary services and supports
investment in infrastructure. Finally, by encouraging the innovation of our people, we contribute to the development of safer
construction techniques for the industry and new services which can be exported to other markets, ultimately earning income for
the country.
FOSTER INNOVATION
At CIMIC, we promote a culture where employees are encouraged to adapt, innovate and be self-critical, and to learn
from 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. Innovation is embedded in the EIC Activities name which
stands for Engineering, Innovation and Capability. EIC Activities partners with all of the Operating Companies to ensure the Group’s
collective experience, technical capabilities, innovations and leading edge technology applications are leveraged to deliver our
client’s objectives.
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, public-private-partnerships (PPPs) and build-own-operate-transfer (BOOT) projects.
70 Launched by the Green Building Council of Australia in 2003, Green Star is Australia's only national and voluntary rating system for buildings and
communities.
99
71 As set out in GRI 201: Economic Performance, where the creation and distribution of economic value provides a basic indication of how
an organisation has created wealth for stakeholders.
100
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INNOVATION
OUR APPROACH
Foster innovation
Measures in place
Innovation is one of the Group’s Principles and is key to a sustainable business. We define innovations as repeatable, new and
better ways of doing things that create value for the Group.
We aim to foster innovation, promoting a culture where employees are encouraged to adapt, innovate and be self-critical, and to
learn from, rather than punish failures.
The Group delivers bespoke projects, each one is unique and often requires a pioneering solution to overcome challenges. By
working closely with clients, partners, suppliers and subcontractors, we can solve tomorrow’s problems today through bringing
together world-class expertise, management and quality
Innovation embedded in Group’s Principles, Sustainability Policy and the mission of EIC
Activities
commitment to innovation
Dedicated engineering and technical services business - EIC Activities - leads Group’s
EIC Activities employees commit to spending 10% of their time on innovation projects
Spigit software platform to capture innovations
Actions taken during 2018
Launched an 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 659 employees in the use of BIM and GIS
Performance
In 2018 there was a 168% increase in the application of BIM and 300% increase in the use
of GIS
innovation
EIC Activities’ employees achieved innovation time of 12.1% and spent 19,498 hours on
Capture knowledge
Measures in place
Interactive Project Knowledge Library (iPKL)
Actions taken during 2018
EIC Activities provided training and webinars to over 4,846 participants during 2018
EIC Activities hosted fortnightly best practice ‘Webinar Wednesdays’ watched by 2,556
EIC Activities hosted Webinars for 1,083 Graduates and provided on-demand training for
people, up from 1,449 in 2017
1,207 employees across the Group
including 292 EIC Activities case studies
Performance
iPKL expanded to capturing details of over 1,963 projects with over 37,983 documents,
Encourage collaboration
Measures in place
Actions taken during 2018
Five green standard projects registered in 2018 and eight certifications received
21 communities of practice established in iPKL to promote collaboration across the Group
Building projects have received 91 Green Star70 certifications since 2006
76 employees accredited to ‘green project’ standards
Performance
CPB Contractors is Australia’s leading sustainability contractor having 23 registrations or
certifications from Infrastructure Sustainability Council of Australia (ISCA)
$4.9 billion of revenue generated from CPB Contractors’ sustainably rated or ‘green’
Manage risk
Measures in place
projects
Policy
Risk Policy; Risk Management Policy; Business Resilience Policy; and Quality Management
Actions taken during 2018
Relevant aspects of the Risk Policy and procedures included in the Tender Policy to ensure
Risk management framework based on ISO 31000
▪ Quality management systems based on ISO 9001
a more rigorous approach to risk management at tender stage.
Around 100 tender review management committee meetings were held across the Group
to assess tenders submitted to clients to ensure they complied with Policy and were
measured against the work being tendered.
Performance
Risk management framework embedded within existing processes and aligned to the
Group’s objectives, both short and longer term
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Focus on the future
Measures in place
Actions taken during 2018
Performance
▪
▪
▪
Risk Policy; Risk Management Policy; Group Strategy Policy; annual strategic plan
Undertaken systematic review of potential longer-term risks and opportunities for the
business
Identified risks and opportunities captured in the Group’s risk matrix
Creating value
The innovation practised by the Company helps to deliver solutions for the client and to generate sustainable cash-
backed profits which creates value for shareholders. The direct economic value, as defined by the GRI, generated and
distributed by CIMIC over the past 3 years is set out in the table below.
Economic value created (A$m)71
Economic value generated: Revenue
Economic value distributed
Of which: Operating costs
Employee wages and benefits
Payments to providers of capital
Payments to governments
Community investments
Economic value retained
2018
14,670
2017
13,429
2016
10,847
(13,933)
(12,650)
(10,494)
(9,404)
(3,634)
(593)
(301)
(0.7)
(8,341)
(3,530)
(510)
(269)
(0.5)
(7,462)
(2,432)
(412)
(188)
(0.3)
737
779
353
Other shareholder return metrics can be found in the Operating and Financial Review and Remuneration Report sections of this
Annual Report.
For CIMIC, 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.
Our companies construct, operate and maintain infrastructure and property projects (such as roads, railways, hospitals, schools,
offices, gas plants, wind farms, power stations, transmission lines, water recycling plants, telecommunications cables and towers,
etc.) which are fundamental to improving the productivity of economies and the quality of people’s lives. We undertake the mining
of resources (such as coal, iron ore, nickel, copper, gold, diamonds) which are critical for economic development and prosperity,
and often construct the supporting mine infrastructure such as the processing plants. The resources that we help produce generate
royalties and tax income for governments, and income for local communities.
The projects that we deliver provide well paid and secure employment for people and, by engaging many thousands of
subcontractors to provide services to our projects, we provide employment opportunities and foster local suppliers, many of them
in regional and remote communities. Additionally, 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 necessary services and supports
investment in infrastructure. Finally, by encouraging the innovation of our people, we contribute to the development of safer
construction techniques for the industry and new services which can be exported to other markets, ultimately earning income for
the country.
FOSTER INNOVATION
At CIMIC, we promote a culture where employees are encouraged to adapt, innovate and be self-critical, and to learn
from 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. Innovation is embedded in the EIC Activities name which
stands for Engineering, Innovation and Capability. EIC Activities partners with all of the Operating Companies to ensure the Group’s
collective experience, technical capabilities, innovations and leading edge technology applications are leveraged to deliver our
client’s objectives.
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, public-private-partnerships (PPPs) and build-own-operate-transfer (BOOT) projects.
70 Launched by the Green Building Council of Australia in 2003, Green Star is Australia's only national and voluntary rating system for buildings and
71 As set out in GRI 201: Economic Performance, where the creation and distribution of economic value provides a basic indication of how
an organisation has created wealth for stakeholders.
communities.
99
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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.
Australian first minimises disruption to communities
CPB Contractors has utilised a giant straddle carrier on Melbourne’s $1.6 billion Caulfield to Dandenong rail line to deliver a new
elevated rail structure. It is the first such use of a straddle carrier and gantry crane in Australia, and the large-scale equipment has
travelled 260km back and forth along the route to safely deliver the project.
CPB Contractors sourced the equipment from Italy which allowed the project to overcome the challenge of construction in a
narrow, inner-city rail corridor. The carrier built 3.2km of the elevated rail structure, consisting of 174 bridge spans weighing as
much as 420 tonnes each. This approach enabled Melbourne’s trains to run uninterrupted while the final section of the elevated
rail structure was built above live train lines and roads.
By employing the straddle carrier and gantry crane, CPB Contractors minimised disruption to local communities. The elevated
design will create 22.5 hectares of open space which will now be transformed into landscaped parks, paths and recreation facilities
for the community to enjoy.
EIC Activities employees are actively encouraged to spend 10% of their time on innovation projects. In 2018, this meant that over
19,498 hours were spent on innovation with 66 approved innovation projects receiving $1.03 million of funding from EIC. This
investment, geared with co-funding from other Operating Companies and external partners, leveraged the funding to more than $2
million of total project investments. EIC Activities supports its capability through other technical groups within the ACS Group,
including HOCHTIEF AG, Dragados and Turner.
Nexplore to drive digital processes
CIMIC is collaborating with HOCHTIEF AG, and its major shareholder ACS, to harness the potential presented by digitalisation,
where fields such as artificial intelligence, virtual reality, machine learning, the Internet of Things, and Industry 4.0 are opening up
new opportunities and perspectives. A specialist organisation - Nexplore - has been established to focus on promoting digitalisation
in our core business.
Nexplore plans to establish several innovation centres worldwide that will collaborate on a range of initiatives. In addition to the
existing locations in Essen and Frankfurt/ Darmstadt, centres will be set up in Madrid, Minneapolis and Sydney. An IT work platform
providing information for everyone involved in the initiative will support the ongoing, systematic transfer of expertise. That way,
project results and best practices can be shared all over the world.
CIMIC has a Group-wide Innovation Program - launched in 2017 - to further enhance the idea generation and implementation of
repeatable, new and better ways that increase value for the Group. The Program encourages employees to submit their ideas and
utilises campaigns to drive targeted idea generation, collaboration, selection and innovation implementation in areas that are
important to the Group. A dedicated management software package - Spigit - enables employees to tap into the collective
intelligence of colleagues, partners and customers to find the best ideas and make the right decisions.
In 2017, Thiess adopted an innovation framework which allows employees to add ideas into an innovation portal. Within this
portal, Thiess has captured over 150 ideas to date. These ideas cover broad areas across the business including mining, assets
management, and health and safety. The innovative initiatives have resulted in efficiency gains and cost savings across the
business and demonstrate a strong commitment to the principle of innovation. Thiess also utilises the CIMIC Innovation Program
and successfully ran a number of Australian based campaigns during the year.
Installing wold-class signalling on the Melbourne Metro Tunnel project
CPB Contractors, in partnership with Bombardier Transportation, is installing a new high-capacity signalling system - the first roll-
out of its kind on an existing network anywhere in Australia - as part of the $11 billion Metro Tunnel Project.
Used extensively in Europe and Asia, the highly specialised signalling system (Communications-Based Train Control - CBTC) will
allow trains to run every two to three minutes while also creating a safer environment for transport operators and commuters. For
commuters, it will mean a true ‘turn-up-and-go’ train network for Melbourne that requires no timetable, within a safer and less
congested environment.
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Massive lid lift an Australian record
In Victoria, a major milestone has been reached on the Craigieburn Sewage Transfer Hub for Yarra Valley Water, with lids lifted into
place on the biggest glass-infused steel sewage tanks in Australia. CPB Contractors is delivering the Transfer Hub and the project
will improve Yarra Valley Water’s capacity to collect, store and transfer sewage flows from future developments in Melbourne’s
northern suburbs.
The project included the installation of two 16 mega-litre, 50-metre diameter glass-infused steel sewage tanks. It took two hours
for a 350 tonne crane to lift the first of two tank roofs into place weighing around 23 tonnes - the same as 16 family passenger cars.
Glass infused steel tanks are common in Europe and some have been installed in other parts of Australia, but they haven’t been
used in a sewage storage application before. Sewage is typically stored in a lined concrete tank, or a steel tank with an epoxy
coating. Glass infusion was selected on this project for its excellent corrosive resistance, cost effectiveness, quick construction time
on site and improved maintainability. The glass infused steel tanks also delivered important safety benefits. Construction of typical
in-situ concrete tank takes a long time and involves a significant amount of working at height. Constructing the tank roof on the
ground reduced working at height requirement by more than 50% and significantly reduced exposure to wind.
Committed to doing things differently at UGL
Employee survey results have inspired a Unipart Joint Venture team to kick off an innovative program that is delivering
improvements in safety, quality and productivity on site. The team, which maintains Sydney’s passenger trains, calls the continuous
improvement program ‘Customer Kaizen’72 which is targeting incremental improvement projects aligned around key areas of
safety, quality, cost and delivery.
Individual teams took ownership and brainstormed ideas for projects to drive improvements in people and culture, cost savings,
delivering value to customers, quality and asset management. They developed 131 improvement initiatives which are owned and
being driven by the frontline teams.
Recognition is a key element and a wall on site has been dedicated to track each initiative’s status and bi-monthly project forums
are being run where teams present their milestones to the broader team on site. These forums also provide the opportunity for
teams to share ideas, recognise good work and celebrate successes and achievements.
Innovation and 3D laser scanners powering projects
The increasing sophistication and adaption of BIM has driven a step change, not only in the design and construction processes, but
also in the survey space. Powerful 3D scanners with multiple applications across the life cycle of a project - from design to delivery,
operations and maintenance - are being utilised. The scanners quickly and comprehensively capture all visible features in a dense
cloud of millions of points, which can be used by design, survey and project teams. Integrated internal cameras provide imagery for
colourised reality models of both existing and built environments.
The point cloud information delivered by the scanners, in combination with BIM, equips design, survey and project teams to make
more informed decisions, helping to improve safety, reduce the risk of rework, capture time and cost savings, and to leverage
improved quality and progress reporting.
CAPTURE KNOWLEDGE
Systematically and rigorously capturing knowledge is a core element of innovation. It allows our people to leverage
learnings and to avoid ‘reinventing the wheel’. A key tool in this knowledge capture has been the creation of a custom-
built, intellectual property database in the form of our interactive Project Knowledge Library (iPKL) which was launched in 2016.
EIC Activities built, and continues to develop, this library which holds key data from over 1,963 diverse 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 the efficient preparation of tenders and assists project delivery. By using iPKL to access and store key
information resources, our people can fast track learning, repeat successes, avoid mistakes and innovate to win challenging
projects.
The iPKL platform also includes 21 communities of practice which bring together engineering expertise, technical solutions, lean
practices, new technologies and advanced industry developments - equipping the Group with more levers to innovate, mitigate
risk, add value and drive performance. 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: applied technical knowledge; asset management; building; concrete and quarry materials; digital engineering;
environment; geotechnical; heavy lift; innovation and lean; knowledge management; mechanical and electrical engineering;
72 Kaizen is the Japanese word for improvement.
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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.
Australian first minimises disruption to communities
CPB Contractors has utilised a giant straddle carrier on Melbourne’s $1.6 billion Caulfield to Dandenong rail line to deliver a new
elevated rail structure. It is the first such use of a straddle carrier and gantry crane in Australia, and the large-scale equipment has
travelled 260km back and forth along the route to safely deliver the project.
CPB Contractors sourced the equipment from Italy which allowed the project to overcome the challenge of construction in a
narrow, inner-city rail corridor. The carrier built 3.2km of the elevated rail structure, consisting of 174 bridge spans weighing as
much as 420 tonnes each. This approach enabled Melbourne’s trains to run uninterrupted while the final section of the elevated
rail structure was built above live train lines and roads.
By employing the straddle carrier and gantry crane, CPB Contractors minimised disruption to local communities. The elevated
design will create 22.5 hectares of open space which will now be transformed into landscaped parks, paths and recreation facilities
for the community to enjoy.
EIC Activities employees are actively encouraged to spend 10% of their time on innovation projects. In 2018, this meant that over
19,498 hours were spent on innovation with 66 approved innovation projects receiving $1.03 million of funding from EIC. This
investment, geared with co-funding from other Operating Companies and external partners, leveraged the funding to more than $2
million of total project investments. EIC Activities supports its capability through other technical groups within the ACS Group,
including HOCHTIEF AG, Dragados and Turner.
Nexplore to drive digital processes
CIMIC is collaborating with HOCHTIEF AG, and its major shareholder ACS, to harness the potential presented by digitalisation,
where fields such as artificial intelligence, virtual reality, machine learning, the Internet of Things, and Industry 4.0 are opening up
new opportunities and perspectives. A specialist organisation - Nexplore - has been established to focus on promoting digitalisation
in our core business.
Nexplore plans to establish several innovation centres worldwide that will collaborate on a range of initiatives. In addition to the
existing locations in Essen and Frankfurt/ Darmstadt, centres will be set up in Madrid, Minneapolis and Sydney. An IT work platform
providing information for everyone involved in the initiative will support the ongoing, systematic transfer of expertise. That way,
project results and best practices can be shared all over the world.
CIMIC has a Group-wide Innovation Program - launched in 2017 - to further enhance the idea generation and implementation of
repeatable, new and better ways that increase value for the Group. The Program encourages employees to submit their ideas and
utilises campaigns to drive targeted idea generation, collaboration, selection and innovation implementation in areas that are
important to the Group. A dedicated management software package - Spigit - enables employees to tap into the collective
intelligence of colleagues, partners and customers to find the best ideas and make the right decisions.
In 2017, Thiess adopted an innovation framework which allows employees to add ideas into an innovation portal. Within this
portal, Thiess has captured over 150 ideas to date. These ideas cover broad areas across the business including mining, assets
management, and health and safety. The innovative initiatives have resulted in efficiency gains and cost savings across the
business and demonstrate a strong commitment to the principle of innovation. Thiess also utilises the CIMIC Innovation Program
and successfully ran a number of Australian based campaigns during the year.
Installing wold-class signalling on the Melbourne Metro Tunnel project
CPB Contractors, in partnership with Bombardier Transportation, is installing a new high-capacity signalling system - the first roll-
out of its kind on an existing network anywhere in Australia - as part of the $11 billion Metro Tunnel Project.
Used extensively in Europe and Asia, the highly specialised signalling system (Communications-Based Train Control - CBTC) will
allow trains to run every two to three minutes while also creating a safer environment for transport operators and commuters. For
commuters, it will mean a true ‘turn-up-and-go’ train network for Melbourne that requires no timetable, within a safer and less
congested environment.
Massive lid lift an Australian record
In Victoria, a major milestone has been reached on the Craigieburn Sewage Transfer Hub for Yarra Valley Water, with lids lifted into
place on the biggest glass-infused steel sewage tanks in Australia. CPB Contractors is delivering the Transfer Hub and the project
will improve Yarra Valley Water’s capacity to collect, store and transfer sewage flows from future developments in Melbourne’s
northern suburbs.
The project included the installation of two 16 mega-litre, 50-metre diameter glass-infused steel sewage tanks. It took two hours
for a 350 tonne crane to lift the first of two tank roofs into place weighing around 23 tonnes - the same as 16 family passenger cars.
Glass infused steel tanks are common in Europe and some have been installed in other parts of Australia, but they haven’t been
used in a sewage storage application before. Sewage is typically stored in a lined concrete tank, or a steel tank with an epoxy
coating. Glass infusion was selected on this project for its excellent corrosive resistance, cost effectiveness, quick construction time
on site and improved maintainability. The glass infused steel tanks also delivered important safety benefits. Construction of typical
in-situ concrete tank takes a long time and involves a significant amount of working at height. Constructing the tank roof on the
ground reduced working at height requirement by more than 50% and significantly reduced exposure to wind.
Committed to doing things differently at UGL
Employee survey results have inspired a Unipart Joint Venture team to kick off an innovative program that is delivering
improvements in safety, quality and productivity on site. The team, which maintains Sydney’s passenger trains, calls the continuous
improvement program ‘Customer Kaizen’72 which is targeting incremental improvement projects aligned around key areas of
safety, quality, cost and delivery.
Individual teams took ownership and brainstormed ideas for projects to drive improvements in people and culture, cost savings,
delivering value to customers, quality and asset management. They developed 131 improvement initiatives which are owned and
being driven by the frontline teams.
Recognition is a key element and a wall on site has been dedicated to track each initiative’s status and bi-monthly project forums
are being run where teams present their milestones to the broader team on site. These forums also provide the opportunity for
teams to share ideas, recognise good work and celebrate successes and achievements.
Innovation and 3D laser scanners powering projects
The increasing sophistication and adaption of BIM has driven a step change, not only in the design and construction processes, but
also in the survey space. Powerful 3D scanners with multiple applications across the life cycle of a project - from design to delivery,
operations and maintenance - are being utilised. The scanners quickly and comprehensively capture all visible features in a dense
cloud of millions of points, which can be used by design, survey and project teams. Integrated internal cameras provide imagery for
colourised reality models of both existing and built environments.
The point cloud information delivered by the scanners, in combination with BIM, equips design, survey and project teams to make
more informed decisions, helping to improve safety, reduce the risk of rework, capture time and cost savings, and to leverage
improved quality and progress reporting.
CAPTURE KNOWLEDGE
Systematically and rigorously capturing knowledge is a core element of innovation. It allows our people to leverage
learnings and to avoid ‘reinventing the wheel’. A key tool in this knowledge capture has been the creation of a custom-
built, intellectual property database in the form of our interactive Project Knowledge Library (iPKL) which was launched in 2016.
EIC Activities built, and continues to develop, this library which holds key data from over 1,963 diverse 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 the efficient preparation of tenders and assists project delivery. By using iPKL to access and store key
information resources, our people can fast track learning, repeat successes, avoid mistakes and innovate to win challenging
projects.
The iPKL platform also includes 21 communities of practice which bring together engineering expertise, technical solutions, lean
practices, new technologies and advanced industry developments - equipping the Group with more levers to innovate, mitigate
risk, add value and drive performance. 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: applied technical knowledge; asset management; building; concrete and quarry materials; digital engineering;
environment; geotechnical; heavy lift; innovation and lean; knowledge management; mechanical and electrical engineering;
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72 Kaizen is the Japanese word for improvement.
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procurement; project planning; rail; roads and civil works; structural engineering; survey; sustainability; temporary works; utility
management; and water and waste water.
Technical training
Thiess has established an innovation framework with an intranet portal 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.
Digital engineering
Digital engineering technologies - Building Information Modelling (BIM) and Geographic Information Systems (GIS) - enable project
teams to collaborate in virtual environments. 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 with added dimensions beyond the traditional 2D (two dimensional) that include:
▪
▪
▪
▪
▪
visualisation and coordination of the project scope (3D);
improving schedule integrity through simulation (4D);
quantification of project scope elements such as cost (5D);
providing accessible asset data for operations and maintenance (6D); and
allowing analysis and improved data access and linkages (XD).
Virtual reality - a new tool for the workshop
Digital technologies such as virtual reality (VR) are increasingly at home on sites and projects, and are now proving their worth in
the workshop - with some help from EIC Activities. One such initiative has supported Thiess’ services efficiency program and the
team’s continuing focus on streamlining the servicing of mining trucks.
Thiess wanted to further improve their patented modular Service Efficiency Structure which is a key tool for service efficiency.
When a truck rolls into a workshop, a specially designed structure - or mobile platform - supports the team in their efforts to
streamline servicing and make the work environment safer.
EIC Activities helped to improve the structure and increase its flexibility so it can service everything from the smallest to the largest
haul trucks in the fleet, in any location in the world, in any set of conditions, in less time than it takes in the current structure. VR
was used to test the solution, providing the opportunity to put the people who will use the structure into it - before it is built - to
test the solution. This then allowed elements such as spatial layout, visibility and sight lines to be fine-tuned in the design phase,
helping to make the structure a safer, and more efficient, high performance tool.
Digital engineering is increasingly being mandated by clients and is becoming the norm for tenders and projects in construction,
mining, mineral processing and services. EIC Activities is leading the Group’s innovation in the use of these technologies.
CIMIC’s expertise in, and, application of, BIM for design and construction was recognised in 2017 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.
Implementing GIS enables projects to integrate, store and analyse geographic information to improve the effectiveness of project
design, planning and delivery. Digital workflows support information transfer throughout the project team and eventually to the
end user.
New on-line platform delivers integrated view
EIC Activities is collaborating with project teams in CPB Contractors and Leighton Asia to continue developing a new online
platform, GeoView. This in-house designed system provides an integrated view of critical project data in one place, delivering time
and cost savings.
GeoView provides a user-friendly interface for different parties, including design teams, consultants, subcontractors and clients to
input and present data systematically and efficiently. Previously, monitoring data was recorded in excel spreadsheets and saved in
different locations. Now, users can view the latest monitoring data, tabulated graphically or geographically in GeoView, which
reduces time spent processing data and creating reports.
In 2016, our projects and sites across the Group were accessing 250,000 maps per week on our GIS platform; by the end of 2017,
that figure was three million maps per week and, by the end of 2018, it was six million maps per week.
In 2018, there was a 168% increase in the application of BIM and a 300% increase in the use of GIS on CIMIC projects. Since
attainment of Kitemark certification in 2017, we have been progressively implementing Digital Engineering best practices on all of
the Group’s infrastructure projects. In 2018, we trained more than 659 people in the use of BIM and GIS.
During the year, EIC Activities continued to deliver its ‘Webinar Wednesday’ program. Held every second Wednesday, and watched
by more than 2,556 employees in 2018, EIC Activities hosted 24 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.
Some of the subjects covered in 2018 included:
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Technical training in 2018
Autodesk enterprise agreement
▪ Goonyella Riverside to South Walker Creek dragline walk
Knowledge management (featuring iPKL and
▪ Ground heat exchangers
Digital engineering: why, what and how
Communities of Practice)
BSI Kitemark certification
International Women’s Day special panel discussion
Importance of technology delivery in major civil
Safety innovation projects
Battery energy storage systems
Arc flash (and mitigation measures)
A conversation on misbehaving soils, part 1
▪ Whole-of-life asset management
Piling engineering: lifting the veil of the dark art
Change management and the impact on projects
infrastructure projects
Developing construction and traffic staging
arrangements - a case study
A conversation on misbehaving soils, part 2: reactive
The future of rail in Australia: high speed or
clays
hyperloop
Temporary pavement design: public roads, haul roads and
Innovations in asphalt: the new black
trafficking shoulders
Looking after your mind - practical tools to help
Straddle carrier: procurement, commissioning and operation
mental health
▪
▪
▪
▪
▪
▪
▪
▪
▪
ENCOURAGE COLLABORATION
At CIMIC, we are supportive of collaborating with industry and other related entities that may provide
opportunities to benefit the Group. We also promote and support research and development projects that have
the potential to improve the safety, efficiency or sustainability of the industry.
The Group is committed to maintaining a position as an industry leader in the delivery of 'green' rated infrastructure and building
projects, and actively encourages clients to mandate the use of these rating systems.
Online collaboration tools more broadly used
In Perth, Western Australia, CPB Contractors’ Broad Construction successfully delivered the residential Claremont on the Park
development. Set on the perimeter of a suburban football ground, the Claremont development consists of 233 apartments set over
two buildings which span a 24,000m2 double basement, varying in height to a maximum of six storeys.
During the planning stages the project team adapted the online system, Aconex, to streamline the existing processes used to
manage building defects prior to handover. Bespoke features were included in the system to open up new avenues of collaboration
between Broad and the many subcontractors employed to complete the job. By creating an easy-to-access online channel, Broad
substantially reduced the volume of hard copy reports being shared across the project and improved relationships with the
subcontractors.
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procurement; project planning; rail; roads and civil works; structural engineering; survey; sustainability; temporary works; utility
management; and water and waste water.
Thiess has established an innovation framework with an intranet portal 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.
Digital engineering
Digital engineering technologies - Building Information Modelling (BIM) and Geographic Information Systems (GIS) - enable project
teams to collaborate in virtual environments. 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 with added dimensions beyond the traditional 2D (two dimensional) that include:
▪
▪
▪
▪
▪
visualisation and coordination of the project scope (3D);
improving schedule integrity through simulation (4D);
quantification of project scope elements such as cost (5D);
providing accessible asset data for operations and maintenance (6D); and
allowing analysis and improved data access and linkages (XD).
Virtual reality - a new tool for the workshop
Digital technologies such as virtual reality (VR) are increasingly at home on sites and projects, and are now proving their worth in
the workshop - with some help from EIC Activities. One such initiative has supported Thiess’ services efficiency program and the
team’s continuing focus on streamlining the servicing of mining trucks.
Thiess wanted to further improve their patented modular Service Efficiency Structure which is a key tool for service efficiency.
When a truck rolls into a workshop, a specially designed structure - or mobile platform - supports the team in their efforts to
streamline servicing and make the work environment safer.
EIC Activities helped to improve the structure and increase its flexibility so it can service everything from the smallest to the largest
haul trucks in the fleet, in any location in the world, in any set of conditions, in less time than it takes in the current structure. VR
was used to test the solution, providing the opportunity to put the people who will use the structure into it - before it is built - to
test the solution. This then allowed elements such as spatial layout, visibility and sight lines to be fine-tuned in the design phase,
helping to make the structure a safer, and more efficient, high performance tool.
Digital engineering is increasingly being mandated by clients and is becoming the norm for tenders and projects in construction,
mining, mineral processing and services. EIC Activities is leading the Group’s innovation in the use of these technologies.
CIMIC’s expertise in, and, application of, BIM for design and construction was recognised in 2017 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.
Implementing GIS enables projects to integrate, store and analyse geographic information to improve the effectiveness of project
design, planning and delivery. Digital workflows support information transfer throughout the project team and eventually to the
end user.
and cost savings.
New on-line platform delivers integrated view
EIC Activities is collaborating with project teams in CPB Contractors and Leighton Asia to continue developing a new online
platform, GeoView. This in-house designed system provides an integrated view of critical project data in one place, delivering time
GeoView provides a user-friendly interface for different parties, including design teams, consultants, subcontractors and clients to
input and present data systematically and efficiently. Previously, monitoring data was recorded in excel spreadsheets and saved in
different locations. Now, users can view the latest monitoring data, tabulated graphically or geographically in GeoView, which
reduces time spent processing data and creating reports.
In 2016, our projects and sites across the Group were accessing 250,000 maps per week on our GIS platform; by the end of 2017,
that figure was three million maps per week and, by the end of 2018, it was six million maps per week.
In 2018, there was a 168% increase in the application of BIM and a 300% increase in the use of GIS on CIMIC projects. Since
attainment of Kitemark certification in 2017, we have been progressively implementing Digital Engineering best practices on all of
the Group’s infrastructure projects. In 2018, we trained more than 659 people in the use of BIM and GIS.
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
Technical training
During the year, EIC Activities continued to deliver its ‘Webinar Wednesday’ program. Held every second Wednesday, and watched
by more than 2,556 employees in 2018, EIC Activities hosted 24 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.
Some of the subjects covered in 2018 included:
Technical training in 2018
Digital engineering: why, what and how
International Women’s Day special panel discussion
Safety innovation projects
Battery energy storage systems
Arc flash (and mitigation measures)
A conversation on misbehaving soils, part 1
▪
▪ Goonyella Riverside to South Walker Creek dragline walk
▪ Ground heat exchangers
▪
▪
▪
▪
▪
▪
▪ Whole-of-life asset management
▪
▪
▪
Piling engineering: lifting the veil of the dark art
Change management and the impact on projects
Temporary pavement design: public roads, haul roads and
trafficking shoulders
Straddle carrier: procurement, commissioning and operation
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Autodesk enterprise agreement
Knowledge management (featuring iPKL and
Communities of Practice)
BSI Kitemark certification
Importance of technology delivery in major civil
infrastructure projects
Developing construction and traffic staging
arrangements - a case study
A conversation on misbehaving soils, part 2: reactive
clays
The future of rail in Australia: high speed or
hyperloop
Innovations in asphalt: the new black
Looking after your mind - practical tools to help
mental health
ENCOURAGE COLLABORATION
At CIMIC, we are supportive of collaborating with industry and other related entities that may provide
opportunities to benefit the Group. We also promote and support research and development projects that have
the potential to improve the safety, efficiency or sustainability of the industry.
The Group is committed to maintaining a position as an industry leader in the delivery of 'green' rated infrastructure and building
projects, and actively encourages clients to mandate the use of these rating systems.
Online collaboration tools more broadly used
In Perth, Western Australia, CPB Contractors’ Broad Construction successfully delivered the residential Claremont on the Park
development. Set on the perimeter of a suburban football ground, the Claremont development consists of 233 apartments set over
two buildings which span a 24,000m2 double basement, varying in height to a maximum of six storeys.
During the planning stages the project team adapted the online system, Aconex, to streamline the existing processes used to
manage building defects prior to handover. Bespoke features were included in the system to open up new avenues of collaboration
between Broad and the many subcontractors employed to complete the job. By creating an easy-to-access online channel, Broad
substantially reduced the volume of hard copy reports being shared across the project and improved relationships with the
subcontractors.
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Green rated projects
Increasingly the Group’s clients are seeking to integrate sustainability considerations into the projects they are delivering. In New
South Wales, for example, the government “seek[s] to deliver sustainable development practices by embedding sustainability
initiatives into the planning, design, construction, operations and maintenance of transport infrastructure projects.”73
In many cases, this is manifest in the requirement to deliver against well established, third-party sustainability ratings systems. For
example:
Government
area
NSW
QLD
WA
VIC
New Zealand
Agency
IS Rating mandate74
Department of Planning
Transport for NSW
Sydney Metro
Queanbeyan Council
Department of Transport and Main Roads
Main Roads WA
Vic Roads
Level Crossings Removal Authority
Melbourne Metro
City of Casey
City Rail Link Ltd
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Critical state significant infrastructure
All projects >$50m
High risk projects <$50m
All projects in program
All project >$2m
All projects >$100m
All projects >$100m
All projects >$100m
All projects in program
All projects in program
Capital works projects
All projects in program
Governments are striving 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. CIMIC is
supportive of this approach by governments as the ratings provide a mechanism to deliver project solutions that deliver
environmental and social benefits while reducing life cycle costs.
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.
Sustainable ratings for Level Crossing Removal Project
An alliance including CPB Contractors, delivering Victoria’s Caulfield to Dandenong Level Crossing Removal Project, has been
recognised as a leader in sustainability by being awarded the Victorian Premier’s Sustainability Award for the Built Environment.
Through hard work and innovation, the project team also achieved a 5-Star Green Star Design Rating for Murrumbeena Station and
is on track to achieve this rating for all stations at the ‘As-Built’ milestone (denoting Australian Excellence75). This will be a first for a
rail project nationally.
Some of the key sustainability initiatives in relation to the Project’s concrete precast facility included:
▪
use of over 17,000 tonnes of recycled concrete in the construction of the facility foundation, reducing the need to import fill
material;
installation of LED lighting throughout the precast facility, reducing demand for energy by over 60%;
using a concrete mix in the precast segments that replaced 21% of the cement with fly-ash, thereby reducing the embodied
energy content;
using a 20% biodiesel mix to power the generators for the gantry cranes which, combined with technology to optimise power
output, saved approximately 51,600 litres of diesel (a 23% reduction) and reduced CO2-e by some 174 tonnes (a 28%
reduction); and
accessing the facility’s 13,000m2 roof to capture rainwater via 3 x 20,000L tanks, enabling the reuse of approximately 10
million litres of water.
▪
▪
▪
▪
CPB Contractors has developed an innovative capability in the area of sustainable buildings and infrastructure, and is currently the
leading sustainability contractor in the Australian market, working on or having delivered 23 IS registered or certified projects
worth more than A$24 billion in total.
Green standard construction projects (#)
IS
Green Star
BEAM Plus
LEED76
Green Roads77
New registrations
Cumulative
during 2018
certifications since
1
2
1
1
0
2006
22
91
8
10
2
2016
2,083
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
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
LEED Silver certification
In 2018, CPB Contractors generated revenue of $4.9 billion from sustainably rated or ‘green’ projects.
CPB Contractors' green project revenue ($m)
Total
2018
4,932
2017
2,703
Setting an example, CIMIC and its Operating Companies are headquartered in a number of green rated offices including:
Office address
Companies based in this office
Green rating
177 Pacific Hwy, North Sydney,
CIMIC, CPB Contractors, Broad, EIC
5 Star Green Star - Office As Built rating
NSW
Activities, Pacific Partnerships, Leighton
5½ Star NABERS Energy rating
Properties
Partnerships
567 Collins St, Melbourne, VIC
CPB Contractors, EIC Activities, Pacific
HQ South Tower, 520 Wickham
CPB Contractors, Broad, EIC Activities,
Street, Brisbane, QLD
Pacific Partnerships
202 Pier Street, Perth WA
CPB Contractors, Broad, EIC Activities
179 Grey Street, South Bank
Thiess
QLD
NSW
Sun Hung Kai Centre, 30
Harbour Road, Hong Kong
Leighton Asia
Collaboration with industry associations and NGOs
40 Miller Street, North Sydney,
UGL
5 Star NABERS Energy rating
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.
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 maintain membership of a
number of trade and industry associations and groups. We recognise that such memberships can provide networking opportunities,
support professional development and help to drive improvements in industry practices, to the benefit of employees, shareholders
and society.
We understand the increasing level of stakeholder interest in membership of industry associations and their potential to play a
lobbying or advocacy role on behalf of the business. CIMIC’s membership participation is restricted to the payment of annual
subscription fees and we do not provide additional funding to support campaigns or other activities.
73 Transport for NSW, Sustainable Design Guidelines Version 4.0, May 2017.
74 Detail provided by ISCA, 6 Dec 2018.
75 Refer to the Scale of green star ratings diagram where a 5 Star Green Star rating denotes a standard of Australian Excellence.
105
76 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.
77 Greenroads is an independent non-profit that advances sustainability performance management and education for transportation capital
projects.
106
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
Green rated projects
Increasingly the Group’s clients are seeking to integrate sustainability considerations into the projects they are delivering. In New
South Wales, for example, the government “seek[s] to deliver sustainable development practices by embedding sustainability
initiatives into the planning, design, construction, operations and maintenance of transport infrastructure projects.”73
In many cases, this is manifest in the requirement to deliver against well established, third-party sustainability ratings systems. For
example:
area
NSW
QLD
WA
VIC
Government
Agency
IS Rating mandate74
Department of Planning
Transport for NSW
Sydney Metro
Queanbeyan Council
Department of Transport and Main Roads
Level Crossings Removal Authority
Main Roads WA
Vic Roads
Melbourne Metro
City of Casey
Critical state significant infrastructure
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
All projects >$50m
High risk projects <$50m
All projects in program
All project >$2m
All projects >$100m
All projects >$100m
All projects >$100m
All projects in program
All projects in program
Capital works projects
All projects in program
New Zealand
City Rail Link Ltd
Governments are striving 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. CIMIC is
supportive of this approach by governments as the ratings provide a mechanism to deliver project solutions that deliver
environmental and social benefits while reducing life cycle costs.
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.
Sustainable ratings for Level Crossing Removal Project
An alliance including CPB Contractors, delivering Victoria’s Caulfield to Dandenong Level Crossing Removal Project, has been
recognised as a leader in sustainability by being awarded the Victorian Premier’s Sustainability Award for the Built Environment.
Through hard work and innovation, the project team also achieved a 5-Star Green Star Design Rating for Murrumbeena Station and
is on track to achieve this rating for all stations at the ‘As-Built’ milestone (denoting Australian Excellence75). This will be a first for a
rail project nationally.
▪
▪
▪
▪
▪
material;
energy content;
reduction); and
million litres of water.
Some of the key sustainability initiatives in relation to the Project’s concrete precast facility included:
use of over 17,000 tonnes of recycled concrete in the construction of the facility foundation, reducing the need to import fill
installation of LED lighting throughout the precast facility, reducing demand for energy by over 60%;
using a concrete mix in the precast segments that replaced 21% of the cement with fly-ash, thereby reducing the embodied
using a 20% biodiesel mix to power the generators for the gantry cranes which, combined with technology to optimise power
output, saved approximately 51,600 litres of diesel (a 23% reduction) and reduced CO2-e by some 174 tonnes (a 28%
accessing the facility’s 13,000m2 roof to capture rainwater via 3 x 20,000L tanks, enabling the reuse of approximately 10
CPB Contractors has developed an innovative capability in the area of sustainable buildings and infrastructure, and is currently the
leading sustainability contractor in the Australian market, working on or having delivered 23 IS registered or certified projects
worth more than A$24 billion in total.
Green standard construction projects (#)
IS
Green Star
BEAM Plus
LEED76
Green Roads77
New registrations
during 2018
1
2
1
1
0
Cumulative
certifications since
2006
22
91
8
10
2
In 2018, CPB Contractors generated revenue of $4.9 billion from sustainably rated or ‘green’ projects.
CPB Contractors' green project revenue ($m)
Total
2018
4,932
2017
2,703
2016
2,083
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 rating
▪
▪
▪
▪
▪
▪
▪
▪
▪
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 associations 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.
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 maintain membership of a
number of trade and industry associations and groups. We recognise that such memberships can provide networking opportunities,
support professional development and help to drive improvements in industry practices, to the benefit of employees, shareholders
and society.
We understand the increasing level of stakeholder interest in membership of industry associations and their potential to play a
lobbying or advocacy role on behalf of the business. CIMIC’s membership participation is restricted to the payment of annual
subscription fees and we do not provide additional funding to support campaigns or other activities.
73 Transport for NSW, Sustainable Design Guidelines Version 4.0, May 2017.
74 Detail provided by ISCA, 6 Dec 2018.
75 Refer to the Scale of green star ratings diagram where a 5 Star Green Star rating denotes a standard of Australian Excellence.
105
76 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.
77 Greenroads is an independent non-profit that advances sustainability performance management and education for transportation capital
projects.
106
106
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
The Group partners with and/or is a member of organisations such as:
Research and development
CIMIC actively promotes and supports R&D projects that have the potential to improve the safety, efficiency or sustainability of the
Australia
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Austmine
Australian Association of Graduate Employers
Australian Chamber of Commerce and Industry
Australian Coal Preparation Society
Australian Constructors Association
Australian Industry Defence Network
Australian Industry Group
Australian Institute of Building
Australian Institute of Company Directors
Australia Japan Business Co-operation Committee
Australia-Latin America Business Council
Australian Mines & Metals Association
Australian Railway Association
Australian Shareholders' Association
Australian Ship Building & Repair Group
Australian Society for Concrete Pavements
Australian Water Association
Australian Women in Resources Alliance
buildingSMART Australasia
Business Council of Australia
Chamber of Commerce (local industry networks)
Chamber of Minerals and Energy of Western Australia
Civil Contractors Federation
Clean Energy Council
Committee of Economic Development of Australia (CEDA)
Consult Australia
Corporate Tax Association (of Australia)
Curtin University’s Advanced Technologies Research and
Innovation Alliance (CATRINA)
Diversity Council of Australia
Engineers Australia
Infrastructure Association of Queensland
Infrastructure Partnerships Australia
Infrastructure Sustainability Council of Australia
Institute of Railway Signal Engineers Australasia
Institute of Water Administration
International Project Finance Association
International Road Federation
International Society of Explosive Engineers
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪ Master Builders Association (various state branches)
▪ Minerals Council of Australia
▪ National Association of Women in Construction
▪ New South Wales Minerals Council
▪
▪
▪ Queensland Major Contractors Association
Permanent Way Institution
Property Council of Australia
▪ Queensland Natural Gas Exploration & Production
industry.
Industry Safety Forum
▪
▪
▪
Hong Kong/Macau
▪
▪
▪
▪
▪
Roads Australia
Safety Institute of Australia
South Australian Chamber of Mines and Energy
Spanish-Australian Chamber of Commerce
Supply Nation
Sydney Business Chamber
The Association for Payroll Specialists
▪ Queensland Resources Council
▪
▪
▪
▪
▪
▪
▪
▪ Women in Mining
New Zealand
▪
▪
▪
Indonesia
▪
Business Leaders' Health and Safety Forum (NZ)
Civil Contractors New Zealand
Infrastructure New Zealand
Asosiasi Kontraktor Indonesia (Indonesian Contractors
Association)
Asosiasi Pertambangan Batubara Indonesia (Indonesian
Coal Mining Association)
Indonesian Chamber of Commerce and Industry
Indonesian Mining Services Association (IMSA - ASPINDO)
Indonesian Mining Association
Hong Kong Construction Association
Hong Kong Construction Industry Council
Hong Kong Federation of Electrical and Mechanical
Contractors
The Australian Chamber of Commerce Hong Kong and
Macau (AustCham)
The Lighthouse Club (Hong Kong and the Philippines)
Employers Confederation of the Philippines
Philippines
▪
▪
▪ Makati Business Club (Philippines)
Singapore/Malaysia/India
▪
▪
▪
Singapore Business Federation
Singapore Contractors Association Ltd
Tunnelling and Underground Construction Society
(Singapore)
▪ Masters Builders Association Malaysia
▪
Confederation of Indian Industry
The Americas
▪
▪
▪
Alberta Mine Safety Association
Canadian Institute of Mining, Metallurgy and Petroleum
Cámara Chilena Australiana de Comercio (Chile Australia
Chamber of Commerce)
Africa
▪
Botswana Chamber of Mines
All corporate memberships of industry bodies relevant to the Group’s business require CEO approval and membership is
coordinated by CIMIC.
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107
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Sustainable on the Logan Enhancement Project
In Brisbane, Queensland, CPB Contractors is constructing the $512 million Logan Enhancement Project, upgrading and widening a
number of roads and interchanges. The project team has adopted a significant innovation that will reduce the total amount of
asphalt required, namely, using the new product Enrobé à Module Élevé (EME2) asphalt for part of the paving requirements. EME2
was developed in France in the 1980s and was intended to reduce the thickness of pavements while still providing sound
performance as well as superior fatigue, deformation and moisture resistance.
The Logan Enhancement Project will be among the first major road projects in Australia to lay the innovative EME2 product at a
commercial scale, not as a trial. It will use approximately 206,000 tonnes on the Gateway Extension Motorway, over approximately
8-10 kilometres of heavily trafficked road, representing a landmark in the construction of EME2 pavements in Australia.
MANAGING RISK
CIMIC is committed to having a risk management framework in place to identify, assess and treat risks
that have the potential to materially impact 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.
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:
▪
▪
▪
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,
environment, reputation, regulation, contracts, human resources, finance, information and strategy.
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 proprietary tender software including Computer Aided Tendering System
(CATS) and SAS to prepare accurate estimates for tenders. CATS and SAS help 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 the requirements of client’s and other stakeholder 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.
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
The Group partners with and/or is a member of organisations such as:
Australia
Austmine
Australian Association of Graduate Employers
Australian Chamber of Commerce and Industry
Australian Coal Preparation Society
Australian Constructors Association
Australian Industry Defence Network
Australian Industry Group
Australian Institute of Building
Australian Institute of Company Directors
Australia Japan Business Co-operation Committee
Australia-Latin America Business Council
Australian Mines & Metals Association
Australian Railway Association
Australian Shareholders' Association
Australian Ship Building & Repair Group
Australian Society for Concrete Pavements
Australian Water Association
Australian Women in Resources Alliance
buildingSMART Australasia
Business Council of Australia
▪ Queensland Natural Gas Exploration & Production
Industry Safety Forum
▪ Queensland Resources Council
Roads Australia
Safety Institute of Australia
South Australian Chamber of Mines and Energy
Spanish-Australian Chamber of Commerce
Supply Nation
Sydney Business Chamber
The Association for Payroll Specialists
▪ Women in Mining
New Zealand
Business Leaders' Health and Safety Forum (NZ)
Civil Contractors New Zealand
Infrastructure New Zealand
Indonesia
Association)
Asosiasi Kontraktor Indonesia (Indonesian Contractors
Asosiasi Pertambangan Batubara Indonesia (Indonesian
Coal Mining Association)
Indonesian Chamber of Commerce and Industry
Chamber of Commerce (local industry networks)
Indonesian Mining Services Association (IMSA - ASPINDO)
Chamber of Minerals and Energy of Western Australia
Indonesian Mining Association
Civil Contractors Federation
Clean Energy Council
Hong Kong/Macau
Hong Kong Construction Association
Committee of Economic Development of Australia (CEDA)
Hong Kong Construction Industry Council
Consult Australia
Hong Kong Federation of Electrical and Mechanical
Corporate Tax Association (of Australia)
Contractors
Curtin University’s Advanced Technologies Research and
The Australian Chamber of Commerce Hong Kong and
Innovation Alliance (CATRINA)
Diversity Council of Australia
Engineers Australia
Infrastructure Association of Queensland
Infrastructure Partnerships Australia
Infrastructure Sustainability Council of Australia
Institute of Railway Signal Engineers Australasia
Institute of Water Administration
International Project Finance Association
International Road Federation
International Society of Explosive Engineers
Macau (AustCham)
Philippines
The Lighthouse Club (Hong Kong and the Philippines)
Employers Confederation of the Philippines
▪ Makati Business Club (Philippines)
Singapore/Malaysia/India
Singapore Business Federation
Singapore Contractors Association Ltd
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
Property Council of Australia
The Americas
Alberta Mine Safety Association
Canadian Institute of Mining, Metallurgy and Petroleum
Cámara Chilena Australiana de Comercio (Chile Australia
Chamber of Commerce)
▪ Queensland Major Contractors Association
Africa
Botswana Chamber of Mines
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All corporate memberships of industry bodies relevant to the Group’s business require CEO approval and membership is
coordinated by CIMIC.
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107
Research and development
CIMIC actively promotes and supports R&D projects that have the potential to improve the safety, efficiency or sustainability of the
industry.
Sustainable on the Logan Enhancement Project
In Brisbane, Queensland, CPB Contractors is constructing the $512 million Logan Enhancement Project, upgrading and widening a
number of roads and interchanges. The project team has adopted a significant innovation that will reduce the total amount of
asphalt required, namely, using the new product Enrobé à Module Élevé (EME2) asphalt for part of the paving requirements. EME2
was developed in France in the 1980s and was intended to reduce the thickness of pavements while still providing sound
performance as well as superior fatigue, deformation and moisture resistance.
The Logan Enhancement Project will be among the first major road projects in Australia to lay the innovative EME2 product at a
commercial scale, not as a trial. It will use approximately 206,000 tonnes on the Gateway Extension Motorway, over approximately
8-10 kilometres of heavily trafficked road, representing a landmark in the construction of EME2 pavements in Australia.
MANAGING RISK
CIMIC is committed to having a risk management framework in place to identify, assess and treat risks
that have the potential to materially impact 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.
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:
▪
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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,
environment, reputation, regulation, contracts, human resources, finance, information and strategy.
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 proprietary tender software including Computer Aided Tendering System
(CATS) and SAS to prepare accurate estimates for tenders. CATS and SAS help 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 the requirements of client’s and other stakeholder 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.
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Royal Australian Air Force recognises CPB Contractors
CPB Contractors was awarded an appreciation medallion by the Chief of Air Force, Air Marshal Leo Davis (AO, CSC), while he was
visiting the $274 million Royal Australian Air Force (RAAF) Williamtown redevelopment project in New South Wales earlier in the
year. Works include building new office accommodation for more than 950 personnel over five levels, a new auditorium for 250
personnel, a new Army and Air Force Canteen Service facility and commercial precinct, upgrades to base entries and new road
alignments inside the base, new on-grade car parks and landscaping, and adaptive reuse of existing buildings.
While touring the site, the Air Marshal and Australian Defence Force VIPs were impressed with the development and discussed the
site’s positive safety culture site with CPB Contractors representatives. The on site team has a commendable safety record and has
achieved a LTI free milestone of 500,000 workhours.
RAAF Williamtown is the latest project awarded to CPB Contractors in a 20-year history of delivering world-class aircraft
infrastructure and service facility construction for the Australian Defence Force.
Across the Group, we have people in pure quality and systems roles with direct accountability for ensuring compliance with ISO
9001 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 (SGS Quality System Certification);
Leighton Asia - ISO 9001 (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 (SAI Global)78.
▪
▪
T2T Alliance wins prestigious Engineering Excellence Award
CPB Contractors, and their alliance partners, were recognised for their expertise and contribution to the Torrens Road to River
Torrens Alliance (T2T) with the 2018 Australian Engineering Excellence Award (South Australia). The award recognises the
innovative approach to the design and construction of the rail-bridge and earth retention, as well as the setting of new industry
benchmarks in safety and culture, traffic and services management, community engagement, and local industry workforce
participation.
The T2T project was targeting an ‘Excellent’ IS Rating, however, the project exceeded this by achieving a ‘Leading’ rating. Some of
the sustainability features included: 97% of waste was diverted away from landfill; an innovative design reduced the amount of
concrete being used in the lowered motorway by 75%; and more than 50% of the asphalt used on the project is reclaimed, saving
147 tonnes of carbon dioxide from being released into the atmosphere.
and maintenance opportunities.
Changes to the energy mix
Thiess’ quality recognised as the gold standard by Timken
The quality of the work of Thiess’ team at the Darra Component Rebuild Centre (Darra CRC) in Brisbane has been acknowledged
with their achievement of gold Timken bearing certification. Timken is one of the world’s largest bearing manufacturers and its
certification recognises that the Darra CRC’s bearing maintenance practices are of the highest standard.
The Darra CRC is one of three Thiess component rebuild centres, alongside Perth and Balikpapan, which remanufactures vital
components to keep Thiess’ fleet and operations working safely and efficiently.
FOCUS ON THE FUTURE
CIMIC actively monitors its existing and potential markets for disruptions, trends or changes
that may present risk or opportunities, and actively looks to capitalise on opportunities. Some
of these potential disruptions, trends or changes that could impact on the Group include the impact of new technologies on
construction techniques, automation in mining, demographic changes and ageing of the population, and changes in the energy mix
with greater use of renewables.
78 Sedgman’s HSEQ management system is certified to this standard, the projects business has been externally audited for compliance and
operational sites are internally audited for compliance.
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New technologies
As a constructor of transport infrastructure, CIMIC will potentially be impacted by the transition to both electric and autonomous
vehicles. CIMIC addressed this in the 2017 Sustainability Report.
CIMIC is monitoring the evolution and potential impact that 3D printing could have on construction. “3D printing could potentially
erase significant amounts of money in bringing construction projects to market, through shorter project times and fewer wasted
resources.”79 Potentially, “3D printing can produce up to 30% less material waste, use less energy and fewer resources, enable in-
situ production (which in turn cuts transport costs), grant greater architectural freedom and generate fewer CO₂ emissions over the
entire lifecycle of the product.”80
Automation in mining
Companies that implement automation technologies are gaining a significant increase in productivity and a decrease in
expenditures. Some companies have seen productivity rise by 15-20 percent as they adopted new technologies.81 The industry also
will benefit from considerable increases in safety. Since implementing autonomous technologies in several of its African mines,
Randgold Resources has seen a 29 percent quarter-on-quarter injury rate improvement.82
During 2018, Thiess secured a contract from Fortescue Metals Group to install autonomous haulage system technology at its
Christmas Creek operations in Western Australia’s Pilbara region. Under the 18-month contract, Thiess will convert a minimum of
65 conventional haul trucks to the system, along with various sub-component installs of the system on ancillary equipment to allow
the machinery to autonomously operate at Fortescue’s Chichester Hubs.
Thiess’ contract with Fortescue strengthens its position as a leading provider of autonomous services and is an acknowledgment of
where the mining industry is headed.
Demographic and population changes
CIMIC is a leading provider of contract mining and mineral processing services to the resources industry through its Thiess and
Sedgman brands respectively. The market for the provision of these resources related services remains positive for the foreseeable
future supported, ultimately, by the growth in and urbanisation of the global population.
Meanwhile, sustained levels of population growth in Australia, which has doubled since 197083, are likely to underpin substantial
investments in infrastructure into the future. Coupled with historic underinvestment, an ageing stock, and evolving technologies,
the outlook for infrastructure investment remains positive in the long term. The Global Infrastructure Hub84 forecasts that $1.7
billion worth of infrastructure investment will be required over the period to 2040 which supports construction, PPP and operations
The International Energy Agency (IEA), in the ‘New Policies Scenario’85 from their World Energy Outlook 2018 (WEO 2018)86
forecast that “rising incomes and an extra 1.7 billion people, mostly added to urban areas in developing economies, push up global
energy demand by more than a quarter to 2040. The increase would be around twice as large if it were not for continued
improvements in energy efficiency, a powerful policy tool to address energy security and sustainability concerns. All the growth
comes from developing economies, led by India. As recently as 2000, Europe and North America accounted for more than 40% of
global energy demand and developing economies in Asia for around 20%. By 2040, this situation is completely reversed.”
CIMIC expects that demand for thermal coal, and the resultant contract mining services in this particular market, while not
growing, will remain substantial for at least the medium-term. Contract mining of thermal coal, used in power generation, currently
accounts for approximately 43% of the Group’s mining revenue and around 11% of total revenue87. Over time however, CIMIC
expects to increasingly diversify its mining services activities to pursue the opportunities presented by the extraction and
processing of other minerals for use in alternative technologies such as solar and batteries. Underpinning the mining business and
positive outlook is a sustained demand for other minerals and resources including metallurgical coal, iron ore, copper, gold and
nickel.
79 http://www.digitalinnovation.pwc.com.au/3d-printing-revolutionise-construction/
80 http://theconversation.com/how-to-print-a-building-the-science-behind-3d-printing-in-construction-98490
81 Eric Onstad, Robots Under Swedish Forest Breathe Life into Ancient Mines, Reuters (Oct. 4, 2017)
82 Martin Creamer, Kibali Africa’s Most Mechanised Gold Mine—Randgold, Creamer Media’s Mining Weekly (Nov. 2, 2017)
83 http://www.abs.gov.au/websitedbs/D3310114.nsf/home/Interesting+Facts+about+Australia%E2%80%99s+population
84 https://outlook.gihub.org/countries/Australia
85 It should be noted that the ‘New Policies Scenario’ reflects the IEA’s view. CIMIC’s use of this scenario should not be read as endorsement of their
views but, rather, to provide an external frame of reference for others to consider potential outcomes. The New Policies Scenario as drafted is
insufficient to meet the objectives of the Paris Agreement to limit global temperatures increases to <2 degrees Celsius.
86 International Energy Agency (IEA), World Energy Outlook 2018 Executive Summary.
87 For the year ended 31 December 2018.
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Royal Australian Air Force recognises CPB Contractors
CPB Contractors was awarded an appreciation medallion by the Chief of Air Force, Air Marshal Leo Davis (AO, CSC), while he was
visiting the $274 million Royal Australian Air Force (RAAF) Williamtown redevelopment project in New South Wales earlier in the
year. Works include building new office accommodation for more than 950 personnel over five levels, a new auditorium for 250
personnel, a new Army and Air Force Canteen Service facility and commercial precinct, upgrades to base entries and new road
alignments inside the base, new on-grade car parks and landscaping, and adaptive reuse of existing buildings.
While touring the site, the Air Marshal and Australian Defence Force VIPs were impressed with the development and discussed the
site’s positive safety culture site with CPB Contractors representatives. The on site team has a commendable safety record and has
achieved a LTI free milestone of 500,000 workhours.
RAAF Williamtown is the latest project awarded to CPB Contractors in a 20-year history of delivering world-class aircraft
infrastructure and service facility construction for the Australian Defence Force.
Across the Group, we have people in pure quality and systems roles with direct accountability for ensuring compliance with ISO
9001 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 (SGS Quality System Certification);
Leighton Asia - ISO 9001 (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 (SAI Global)78.
▪
▪
▪
▪
▪
T2T Alliance wins prestigious Engineering Excellence Award
CPB Contractors, and their alliance partners, were recognised for their expertise and contribution to the Torrens Road to River
Torrens Alliance (T2T) with the 2018 Australian Engineering Excellence Award (South Australia). The award recognises the
innovative approach to the design and construction of the rail-bridge and earth retention, as well as the setting of new industry
benchmarks in safety and culture, traffic and services management, community engagement, and local industry workforce
participation.
The T2T project was targeting an ‘Excellent’ IS Rating, however, the project exceeded this by achieving a ‘Leading’ rating. Some of
the sustainability features included: 97% of waste was diverted away from landfill; an innovative design reduced the amount of
concrete being used in the lowered motorway by 75%; and more than 50% of the asphalt used on the project is reclaimed, saving
147 tonnes of carbon dioxide from being released into the atmosphere.
Thiess’ quality recognised as the gold standard by Timken
The quality of the work of Thiess’ team at the Darra Component Rebuild Centre (Darra CRC) in Brisbane has been acknowledged
with their achievement of gold Timken bearing certification. Timken is one of the world’s largest bearing manufacturers and its
certification recognises that the Darra CRC’s bearing maintenance practices are of the highest standard.
The Darra CRC is one of three Thiess component rebuild centres, alongside Perth and Balikpapan, which remanufactures vital
components to keep Thiess’ fleet and operations working safely and efficiently.
FOCUS ON THE FUTURE
CIMIC actively monitors its existing and potential markets for disruptions, trends or changes
that may present risk or opportunities, and actively looks to capitalise on opportunities. Some
of these potential disruptions, trends or changes that could impact on the Group include the impact of new technologies on
construction techniques, automation in mining, demographic changes and ageing of the population, and changes in the energy mix
with greater use of renewables.
78 Sedgman’s HSEQ management system is certified to this standard, the projects business has been externally audited for compliance and
operational sites are internally audited for compliance.
109
New technologies
As a constructor of transport infrastructure, CIMIC will potentially be impacted by the transition to both electric and autonomous
vehicles. CIMIC addressed this in the 2017 Sustainability Report.
CIMIC is monitoring the evolution and potential impact that 3D printing could have on construction. “3D printing could potentially
erase significant amounts of money in bringing construction projects to market, through shorter project times and fewer wasted
resources.”79 Potentially, “3D printing can produce up to 30% less material waste, use less energy and fewer resources, enable in-
situ production (which in turn cuts transport costs), grant greater architectural freedom and generate fewer CO₂ emissions over the
entire lifecycle of the product.”80
Automation in mining
Companies that implement automation technologies are gaining a significant increase in productivity and a decrease in
expenditures. Some companies have seen productivity rise by 15-20 percent as they adopted new technologies.81 The industry also
will benefit from considerable increases in safety. Since implementing autonomous technologies in several of its African mines,
Randgold Resources has seen a 29 percent quarter-on-quarter injury rate improvement.82
During 2018, Thiess secured a contract from Fortescue Metals Group to install autonomous haulage system technology at its
Christmas Creek operations in Western Australia’s Pilbara region. Under the 18-month contract, Thiess will convert a minimum of
65 conventional haul trucks to the system, along with various sub-component installs of the system on ancillary equipment to allow
the machinery to autonomously operate at Fortescue’s Chichester Hubs.
Thiess’ contract with Fortescue strengthens its position as a leading provider of autonomous services and is an acknowledgment of
where the mining industry is headed.
Demographic and population changes
CIMIC is a leading provider of contract mining and mineral processing services to the resources industry through its Thiess and
Sedgman brands respectively. The market for the provision of these resources related services remains positive for the foreseeable
future supported, ultimately, by the growth in and urbanisation of the global population.
Meanwhile, sustained levels of population growth in Australia, which has doubled since 197083, are likely to underpin substantial
investments in infrastructure into the future. Coupled with historic underinvestment, an ageing stock, and evolving technologies,
the outlook for infrastructure investment remains positive in the long term. The Global Infrastructure Hub84 forecasts that $1.7
billion worth of infrastructure investment will be required over the period to 2040 which supports construction, PPP and operations
and maintenance opportunities.
Changes to the energy mix
The International Energy Agency (IEA), in the ‘New Policies Scenario’85 from their World Energy Outlook 2018 (WEO 2018)86
forecast that “rising incomes and an extra 1.7 billion people, mostly added to urban areas in developing economies, push up global
energy demand by more than a quarter to 2040. The increase would be around twice as large if it were not for continued
improvements in energy efficiency, a powerful policy tool to address energy security and sustainability concerns. All the growth
comes from developing economies, led by India. As recently as 2000, Europe and North America accounted for more than 40% of
global energy demand and developing economies in Asia for around 20%. By 2040, this situation is completely reversed.”
CIMIC expects that demand for thermal coal, and the resultant contract mining services in this particular market, while not
growing, will remain substantial for at least the medium-term. Contract mining of thermal coal, used in power generation, currently
accounts for approximately 43% of the Group’s mining revenue and around 11% of total revenue87. Over time however, CIMIC
expects to increasingly diversify its mining services activities to pursue the opportunities presented by the extraction and
processing of other minerals for use in alternative technologies such as solar and batteries. Underpinning the mining business and
positive outlook is a sustained demand for other minerals and resources including metallurgical coal, iron ore, copper, gold and
nickel.
79 http://www.digitalinnovation.pwc.com.au/3d-printing-revolutionise-construction/
80 http://theconversation.com/how-to-print-a-building-the-science-behind-3d-printing-in-construction-98490
81 Eric Onstad, Robots Under Swedish Forest Breathe Life into Ancient Mines, Reuters (Oct. 4, 2017)
82 Martin Creamer, Kibali Africa’s Most Mechanised Gold Mine—Randgold, Creamer Media’s Mining Weekly (Nov. 2, 2017)
83 http://www.abs.gov.au/websitedbs/D3310114.nsf/home/Interesting+Facts+about+Australia%E2%80%99s+population
84 https://outlook.gihub.org/countries/Australia
85 It should be noted that the ‘New Policies Scenario’ reflects the IEA’s view. CIMIC’s use of this scenario should not be read as endorsement of their
views but, rather, to provide an external frame of reference for others to consider potential outcomes. The New Policies Scenario as drafted is
insufficient to meet the objectives of the Paris Agreement to limit global temperatures increases to <2 degrees Celsius.
86 International Energy Agency (IEA), World Energy Outlook 2018 Executive Summary.
87 For the year ended 31 December 2018.
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A 2017 World Bank report88 notes that: “Minerals and metals will play a key role in the transition to a significantly lower carbon
future, with potentially significant changes for the minerals and metals market. Metals are crucial to the way in which energy is
generated and used. The future move to a low carbon economy, based on low carbon electricity generation and energy-efficient
energy-using technologies, has huge potential to shift both the scale and composition of the demand for minerals and metals.”
The report goes on to say that, “Using wind, solar, and energy storage batteries as proxies, the study examines which metals will
likely rise in demand to be able to deliver on a carbon-constrained future. Metals which could see a growing market include
aluminium (including its key constituent, bauxite), cobalt, copper, iron ore, lead, lithium, nickel, manganese, the platinum group of
metals, rare earth metals including cadmium, molybdenum, neodymium, and indium-silver, steel, titanium and zinc.”
CIMIC foresees the growth in demand for renewable energy generating substantial opportunities for construction and operations
and maintenance activities where both CPB Contractors, UGL and Sedgman have significant experience. A reduction in the use of
coal may lead to opportunities in the decommissioning and cleaning up of coal-fired power stations, as well as the rehabilitation of
old coal mines. Similarly, the rehabilitation of older mines with tailings dams containing economically recoverable minerals, as
described in the New Century case study on page 82, may create additional opportunities. Furthermore, the upgrading of existing
processing facilities to reduce their water footprints, such as the use of tailings filtration and dry stacking - as opposed to dams,
offer further prospects for the Group.
At a policy level, we understand that energy reliability and affordability, and greenhouse gas emissions, are inseparable and need to
be dealt with holistically by Government. We support a market-based approach based on rigorous cost-benefit analysis, aimed at
driving efficient, fuel and technology neutral outcomes.
OUTLOOK AND FUTURE PLANS
We are committed to bringing an innovative approach to the successful delivery of projects. In 2019, we plan to:
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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 the 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;
scale the Thiess Innovation framework to provide transparency of ideas for collaboration across geographical boundaries;
unlock the value of innovation through the delivery of the Innovation and Technology road map to define Thiess' digital
landscape for our business strategy;
continued use of crowd sourcing innovation campaigns using Spigit to identify challenges and deliver innovation;
leverage the engineering expertise and experience of our major shareholder, HOCHTIEF, and its related entities; and
review and, if necessary, re-publish our response to the TCFD89 recommendations.
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88 World Bank report, “The Growing Role of Minerals and Metals for a Low‐Carbon Future”, 18 July 2017.
89 Task Force on Climate related Financial Disclosures
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ENVIRONMENT
OUR APPROACH
emissions;
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Respect for the environment is a demonstration of the CIMIC Group's Principles of Integrity, Accountability, Innovation and
Delivery. 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
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.
We aim to continually innovate so as to improve the efficiency of the resources we use and reduce waste, thereby lowering our
costs, improving our value proposition and benefitting the environment. 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
Code of Conduct; Environmental Policy supplemented by Operating Company Policies and
systems
▪ Quarterly review of the performance of Operating Companies by ECSC
100% of Operating Company management systems certified to ISO 14001
Actions taken during 2018
▪ Maintained a rigorous approach to environmental management
▪ Numerous, project‐by‐project initiatives tailored to manage risks as appropriate
Performance
Solid environmental result with zero Level 1 incidents and 14 Level 2 incidents recorded
21 breaches resulted in 5 fines totalling $21,379
Use energy efficiently and reduce emissions
Measures in place
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
Actions taken during 2018
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 a response to TCFD
Energy Management System (EnMS) (in accordance with ISO 50001) implemented on
▪ Numerous, project‐by‐project initiatives tailored to energy efficiency and reducing
selected Hong Kong projects
emissions as appropriate
on the Energy and Emissions Report
Received a ‘C’ rating from CDP
Performance
EY under took a Limited Assurance audit of the Group’s NGER submission and signed off
Reduce waste
Measures in place
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
Actions taken during 2018
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
Performance
Each Operating Company has a range of programs in place to actively reduce waste and
Conserve water
Measures in place
encourage recycling
and systems
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
Actions taken during 2018
Submitted a comprehensive response to CDP’s 2017 Water survey
▪ Numerous, project‐by‐project initiatives tailored to conserve water as appropriate
Performance
Received a ‘B‐’ rating from CDP
Use materials efficiently and reduce impact
Measures in place
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
Actions taken during 2018
Numerous, project‐by‐project initiatives tailored to use materials efficiently as
Performance
Aggregate water usage reduced with a reduction in water intensity
and systems
appropriate
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▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
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ENVIRONMENT
OUR APPROACH
Respect for the environment is a demonstration of the CIMIC Group's Principles of Integrity, Accountability, Innovation and
Delivery. 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.
We aim to continually innovate so as to improve the efficiency of the resources we use and reduce waste, thereby lowering our
costs, improving our value proposition and benefitting the environment. 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 2018
Performance
Code of Conduct; Environmental Policy supplemented by Operating Company Policies and
systems
100% of Operating Company management systems certified to ISO 14001
Quarterly review of the performance of Operating Companies by ECSC
Maintained a rigorous approach to environmental management
Numerous, project-by-project initiatives tailored to manage risks as appropriate
Solid environmental result with zero Level 1 incidents and 14 Level 2 incidents recorded
21 breaches resulted in 5 fines totalling $21,379
A 2017 World Bank report88 notes that: “Minerals and metals will play a key role in the transition to a significantly lower carbon
future, with potentially significant changes for the minerals and metals market. Metals are crucial to the way in which energy is
generated and used. The future move to a low carbon economy, based on low carbon electricity generation and energy-efficient
energy-using technologies, has huge potential to shift both the scale and composition of the demand for minerals and metals.”
The report goes on to say that, “Using wind, solar, and energy storage batteries as proxies, the study examines which metals will
likely rise in demand to be able to deliver on a carbon-constrained future. Metals which could see a growing market include
aluminium (including its key constituent, bauxite), cobalt, copper, iron ore, lead, lithium, nickel, manganese, the platinum group of
metals, rare earth metals including cadmium, molybdenum, neodymium, and indium-silver, steel, titanium and zinc.”
CIMIC foresees the growth in demand for renewable energy generating substantial opportunities for construction and operations
and maintenance activities where both CPB Contractors, UGL and Sedgman have significant experience. A reduction in the use of
coal may lead to opportunities in the decommissioning and cleaning up of coal-fired power stations, as well as the rehabilitation of
old coal mines. Similarly, the rehabilitation of older mines with tailings dams containing economically recoverable minerals, as
described in the New Century case study on page 82, may create additional opportunities. Furthermore, the upgrading of existing
processing facilities to reduce their water footprints, such as the use of tailings filtration and dry stacking - as opposed to dams,
offer further prospects for the Group.
At a policy level, we understand that energy reliability and affordability, and greenhouse gas emissions, are inseparable and need to
be dealt with holistically by Government. We support a market-based approach based on rigorous cost-benefit analysis, aimed at
driving efficient, fuel and technology neutral outcomes.
OUTLOOK AND FUTURE PLANS
We are committed to bringing an innovative approach to the successful delivery of projects. In 2019, 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 the 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;
scale the Thiess Innovation framework to provide transparency of ideas for collaboration across geographical boundaries;
unlock the value of innovation through the delivery of the Innovation and Technology road map to define Thiess' digital
landscape for our business strategy;
continued use of crowd sourcing innovation campaigns using Spigit to identify challenges and deliver innovation;
leverage the engineering expertise and experience of our major shareholder, HOCHTIEF, and its related entities; and
review and, if necessary, re-publish our response to the TCFD89 recommendations.
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
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 a response to TCFD
Energy Management System (EnMS) (in accordance with ISO 50001) implemented on
selected Hong Kong projects
Actions taken during 2018
Use energy efficiently and reduce emissions
Measures in place
88 World Bank report, “The Growing Role of Minerals and Metals for a Low‐Carbon Future”, 18 July 2017.
89 Task Force on Climate related Financial Disclosures
111
Actions taken during 2018
Performance
Performance
Reduce waste
Measures in place
Actions taken during 2018
Performance
Conserve water
Measures in place
Actions taken during 2018
Performance
Use materials efficiently and reduce impact
Measures in place
Numerous, project-by-project initiatives tailored to energy efficiency and reducing
emissions as appropriate
EY under took a Limited Assurance audit of the Group’s NGER submission and signed off
on the Energy and Emissions 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
Each Operating Company has a range of programs in place to actively reduce waste and
encourage recycling
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
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
Numerous, project-by-project initiatives tailored to use materials efficiently as
appropriate
Aggregate water usage reduced with a reduction in water intensity
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Protect biodiversity
Measures in place
▪
Actions taken during 2018
Performance
Build resilience to climate risks
Measures in place
▪
▪
▪
Actions taken during 2018
Performance
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
Numerous, project-by-project initiatives tailored to protect diversity as appropriate
Reshaped 335ha, top-soiled 271ha and seeded eight ha of mining projects
▪
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
Comprehensive ‘Assessing Climate Risk’ guidance in place to support the 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 project plans and lifecycle
assessments
breach of planning approvals relating to blasting and painting at a work yard, and a blast monitor not registering an event due to
quarterly servicing.
No Level 1 or Level 2 environmental incidents were reported at Sedgman or UGL.
The number of Level 3 incidents across the Group has risen from 497 in 2017 to 693 in 2018. This relates to an increasingly
stringent reporting criteria which aims to capture any adverse impacts and encourages self-reporting.
USE ENERGY EFFICIENTLY AND REDUCE EMISSIONS
A key environmental commitment of the Group is to use energy efficiently, reduce our energy intensity, utilise
renewables when efficient to do so and to minimise the emission of greenhouse gases. Managing the earth’s
scarce resources more effectively is not only the right thing to do but it also creates value by reducing operating costs.
The mining activities of Thiess utilise substantial quantities of diesel in the operation of haul trucks, excavators and ancillary
equipment. Thiess continually seeks to innovate to find more efficient ways to deliver its services through optimising mine
PREVENT POLLUTION
CIMIC is committed to preventing the incidence, and mitigating the impact, of any pollution to air, water
or land. We understand 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. As per Principle 7 of
the UN Global Compact, CIMIC supports a precautionary approach to environmental challenges.
We recognise that good environmental performance helps to gain the confidence of the markets and communities in which we
operate. We also understand that by delivering on the specifications and standards set by clients, regulators and other
stakeholders, we can also avoid the potential of litigation and the resultant increase in insurance premiums.
planning and operations, as well as equipment utilisation.
The Group’s energy consumption for 2018 was as follows:
Energy consumption
Total Gigawatt hours (GWH)
Of which: Liquid, gas and solid fuel (%)
Electricity (%)
Energy spend ($m)
2018
10,846
98.6
1.4
266
2017
8,790
98.4
1.6
225
The Group has adopted a comprehensive, systematic and collective approach to hazard and risk management. By continuously
monitoring and improving our performance, we ensure we remain competitive in the markets in which we operate.
and socially responsible projects.
The Group is actively pursuing a range of energy efficiency initiatives that promote the delivery of energy efficient, environmentally
The Group’s 2018 environmental performance was positive: zero Level 1 incidents were recorded (zero also recorded in 2017) and
14 Level 2 incidents recorded (versus 10 in 2017).
Environmental incidents
Level 1 (#)
Level 2 (#)
Level 3 (#)
Environmental incident frequency rate (#/MhW)
Number of breaches (#)
Number of violations of legal obligations/regulations
resulting in fines
Value of fines incurred ($)
2018
0
14
693
0.09
21
5
2017
0
10
497
0.06
15
4
21,379
38,200
2016
0
6
520
0.05
10
2
9,800
CPB Contractors recorded 11 Level 2 incidents which related to mud tracking, dust management, out-of-hours working and off-site
water discharges.
CPB Contractors recorded 13 legal breaches for environmental incidents. For three of these incidents, CPB Contractors received
fines of $750 (totalling $2,250). These incidents related to water discharges (related to rainfall events) on the Transmission Gully
project in New Zealand. In New South Wales, the Environmental Protection Authority NSW issued CPB Contractors a fine of $15,000
for the tracking of mud from the New M5 project. The incidents were investigated in accordance with environmental management
processes and corrective actions were implemented.
On 5 October 2018, CPB Contractors entered a plea of guilty in the NSW Land & Environment Court to four charges of causing the
emission of an offensive odour under the Protection of the Environment Operations Act 1997 (POEO Act). Sentencing has been
stood over to the first quarter of 2019. No decision has been made as to the result, nor penalties applied at the time of writing.
In Leighton Asia, four legal breaches were recorded for: loose soil found on the road in the vicinity of a work area in the Philippines,
incorrect loading of material onto a barge in Hong Kong, incorrect dumping of marine deposit under an old permit in Hong Kong
(classified as a Level 2 incident), and a case of mosquito larvae breeding on a project site in Singapore (also classified as Level 2). A
fine of $4,129 was imposed by the regulator for the Singapore breach. The incidents were investigated in accordance with Leighton
Asia’s environmental management processes and corrective actions were implemented to prevent a reoccurrence
Thiess recorded one Level 2 incident relating to the discharge of turbid water from a sediment pond into a river in Indonesia and
three other licence breaches (classified as Level 3 incidents). The breaches related to: dust exceeding air quality license limits,
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Solar system helps to deliver a sustainable Sydney Metro
UGL and CPB Contractors are members of the Northwest Rapid Transit Consortium (NRT) delivering the Sydney Metro Northwest
project. The NRT will procure rolling stock and design, build, finance and then operate the 36km rapid transit train service for 15
years.
The Sydney Metro Northwest project is Australia’s first driverless metro-style rail line and the introduction of this new technology
requires innovation such as the incorporation of a large solar array on maintenance building rooftops at the depot. The solar array -
as large as a football field - features 3,287 panels and is one of the biggest solar power systems mounted on a building in Australia.
It also includes information systems to inform the public about the quantities of locally-generated solar energy on a daily basis.
The solar array is expected to generate approximately 1.5 million kilowatt hours of electricity annually - enough to power about
270 average-sized homes for a year. The electricity generated by the panels will be used to power some of the Sydney Metro
railway stations as well as the maintenance facility, where Sydney’s new metro trains will be serviced. The trains themselves use
high voltage power not related to the solar array. However, the trains use regenerative braking - this means extra energy from a
slowing train can be recycled back into the power system and used by nearby trains.
CIMIC is committed to reducing greenhouse gas emissions in response to the threat of climate change and adopts a number of
approaches to do so including; seeking to boost energy productivity, reducing waste, rehabilitating degraded land, increasing the
use of renewable energy and by driving innovation. Wherever possible, we work together with our clients and business partners on
each of our bespoke projects to develop tailored solutions 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 (GHG)
emissions. For CIMIC, while absolute emissions generated are important, these are a function of activity levels and the work that is
delivered on behalf of clients. We continue to try and find ways to operate more effectively and efficiently to reduce the emissions
from each individual project.
Scope 1 greenhouse gas emissions
Total (kt.CO2-e)
Intensity (kt.CO2-e/$m)
2018
2,689
0.18
2017
2,202
0.16
The majority (~91%) of the Group’s Scope 1 emissions were generated by the consumption of diesel in the contract mining
activities of Thiess. In 2018, while total emissions rose by 22%, this was less than the growth in revenue from mining and mineral
processing, which grew by more than 25%.
2016
1,964
0.18
114
Actions taken during 2018
Numerous, project-by-project initiatives tailored to protect diversity as appropriate
Performance
Reshaped 335ha, top-soiled 271ha and seeded eight ha 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 the development of
Climate Resilience Plans on CPB Contractors’ construction projects
Actions taken during 2018
Drafted response to TCFD
Performance
Climate change resilience initiatives integrated into project plans and lifecycle
▪ Numerous, project-by-project initiatives tailored to build resilience as appropriate
▪
▪
▪
▪
▪
▪
▪
and systems
and systems
assessments
PREVENT POLLUTION
CIMIC is committed to preventing the incidence, and mitigating the impact, of any pollution to air, water
or land. We understand 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. As per Principle 7 of
the UN Global Compact, CIMIC supports a precautionary approach to environmental challenges.
We recognise that good environmental performance helps to gain the confidence of the markets and communities in which we
operate. We also understand that by delivering on the specifications and standards set by clients, regulators and other
stakeholders, we can also avoid the potential of litigation and the resultant increase in insurance premiums.
The Group’s 2018 environmental performance was positive: zero Level 1 incidents were recorded (zero also recorded in 2017) and
14 Level 2 incidents recorded (versus 10 in 2017).
Environmental incidents
Level 1 (#)
Level 2 (#)
Level 3 (#)
Environmental incident frequency rate (#/MhW)
Number of breaches (#)
Number of violations of legal obligations/regulations
resulting in fines
Value of fines incurred ($)
2018
0
14
693
0.09
21
5
2017
0
10
497
0.06
15
4
21,379
38,200
2016
0
6
520
0.05
10
2
9,800
CPB Contractors recorded 11 Level 2 incidents which related to mud tracking, dust management, out-of-hours working and off-site
water discharges.
CPB Contractors recorded 13 legal breaches for environmental incidents. For three of these incidents, CPB Contractors received
fines of $750 (totalling $2,250). These incidents related to water discharges (related to rainfall events) on the Transmission Gully
project in New Zealand. In New South Wales, the Environmental Protection Authority NSW issued CPB Contractors a fine of $15,000
for the tracking of mud from the New M5 project. The incidents were investigated in accordance with environmental management
processes and corrective actions were implemented.
On 5 October 2018, CPB Contractors entered a plea of guilty in the NSW Land & Environment Court to four charges of causing the
emission of an offensive odour under the Protection of the Environment Operations Act 1997 (POEO Act). Sentencing has been
stood over to the first quarter of 2019. No decision has been made as to the result, nor penalties applied at the time of writing.
In Leighton Asia, four legal breaches were recorded for: loose soil found on the road in the vicinity of a work area in the Philippines,
incorrect loading of material onto a barge in Hong Kong, incorrect dumping of marine deposit under an old permit in Hong Kong
(classified as a Level 2 incident), and a case of mosquito larvae breeding on a project site in Singapore (also classified as Level 2). A
fine of $4,129 was imposed by the regulator for the Singapore breach. The incidents were investigated in accordance with Leighton
Asia’s environmental management processes and corrective actions were implemented to prevent a reoccurrence
Thiess recorded one Level 2 incident relating to the discharge of turbid water from a sediment pond into a river in Indonesia and
three other licence breaches (classified as Level 3 incidents). The breaches related to: dust exceeding air quality license limits,
113
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Protect biodiversity
Measures in place
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
breach of planning approvals relating to blasting and painting at a work yard, and a blast monitor not registering an event due to
quarterly servicing.
No Level 1 or Level 2 environmental incidents were reported at Sedgman or UGL.
The number of Level 3 incidents across the Group has risen from 497 in 2017 to 693 in 2018. This relates to an increasingly
stringent reporting criteria which aims to capture any adverse impacts and encourages self-reporting.
USE ENERGY EFFICIENTLY AND REDUCE EMISSIONS
A key environmental commitment of the Group is to use energy efficiently, reduce our energy intensity, utilise
renewables when efficient to do so and to minimise the emission of greenhouse gases. Managing the earth’s
scarce resources more effectively is not only the right thing to do but it also creates value by reducing operating costs.
The mining activities of Thiess utilise substantial quantities of diesel in the operation of haul trucks, excavators and ancillary
equipment. Thiess continually seeks to innovate to find more efficient ways to deliver its services through optimising mine
planning and operations, as well as equipment utilisation.
The Group’s energy consumption for 2018 was as follows:
Energy consumption
Total Gigawatt hours (GWH)
Of which: Liquid, gas and solid fuel (%)
Electricity (%)
Energy spend ($m)
2018
10,846
98.6
1.4
266
2017
8,790
98.4
1.6
225
The Group has adopted a comprehensive, systematic and collective approach to hazard and risk management. By continuously
monitoring and improving our performance, we ensure we remain competitive in the markets in which we operate.
The Group is actively pursuing a range of energy efficiency initiatives that promote the delivery of energy efficient, environmentally
and socially responsible projects.
Solar system helps to deliver a sustainable Sydney Metro
UGL and CPB Contractors are members of the Northwest Rapid Transit Consortium (NRT) delivering the Sydney Metro Northwest
project. The NRT will procure rolling stock and design, build, finance and then operate the 36km rapid transit train service for 15
years.
The Sydney Metro Northwest project is Australia’s first driverless metro-style rail line and the introduction of this new technology
requires innovation such as the incorporation of a large solar array on maintenance building rooftops at the depot. The solar array -
as large as a football field - features 3,287 panels and is one of the biggest solar power systems mounted on a building in Australia.
It also includes information systems to inform the public about the quantities of locally-generated solar energy on a daily basis.
The solar array is expected to generate approximately 1.5 million kilowatt hours of electricity annually - enough to power about
270 average-sized homes for a year. The electricity generated by the panels will be used to power some of the Sydney Metro
railway stations as well as the maintenance facility, where Sydney’s new metro trains will be serviced. The trains themselves use
high voltage power not related to the solar array. However, the trains use regenerative braking - this means extra energy from a
slowing train can be recycled back into the power system and used by nearby trains.
CIMIC is committed to reducing greenhouse gas emissions in response to the threat of climate change and adopts a number of
approaches to do so including; seeking to boost energy productivity, reducing waste, rehabilitating degraded land, increasing the
use of renewable energy and by driving innovation. Wherever possible, we work together with our clients and business partners on
each of our bespoke projects to develop tailored solutions 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 (GHG)
emissions. For CIMIC, while absolute emissions generated are important, these are a function of activity levels and the work that is
delivered on behalf of clients. We continue to try and find ways to operate more effectively and efficiently to reduce the emissions
from each individual project.
Scope 1 greenhouse gas emissions
Total (kt.CO2-e)
Intensity (kt.CO2-e/$m)
2018
2,689
0.18
2017
2,202
0.16
2016
1,964
0.18
The majority (~91%) of the Group’s Scope 1 emissions were generated by the consumption of diesel in the contract mining
activities of Thiess. In 2018, while total emissions rose by 22%, this was less than the growth in revenue from mining and mineral
processing, which grew by more than 25%.
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CIMIC’s Scope 2 GHG emissions are almost entirely derived from the consumption of purchased electricity. These electricity
purchases are primarily used to:
▪
▪
▪
power some construction equipment, (i.e. tunnel boring machines and cranes);
provide outdoor lighting on construction, mining, and operations and maintenance projects; and
illuminate workshops, site sheds and other project related facilities.
Scope 2 greenhouse gas emissions
Total (kt.CO2-e)
Intensity (kt.CO2-e/$m)
2018
125
0.01
Scope 3 includes other indirect emissions, generated from activities such as:
▪
▪
▪
▪
▪
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;
electricity-related activities not covered in Scope 2;
outsourced activities; and
waste disposal.
Scope 3 greenhouse gas emissions (kt.CO2-e)
Total (kt.CO2-e)
Intensity (kt.CO2-e/$m)
2018
1,047
0.07
2017
128
0.01
2017
1,653
0.12
2016
89
0.01
2016
2,666
0.25
In 2018, CIMIC’s Scope 3 emission reduced by 37%, reflecting substantially lower materials usage in Leighton Asia, updated
materials emission factors in CPB Contractors 90 and an overstatement of emission generated by landfill, waste and steel in 2017 by
UGL.91
As a substantial energy user and greenhouse gas emitter, CIMIC is registered to report under the NGER92 scheme. Energy use and
emissions data is collected for all of its projects and sites irrespective of the operational control status and reported as required.
The Group has comprehensive measures in place to manage its NGER obligations including:
▪
▪
▪
having established legal review processes to identify operational control status at the tender and contract stages;
utilising Group-wide reporting systems to manage all data; and
having the Group’s data and processes subjected to annual external assurance audits.
The Group has reported the following aggregated emissions and energy usage data under the NGER Scheme based on its Australian
operations and for those facilities where the Group has operational control.
Greenhouse gas emissions and energy consumption
2017/18
2016/17
2015/16
2014/15
Total Scope 1
emissions (t CO2-e)
128,057
68,295
50,639
77,412
Total Scope 2
emissions (t CO2-e
113,591
53,534
32,910
72,142
Total Net energy
consumed (GJ)
2,336,472
1,233,835
884,558
1,434,467
CIMIC’s Scope 1 emissions increased substantially in 2017/18, mainly due to increased diesel usage in CPB Contractors as activity
levels ramped up on a number of large construction projects. Scope 2 emissions also increased significantly, driven by the use of
electricity for large tunnelling equipment on the same construction projects. These increases were reflected in the increase in the
consumption of energy.
EY signed off on the preparation of CIMIC’s Energy and Emissions Report, again providing a limited assurance audit for the
2017/2018 NGER data as requested.
Renewables energy increasingly being used in construction
In CPB Contractors, employees across the business are being encouraged to consider using renewables or green energy where they
can. This approach is gaining ground as, in 2018, 18% of all electricity used in CPB Contractors’ offices and projects was sourced
from renewables and/or green power. This is the equivalent to 5 times the construction energy that was used to build the new 488-
bed, Northern Beaches Hospital in Sydney.
REDUCE WASTE
CIMIC is committed to reducing waste by using resources efficiently, encouraging recycling and taking a lifecycle
approach to waste management on projects. This often means reducing waste through smarter design and procurement,
and seeking opportunities for recycling or reuse.
Creating a legacy for Sydney’s koalas
The koalas of Taronga Zoo are set to make themselves a home among gum trees donated by the Homebush Bay Drive site on the
7km, $2.7 billion WestConnexM4 East project, where a number of eucalypt trees were being removed to accommodate the Sydney
Olympic Park cycleway.
Thanks to a sustainability initiative from the project team, a Taronga Zookeeper visited the Homebush Bay Drive site and left with
two Ironbark eucalyptus trunks that have been used to upgrade the koala habitat enclosure. The collaboration is a great result for
the Zoo as it is often difficult to obtain undamaged vegetation to create a more natural environment for the Koalas. Other
vegetation from the site, deemed unsuitable for the animals, was supplied as mulch for use around the zoo.
In recent years, the Group has generated a significant amount of waste due to an increase in tunnelling activity which generates
spoil - or waste earth and rock - that needs to be disposed of. Much of the spoil generated from the large tunnelling projects being
undertaken in Sydney and Melbourne is transported to other infrastructure and construction projects where it is re-used as fill - to
In 2018, generated a total of 13,126,968 tonnes of waste, of which more than 95% was diverted - mainly for reuse - and only ~1.4%
create level areas.
was disposed of in a landfill.
Waste generation (tonnes)
Disposed - landfill
Disposed - other
Diverted - reuse
Diverted - recycling
Diverted - other
Total
2018
188,121
440,653
10,677,213
1,820,119
862
13,126,968
2017
726,887
-
1,526,012
5,569,579
405,365
8,227,742
During the year, the Group generated 12,380 tonnes of hazardous waste. The Group’s Operating Companies generated relatively
small amounts of hazardous waste which are diverted for reuse/recycling where possible and, if this is not possible, disposed of as
per regulatory requirements. These waste streams typically include:
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 generated (tonnes)
Group
2018
12,380
2017
109,75593
Sustainability award for Victorian rail project
An alliance including CPB Contractors, has been recognised by the Victorian Government as a leader in sustainability for their work
in delivering the Caulfield to Dandenong Level Crossing Removal Project. The $1.6 billion project (worth approximately $500 million
to CPB Contractors) involves removing nine dangerous and congested level crossings by using an elevated rail design, the rebuilding
of five new stations, and upgrading of signalling and power along the corridor.
The team were recognised at the awarding of the Victorian Premier's Sustainability Awards where the alliance won the top prize in
the Built Environment category. The innovative elevated rail design has transformed the previous brownfield rail corridor into 22.5
hectares of new linear park beneath the structure, and embraces holistic sustainability from design through to construction and
operation. The material use and reuse has seen the project set exceptionally high standards for waste and emissions reduction.
This is also the largest re-giving of land in Melbourne since the opening of the Botanic Gardens and provides a significant
opportunity to maximise ecological outcomes and reconnect communities. Previously communities along the corridor have long
been split in half by the rail but, with the creation of the linear park and a redeveloped station precinct, the suburbs will be
reconnected.
90 In 2018, CPB Contractors applied updated emissions factors in line with accepted infrastructure standard estimates (based on IS Materials
calculator V1.2) for upstream material emissions.
91 In 2017, UGL reported emissions for the first time under CIMIC, following their acquisition. Some of the calculations used overstated UGL’s Scope
3 emissions for landfill, waste and steel. The accuracy and completeness of the 2018 data has significantly improved compared to 2017.
92 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.
115
93 As noted in the 2017 Sustainability Report, of the significantly higher figure reported for 2017, more than 90% was generated from construction
projects in Australia which related to spoil removed from client’s 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 PFOS, is dealt with using
specific processes and controls, and in line with all regulatory guidelines and requirements, and industry best practice.
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▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
CIMIC’s Scope 2 GHG emissions are almost entirely derived from the consumption of purchased electricity. 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 3 includes other indirect emissions, generated from activities such as:
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;
electricity-related activities not covered in Scope 2;
Scope 2 greenhouse gas emissions
Total (kt.CO2-e)
Intensity (kt.CO2-e/$m)
outsourced activities; and
waste disposal.
Scope 3 greenhouse gas emissions (kt.CO2-e)
Total (kt.CO2-e)
Intensity (kt.CO2-e/$m)
2018
125
0.01
2018
1,047
0.07
2017
128
0.01
2017
1,653
0.12
2016
89
0.01
2016
2,666
0.25
In 2018, CIMIC’s Scope 3 emission reduced by 37%, reflecting substantially lower materials usage in Leighton Asia, updated
materials emission factors in CPB Contractors 90 and an overstatement of emission generated by landfill, waste and steel in 2017 by
UGL.91
As a substantial energy user and greenhouse gas emitter, CIMIC is registered to report under the NGER92 scheme. Energy use and
emissions data is collected for all of its projects and sites irrespective of the operational control status and reported as required.
The Group has comprehensive measures in place to manage its NGER obligations including:
having established legal review processes to identify operational control status at the tender and contract stages;
utilising Group-wide reporting systems to manage all data; and
having the Group’s data and processes subjected to annual external assurance audits.
The Group has reported the following aggregated emissions and energy usage data under the NGER Scheme based on its Australian
operations and for those facilities where the Group has operational control.
Greenhouse gas emissions and energy consumption
Total Scope 1
Total Scope 2
emissions (t CO2-e)
emissions (t CO2-e
128,057
68,295
50,639
77,412
Total Net energy
consumed (GJ)
2,336,472
1,233,835
884,558
1,434,467
113,591
53,534
32,910
72,142
2017/18
2016/17
2015/16
2014/15
CIMIC’s Scope 1 emissions increased substantially in 2017/18, mainly due to increased diesel usage in CPB Contractors as activity
levels ramped up on a number of large construction projects. Scope 2 emissions also increased significantly, driven by the use of
electricity for large tunnelling equipment on the same construction projects. These increases were reflected in the increase in the
consumption of energy.
2017/2018 NGER data as requested.
EY signed off on the preparation of CIMIC’s Energy and Emissions Report, again providing a limited assurance audit for the
Renewables energy increasingly being used in construction
In CPB Contractors, employees across the business are being encouraged to consider using renewables or green energy where they
can. This approach is gaining ground as, in 2018, 18% of all electricity used in CPB Contractors’ offices and projects was sourced
from renewables and/or green power. This is the equivalent to 5 times the construction energy that was used to build the new 488-
bed, Northern Beaches Hospital in Sydney.
90 In 2018, CPB Contractors applied updated emissions factors in line with accepted infrastructure standard estimates (based on IS Materials
calculator V1.2) for upstream material emissions.
91 In 2017, UGL reported emissions for the first time under CIMIC, following their acquisition. Some of the calculations used overstated UGL’s Scope
3 emissions for landfill, waste and steel. The accuracy and completeness of the 2018 data has significantly improved compared to 2017.
92 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.
115
REDUCE WASTE
CIMIC is committed to reducing waste by using resources efficiently, encouraging recycling and taking a lifecycle
approach to waste management on projects. This often means reducing waste through smarter design and procurement,
and seeking opportunities for recycling or reuse.
Creating a legacy for Sydney’s koalas
The koalas of Taronga Zoo are set to make themselves a home among gum trees donated by the Homebush Bay Drive site on the
7km, $2.7 billion WestConnexM4 East project, where a number of eucalypt trees were being removed to accommodate the Sydney
Olympic Park cycleway.
Thanks to a sustainability initiative from the project team, a Taronga Zookeeper visited the Homebush Bay Drive site and left with
two Ironbark eucalyptus trunks that have been used to upgrade the koala habitat enclosure. The collaboration is a great result for
the Zoo as it is often difficult to obtain undamaged vegetation to create a more natural environment for the Koalas. Other
vegetation from the site, deemed unsuitable for the animals, was supplied as mulch for use around the zoo.
In recent years, the Group has generated a significant amount of waste due to an increase in tunnelling activity which generates
spoil - or waste earth and rock - that needs to be disposed of. Much of the spoil generated from the large tunnelling projects being
undertaken in Sydney and Melbourne is transported to other infrastructure and construction projects where it is re-used as fill - to
create level areas.
In 2018, generated a total of 13,126,968 tonnes of waste, of which more than 95% was diverted - mainly for reuse - and only ~1.4%
was disposed of in a landfill.
Waste generation (tonnes)
Disposed - landfill
Disposed - other
Diverted - reuse
Diverted - recycling
Diverted - other
Total
2018
188,121
440,653
10,677,213
1,820,119
862
13,126,968
2017
726,887
-
1,526,012
5,569,579
405,365
8,227,742
During the year, the Group generated 12,380 tonnes of hazardous waste. The Group’s Operating Companies generated relatively
small amounts of hazardous waste which are diverted for reuse/recycling where possible and, if this is not possible, disposed of as
per regulatory requirements. These waste streams typically include:
▪
▪
▪
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 generated (tonnes)
Group
2018
12,380
2017
109,75593
Sustainability award for Victorian rail project
An alliance including CPB Contractors, has been recognised by the Victorian Government as a leader in sustainability for their work
in delivering the Caulfield to Dandenong Level Crossing Removal Project. The $1.6 billion project (worth approximately $500 million
to CPB Contractors) involves removing nine dangerous and congested level crossings by using an elevated rail design, the rebuilding
of five new stations, and upgrading of signalling and power along the corridor.
The team were recognised at the awarding of the Victorian Premier's Sustainability Awards where the alliance won the top prize in
the Built Environment category. The innovative elevated rail design has transformed the previous brownfield rail corridor into 22.5
hectares of new linear park beneath the structure, and embraces holistic sustainability from design through to construction and
operation. The material use and reuse has seen the project set exceptionally high standards for waste and emissions reduction.
This is also the largest re-giving of land in Melbourne since the opening of the Botanic Gardens and provides a significant
opportunity to maximise ecological outcomes and reconnect communities. Previously communities along the corridor have long
been split in half by the rail but, with the creation of the linear park and a redeveloped station precinct, the suburbs will be
reconnected.
93 As noted in the 2017 Sustainability Report, of the significantly higher figure reported for 2017, more than 90% was generated from construction
projects in Australia which related to spoil removed from client’s 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 PFOS, is dealt with using
specific processes and controls, and in line with all regulatory guidelines and requirements, and industry best practice.
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Beating plastic pollution
The theme for World Environment Day 2018 was ‘Beat Plastic Pollution’. It was a call to action for all of us to come together to
combat one of the great environmental challenges of our time.
Thiess’ environment team celebrated World Environment Day by launching an internal global photo competition, calling on people
to submit photos of why and how they are taking on plastic pollution at home, on site and at play. The response has showcased the
many different ways people are reusing plastic and avoiding polluting the environment. From staging massive clean-ups on site to
running recycling initiatives and repurposing plastic into fashion bags, slippers and even tools for housekeeping.
Around Australia and New Zealand, the environment teams of CPB Contractors committed to minimising, recycling and reusing
plastic to help ensure the sustainability of its operations - and our planet. CPB Contractors produced a range of communication
tools, including video, to educate their workmates and provide a range of tips on how everyone can contribute to better
environmental management.
Re-purposing used tyres to reduce erosion
In Indonesia, haul truck tyres that are beyond their useful life are being put to good use to build drainage channels in rehabilitated
land at Thiess mining projects. The tyres help to prevent erosion, providing stability to the channels in a region which receives up to
3 metres of rainfall on average per annum.
During 2018, the Group withdrew 8.1 million kilolitres of water and discharged more than 9.0 million kilolitres which led to negative
consumption of 0.9 million litres, a substantial reduction on 2017. The significant increase in the amount of water discharged
relates to pit dewatering activities at the Senakin coal mine in Indonesia where mining recommenced in 2018. This meant that the
open cut pits, which were holding a significant amount of water, had to be pumped out resulting in significant discharge volumes.
The Group will seek opportunities where possible to recycle or reuse water and, in 2018, 9.2 million kilolitres was sourced in this
way. This generated a recycling-reuse percentage of 53.1% which was a substantial improvement on the prior year.
The Group’s withdrawals were primarily sourced from rainwater and rivers, wastewater from other organisations, renewable
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.
Fresh surface water, including rainwater, water from wetlands, rivers and
CONSERVE WATER
CIMIC understands the importance of, and is committed to, minimising water usage and implementing
opportunities for water efficiency and recycling. The Group’s projects - be they construction, mining or services -
can often be substantial users of water. Some of these uses of water include for dust suppression on construction and mining
projects, in the operation of minerals processing plants (such as coal handling preparation plants) and for the washing down and
cleaning of different types of equipment.
Opportunities to conserve or reduce water use, and to increase the use of recycled water, are positive for the environment but also
help save on costs when water must be procured.
Melbourne Water’s Western Treatment Plant
With an existing wastewater treatment plant at capacity, UGL and CPB Contractors are delivering and operating a nutrient removal
plant in Victoria for Melbourne Water. Expansion was needed to meet forecast growth in influent flows and loads, to comply with
environmental protection requirements and to continue to reliably supply recycled water to users.
Our clients increasingly consider commissioning and performance reliability in evaluation, so the team’s tender demonstrated a
whole-of-life solution, including commissioning. The new plant includes innovative use of pre-cast concrete for the combined
bioreactor and clarifier and an optimised plant feed system, and provides treatment facilities for a catchment area of 700,000
people.
Each project develops an environmental management plan which integrates specific water management plans. The plans recognise
the unique conditions of that project so they can be effectively managed. Water management plans address:
▪
▪
▪
the environmental values of the surrounding environment;
potential water requirements and sources; and
the regulatory commitments and landholder obligations that a particular project must meet.
The plans systematically address all of the risks associated with water management on the project and identify the 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.
Sustainable water re-use to suppress dust
Dust sometimes presents an environmental risk associated with construction activities. If not suitably managed, dust can cause a
nuisance for local residents, as well as construction teams. To effectively manage dust on the Westconnex M4 East project, the
construction team - including CPB Contractors - utilise several water carts to apply approximately 10,000L of water (per load),
routinely circulating the construction site spraying a fine mist of water on exposed soils to suppress dust. Water is a highly valued
limited resource and hiring water carts can become expensive. The M4 East project therefore often stores and uses rainwater
captured on site. For example, between June and September 2018, the Concord site re-used approximately 350,000L of rainwater.
The tunnel support site has also gone a step further and eliminated water cart hire by modifying some equipment to include a
pressurised pump and spray nozzle that disperses water from two recycled pallet tanks. This initiative not only reuses site water
and reduces the costs associated with hiring a water cart, but also reduces fuel use and carbon emissions.
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Water usage and consumption94
Withdrawals (ML)
Discharge (ML)
Consumption (ML)
Recycled-reused (ML)
Recycled-reused (%)
groundwater and mains supply.
Withdrawals sources (%)
lakes
Brackish surface water/seawater
Groundwater - renewable
Groundwater - non-renewable
Third-party sources
Discharge destinations (%)
lakes
Groundwater - renewable
Brackish surface water/seawater
Third-party destinations
2018
8,121
(9,022)
(901)
9,200
53.1
2018
44
3
17
9
27
2018
86
6
7
1
2018
4,970
2018
76
16
7
<1
2017
7,414
(476)
6,938
4,052
35.3
2017
44
0
20
1
35
2017
55
0
23
21
2017
3,990
2017
86
9
5
<1
118
Discharges were primarily made to rivers, marine environments, and industrial wastewater treatment plants and public utilities.
Fresh surface water, including rainwater, water from wetlands, rivers and
USE MATERIALS EFFICIENTLY AND REDUCE IMPACT
Innovation is one of the Group’s Principles and, by continually seeking to innovate to improve the efficiency of resources
used, CIMIC can reduce its impact on the environment and society while also lowering costs. This can be a win for clients
who are increasingly seeking sustainable solutions and provides an opportunity for CIMIC to improve its value proposition.
In 2018, the Group’s Operating Companies procured nearly 5.0 million tonnes of construction materials.
The quantities of construction materials purchased - the bulk of which are concrete, steel, asphalt and to a lesser extent timber, is
Material use (kilotonnes) and spend ($m)
Quantity
split as follows:
Quantities (%)
Concrete
Steel
Asphalt
Timber
94 These water disclosures for withdrawals, discharges and consumption align with the ‘CDP Technical Note on Water Accounting’, CDP Water
Security 2018.
Beating plastic pollution
The theme for World Environment Day 2018 was ‘Beat Plastic Pollution’. It was a call to action for all of us to come together to
combat one of the great environmental challenges of our time.
Thiess’ environment team celebrated World Environment Day by launching an internal global photo competition, calling on people
to submit photos of why and how they are taking on plastic pollution at home, on site and at play. The response has showcased the
many different ways people are reusing plastic and avoiding polluting the environment. From staging massive clean-ups on site to
running recycling initiatives and repurposing plastic into fashion bags, slippers and even tools for housekeeping.
Around Australia and New Zealand, the environment teams of CPB Contractors committed to minimising, recycling and reusing
plastic to help ensure the sustainability of its operations - and our planet. CPB Contractors produced a range of communication
tools, including video, to educate their workmates and provide a range of tips on how everyone can contribute to better
environmental management.
Re-purposing used tyres to reduce erosion
3 metres of rainfall on average per annum.
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 understands the importance of, and is committed to, minimising water usage and implementing
opportunities for water efficiency and recycling. The Group’s projects - be they construction, mining or services -
can often be substantial users of water. Some of these uses of water include for dust suppression on construction and mining
projects, in the operation of minerals processing plants (such as coal handling preparation plants) and for the washing down and
cleaning of different types of equipment.
Opportunities to conserve or reduce water use, and to increase the use of recycled water, are positive for the environment but also
help save on costs when water must be procured.
Melbourne Water’s Western Treatment Plant
With an existing wastewater treatment plant at capacity, UGL and CPB Contractors are delivering and operating a nutrient removal
plant in Victoria for Melbourne Water. Expansion was needed to meet forecast growth in influent flows and loads, to comply with
environmental protection requirements and to continue to reliably supply recycled water to users.
Our clients increasingly consider commissioning and performance reliability in evaluation, so the team’s tender demonstrated a
whole-of-life solution, including commissioning. The new plant includes innovative use of pre-cast concrete for the combined
bioreactor and clarifier and an optimised plant feed system, and provides treatment facilities for a catchment area of 700,000
the environmental values of the surrounding environment;
potential water requirements and sources; and
the regulatory commitments and landholder obligations that a particular project must meet.
The plans systematically address all of the risks associated with water management on the project and identify the 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.
Sustainable water re-use to suppress dust
Dust sometimes presents an environmental risk associated with construction activities. If not suitably managed, dust can cause a
nuisance for local residents, as well as construction teams. To effectively manage dust on the Westconnex M4 East project, the
construction team - including CPB Contractors - utilise several water carts to apply approximately 10,000L of water (per load),
routinely circulating the construction site spraying a fine mist of water on exposed soils to suppress dust. Water is a highly valued
limited resource and hiring water carts can become expensive. The M4 East project therefore often stores and uses rainwater
captured on site. For example, between June and September 2018, the Concord site re-used approximately 350,000L of rainwater.
The tunnel support site has also gone a step further and eliminated water cart hire by modifying some equipment to include a
pressurised pump and spray nozzle that disperses water from two recycled pallet tanks. This initiative not only reuses site water
and reduces the costs associated with hiring a water cart, but also reduces fuel use and carbon emissions.
people.
▪
▪
▪
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During 2018, the Group withdrew 8.1 million kilolitres of water and discharged more than 9.0 million kilolitres which led to negative
consumption of 0.9 million litres, a substantial reduction on 2017. The significant increase in the amount of water discharged
relates to pit dewatering activities at the Senakin coal mine in Indonesia where mining recommenced in 2018. This meant that the
open cut pits, which were holding a significant amount of water, had to be pumped out resulting in significant discharge volumes.
Water usage and consumption94
Withdrawals (ML)
Discharge (ML)
Consumption (ML)
Recycled-reused (ML)
Recycled-reused (%)
2018
8,121
(9,022)
(901)
9,200
53.1
2017
7,414
(476)
6,938
4,052
35.3
The Group will seek opportunities where possible to recycle or reuse water and, in 2018, 9.2 million kilolitres was sourced in this
way. This generated a recycling-reuse percentage of 53.1% which was a substantial improvement on the prior year.
In Indonesia, haul truck tyres that are beyond their useful life are being put to good use to build drainage channels in rehabilitated
land at Thiess mining projects. The tyres help to prevent erosion, providing stability to the channels in a region which receives up to
The Group’s withdrawals were primarily sourced from rainwater and rivers, wastewater from other organisations, renewable
groundwater and mains supply.
Withdrawals sources (%)
Fresh surface water, including rainwater, water from wetlands, rivers and
lakes
Brackish surface water/seawater
Groundwater - renewable
Groundwater - non-renewable
Third-party sources
2018
44
3
17
9
27
2017
44
0
20
1
35
Discharges were primarily made to rivers, marine environments, and industrial wastewater treatment plants and public utilities.
Discharge destinations (%)
Fresh surface water, including rainwater, water from wetlands, rivers and
lakes
Groundwater - renewable
Brackish surface water/seawater
Third-party destinations
2018
86
6
7
1
2017
55
0
23
21
USE MATERIALS EFFICIENTLY AND REDUCE IMPACT
Innovation is one of the Group’s Principles and, by continually seeking to innovate to improve the efficiency of resources
used, CIMIC can reduce its impact on the environment and society while also lowering costs. This can be a win for clients
who are increasingly seeking sustainable solutions and provides an opportunity for CIMIC to improve its value proposition.
In 2018, the Group’s Operating Companies procured nearly 5.0 million tonnes of construction materials.
Each project develops an environmental management plan which integrates specific water management plans. The plans recognise
the unique conditions of that project so they can be effectively managed. Water management plans address:
Material use (kilotonnes) and spend ($m)
Quantity
2018
4,970
2017
3,990
The quantities of construction materials purchased - the bulk of which are concrete, steel, asphalt and to a lesser extent timber, is
split as follows:
Quantities (%)
Concrete
Steel
Asphalt
Timber
2018
76
16
7
<1
2017
86
9
5
<1
94 These water disclosures for withdrawals, discharges and consumption align with the ‘CDP Technical Note on Water Accounting’, CDP Water
Security 2018.
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Materials made up approximately 21% of the Group’s total expenses in 2018 (versus 20% in 2017). This compares with the Group’s
other major expense segments as per the table below.
Total expenses (%)95
Subcontractors
Personnel costs
Materials
Plant costs (including depreciation and lease payments)
Other
2018
32
27
21
15
5
2017
32
29
20
14
6
Recycling in action
The $1.1 billion Rail Systems Alliance (RSA) is being delivered by a consortium comprising CPB Contractors, Bombardier
Transportation and Metro Trains Melbourne. The RSA will roll out 58 kilometres of high capacity signalling on an existing train
network for the first time in Australia and install platform screen doors at the five new underground stations. On this project, which
has registered for a Design v1.2 IS Rating, significant recycling targets must be achieved to satisfy client, contractual and ISCA
requirements.
The RSA team has put in place co-mingle, paper/cardboard, organic food waste, battery and mobile phone recycling bins. They are
also evaluating the use of recycled materials as substitutes for traditional construction materials and the reuse of contaminated soil
in accordance with environmental regulations. As of November 2018, RSA has recycled a combined total of 5.5 tonnes of waste,
averaging around 70% of waste diverted from landfill each month. This exceeds the target of diverting 60% of office waste from
landfill.
PROTECT BIODIVERSITY
CIMIC’s construction, mining and mineral processing, and operations and maintenance activities have the
potential to impact on the natural habitat and its biodiversity. CIMIC is committed to minimising any
disturbances and avoiding impacts on habitats and ecology where possible, and to promoting biodiversity.
We plan activities to avoid environmental impacts to habitats, especially sensitive locations, during the design and planning phases
of our diverse infrastructure, resources and property projects. Where this is not possible, we deploy strategies to minimise
disturbance while efficiently, effectively and safely completing work. A range of measures to manage and mitigate potential
impacts are implemented including the development of biodiversity management plans that consider local contexts, baseline
surveys, monitoring results and specialist advice.
Lizards welcomed home to Transmission Gully
The 27km, four-lane Transmission Gully motorway project is a champion for sustainability, creating an enduring corridor where
biodiversity and ecological connections will help local flora and fauna thrive, including bird, lizard and native fish populations.
In an example of the team’s best practice approach, three species of lizard, gathered before construction began in 2015, were
released into newly created habitats, located outside of the active construction site. The lizards were given special whakapainga
(blessings) by Kaumātua (elders) of two iwi (tribes), before being released to a pest-protected home outside of the active
construction site in the hills near Paekākāriki, overlooking Kāpiti Island.
A key focus of the project is leaving the environment in better shape than it was before works started. To that end, one of the
largest planting programmes ever seen in the lower North Island is underway on the project. More than 530 hectares are being
retired from grazing, and areas planted with around 2 million native trees and shrubs. Pest control efforts are also being carried out
throughout the 27km route, and this work will continue after the new motorway has been completed.
The rehabilitation of disturbed areas remains an integral element of dealing with biodiversity on our construction, mining and
services projects. This is especially important in mining and typically involves progressively reshaping disturbed areas, establishing
erosion control structures, and topsoiling and seeding. We seek to ensure that disturbed areas are rehabilitated so that they are
safe, stable and suitable for agreed land uses, such as agriculture, grazing or natural habitats.
Rehabilitation of mining area (ha)
Australia/Pacific
Asia/Africa/Americas
Total
Reshaped
105.9
229.5
335.4
Top-soiled
90.6
180.4
271.0
Seeded
7.8
0
7.8
95 Figures might not add exactly to 100% due to rounding.
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Pre-production rehabilitation at Mt Pleasant
Thiess has been delivering total mining operations since 2017 at the greenfield Mt Pleasant coal mine in Australia’s Hunter Valley in
New South Wales. In doing so, Thiess has worked closely with their client to ensure that obligations around dust and noise
mitigation are managed above and beyond regulatory requirements. Thiess’ team has commenced rehabilitation works early in the
life of the mine to mitigate the visual and noise impacts for the local community.
Building an effective visual and noise barrier at Mount Pleasant has been a priority to minimise dust and work is well underway
with a natural landform approach including contours, peaks and valley. Thiess has also delivered an open grassy woodland with
native grasses, trees and shrubs, as well as a cover crop to stabilise the soil and minimise dust impacts. Rock piles, log piles and tree
hollows have also been incorporated to promote habitat for local fauna.
BUILD RESILIENCE TO CLIMATE RISKS
Warming of the planet, caused by greenhouse gas emissions, is widely acknowledged to pose serious risks to the global
economy and will have an impact across many economic sectors. CIMIC recognises the increasing international
commitment of governments, communities and others in creating a low-carbon, climate resilient future. Within that environment,
CIMIC understands the need to reduce emissions by boosting energy productivity, reducing waste, rehabilitating degraded land,
increasing the use of renewable energy and driving innovation.
Sustainability in construction of new Northern Beaches Hospital
CPB successfully delivered the new Northern Beaches Hospital in Sydney, some of the features of which included 488-beds, a 50-
space emergency department, 14 operating theatres, state-of-the-art intensive care and 6 surgical suites, a 1,400-space car park
and a helipad.
This the first Green Star hospital constructed in NSW, with the project achieving a ‘4 Star Green Star-Healthcare Design v1’ rating.
The hospital includes an integrated Energy Management System (EMS) which provides billing and energy management for the
commercial operating phase of the hospital and flexibility to accommodate future changes to hospital functions. A co-generation
baseload plant was installed and sized for maximum efficiency baseload, with modular expansion of the co-generation plant
possible, should demand increase.
To help identify the information needed by investors, lenders, and insurance underwriters to appropriately assess and price
climate-related risks and opportunities, CIMIC has used the Task Force on Climate related Financial Disclosures (the ‘TCFD’) to
provide a disclosure framework regarding our various approaches to dealing with climate change. CIMIC’s TCFD Discussion paper,
which will be made available on the Group’s website, considers the Group’s risks and opportunities across each of its three major
activities: construction, mining and mineral and processing, and operations and maintenance services.
CIMIC Group is largely a construction, mining, and operations and maintenance service contractor, and not the long-term owner of
infrastructure, resources or property assets (with the exception of investments in some Public Private Partnership (PPP) type
projects). As a result, CIMIC Group has a different exposure to climate-change to many other companies in the industrials sector,
due to the relatively short term nature of the services it provides to the owners of those infrastructure, resources or property
assets who will hold them for the long term. This exposure may vary depending on the extent of any performance warranties
provided by CIMIC and, potentially, on the input of the Group in the design phase of a project.
Climate change is driving a move away from fossil fuels and towards renewable energy, potentially leading to renewable energy
construction opportunities. Climate change impacts may also necessitate the rehabilitation of infrastructure damaged by potential
weather extremes. This could mean that substantial investments will need to be made in new and more resilient infrastructure to
cope with the impacts of climate change.
Some of the important points that are relevant to investors, lenders, insurance underwriters, and other stakeholders when
considering the impact of climate change on CIMIC include:
the Group has a robust governance and management system in place to oversee climate-related risks and opportunities;
the Group’s strategy is built around being a provider of construction, mining, mineral processing, operations and maintenance,
PPP and engineering services, and it is not generally the long term owner of infrastructure, property or resources assets, and
therefore has only a relatively limited exposure to the risks of climate change over the longer term compared to many other
the relatively short-term duration of the contracting services provided by the Group means that both the transition and
physical risks, and their associated costs, can reasonably be identified and factored into tenders and contracts, thereby
reducing their potential 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 prepared to consider in their life-cycle assessments and to
increasing levels of acute and chronic weather related risks (i.e. from rising sea levels or sustained higher temperatures) are
likely to lead to a range of construction opportunities (and increased revenues) from remediation work and investments by
clients to create greater resilience to the potential effects of climate change;
▪
▪
▪
▪
▪
companies;
pay for;
120
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
Pre-production rehabilitation at Mt Pleasant
Thiess has been delivering total mining operations since 2017 at the greenfield Mt Pleasant coal mine in Australia’s Hunter Valley in
New South Wales. In doing so, Thiess has worked closely with their client to ensure that obligations around dust and noise
mitigation are managed above and beyond regulatory requirements. Thiess’ team has commenced rehabilitation works early in the
life of the mine to mitigate the visual and noise impacts for the local community.
Building an effective visual and noise barrier at Mount Pleasant has been a priority to minimise dust and work is well underway
with a natural landform approach including contours, peaks and valley. Thiess has also delivered an open grassy woodland with
native grasses, trees and shrubs, as well as a cover crop to stabilise the soil and minimise dust impacts. Rock piles, log piles and tree
hollows have also been incorporated to promote habitat for local fauna.
BUILD RESILIENCE TO CLIMATE RISKS
Warming of the planet, caused by greenhouse gas emissions, is widely acknowledged to pose serious risks to the global
economy and will have an impact across many economic sectors. CIMIC recognises the increasing international
commitment of governments, communities and others in creating a low-carbon, climate resilient future. Within that environment,
CIMIC understands the need to reduce emissions by boosting energy productivity, reducing waste, rehabilitating degraded land,
increasing the use of renewable energy and driving innovation.
Sustainability in construction of new Northern Beaches Hospital
CPB successfully delivered the new Northern Beaches Hospital in Sydney, some of the features of which included 488-beds, a 50-
space emergency department, 14 operating theatres, state-of-the-art intensive care and 6 surgical suites, a 1,400-space car park
and a helipad.
This the first Green Star hospital constructed in NSW, with the project achieving a ‘4 Star Green Star-Healthcare Design v1’ rating.
The hospital includes an integrated Energy Management System (EMS) which provides billing and energy management for the
commercial operating phase of the hospital and flexibility to accommodate future changes to hospital functions. A co-generation
baseload plant was installed and sized for maximum efficiency baseload, with modular expansion of the co-generation plant
possible, should demand increase.
To help identify the information needed by investors, lenders, and insurance underwriters to appropriately assess and price
climate-related risks and opportunities, CIMIC has used the Task Force on Climate related Financial Disclosures (the ‘TCFD’) to
provide a disclosure framework regarding our various approaches to dealing with climate change. CIMIC’s TCFD Discussion paper,
which will be made available on the Group’s website, considers the Group’s risks and opportunities across each of its three major
activities: construction, mining and mineral and processing, and operations and maintenance services.
CIMIC Group is largely a construction, mining, and operations and maintenance service contractor, and not the long-term owner of
infrastructure, resources or property assets (with the exception of investments in some Public Private Partnership (PPP) type
projects). As a result, CIMIC Group has a different exposure to climate-change to many other companies in the industrials sector,
due to the relatively short term nature of the services it provides to the owners of those infrastructure, resources or property
assets who will hold them for the long term. This exposure may vary depending on the extent of any performance warranties
provided by CIMIC and, potentially, on the input of the Group in the design phase of a project.
Climate change is driving a move away from fossil fuels and towards renewable energy, potentially leading to renewable energy
construction opportunities. Climate change impacts may also necessitate the rehabilitation of infrastructure damaged by potential
weather extremes. This could mean that substantial investments will need to be made in new and more resilient infrastructure to
cope with the impacts of climate change.
Materials made up approximately 21% of the Group’s total expenses in 2018 (versus 20% in 2017). This compares with the Group’s
other major expense segments as per the table below.
2018
32
27
21
15
5
2017
32
29
20
14
6
Plant costs (including depreciation and lease payments)
The $1.1 billion Rail Systems Alliance (RSA) is being delivered by a consortium comprising CPB Contractors, Bombardier
Transportation and Metro Trains Melbourne. The RSA will roll out 58 kilometres of high capacity signalling on an existing train
network for the first time in Australia and install platform screen doors at the five new underground stations. On this project, which
has registered for a Design v1.2 IS Rating, significant recycling targets must be achieved to satisfy client, contractual and ISCA
The RSA team has put in place co-mingle, paper/cardboard, organic food waste, battery and mobile phone recycling bins. They are
also evaluating the use of recycled materials as substitutes for traditional construction materials and the reuse of contaminated soil
in accordance with environmental regulations. As of November 2018, RSA has recycled a combined total of 5.5 tonnes of waste,
averaging around 70% of waste diverted from landfill each month. This exceeds the target of diverting 60% of office waste from
Total expenses (%)95
Subcontractors
Personnel costs
Materials
Other
Recycling in action
requirements.
landfill.
PROTECT BIODIVERSITY
CIMIC’s construction, mining and mineral processing, and operations and maintenance activities have the
potential to impact on the natural habitat and its biodiversity. CIMIC is committed to minimising any
disturbances and avoiding impacts on habitats and ecology where possible, and to promoting biodiversity.
We plan activities to avoid environmental impacts to habitats, especially sensitive locations, during the design and planning phases
of our diverse infrastructure, resources and property projects. Where this is not possible, we deploy strategies to minimise
disturbance while efficiently, effectively and safely completing work. A range of measures to manage and mitigate potential
impacts are implemented including the development of biodiversity management plans that consider local contexts, baseline
surveys, monitoring results and specialist advice.
Lizards welcomed home to Transmission Gully
The 27km, four-lane Transmission Gully motorway project is a champion for sustainability, creating an enduring corridor where
biodiversity and ecological connections will help local flora and fauna thrive, including bird, lizard and native fish populations.
In an example of the team’s best practice approach, three species of lizard, gathered before construction began in 2015, were
released into newly created habitats, located outside of the active construction site. The lizards were given special whakapainga
(blessings) by Kaumātua (elders) of two iwi (tribes), before being released to a pest-protected home outside of the active
construction site in the hills near Paekākāriki, overlooking Kāpiti Island.
A key focus of the project is leaving the environment in better shape than it was before works started. To that end, one of the
largest planting programmes ever seen in the lower North Island is underway on the project. More than 530 hectares are being
retired from grazing, and areas planted with around 2 million native trees and shrubs. Pest control efforts are also being carried out
throughout the 27km route, and this work will continue after the new motorway has been completed.
The rehabilitation of disturbed areas remains an integral element of dealing with biodiversity on our construction, mining and
services projects. This is especially important in mining and typically involves progressively reshaping disturbed areas, establishing
erosion control structures, and topsoiling and seeding. We seek to ensure that disturbed areas are rehabilitated so that they are
safe, stable and suitable for agreed land uses, such as agriculture, grazing or natural habitats.
Rehabilitation of mining area (ha)
Reshaped
Top-soiled
Seeded
Australia/Pacific
Asia/Africa/Americas
Total
105.9
229.5
335.4
90.6
180.4
271.0
7.8
0
7.8
95 Figures might not add exactly to 100% due to rounding.
119
the Group has a robust governance and management system in place to oversee climate-related risks and opportunities;
the Group’s strategy is built around being a provider of construction, mining, mineral processing, operations and maintenance,
PPP and engineering services, and it is not generally the long term owner of infrastructure, property or resources assets, and
therefore has only a relatively limited exposure to the risks of climate change over the longer term compared to many other
companies;
the relatively short-term duration of the contracting services provided by the Group means that both the transition and
physical risks, and their associated costs, can reasonably be identified and factored into tenders and contracts, thereby
reducing their potential 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 prepared to consider in their life-cycle assessments and to
pay for;
increasing levels of acute and chronic weather related risks (i.e. from rising sea levels or sustained higher temperatures) are
likely to lead to a range of construction opportunities (and increased revenues) from remediation work and investments by
clients to create greater resilience to the potential effects of climate change;
Some of the important points that are relevant to investors, lenders, insurance underwriters, and other stakeholders when
considering the impact of climate change on CIMIC include:
▪
▪
▪
▪
▪
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120
120
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▪
the Group has developed a strong competitive position in delivering sustainably rated infrastructure and building projects,
which now account for more than 20% of revenue, and demand for these type of projects is expected to expand;
▪ while the contract mining of thermal coal is unlikely to see growth in the mid-to-longer term, it is forecast to remain a
▪
▪
▪
relatively stable market for the foreseeable future (to 204096);
contract mining activity will be supplemented by opportunities to apply these mining services to the extraction of other
resources and minerals, such as lithium, cobalt, manganese, nickel, graphite and rare earths, for use in alternative
technologies such as solar and batteries;
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 and on an intensity basis; and
the Group aims to reduce emissions by working together with clients and business partners, and continually tries to find ways
to operate more effectively and efficiently in delivering construction, mining, or operations and maintenance services so as to
reduce the emissions generated by each individual project.
A conclusion that can be drawn from this discussion paper is that CIMIC, while exposed to the impacts of climate change, has
significant resilience due to the nature of the contracting services it provides. Some of the risks will likely impact the Group, but
these can be readily identified, priced and mitigated, limiting their financial impact relative to companies in many other industries.
OUTLOOK AND FUTURE PLANS
We are committed to, wherever possible, preventing or otherwise mitigating and remediating any harmful effects from our
operations. In 2019, we plan to:
▪
▪
▪
continue to focus on initiatives to report on and reduce GHG emissions;
review and update as appropriate the recommended disclosures of the TCFD which will be available 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 bi-annual CIMIC HOCHTIEF Innovation Awards, using these identify and communicate worthwhile
initiatives.
▪
▪
OUR AWARDS
SUSTAINABILITY
CIMIC
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
SAFETY
CPB Contractors
Leighton Asia
Thiess
initiative.
INTEGRITY
CPB Contractors
Thiess
▪
CULTURE
CIMIC
graduates.
CPB Contractors
O’Donnell.
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.
DJSI again recognised CIMIC with inclusion in the DJSI Australia Index, the only construction and engineering company to be
included. CIMIC was identified as a construction and engineering sector global leader in two categories; 1. Building Materials,
and 2. Resource Conservation and Resource Efficiency.
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”97.
CDP again recognised CIMIC with a ‘B-’ rating for its ‘Water Security’ submission which indicates that CIMIC has provided
“evidence of actions associated with good environmental management”98.
2018 South Australian Civil Contractors Federation (CCF) industry award for the Best Individual Contribution to Workplace
Health & Safety to Gavin Wright, Health & Safety Manager.
Hong Kong Construction Association’s Proactive Safety Contractor Award 2017.
Lighthouse Club International Design for Safety Award for excellence in mitigating significant health and safety risks awarded
to the HKZMB Passenger Clearance Building (PCB) project team.
Hong Kong Construction Association (HKCA) Safe Person-in-charge Award to Roger Wong, Project Director.
HKCA Safe Supervisors Award to Tam Kit Choi, Building Engineer.
Chilean government’s ‘National Geology and Mining Service Award’ for safety performance to the Thiess Centinela operations.
▪ New South Wales Mineral Councils (NSWMC) Health Excellence Award to the Mt Owen team for their Positively Healthy
▪ Western Australian Government’s Department of Finance Supplier Performance Award to Broad Construction.
Public Relations Institute of Australia’s Highly Commended award in the Community Relations category for the Gold Coast
Light Rail Stage 2 Project.
Coal Mongolia’s Best Contractor Award at the annual International Trade and Investment Conference.
LinkedIn ranked CIMIC Group as number six on its ‘Top Companies 2017: Where Australia wants to work now’ list.
Financial Review’s Top 100 Graduate Employers survey ranked CIMIC as number 44 in their list of most popular firms for
CIMIC’s CEO and all Australian-based Operating Company Managing Directors recognised as WGEA Pay Equity Ambassadors.
2018 Civil Contractors New Zealand (CCNZ) Excellence Awards in the Young Engineer of the Year category awarded to Amy
2018 South Australian Civil Contractors Federation (CCF) industry awards for the Next Generation Civil Future Leader, to Nicola
Howlett, Project Engineer.
2018 South CCF industry awards for the Training Coordinator of the Year, to Sally Faraguna, Human Resources Advisor.
2018 Australasian Rail Industry Frank Franklyn Young Rail Specialist Award to Andrew Kelly.
▪ National Association of Women in Construction (NAWC) Young Achiever Award to Christine Larbi-Bram, Graduate Electrical
Engineer on the Caval Ridge Southern Circuit (CRSC) project.
▪ New Zealand National Association for Women in Construction (NAIWC) Helen Tippett Award for work to empower and support
women in construction award to Gabby Bush, Transmission Gully Project Engineer.
NAIWC Rising Star Award to Jemma Dutton, Environmental Advisor on the Transmission Gully project.
96 As per the International Energy Agency’s World Energy Outlook 2018, https://www.iea.org/weo2018/scenarios/
121
97 CDP’s 2018’ Climate Change Basic Performance Review Report’, 22 Jan 2019.
98 CDP’s ‘2018 Company response status and score’ and CDP’s ‘Scoring introduction 2016’.
122
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
OUR AWARDS
SUSTAINABILITY
CIMIC
▪
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.
DJSI again recognised CIMIC with inclusion in the DJSI Australia Index, the only construction and engineering company to be
included. CIMIC was identified as a construction and engineering sector global leader in two categories; 1. Building Materials,
and 2. Resource Conservation and Resource Efficiency.
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”97.
CDP again recognised CIMIC with a ‘B-’ rating for its ‘Water Security’ submission which indicates that CIMIC has provided
“evidence of actions associated with good environmental management”98.
SAFETY
CPB Contractors
▪
2018 South Australian Civil Contractors Federation (CCF) industry award for the Best Individual Contribution to Workplace
Health & Safety to Gavin Wright, Health & Safety Manager.
Leighton Asia
▪
▪
Hong Kong Construction Association’s Proactive Safety Contractor Award 2017.
Lighthouse Club International Design for Safety Award for excellence in mitigating significant health and safety risks awarded
to the HKZMB Passenger Clearance Building (PCB) project team.
Hong Kong Construction Association (HKCA) Safe Person-in-charge Award to Roger Wong, Project Director.
HKCA Safe Supervisors Award to Tam Kit Choi, Building Engineer.
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
the Group has developed a strong competitive position in delivering sustainably rated infrastructure and building projects,
which now account for more than 20% of revenue, and demand for these type of projects is expected to expand;
▪ while the contract mining of thermal coal is unlikely to see growth in the mid-to-longer term, it is forecast to remain a
relatively stable market for the foreseeable future (to 204096);
contract mining activity will be supplemented by opportunities to apply these mining services to the extraction of other
resources and minerals, such as lithium, cobalt, manganese, nickel, graphite and rare earths, for use in alternative
technologies such as solar and batteries;
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 and on an intensity basis; and
the Group aims to reduce emissions by working together with clients and business partners, and continually tries to find ways
to operate more effectively and efficiently in delivering construction, mining, or operations and maintenance services so as to
reduce the emissions generated by each individual project.
A conclusion that can be drawn from this discussion paper is that CIMIC, while exposed to the impacts of climate change, has
significant resilience due to the nature of the contracting services it provides. Some of the risks will likely impact the Group, but
these can be readily identified, priced and mitigated, limiting their financial impact relative to companies in many other industries.
We are committed to, wherever possible, preventing or otherwise mitigating and remediating any harmful effects from our
OUTLOOK AND FUTURE PLANS
operations. In 2019, we plan to:
continue to focus on initiatives to report on and reduce GHG emissions;
review and update as appropriate the recommended disclosures of the TCFD which will be available 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 bi-annual CIMIC HOCHTIEF Innovation Awards, using these identify and communicate worthwhile
initiatives.
Thiess
▪
▪ New South Wales Mineral Councils (NSWMC) Health Excellence Award to the Mt Owen team for their Positively Healthy
Chilean government’s ‘National Geology and Mining Service Award’ for safety performance to the Thiess Centinela operations.
initiative.
INTEGRITY
CPB Contractors
▪ Western Australian Government’s Department of Finance Supplier Performance Award to Broad Construction.
▪
Public Relations Institute of Australia’s Highly Commended award in the Community Relations category for the Gold Coast
Light Rail Stage 2 Project.
Thiess
▪
Coal Mongolia’s Best Contractor Award at the annual International Trade and Investment Conference.
CULTURE
CIMIC
▪
▪
▪
LinkedIn ranked CIMIC Group as number six on its ‘Top Companies 2017: Where Australia wants to work now’ list.
Financial Review’s Top 100 Graduate Employers survey ranked CIMIC as number 44 in their list of most popular firms for
graduates.
CIMIC’s CEO and all Australian-based Operating Company Managing Directors recognised as WGEA Pay Equity Ambassadors.
CPB Contractors
▪
▪
2018 Civil Contractors New Zealand (CCNZ) Excellence Awards in the Young Engineer of the Year category awarded to Amy
O’Donnell.
2018 South Australian Civil Contractors Federation (CCF) industry awards for the Next Generation Civil Future Leader, to Nicola
Howlett, Project Engineer.
2018 South CCF industry awards for the Training Coordinator of the Year, to Sally Faraguna, Human Resources Advisor.
2018 Australasian Rail Industry Frank Franklyn Young Rail Specialist Award to Andrew Kelly.
▪
▪
▪ National Association of Women in Construction (NAWC) Young Achiever Award to Christine Larbi-Bram, Graduate Electrical
Engineer on the Caval Ridge Southern Circuit (CRSC) project.
▪ New Zealand National Association for Women in Construction (NAIWC) Helen Tippett Award for work to empower and support
women in construction award to Gabby Bush, Transmission Gully Project Engineer.
NAIWC Rising Star Award to Jemma Dutton, Environmental Advisor on the Transmission Gully project.
▪
96 As per the International Energy Agency’s World Energy Outlook 2018, https://www.iea.org/weo2018/scenarios/
121
97 CDP’s 2018’ Climate Change Basic Performance Review Report’, 22 Jan 2019.
98 CDP’s ‘2018 Company response status and score’ and CDP’s ‘Scoring introduction 2016’.
122
122
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
▪
NAIWC highly commended acknowledgment to Papua Taumate, Graduate Engineer on the Southern Corridor Improvements
project.
▪ NAWIC Western Australian chapter Young Achiever of the Year award to Jessica Corica, HR Manager for Western Australia and
the Northern Territory.
CareerTrackers 2018 Mark of Excellence winner was Jasmine Ryan, a human resources undergraduate.
▪
▪ NSW Training Awards Trainee of the Year awarded to Tara Proberts-Roberts, a skilled labourer on the WestConnex New M5
project.
INNOVATION
CPB Contractors
▪
▪ National Infrastructure Awards (NIA) winner of the ‘Government Partnership Excellence’ category to the GoldLinQ consortium
2018 Australian Engineering Excellence Award (South Australia) for the Torrens Road to River Torrens Alliance (T2T).
▪
▪
(including CPB Contractors, UGL and Ventia) for delivery of the Gold Coast Light Rail Stage 2 project.
Finalist in the NIA in the ‘Contractor Excellence’ category for the CityLink Tulla Widening in Victoria and Moreton Bay Rail in
Queensland.
Australian Construction Achievement Award (ACAA) finalist to the Northern Beaches Hospital in New South Wales and Post
Entry Quarantine Facility in Victoria.
▪ Western Australian Institute of Building (WAIB) Professional Excellence Award - High Commendation Award for Commercial
▪
Construction $5 million to $25 million to Siljan Stojkovski, Senior Project Manager for the WASSF Upgrade project.
WAIB Professional Excellence Award - High Commendation Award for Commercial Construction up to $5 million to David
McNichol, Project Manager on the Highgate Primary School - Teaching Block project.
EIC Activities
▪
Consult Australia's 2018 FutureNet Business Leaders Course People's Choice Award and the Judges Overall Winner Award to
Idy Li, Associate Principal - Geotechnical.
UGL
▪
▪
Infrastructure Partnerships Australia’s ‘Operator and Service Provider Excellence’ award for delivery of the MR4 Melbourne
Rail Franchise project.
2018 Australasian Rail Industry Innovation and Technology Award to Metro Trains Melbourne (a consortium which includes
UGL) for its uninterruptible power supply for the Melbourne signalling network.
▪ National Infrastructure Awards (NIA) winner of the ‘Government Partnership Excellence’ category to the GoldLinQ consortium
(including CPB Contractors, UGL and Ventia) for delivery of the Gold Coast Light Rail Stage 2 project.
Thiess
▪
Darra Component Rebuild Centre achieved gold Timken bearing certification.
ENVIRONMENT
CPB Contractors
▪
International Erosion Control Association Australasia Environmental Excellence Award to the Transmission Gully project.
Leighton Asia
▪
Hong Kong Awards for Environmental Excellence Gold Award to the Sha Tin to Central Link - Exhibition Station and Western
Approach Tunnel project.
Singapore’s Building and Construction Authority’s Green and Gracious Builder Merit Award.
▪
123
123
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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
◕
◑
◎
GRI Standard
Universal standards
General Disclosures
Name of the organisation
Activities, brands, products, and services
102-1
102-2
102-3
Location of headquarters
102-4
Location of operations
102-5
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
102-15
Key impacts, risks, and opportunities
Ethics and integrity
102-16
102-17
Values, principles, standards, and norms of behaviour
Mechanisms for advice and concerns about ethics
Governance
102-18
Governance structure
Delegating authority
102-6
102-7
102-8
102-9
102-10
102-11
102-12
102-13
102-19
102-20
102-21
102-22
102-14
Statement from senior decision-maker
Executive Chairman’s review,
Executive-level responsibility for economic, environmental, and social topics
2015 Sustainability Report,
Consulting stakeholders on economic, environmental, and social topics
60 - 62
Composition of the highest governance body and its committees
102-23
Chair of the highest governance body
102-24
102-25
Conflicts of interest
Nominating and selecting the highest governance body
2018 Governance Statement
102-26
Role of highest governance body in setting purpose, values, and strategy
2018 Governance Statement,
102-27
102-28
Collective knowledge of highest governance body
Evaluating the highest governance body’s performance
99 The CIMIC Group Code of Conduct can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
100 The CIMIC Group Policies can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
101 The CIMIC Group Ethics Line can be accessed at: http://www.cimic.com.au/ethics-line.
102 The 2018 Corporate Governance Statements can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
103 The Group’s approach to Corporate Governance can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
104 The Board and Committee Charters can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
124
Annual Report section, Page
Application
number/s and/or URL
level /
omission
Cover
Operating and Financial Review
(OFR), www.cimic.com.au
Shareholder information (SI),
www.cimic.com.au
Introduction (intro),
www.cimic.com.au
Financial Report (FR),
www.cimic.com.au
OFR, www.cimic.com.au
OFR, FR, 63 - 64, 86
63, 86 - 97
80
OFR, 80
Code99, Sustainability Policy,
Environmental Policy, 113
60, 87, Group Policies100
106 - 107
CEO’s review
OFR, 60 - 62
59, Group Policies, Code
76 - 77, Code, Ethics-line101
2018 Governance Statement,102
Corporate Governance103
Corporate Governance
Corporate Governance
Directors’ Report, 2018
Governance Statement
Directors’ Report, 2018
Governance Statement,
www.cimic.com.au
Directors’ Report, 2018
Governance Statement,
www.cimic.com.au
Board & committee charters104
2018 Governance Statement
2018 Governance Statement
●
●
●
●
●
●
●
●
◑
◑
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
project.
the Northern Territory.
project.
INNOVATION
CPB Contractors
2018 Australian Engineering Excellence Award (South Australia) for the Torrens Road to River Torrens Alliance (T2T).
▪ National Infrastructure Awards (NIA) winner of the ‘Government Partnership Excellence’ category to the GoldLinQ consortium
(including CPB Contractors, UGL and Ventia) for delivery of the Gold Coast Light Rail Stage 2 project.
Finalist in the NIA in the ‘Contractor Excellence’ category for the CityLink Tulla Widening in Victoria and Moreton Bay Rail in
Australian Construction Achievement Award (ACAA) finalist to the Northern Beaches Hospital in New South Wales and Post
Queensland.
Entry Quarantine Facility in Victoria.
▪ Western Australian Institute of Building (WAIB) Professional Excellence Award - High Commendation Award for Commercial
Construction $5 million to $25 million to Siljan Stojkovski, Senior Project Manager for the WASSF Upgrade project.
WAIB Professional Excellence Award - High Commendation Award for Commercial Construction up to $5 million to David
McNichol, Project Manager on the Highgate Primary School - Teaching Block project.
Consult Australia's 2018 FutureNet Business Leaders Course People's Choice Award and the Judges Overall Winner Award to
EIC Activities
Idy Li, Associate Principal - Geotechnical.
UGL
Rail Franchise project.
Infrastructure Partnerships Australia’s ‘Operator and Service Provider Excellence’ award for delivery of the MR4 Melbourne
2018 Australasian Rail Industry Innovation and Technology Award to Metro Trains Melbourne (a consortium which includes
UGL) for its uninterruptible power supply for the Melbourne signalling network.
▪ National Infrastructure Awards (NIA) winner of the ‘Government Partnership Excellence’ category to the GoldLinQ consortium
(including CPB Contractors, UGL and Ventia) for delivery of the Gold Coast Light Rail Stage 2 project.
Darra Component Rebuild Centre achieved gold Timken bearing certification.
International Erosion Control Association Australasia Environmental Excellence Award to the Transmission Gully project.
Hong Kong Awards for Environmental Excellence Gold Award to the Sha Tin to Central Link - Exhibition Station and Western
Approach Tunnel project.
Singapore’s Building and Construction Authority’s Green and Gracious Builder Merit Award.
Thiess
▪
ENVIRONMENT
CPB Contractors
Leighton Asia
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
123
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
NAIWC highly commended acknowledgment to Papua Taumate, Graduate Engineer on the Southern Corridor Improvements
GRI INDEX
▪ NAWIC Western Australian chapter Young Achiever of the Year award to Jessica Corica, HR Manager for Western Australia and
CareerTrackers 2018 Mark of Excellence winner was Jasmine Ryan, a human resources undergraduate.
▪ NSW Training Awards Trainee of the Year awarded to Tara Proberts-Roberts, a skilled labourer on the WestConnex New M5
Legend
●
Covered in full
Code = Covered in the Code of Conduct
◕
Covered for the most part
◑
Covered in part
Not covered
◎
Annual Report section, Page
number/s and/or URL
Application
level /
omission
GRI Standard
Universal standards
General Disclosures
Name of the organisation
Activities, brands, products, and services
102-1
102-2
102-3
Location of headquarters
102-4
Location of operations
102-5
Ownership and legal form
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
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
102-23
Chair of the highest governance body
102-24
102-25
Nominating and selecting the highest governance body
Conflicts of interest
102-26
Role of highest governance body in setting purpose, values, and strategy
102-27
102-28
Collective knowledge of highest governance body
Evaluating the highest governance body’s performance
Cover
Operating and Financial Review
(OFR), www.cimic.com.au
Shareholder information (SI),
www.cimic.com.au
Introduction (intro),
www.cimic.com.au
Financial Report (FR),
www.cimic.com.au
OFR, www.cimic.com.au
OFR, FR, 63 - 64, 86
63, 86 - 97
80
OFR, 80
Code99, Sustainability Policy,
Environmental Policy, 113
60, 87, Group Policies100
106 - 107
Executive Chairman’s review,
CEO’s review
OFR, 60 - 62
59, Group Policies, Code
76 - 77, Code, Ethics-line101
2018 Governance Statement,102
Corporate Governance103
Corporate Governance
2015 Sustainability Report,
Corporate Governance
60 - 62
Directors’ Report, 2018
Governance Statement
Directors’ Report, 2018
Governance Statement,
www.cimic.com.au
2018 Governance Statement
Directors’ Report, 2018
Governance Statement,
www.cimic.com.au
2018 Governance Statement,
Board & committee charters104
2018 Governance Statement
2018 Governance Statement
99 The CIMIC Group Code of Conduct can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
100 The CIMIC Group Policies can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
101 The CIMIC Group Ethics Line can be accessed at: http://www.cimic.com.au/ethics-line.
102 The 2018 Corporate Governance Statements can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
103 The Group’s approach to Corporate Governance can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
104 The Board and Committee Charters can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
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GRI Standard
102-29
Identifying and managing economic, environmental, and social impacts
102-30
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
102-37
102-38
102-39
102-40
102-41
102-42
102-43
102-44
102-45
102-46
102-47
102-48
Remuneration policies
Process for determining remuneration
Stakeholders’ involvement in remuneration
Annual total compensation ratio
Percentage increase in annual total compensation ratio
Stakeholder engagement
List of stakeholder groups
Collective bargaining agreements
Identifying and selecting stakeholders
Approach to stakeholder engagement
Key topics and concerns raised
Reporting practice
Entities included in the consolidated financial statements
Defining report content and topic Boundaries
List of material topics
Restatements of information
102-49
Changes in reporting
102-50
Reporting period
102-51
Date of most recent report
102-52
Reporting cycle
102-53
102-54
102-55
102-56
103-1
Contact point for questions regarding the report
Claims of reporting in accordance with the GRI Standards
GRI content index
External assurance
Management Approach
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
201-1
201-2
Economic Topic-specific Disclosures
Economic performance
Direct economic value generated and distributed
Financial implications and other risks and opportunities due to
climate change
Annual Report section, Page
number/s and/or URL
2018 Governance Statement,
Board & committee charters
2018 Governance Statement,
Board & committee charters
65 - 121, 2018 Governance
Statement, Board & committee
charters
59, Director’s Report, 2018
Governance Statement, Board &
committee charters
77, 2018 Governance Statement,
Board & committee charters
77, 2017 Governance Statement,
Board & committee charters
Remuneration Report
Remuneration Report
Remuneration Report, 2018
AGM Results105
98
98
60 - 62
88
60 - 62
60 - 62
60 - 62
59, Financial Report
59
60 - 62
62, 63 - 64, Operating and
Financial Review, Financial
Report
59, Operating and Financial
Review, Financial Report
59, Operating and Financial
Review, Financial Report
Operating and Financial Review,
Financial Report
59, Operating and Financial
Review, Financial Report
Justin Grogan, EGM Sustainability
59
124 - 128
Not externally assured
60 - 62 (see references to
sections of Annual Report)
60 - 62 (see references to
sections of Annual Report)
59 - 62 (see references to
sections of Annual Report)
100
120 - 121, 2015 Sustainability
Report, 2016 Sustainability
Application
level /
omission
Annual Report section, Page
Application
number/s and/or URL
level /
omission
Report, 2017 Sustainability
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◕
105 The 2018 AGM results can be accessed at: http://www.cimic.com.au/investor-and-media-centre/financial-results-and-meetings/annual-reports-
and-annual-general-meetings.
125
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GRI Standard
Market Presence
minimum wage
201-3
201-4
Defined benefit plan obligations and other retirement plans
Financial assistance received from government
202-1
Ratios of standard entry level wage by gender compared to local
Not disclosed
202-2
Proportion of senior management hired from the local
96
community
Indirect Economic Impacts
Infrastructure investments and services supported
Significant indirect economic impacts
Procurement Practices
204-1
Proportion of spending on local suppliers
Not disclosed
Anti-corruption
procedures
Operations assessed for risks related to corruption
Communication and training about anti-corruption policies and
205-3
Confirmed incidents of corruption and actions taken
206-1
Legal actions for anti-competitive behaviour, anti-trust, and
Anti-competitive Behaviour
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
Reduction of energy consumption
Reductions in energy requirements of products and services
Water and Effluents
Interactions with water as a shared resource
Management of water discharge-related impacts
304-1
Operational sites owned, leased, managed in, or adjacent to,
119 - 120
protected areas and areas of high biodiversity value outside
304-2
Significant impacts of activities, products, and services on
119 - 120
IUCN Red List species and national conservation list species with
Not disclosed
Water withdrawal
Water discharge
Water consumption
Biodiversity
protected areas
biodiversity
Habitats protected or restored
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
Not disclosed
air emissions
Effluents and Waste
306-1
Water discharge by quality and destination
117 - 118
Report
97
78 - 79
60, 100
100
75 - 76
63, 77
77
79
118 - 119
118 - 119
116, 118
64, 114
64, 114
64, 114
64, 114
64, 114
117 - 118
117 - 118
64, 117 - 118
64, 117 - 118
64, 117 - 118
119 - 120
64, 114 - 115
64, 114 - 115
64, 114 - 115
64, 114 - 115
64, 114 - 115
64, 114 - 115
203-1
203-2
205-1
205-2
301-1
301-2
301-3
302-1
302-2
302-3
302-4
302-5
303-1
303-2
303-3
303-4
303-5
304-3
304-4
305-1
305-2
305-3
305-4
305-5
305-6
305-7
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CIMIC Group Limited Annual Report 2018 | Sustainability Report
GRI Standard
GRI Standard
Annual Report section, Page
Application
number/s and/or URL
level /
omission
Annual Report section, Page
number/s and/or URL
Application
level /
omission
102-29
Identifying and managing economic, environmental, and social impacts
102-30
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
102-37
102-38
102-39
102-40
102-41
102-42
102-43
102-44
102-45
102-46
102-47
102-48
102-53
102-54
102-55
102-56
Remuneration policies
Process for determining remuneration
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
Defining report content and topic Boundaries
List of material topics
Restatements of information
102-49
Changes in reporting
102-50
Reporting period
102-51
Date of most recent report
102-52
Reporting cycle
GRI content index
External assurance
Management Approach
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
Economic Topic-specific Disclosures
Economic performance
2018 Governance Statement,
Board & committee charters
2018 Governance Statement,
Board & committee charters
65 - 121, 2018 Governance
Statement, Board & committee
charters
59, Director’s Report, 2018
Governance Statement, Board &
committee charters
77, 2018 Governance Statement,
Board & committee charters
77, 2017 Governance Statement,
Board & committee charters
Remuneration Report
Remuneration Report
Remuneration Report, 2018
AGM Results105
98
98
60 - 62
88
60 - 62
60 - 62
60 - 62
59
60 - 62
Report
62, 63 - 64, Operating and
Financial Review, Financial
59, Operating and Financial
Review, Financial Report
59, Operating and Financial
Review, Financial Report
Operating and Financial Review,
Financial Report
59, Operating and Financial
Review, Financial Report
59
124 - 128
Not externally assured
60 - 62 (see references to
sections of Annual Report)
60 - 62 (see references to
sections of Annual Report)
59 - 62 (see references to
sections of Annual Report)
Contact point for questions regarding the report
Justin Grogan, EGM Sustainability
Claims of reporting in accordance with the GRI Standards
Entities included in the consolidated financial statements
59, Financial Report
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201-1
201-2
Direct economic value generated and distributed
100
Financial implications and other risks and opportunities due to
120 - 121, 2015 Sustainability
climate change
Report, 2016 Sustainability
105 The 2018 AGM results can be accessed at: http://www.cimic.com.au/investor-and-media-centre/financial-results-and-meetings/annual-reports-
and-annual-general-meetings.
125
201-3
201-4
202-1
202-2
203-1
203-2
204-1
205-1
205-2
205-3
206-1
301-1
301-2
301-3
302-1
302-2
302-3
302-4
302-5
303-1
303-2
303-3
303-4
303-5
304-1
304-2
304-3
304-4
305-1
305-2
305-3
305-4
305-5
305-6
305-7
306-1
Defined benefit plan obligations and other retirement plans
Financial assistance received from government
Market Presence
Ratios of standard entry level wage by gender compared to local
minimum wage
Proportion of senior management hired from the local
community
Indirect Economic Impacts
Infrastructure investments and services supported
Significant indirect economic impacts
Procurement Practices
Proportion of spending on local suppliers
Anti-corruption
Operations assessed for risks related to 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
Reduction of energy consumption
Reductions in energy requirements of products and services
Water and Effluents
Interactions with water as a shared resource
Management of water discharge-related impacts
Water withdrawal
Water discharge
Water consumption
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
Report, 2017 Sustainability
Report
97
78 - 79
Not disclosed
96
60, 100
100
Not disclosed
75 - 76
63, 77
77
79
118 - 119
118 - 119
116, 118
64, 114
64, 114
64, 114
64, 114
64, 114
117 - 118
117 - 118
64, 117 - 118
64, 117 - 118
64, 117 - 118
119 - 120
119 - 120
119 - 120
Not disclosed
64, 114 - 115
64, 114 - 115
64, 114 - 115
64, 114 - 115
64, 114 - 115
64, 114 - 115
Not disclosed
117 - 118
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GRI Standard
Annual Report section, Page
number/s and/or URL
Application
level /
omission
GRI Standard
Annual Report section, Page
Application
number/s and/or URL
level /
omission
306-2
306-3
306-4
306-5
307-1
308-1
308-2
401-1
401-2
401-3
402-1
403-1
403-2
403-3
403-4
403-5
403-6
403-7
403-8
Waste by type and disposal method
Significant spills
Transport of hazardous waste
Water bodies affected by water discharges and/or runoff
Environmental Compliance
Non-compliance with environmental laws and regulations
Supplier Environmental Assessment
New suppliers that were screened using environmental criteria
Negative environmental impacts in the supply chain and actions
taken
Social Topic-specific Disclosures
Employment
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
Minimum notice periods regarding operational changes
Occupational Health and Safety
Occupational health and safety management system
Hazard identification, risk assessment, and incident investigation
Occupational health services
Worker participation, consultation, and communication on
occupational health and safety
Worker training on occupational health and safety
Promotion of worker health
Prevention and mitigation of occupational health and safety
impacts directly linked by business relationships
Workers covered by an occupational health and safety
management system
Work-related injuries
404-1
404-2
403-9
403-10 Work-related ill health
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
Diversity and Equal Opportunity
Diversity of governance bodies and employees
404-3
405-1
116 - 117
64, 113 - 114, Directors’ Report
116
113 - 114
64, 113 - 114, Directors’ Report
80
113 - 114
63, 91
Not disclosed
94
As per statutory obligations
65 - 72
65 - 72
70
As per statutory obligations
65 - 72
65 - 72
65 - 72
65 - 72
58, 63, 66 - 67
70
89 - 91
89 - 91
98
63, 92 - 97, Directors’ Report,
2018 Governance Statement
94
87 - 88
Not disclosed
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
Operations and suppliers in which the right to freedom of
association and collective bargaining may be at risk
Child Labor
Operations and suppliers at significant risk for incidents of child
labor
Forced or Compulsory Labor
Operations and suppliers at significant risk for incidents of forced
or compulsory labor
Security Practices
Security personnel trained in human rights policies or procedures Not disclosed
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
87
87
83
87
405-2
406-1
407-1
408-1
409-1
410-1
411-1
412-1
127
127
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412-2
412-3
Employee training on human rights policies or procedures
Not disclosed
Significant investment agreements and contracts that include
87
human rights clauses or that underwent human rights screening
Local Communities
413-1
Operations with local community engagement, impact
81 - 82
assessments, and development programs
413-2
Operations with significant actual and potential negative impacts
81 - 82
on local communities
Supplier Social Assessment
414-1
414-2
New suppliers that were screened using social criteria
Negative social impacts in the supply chain and actions taken
Public Policy
415-1
Political contributions
Customer Health and Safety
416-1
Assessment of the health and safety impacts of product and
72 - 73
416-2
Incidents of non-compliance concerning the health and safety
72 - 73
service categories
impacts of products and services
Marketing and Labelling
417-1
417-2
Requirements for product and service information and labelling
72 - 73
Incidents of non-compliance concerning product and service
72 - 73, 79
information and labelling
417-3
Incidents of non-compliance concerning marketing
80 - 81
80 - 81
76
79
78
418-1
Substantiated complaints concerning breaches of customer
communications
Customer Privacy
privacy and losses of customer data
Socioeconomic Compliance
economic area
419-1
Non-compliance with laws and regulations in the social and
78, 79
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Application
number/s and/or URL
level /
omission
64, 113 - 114, Directors’ Report
116 - 117
116
113 - 114
Waste by type and disposal method
Significant spills
Transport of hazardous waste
Water bodies affected by water discharges and/or runoff
Environmental Compliance
307-1
Non-compliance with environmental laws and regulations
64, 113 - 114, Directors’ Report
Supplier Environmental Assessment
New suppliers that were screened using environmental criteria
80
Negative environmental impacts in the supply chain and actions
113 - 114
taken
Social Topic-specific Disclosures
Employment
New employee hires and employee turnover
temporary or part-time employees
401-3
Parental leave
Labor/Management Relations
Benefits provided to full-time employees that are not provided to
Not disclosed
402-1
Minimum notice periods regarding operational changes
As per statutory obligations
Occupational Health and Safety
Occupational health and safety management system
Hazard identification, risk assessment, and incident investigation
Occupational health services
Worker participation, consultation, and communication on
As per statutory obligations
306-2
306-3
306-4
306-5
308-1
308-2
401-1
401-2
403-1
403-2
403-3
403-4
403-5
403-6
403-7
occupational health and safety
Worker training on occupational health and safety
Promotion of worker health
Prevention and mitigation of occupational health and safety
impacts directly linked by business relationships
403-8
Workers covered by an occupational health and safety
management system
403-9
Work-related injuries
403-10 Work-related ill health
Training and Education
404-1
404-2
Average hours of training per year per employee
Programs for upgrading employee skills and transition assistance
programs
404-3
Percentage of employees receiving regular performance and
98
career development reviews
Diversity and Equal Opportunity
405-1
Diversity of governance bodies and employees
63, 91
94
65 - 72
65 - 72
70
65 - 72
65 - 72
65 - 72
65 - 72
58, 63, 66 - 67
70
89 - 91
89 - 91
63, 92 - 97, Directors’ Report,
2018 Governance Statement
405-2
Ratio of basic salary and remuneration of women to men
94
Non-discrimination
406-1
Incidents of discrimination and corrective actions taken
Not disclosed
Freedom of Association and Collective Bargaining
407-1
Operations and suppliers in which the right to freedom of
87 - 88
association and collective bargaining may be at risk
408-1
Operations and suppliers at significant risk for incidents of child
87
409-1
Operations and suppliers at significant risk for incidents of forced
87
410-1
Security personnel trained in human rights policies or procedures Not disclosed
411-1
Incidents of violations involving rights of indigenous peoples
412-1
Operations that have been subject to human rights reviews or
83
87
Child Labor
labor
Forced or Compulsory Labor
or compulsory labor
Security Practices
Rights of Indigenous Peoples
Human Rights Assessment
impact assessments
127
●
●
●
●
●
◑
◑
●
◎
●
◎
●
●
●
◎
●
●
●
●
●
●
●
●
●
●
◑
◎
●
●
●
◎
●
●
CIMIC Group Limited Annual Report 2018 | Sustainability Report
CIMIC Group Limited Annual Report 2018 | Sustainability Report
GRI Standard
GRI Standard
Annual Report section, Page
number/s and/or URL
Application
level /
omission
412-2
412-3
413-1
413-2
414-1
414-2
415-1
416-1
416-2
417-1
417-2
417-3
418-1
419-1
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
Operations with local community engagement, impact
assessments, and development programs
Operations with significant actual and potential negative impacts
on local communities
Supplier Social Assessment
New suppliers that were screened using social criteria
Negative social impacts in the supply chain and 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
Non-compliance with laws and regulations in the social and
economic area
Not disclosed
87
81 - 82
81 - 82
80 - 81
80 - 81
76
72 - 73
72 - 73
72 - 73
72 - 73, 79
79
78
78, 79
◎
◑
●
●
◑
◑
●
●
●
●
●
●
●
●
128
128
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129
CIMIC Group I Annual Report 2018
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CIMIC Group I Annual Report 2018
130
131
CIMIC Group I Annual Report 2018
CIMIC AR 20.indd 26
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collaborative
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
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CIMIC Group I Annual Report 2018
132
Third New Zealand Schools PPPPacific Partnerships and CPB Contractors, New ZealandPacific Partnerships and CPB Contractors are delivering five schools, as part of a consortium, under the third New Zealand Schools PPP.In Christchurch, the project includes a state of the art education precinct that will co-locate two single sex public high schools – a first for New Zealand. The shared campus will serve more than 2,000 students attending the local girls’ and boys’ high schools.Working with our client, New Zealand’s Ministry of Education, and leaders at each school, the team is ensuring the campus is responsive to student and curriculum priorities, cultural protocols, the area’s history and involvement of local iwi.Operating the campus for 25 years means we’ll be part of this community for a long time.
133
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CIMIC Group Limited Annual Report 2018 | Financial Report
Financial Report
TABLE OF CONTENTS
Consolidated Statement of Profit or Loss
Consolidated Statement of Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1.
2.
3.
Summary of significant accounting policies
Revenue
Expenses
4. Net finance income / (costs)
5.
6.
7.
8.
9.
Auditors’ remuneration
Income tax expense
Cash and cash equivalents
Trade and other receivables
Current tax assets
10.
Inventories
11.
Investments accounted for using the equity method
12. Other investments
13. Deferred taxes
14. Property, plant and equipment
15.
Intangibles
16. Trade and other payables
17. Current tax liabilities
18. Provisions
19.
Interest bearing liabilities
20. Share capital
21. Reserves
22. Retained earnings
23. Dividends
24. Earnings per share
25. Associates
26.
Joint venture entities
27.
Joint operations
28. 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
135
136
137
138
139
140
140
156
156
157
158
159
160
160
163
163
164
164
165
166
167
169
169
169
170
171
172
173
174
175
176
178
181
183
184
184
185
188
190
191
192
207
211
214
228
229
230
231
CIMIC Group I Annual Report 2018
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Consolidated Statement of Profit or Loss
for the 12 months to 31 December 2018
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 2018
$m
12 months to
December 2017
$m
14,670.2
(13,586.1)
58.5
1,142.6
55.3
(123.2)
(67.9)
1,074.7
(300.9)
773.8
13,429.5
(12,377.2)
(49.9)
1,002.4
71.6
(114.8)
(43.2)
959.2
(268.6)
690.6
Consolidated Statement of Other Comprehensive
Income
for the 12 months to 31 December 2018
12 months to
12 months to
December 2018
December 2017
Note
$m
$m
Profit for the year attributable to shareholders of the parent entity
780.6
702.1
Other comprehensive income attributable to shareholders of the parent entity:
Items that may be reclassified to profit or loss:
Foreign exchange translation differences (net of tax)
-
-
Effective portion of changes in fair value of cash flow hedges (net of tax)
21
21
124.6
0.5
(222.0)
4.4
Other comprehensive income / (expense) for the year
125.1
(217.6)
Total comprehensive income / (expense) for the year attributable to shareholders
905.7
484.5
(Profit) / loss for the year attributable to non-controlling interests
6.8
11.5
Total comprehensive income / (expense) for the year attributable to shareholders
Profit for the year attributable to shareholders of the parent entity
780.6
702.1
Dividends per share - Final
Dividends per share - Interim
Basic earnings per share
Diluted earnings per share
23
23
24
24
86.0¢
70.0¢
240.7¢
240.7¢
75.0¢
60.0¢
216.5¢
216.5¢
Total comprehensive income / (expense) for the year
Total comprehensive (income) / expense for the year attributable to non-controlling
898.9
6.8
473.0
11.5
Total comprehensive income / (expense) for the year attributable to shareholders
905.7
484.5
of the parent entity
of the parent entity:
interests
of the parent entity
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
report.
The consolidated statement of other comprehensive income is to be read in conjunction with the notes to the consolidated financial
135
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CIMIC Group Limited Annual Report 2018 | Financial Report
Consolidated Statement of Profit or Loss
for the 12 months to 31 December 2018
Share of profit / (loss) of associates and joint venture entities
25, 26
Earnings before interest and tax (“EBIT”)
Revenue
Expenses
Finance income
Finance costs
Net finance income / (costs)
Profit before tax
Income tax (expense) / benefit
Profit for the year
Dividends per share - Final
Dividends per share - Interim
Basic earnings per share
Diluted earnings per share
12 months to
December 2018
12 months to
December 2017
$m
$m
Note
2
3
4
4
6
23
23
24
24
14,670.2
(13,586.1)
58.5
1,142.6
55.3
(123.2)
(67.9)
1,074.7
(300.9)
773.8
13,429.5
(12,377.2)
(49.9)
1,002.4
71.6
(114.8)
(43.2)
959.2
(268.6)
690.6
86.0¢
70.0¢
240.7¢
240.7¢
75.0¢
60.0¢
216.5¢
216.5¢
Consolidated Statement of Other Comprehensive
Income
for the 12 months to 31 December 2018
12 months to
December 2018
$m
12 months to
December 2017
$m
Note
Profit for the year attributable to shareholders of the parent entity
780.6
702.1
Other comprehensive income attributable to shareholders of the parent entity:
Items that may be reclassified to profit or loss:
-
Foreign exchange translation differences (net of tax)
- Effective portion of changes in fair value of cash flow hedges (net of tax)
21
21
124.6
0.5
(222.0)
4.4
Other comprehensive income / (expense) for the year
125.1
(217.6)
Total comprehensive income / (expense) for the year attributable to shareholders
905.7
484.5
of the parent entity
(Profit) / loss for the year attributable to non-controlling interests
6.8
11.5
Total comprehensive income / (expense) for the year attributable to shareholders
Profit for the year attributable to shareholders of the parent entity
780.6
702.1
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
898.9
6.8
473.0
11.5
905.7
484.5
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
The consolidated statement of other comprehensive income is to be read in conjunction with the notes to the consolidated financial
report.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Consolidated Statement of Financial Position
as at 31 December 2018
Consolidated Statement of Changes in Equity
for the 12 months to 31 December 2018
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
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
31 December
2018
Note
$m
31 December
2017
$m
7
8
9
10
30
8
10
11
12
13
14
15
16
17
18
19
16
18
19
13
20
21
22
2,141.7
3,125.4
-
315.1
1.5
5,583.7
777.4
111.1
136.6
105.4
49.8
1,292.7
1,093.5
3,566.5
9,150.2
5,701.0
68.4
326.0
50.7
6,146.1
113.4
62.4
472.1
19.4
667.3
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
6,813.4
6,214.3
2,336.8
3,357.2
1,750.3
(514.3)
1,145.2
2,381.2
(44.4)
2,336.8
1,750.3
(554.3)
2,183.0
3,379.0
(21.8)
3,357.2
Share
capital
Reserves
Retained
Attributable
earnings
to equity
holders
Non-
controlling
interests
Total
equity
$m
$m
$m
$m
$m
$m
Total equity at 1 January 2017
1,750.3
(325.6)
1,876.5
3,301.2
(9.8)
3,291.4
Total transactions with shareholders
(11.1)
(395.6)
(406.7)
Total equity at 31 December 2017
1,750.3
(554.3)
2,183.0
3,379.0
(21.8)
3,357.2
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
Dividends
Share based payments
- Other
Opening balance adjustment on
application of AASB 151
Opening balance adjustment on
application of AASB 91
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
Dividends
Share based payments
- Other
-
-
-
-
23
21
23
21
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
702.1
702.1
(11.5)
690.6
(217.6)
-
(217.6)
-
(217.6)
(11.1)
(395.6)
-
-
(395.6)
(11.1)
-
-
-
(0.5)
(0.5)
(395.6)
(11.1)
(0.5)
(407.2)
(7.2)
(932.2)
(939.4)
(13.9)
(953.3)
(72.9)
(416.0)
(488.9)
-
(488.9)
125.1
780.6
-
780.6
125.1
(6.8)
773.8
125.1
(5.0)
(470.2)
(470.2)
-
-
(5.0)
-
-
-
-
(1.9)
(1.9)
(470.2)
(5.0)
(1.9)
(477.1)
Total equity at 1 January 2018
1,750.3
(634.4)
834.8
1,950.7
(35.7)
1,915.0
Total transactions with shareholders
(5.0)
(470.2)
(475.2)
Total equity at 31 December 2018
1,750.3
(514.3)
1,145.2
2,381.2
(44.4)
2,336.8
1 Refer to Note 1: Summary of significant accounting policies – basis of preparation for details on opening balance
adjustments made on application of new accounting standards.
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.
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138
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Consolidated Statement of Financial Position
as at 31 December 2018
Consolidated Statement of Changes in Equity
for the 12 months to 31 December 2018
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
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
31 December
31 December
2018
$m
2017
$m
Note
7
8
9
10
30
8
10
11
12
13
14
15
16
17
18
19
16
18
19
13
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
40.4
311.8
265.6
152.0
69.3
637.8
-
859.1
2,141.7
3,125.4
-
315.1
1.5
5,583.7
777.4
111.1
136.6
105.4
49.8
1,292.7
1,093.5
3,566.5
9,150.2
68.4
326.0
50.7
113.4
62.4
472.1
19.4
667.3
5,701.0
4,737.4
6,146.1
5,355.2
6,813.4
6,214.3
2,336.8
3,357.2
1,750.3
(514.3)
1,145.2
2,381.2
(44.4)
2,336.8
1,750.3
(554.3)
2,183.0
3,379.0
(21.8)
3,357.2
Share
capital
Reserves
Retained
earnings
Attributable
to equity
holders
Non-
controlling
interests
Total
equity
$m
$m
$m
$m
$m
$m
Total equity at 1 January 2017
1,750.3
(325.6)
1,876.5
3,301.2
(9.8)
3,291.4
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)
(11.1)
-
-
-
(395.6)
(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
1,750.3
(554.3)
2,183.0
3,379.0
(21.8)
3,357.2
Opening balance adjustment on
application of AASB 151
Opening balance adjustment on
application of AASB 91
-
-
(7.2)
(932.2)
(939.4)
(13.9)
(953.3)
(72.9)
(416.0)
(488.9)
-
(488.9)
Total equity at 1 January 2018
1,750.3
(634.4)
834.8
1,950.7
(35.7)
1,915.0
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
-
-
-
-
-
-
-
780.6
125.1
-
780.6
125.1
-
(470.2)
(470.2)
(5.0)
-
-
-
(5.0)
-
(5.0)
(470.2)
(475.2)
(6.8)
-
-
-
(1.9)
(1.9)
773.8
125.1
(470.2)
(5.0)
(1.9)
(477.1)
Total equity at 31 December 2018
1,750.3
(514.3)
1,145.2
2,381.2
(44.4)
2,336.8
1 Refer to Note 1: Summary of significant accounting policies – basis of preparation for details on opening balance
adjustments made on application of new accounting standards.
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.
137
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Consolidated Statement of Cash Flows
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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
16,040.8
14,089.9
(14,181.9)
(12,566.5)
1,858.9
1,523.4
12 months to
December 2018
$m
12 months to
December 2017
$m
Note
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
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
Payments for investments in controlled entities and businesses
29
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
Cash payments in relation to employee share plans
Proceeds from borrowings
Repayment of borrowings
Repayment of finance leases
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
28.0
(119.5)
(58.9)
28 (a)
1,708.5
26.0
(106.2)
(80.8)
1,362.4
(14.2)
(424.1)
-
118.6
46.9
-
(59.0)
(60.1)
(40.9)
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
-
(53.1)
(1.1)
(545.2)
(432.8)
-
(8.6)
407.7
1,517.0
(835.6)
(1,705.9)
-
(470.2)
-
(898.1)
265.2
1,813.8
62.7
2,141.7
(21.2)
(395.6)
(29.3)
(643.6)
286.0
1,576.5
(48.7)
1,813.8
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.
139
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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 financial instruments that have been 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 Group has applied new accounting standards and their impact is disclosed below. In accordance with elections available under
the relevant accounting standards, new accounting policies are only effective from 1 January 2018 and comparative information is
still prepared under policies disclosed in the 31 December 2017 CIMIC Financial Report, although as set out below certain
comparables have been re-presented to be consistent with the current period.
New and amended standards adopted by the Company
New and amended accounting standards relevant to the Group that are effective for the period are as follows:
AASB 15: Revenue from Contracts with Customers
In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as amended in April 2016) which has
come into effect 1 January 2018. Details of the new requirements of AASB 15 as well as their impact on the Group’s consolidated
financial statements are described below.
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 and related interpretations. The core principle
of AASB 15 is that an entity shall recognise revenue when control of a good or service transfers to a customer.
CIMIC Group has operations across different industry sectors and geographical locations which are subject to different legal and
contractual frameworks. Significant judgements and estimates are used in determining the impact of AASB 15, 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 productivity. In making this assessment we have considered, for applicable contracts, the individual
status of legal proceedings, including arbitration and litigation.
The Group’s accounting policies for its revenue streams are disclosed in detail in Note 1: Summary of significant accounting policies
– a) Revenue recognition.
AASB 9: Financial instruments
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.
To assess for any expected credit losses under AASB 9, there is consideration around the probability of default upon initial
recognition of the asset, and subsequent consideration as to whether there have been any significant increases in credit risk on an
ongoing basis at each reporting period. To assess whether there is a significant increase in credit risk the Group compares the risk of
a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition.
140
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Consolidated Statement of Cash Flows
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
12 months to
12 months to
December 2018
December 2017
Note
$m
$m
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
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
16,040.8
14,089.9
(14,181.9)
(12,566.5)
1,858.9
1,523.4
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.
28 (a)
1,708.5
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 financial instruments that have been 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 Group has applied new accounting standards and their impact is disclosed below. In accordance with elections available under
the relevant accounting standards, new accounting policies are only effective from 1 January 2018 and comparative information is
still prepared under policies disclosed in the 31 December 2017 CIMIC Financial Report, although as set out below certain
comparables have been re-presented to be consistent with the current period.
New and amended standards adopted by the Company
New and amended accounting standards relevant to the Group that are effective for the period are as follows:
AASB 15: Revenue from Contracts with Customers
In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as amended in April 2016) which has
come into effect 1 January 2018. Details of the new requirements of AASB 15 as well as their impact on the Group’s consolidated
financial statements are described below.
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 and related interpretations. The core principle
of AASB 15 is that an entity shall recognise revenue when control of a good or service transfers to a customer.
CIMIC Group has operations across different industry sectors and geographical locations which are subject to different legal and
contractual frameworks. Significant judgements and estimates are used in determining the impact of AASB 15, 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 productivity. In making this assessment we have considered, for applicable contracts, the individual
status of legal proceedings, including arbitration and litigation.
The Group’s accounting policies for its revenue streams are disclosed in detail in Note 1: Summary of significant accounting policies
– a) Revenue recognition.
AASB 9: Financial instruments
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.
To assess for any expected credit losses under AASB 9, there is consideration around the probability of default upon initial
recognition of the asset, and subsequent consideration as to whether there have been any significant increases in credit risk on an
ongoing basis at each reporting period. To assess whether there is a significant increase in credit risk the Group compares the risk of
a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition.
139
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Payments for investments in controlled entities and businesses
29
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
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
businesses
Payments for investments
Loans to associates and joint ventures
Net cash from investing activities
Cash flows from financing activities
Cash payments in relation to employee share plans
Proceeds from borrowings
Repayment of borrowings
Repayment of finance leases
Dividends paid to 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
28.0
(119.5)
(58.9)
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
-
(53.1)
(1.1)
-
-
-
(470.2)
(898.1)
265.2
1,813.8
62.7
2,141.7
26.0
(106.2)
(80.8)
1,362.4
(14.2)
(424.1)
118.6
46.9
-
-
(59.0)
(60.1)
(40.9)
(21.2)
(395.6)
(29.3)
(643.6)
286.0
1,576.5
(48.7)
1,813.8
(545.2)
(432.8)
(8.6)
407.7
1,517.0
(835.6)
(1,705.9)
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.
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
In making this assessment, as far as available, the Group considers both quantitative and qualitative information that is reasonable
and supportable, including historical experience and forward-looking information that is available without undue cost or effort.
Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors operate,
obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar
organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the
Group’s core operations. In particular, as far as available, the following information is taken into account when assessing significant
movements in credit risk:
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a
significant change to the borrower’s ability to meet its obligations;
actual or expected significant changes in the operating results of the borrower;
significant increases in credit risk on other financial instruments of the same borrower;
external credit rating;
significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit
enhancements;
significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of
borrowers in the Group and changes in the operating results of the borrower; and
macroeconomic information such as market interest rates and growth rates.
AASB 9 also introduces new hedge accounting requirements, however these have had no impact on the results of the Group.
Impact on application
The Group has applied AASB 15 and AASB 9 retrospectively with the cumulative effect of initially applying the standards as an
adjustment to the opening balance of equity and comparative figures are therefore not restated, however some comparative
disclosure notes have been restated where appropriate. The opening equity adjustment due to the application of the new
standards is analysed by financial statement line item below.
Impact on assets, liabilities and equity at 1 January 2018
Current trade and other receivables
Non-current trade and other receivables
Investments accounted using the equity method
Deferred tax assets
Total assets impact
Current trade and other payables
Total liabilities impact
Net asset impact
Retained earnings
Foreign currency translation reserve
Non-controlling interests
Total equity impact
As reported
31 December 2017
$m
AASB 9 Transition
Adjustments
$m
AASB 15 Transition
Adjustments
$m
Opening Balance
1 January 2018
$m
(1)
(2)
(3)
(1)
(1)
(4)
3,216.3
1,090.8
382.7
145.4
4,737.4
2,183.0
162.3
(21.8)
-
(753.1)
2,463.2
(488.9)
-
-
(488.9)
-
-
-
(263.3)
88.8
(927.6)
25.7
25.7
(488.9)
(953.3)
(416.0)
(72.9)
-
(488.9)
(932.2)
(7.2)
(13.9)
(953.3)
601.9
119.4
234.2
4,763.1
834.8
82.2
(35.7)
The contracted terms and the way in which the Group operates its construction and services contracts results in revenue
predominantly being derived from projects containing one performance obligation. Construction and services 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 was previously 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
Under AASB 111 Construction Contracts, costs incurred during the tender process were 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
Basis of preparation continued
(1) Revenue recognition
not occur.
Tender costs & contract costs
the delivery of the project.
Tax
been impacted.
Adjustments under the new standards are subject to tax effect accounting and therefore the net deferred tax position has
(2) The change in method from recognition of incurred losses to recognition of expected credit losses for impairment of financial
assets under AASB 9 has led to an adjustment reducing non-current receivables by $487.4 million with regards to the non-
current loan receivables from a joint venture, BIC Contracting LLC (BICC) (formerly HLG Contracting LLC). In determining the
estimated expected credit loss on application of AASB 9, CIMIC engaged an independent advisory expert to obtain a credit
rating and applied the relevant expected credit loss rate to the loan in line with rating agency published rates and
methodology.
An additional $1.5 million expected credit loss has been recognised in relation to other non-current receivables.
(3) As BICC is accounted for as an equity method joint venture, the book carrying value of CIMIC’s investment in BICC reflects the
Group’s share of BICC’s operating results, including BICC’s recognition of construction revenue. The adjustment reflects the
consistent application of CIMIC Group revenue recognition criteria as outlined in (1) Revenue recognition. The higher
recognition threshold and constraint criteria in the new standard has led to a reduction in the investment of $245.6 million. As
BICC is a jointly controlled investment, CIMIC does not exert the same degree of control over BICC’s implementation project as
it does over its own and therefore the impact is subject to a higher degree of estimation uncertainty.
Other equity investments under AASB 15 have also been adjusted through the same process reducing investments by $17.7
million.
(4) The total of adjustments (1) to (3) above have been recognised in opening equity. These have been recognised between
retained earnings, foreign currency translation reserve, which is a result of the cumulative effect of foreign currency
fluctuations, and those balances attributable to non-controlling interests.
There has been no material impact on cash flow or other financial statement items on transition.
141
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142
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
In making this assessment, as far as available, the Group considers both quantitative and qualitative information that is reasonable
and supportable, including historical experience and forward-looking information that is available without undue cost or effort.
Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors operate,
obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar
organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the
Group’s core operations. In particular, as far as available, the following information is taken into account when assessing significant
movements in credit risk:
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a
significant change to the borrower’s ability to meet its obligations;
actual or expected significant changes in the operating results of the borrower;
significant increases in credit risk on other financial instruments of the same borrower;
significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit
significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of
borrowers in the Group and changes in the operating results of the borrower; and
macroeconomic information such as market interest rates and growth rates.
external credit rating;
enhancements;
AASB 9 also introduces new hedge accounting requirements, however these have had no impact on the results of the Group.
Impact on application
The Group has applied AASB 15 and AASB 9 retrospectively with the cumulative effect of initially applying the standards as an
adjustment to the opening balance of equity and comparative figures are therefore not restated, however some comparative
disclosure notes have been restated where appropriate. The opening equity adjustment due to the application of the new
standards is analysed by financial statement line item below.
Impact on assets, liabilities and equity at 1 January 2018
Current trade and other receivables
Non-current trade and other receivables
Investments accounted using the equity method
Deferred tax assets
Total assets impact
Current trade and other payables
Total liabilities impact
Retained earnings
Foreign currency translation reserve
Non-controlling interests
Total equity impact
As reported
AASB 9 Transition
AASB 15 Transition
Opening Balance
31 December 2017
Adjustments
Adjustments
1 January 2018
$m
$m
$m
$m
(753.1)
2,463.2
(1)
(2)
(3)
(1)
(1)
(4)
3,216.3
1,090.8
382.7
145.4
4,737.4
2,183.0
162.3
(21.8)
-
-
-
-
-
-
(488.9)
(488.9)
(416.0)
(72.9)
(488.9)
-
(263.3)
88.8
(927.6)
25.7
25.7
(932.2)
(7.2)
(13.9)
(953.3)
601.9
119.4
234.2
4,763.1
834.8
82.2
(35.7)
Net asset impact
(488.9)
(953.3)
Basis of preparation continued
(1) Revenue recognition
The contracted terms and the way in which the Group operates its construction and services contracts results in revenue
predominantly being derived from projects containing one performance obligation. Construction and services 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 was previously 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.
Tender costs & contract costs
Under AASB 111 Construction Contracts, costs incurred during the tender process were 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 the project.
Tax
Adjustments under the new standards are subject to tax effect accounting and therefore the net deferred tax position has
been impacted.
(2) The change in method from recognition of incurred losses to recognition of expected credit losses for impairment of financial
assets under AASB 9 has led to an adjustment reducing non-current receivables by $487.4 million with regards to the non-
current loan receivables from a joint venture, BIC Contracting LLC (BICC) (formerly HLG Contracting LLC). In determining the
estimated expected credit loss on application of AASB 9, CIMIC engaged an independent advisory expert to obtain a credit
rating and applied the relevant expected credit loss rate to the loan in line with rating agency published rates and
methodology.
An additional $1.5 million expected credit loss has been recognised in relation to other non-current receivables.
(3) As BICC is accounted for as an equity method joint venture, the book carrying value of CIMIC’s investment in BICC reflects the
Group’s share of BICC’s operating results, including BICC’s recognition of construction revenue. The adjustment reflects the
consistent application of CIMIC Group revenue recognition criteria as outlined in (1) Revenue recognition. The higher
recognition threshold and constraint criteria in the new standard has led to a reduction in the investment of $245.6 million. As
BICC is a jointly controlled investment, CIMIC does not exert the same degree of control over BICC’s implementation project as
it does over its own and therefore the impact is subject to a higher degree of estimation uncertainty.
Other equity investments under AASB 15 have also been adjusted through the same process reducing investments by $17.7
million.
(4) The total of adjustments (1) to (3) above have been recognised in opening equity. These have been recognised between
retained earnings, foreign currency translation reserve, which is a result of the cumulative effect of foreign currency
fluctuations, and those balances attributable to non-controlling interests.
There has been no material impact on cash flow or other financial statement items on transition.
141
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
Basis of preparation continued
Classification of financials instruments on transition to AASB 9
All recognised financial assets that are within the scope of AASB 9 are required to be measured subsequently at amortised cost or
fair value on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics
of the financial assets. Specifically:
debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and that have
contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured
subsequently at amortised cost;
debt instruments that are held within a business model whose objective is both to collect the contractual cash flows and to
sell the debt instruments, and that have contractual cash flows that are solely payments of principal and interest on the
principal amount outstanding, are measured subsequently at fair value through other comprehensive income (FVOCI); and
all other debt investments and equity investments are measured subsequently at fair value through profit or loss (FVPL).
Despite the aforegoing, the Group may make the following irrevocable designation at initial recognition of a financial asset:
Amounts receivable from related parties
Amortised cost
1,087.8 Amortised cost
the Group may irrevocably elect to present subsequent changes in fair value of an equity investment that is neither held for
trading nor contingent consideration recognised by an acquirer in a business combination in other comprehensive income;
and
the Group may irrevocably designate a debt investment that meets the amortised cost or FVOCI criteria as measured at FVPL if
doing so eliminates or significantly reduces an accounting mismatch.
The Group has not made any irrevocable elections or designations in respect of financial assets acquired during the year.
Furthermore the Group did not designate any financial assets as being measured at FVPL or investments in equity instruments as
FVOCI on initial application.
Based on the facts and circumstances that existed on 1 January 2018, the initial application of AASB 9 has had the following impact
on the Group’s financial assets as regards to their classification and measurement:
Financial assets
Financial assets at amortised cost
Cash and cash equivalents
Contract debtors
Trade debtors
(2)
(2)
(1)
(1)
(1)
Other amounts receivable
Available-for-sale financial assets
Financial assets at fair value through profit or
loss
Financial assets at fair value through other
comprehensive income
Derivative financial instruments
Used for hedging
Held for trading at fair value through
profit or loss
Balance at reporting date
(1) Classification transfers
31 December 2017
Balance at 31
1 January 2018
1 January 2018
AASB 139
December 2017
AASB 9
Adjusted amounts
Classification
$m
Classification
$m
Amortised cost
1,813.8 Amortised cost
Amortised cost
2,495.9 Amortised cost
Amortised cost
180.7 Amortised cost
Amortised cost
531.2 Amortised cost
Available for sale
FVPL
FVOCI
7.3
161.9
FVPL
FVPL
-
FVOCI
Derivative
Derivative
11.5
Derivative
-
Derivative
6,290.1
1,813.8
2,495.9
180.7
600.4
529.7
100.0
-
-
11.5
69.2
5,801.2
Under AASB 9, available-for-sale classification is no longer permitted. CIMIC’s financial assets under this category have been
transferred to fair value through profit or loss on transition at 1 January 2018. These are all equity instruments and there has
been no impact on the carrying amount. The BICC option has also been re-classified from financial assets at FVPL to derivative
financial instruments as required by AASB 9.
(2)
Impairment of assets
outlined in the above notes.
The carrying amount of financial assets receivable from related parties has been adjusted for impairment on transition as
There has been no change in classifications for any financial liabilities under the transition from AASB 139 to AASB 9. The carrying
amounts and classifications at 31 December 2017 and 31 December 2018 have been outlined in Note 35(a): Financial instruments –
Classification of financial assets and financial liabilities.
Other new and amended accounting standards
Transactions; and
Editorial Corrections
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment
AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and
While these standards introduce new disclosure requirements, they do not affect the Group’s accounting policies or any of the
amounts recognised in the financial statements.
143
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144
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
Basis of preparation continued
and
Classification of financials instruments on transition to AASB 9
All recognised financial assets that are within the scope of AASB 9 are required to be measured subsequently at amortised cost or
fair value on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics
of the financial assets. Specifically:
debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and that have
contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured
subsequently at amortised cost;
debt instruments that are held within a business model whose objective is both to collect the contractual cash flows and to
sell the debt instruments, and that have contractual cash flows that are solely payments of principal and interest on the
principal amount outstanding, are measured subsequently at fair value through other comprehensive income (FVOCI); and
all other debt investments and equity investments are measured subsequently at fair value through profit or loss (FVPL).
Despite the aforegoing, the Group may make the following irrevocable designation at initial recognition of a financial asset:
the Group may irrevocably elect to present subsequent changes in fair value of an equity investment that is neither held for
trading nor contingent consideration recognised by an acquirer in a business combination in other comprehensive income;
the Group may irrevocably designate a debt investment that meets the amortised cost or FVOCI criteria as measured at FVPL if
doing so eliminates or significantly reduces an accounting mismatch.
The Group has not made any irrevocable elections or designations in respect of financial assets acquired during the year.
Furthermore the Group did not designate any financial assets as being measured at FVPL or investments in equity instruments as
FVOCI on initial application.
Based on the facts and circumstances that existed on 1 January 2018, the initial application of AASB 9 has had the following impact
on the Group’s financial assets as regards to their classification and measurement:
Financial assets
Financial assets at amortised cost
Cash and cash equivalents
Contract debtors
Trade debtors
Amounts receivable from related parties
Other amounts receivable
Available-for-sale financial assets
Financial assets at fair value through profit or
loss
Financial assets at fair value through other
comprehensive income
Derivative financial instruments
Used for hedging
Held for trading at fair value through
profit or loss
Balance at reporting date
(1) Classification transfers
31 December 2017
AASB 139
Classification
Balance at 31
December 2017
$m
1 January 2018
AASB 9
Classification
1 January 2018
Adjusted amounts
$m
Amortised cost
1,813.8 Amortised cost
Amortised cost
2,495.9 Amortised cost
Amortised cost
180.7 Amortised cost
Amortised cost
1,087.8 Amortised cost
Amortised cost
531.2 Amortised cost
Available for sale
FVPL
FVOCI
7.3
161.9
FVPL
FVPL
-
FVOCI
(2)
(2)
(1)
(1)
Derivative
11.5
Derivative
(1)
Derivative
-
Derivative
6,290.1
1,813.8
2,495.9
180.7
600.4
529.7
-
100.0
-
11.5
69.2
5,801.2
Under AASB 9, available-for-sale classification is no longer permitted. CIMIC’s financial assets under this category have been
transferred to fair value through profit or loss on transition at 1 January 2018. These are all equity instruments and there has
been no impact on the carrying amount. The BICC option has also been re-classified from financial assets at FVPL to derivative
financial instruments as required by AASB 9.
(2)
Impairment of assets
The carrying amount of financial assets receivable from related parties has been adjusted for impairment on transition as
outlined in the above notes.
There has been no change in classifications for any financial liabilities under the transition from AASB 139 to AASB 9. The carrying
amounts and classifications at 31 December 2017 and 31 December 2018 have been outlined in Note 35(a): Financial instruments –
Classification of financial assets and financial liabilities.
Other new and amended accounting standards
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment
Transactions; and
AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and
Editorial Corrections
While these standards introduce new disclosure requirements, they do not affect the Group’s accounting policies or any of the
amounts recognised in the financial statements.
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CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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, services and mining contracting projects:
- determination of stage of completion;
- estimation of total contract costs;
- estimation of total contract revenue, including recognising revenue on contract variations and claims only to the extent it is
highly probable that a significant reversal in the amount recognised will not occur in the future;
- estimation of project completion date; and
- assumed levels of project execution productivity.
Estimation of allowance for expected credit losses on financial assets.
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 contract
assets, contract liabilities 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 financial instruments; 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 re-
measured to its fair value with the change in carrying amount recognised in profit or loss.
Basis of consolidation continued
Controlled entities
Investments in associates
Investments in controlled entities are carried in the Company’s financial statements at cost less impairment.
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
Joint operations
Note 27: Joint operations.
Joint ventures
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement. The
Company has assessed the nature of its joint arrangements and determined to have both joint operations and joint ventures.
The 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
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 fair value through profit and loss financial assets.
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CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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, services and mining contracting projects:
- determination of stage of completion;
- estimation of total contract costs;
- estimation of total contract revenue, including recognising revenue on contract variations and claims only to the extent it is
highly probable that a significant reversal in the amount recognised will not occur in the future;
- estimation of project completion date; and
- assumed levels of project execution productivity.
Estimation of allowance for expected credit losses on financial assets.
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 contract
assets, contract liabilities 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 financial instruments; 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 re-
measured 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 fair value through profit and loss financial assets.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
a)
Revenue recognition
Policies applied from 1 January 2018
Construction revenue
The Group derives revenue from the long-term construction of major infrastructure projects, including roads, railways, tunnels,
airports, buildings, social infrastructure, water, energy and resources facilities across Australia and Asia. Contracts entered into may
be for the construction of one or several separate inter-linked pieces of large infrastructure. The construction of each individual
piece of infrastructure is generally taken to be one performance obligation. Where contracts are entered for the building of several
projects the total transaction price is allocated across each project based on stand-alone selling prices. The transaction price is
normally fixed at the start of the project. It is normal practice for contracts to include bonus and penalty elements based on timely
construction or other performance criteria known as variable consideration, discussed below.
The performance obligation is fulfilled over time and as such revenue is recognised over time. As work is performed on the assets
being constructed they are controlled by the customer and have no alternative use to the CIMIC Group, with the Group having a
right to payment for performance to date.
Generally, contracts identify various inter-linked activities required in the construction process. Revenue is recognised on the
measured output of each process based on appraisals that are agreed with the customer on a regular basis.
Revenue earned is typically invoiced monthly or in some cases on achievement of milestones or to match major capital outlay.
Invoices are paid on normal commercial terms, which may include the customer withholding a retention amount until finalisation
of the construction. Certain construction projects entered into receive payment prior to work being performed in which case
revenue is deferred on the balance sheet.
Mining and mineral processing revenue
The Group generates revenue from the provision of mining services, mineral processing from various mine sites, dry hire and plant
sales within Australia, Asia, the Americas and Africa. Contracts often include multiple obligations for the processes required to
enable mine site development, extraction, processing and remediation. These processes can include the design and construction of
mine infrastructure, construction, operation and maintenance of processing facilities, topsoil stripping, drill and blast, excavation,
processing, rehabilitation and mine closure. In addition, processes may be performed by the Group or by other contractors
employed by the customer and as such are accounted for as separate obligations. The transaction price is allocated to each
performance obligation based on the stand-alone selling price. The total transaction price may include a variable pricing element
which is accounted for in accordance with the policy on variable consideration.
Performance obligations are fulfilled over time with revenue recognised in the accounting period in which the mining or mineral
processes are rendered based on the amount of the expected transaction price allocated to each performance obligation as the
customer continues to control the asset as it is enhanced.
Customers are typically invoiced on a monthly basis for an amount that is calculated on a schedule of rates that is aligned with the
stand alone selling prices for each performance obligation. Payment is received following invoice on normal commercial terms.
Services revenue
The Group performs maintenance and other services for a variety of different industries. Contracts entered into can cover servicing
of related assets which may involve various different processes. These processes and activities tend to be highly inter-related and
the Group provides a significant service of integration for these assets under contract. Where this is the case, these are taken to be
one performance obligation. The total transaction price is allocated across each service or performance obligation and, where
linked, the construction of the relevant asset. The transaction price is allocated to each performance obligation based on
contracted prices. The total transaction price may include variable consideration.
a)
Revenue recognition continued
Performance obligations are fulfilled over time as the Group enhances assets which the customer controls, for which the Group
does not have an alternative use and for which the Group has right to payment for performance to date. Revenue is recognised in
the accounting period in which the services are rendered based on the amount of the expected transaction price allocated to each
performance obligation. Customers are in general invoiced on a monthly basis for an amount that is calculated on either a schedule
of rates or a cost plus basis that are aligned with the stand alone selling prices for each performance obligation. Payment is
received following invoice on normal commercial terms.
Variable consideration
It is common for contracts to include performance bonuses or penalties assessed against the timeliness or cost effectiveness of
work completed or other performance related KPIs. Where consideration in respect of a contract is variable, the expected value of
revenue is only recognised when the uncertainty associated with the variable consideration is subsequently resolved, known as
“constraint” requirements. The Group assesses the constraint requirements on a periodic basis when estimating the variable
consideration to be included in the transaction price. The estimate is based on all available information including historic
performance. Where modifications in design or contract requirements are entered into, the transaction price is updated to reflect
these. Where the price of the modification has not been confirmed, an estimate is made of the amount of revenue to recognise
whilst also considering the constraint requirement.
Contract assets and liabilities
AASB 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what is commonly known as ‘accrued revenue’ and
‘deferred revenue’. Contract receivables represent receivables in respect of which the Group’s right to consideration is
unconditional subject only to the passage of time. Contract receivables are non-derivative financial assets accounted for in
accordance with the Group’s accounting policy for non-derivative financial assets set out in Note 1(e): Non-derivative financial
instruments. Contract assets represent the Group’s right to consideration for services provided to customers for which the Group’s
right remains conditional on something other than the passage of time. Contract liabilities arise where payment is received prior to
work being performed. Contract assets and contract liabilities are recognised and measured in accordance with this accounting
policy.
Contract fulfilment costs
the course of the contract.
Financing components
time value of money.
Warranties and defect periods
Contingent Assets.
Loss making contracts
Costs incurred prior to the commencement of a contract may arise due to mobilisation/site setup costs, feasibility studies,
environmental impact studies and preliminary design activities as these are costs incurred to fulfil a contract. Where these costs
are expected to be recovered, they are capitalised and amortised over the course of the contract consistent with the transfer of
service to the customer. Where the costs, or a portion of these costs, are reimbursed by the customer, the amount received is
recognised as deferred revenue and allocated to the performance obligations within the contract and recognised as revenue over
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the
customer represents a financing component. As a consequence, the Group does not adjust any of the transaction prices for the
Generally construction and services contracts include defect and warranty periods following completion of the project. These
obligations are not deemed to be separate performance obligations and therefore estimated and included in the total costs of the
contracts. Where required, amounts are recognised accordingly in line with AASB 137: Provisions, Contingent Liabilities and
A provision is made for the difference between the expected cost of fulfilling a contract and the expected unearned portion of the
transaction price where the forecast costs are greater than the forecast revenue.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
a)
Revenue recognition
Policies applied from 1 January 2018
Construction revenue
The Group derives revenue from the long-term construction of major infrastructure projects, including roads, railways, tunnels,
airports, buildings, social infrastructure, water, energy and resources facilities across Australia and Asia. Contracts entered into may
be for the construction of one or several separate inter-linked pieces of large infrastructure. The construction of each individual
piece of infrastructure is generally taken to be one performance obligation. Where contracts are entered for the building of several
projects the total transaction price is allocated across each project based on stand-alone selling prices. The transaction price is
normally fixed at the start of the project. It is normal practice for contracts to include bonus and penalty elements based on timely
construction or other performance criteria known as variable consideration, discussed below.
The performance obligation is fulfilled over time and as such revenue is recognised over time. As work is performed on the assets
being constructed they are controlled by the customer and have no alternative use to the CIMIC Group, with the Group having a
right to payment for performance to date.
Generally, contracts identify various inter-linked activities required in the construction process. Revenue is recognised on the
measured output of each process based on appraisals that are agreed with the customer on a regular basis.
Revenue earned is typically invoiced monthly or in some cases on achievement of milestones or to match major capital outlay.
Invoices are paid on normal commercial terms, which may include the customer withholding a retention amount until finalisation
of the construction. Certain construction projects entered into receive payment prior to work being performed in which case
revenue is deferred on the balance sheet.
Mining and mineral processing revenue
The Group generates revenue from the provision of mining services, mineral processing from various mine sites, dry hire and plant
sales within Australia, Asia, the Americas and Africa. Contracts often include multiple obligations for the processes required to
enable mine site development, extraction, processing and remediation. These processes can include the design and construction of
mine infrastructure, construction, operation and maintenance of processing facilities, topsoil stripping, drill and blast, excavation,
processing, rehabilitation and mine closure. In addition, processes may be performed by the Group or by other contractors
employed by the customer and as such are accounted for as separate obligations. The transaction price is allocated to each
performance obligation based on the stand-alone selling price. The total transaction price may include a variable pricing element
which is accounted for in accordance with the policy on variable consideration.
Performance obligations are fulfilled over time with revenue recognised in the accounting period in which the mining or mineral
processes are rendered based on the amount of the expected transaction price allocated to each performance obligation as the
customer continues to control the asset as it is enhanced.
Customers are typically invoiced on a monthly basis for an amount that is calculated on a schedule of rates that is aligned with the
stand alone selling prices for each performance obligation. Payment is received following invoice on normal commercial terms.
Services revenue
The Group performs maintenance and other services for a variety of different industries. Contracts entered into can cover servicing
of related assets which may involve various different processes. These processes and activities tend to be highly inter-related and
the Group provides a significant service of integration for these assets under contract. Where this is the case, these are taken to be
one performance obligation. The total transaction price is allocated across each service or performance obligation and, where
linked, the construction of the relevant asset. The transaction price is allocated to each performance obligation based on
contracted prices. The total transaction price may include variable consideration.
a) Revenue recognition continued
Performance obligations are fulfilled over time as the Group enhances assets which the customer controls, for which the Group
does not have an alternative use and for which the Group has right to payment for performance to date. Revenue is recognised in
the accounting period in which the services are rendered based on the amount of the expected transaction price allocated to each
performance obligation. Customers are in general invoiced on a monthly basis for an amount that is calculated on either a schedule
of rates or a cost plus basis that are aligned with the stand alone selling prices for each performance obligation. Payment is
received following invoice on normal commercial terms.
Variable consideration
It is common for contracts to include performance bonuses or penalties assessed against the timeliness or cost effectiveness of
work completed or other performance related KPIs. Where consideration in respect of a contract is variable, the expected value of
revenue is only recognised when the uncertainty associated with the variable consideration is subsequently resolved, known as
“constraint” requirements. The Group assesses the constraint requirements on a periodic basis when estimating the variable
consideration to be included in the transaction price. The estimate is based on all available information including historic
performance. Where modifications in design or contract requirements are entered into, the transaction price is updated to reflect
these. Where the price of the modification has not been confirmed, an estimate is made of the amount of revenue to recognise
whilst also considering the constraint requirement.
Contract assets and liabilities
AASB 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what is commonly known as ‘accrued revenue’ and
‘deferred revenue’. Contract receivables represent receivables in respect of which the Group’s right to consideration is
unconditional subject only to the passage of time. Contract receivables are non-derivative financial assets accounted for in
accordance with the Group’s accounting policy for non-derivative financial assets set out in Note 1(e): Non-derivative financial
instruments. Contract assets represent the Group’s right to consideration for services provided to customers for which the Group’s
right remains conditional on something other than the passage of time. Contract liabilities arise where payment is received prior to
work being performed. Contract assets and contract liabilities are recognised and measured in accordance with this accounting
policy.
Contract fulfilment costs
Costs incurred prior to the commencement of a contract may arise due to mobilisation/site setup costs, feasibility studies,
environmental impact studies and preliminary design activities as these are costs incurred to fulfil a contract. Where these costs
are expected to be recovered, they are capitalised and amortised over the course of the contract consistent with the transfer of
service to the customer. Where the costs, or a portion of these costs, are reimbursed by the customer, the amount received is
recognised as deferred revenue and allocated to the performance obligations within the contract and recognised as revenue over
the course of the contract.
Financing components
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the
customer represents a financing component. As a consequence, the Group does not adjust any of the transaction prices for the
time value of money.
Warranties and defect periods
Generally construction and services contracts include defect and warranty periods following completion of the project. These
obligations are not deemed to be separate performance obligations and therefore estimated and included in the total costs of the
contracts. Where required, amounts are recognised accordingly in line with AASB 137: Provisions, Contingent Liabilities and
Contingent Assets.
Loss making contracts
A provision is made for the difference between the expected cost of fulfilling a contract and the expected unearned portion of the
transaction price where the forecast costs are greater than the forecast revenue.
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CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
a)
Revenue recognition continued
Other revenue
Property revenue is recognised when control over the property has been transferred to the customer. This is generally at the point
when legal title has transferred to the customer as properties are not developed based on the specific needs of individual
customers. The revenue is measured at the transaction price agreed under the contract.
Rental income is recognised on a straight line basis over the term of the operating lease.
Government grant income when recognised relates to incentives received by the Group as allowed under AASB 120: Accounting for
Government grants and disclosure of Government assistance.
Interest revenue is recognised on an accruals basis, other than related party interest which is calculated using the effective interest
rate method.
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.
d)
Earnings per share
Basic earnings per share
Diluted 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 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
Policies applied from 1 January 2018
Non-derivative financial assets
(i)
Classification
From 1 January 2018, the Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through other comprehensive income, or profit or loss), and
those to be measured at amortised cost.
The classification depends on the Group’s business model for managing financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For
investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity
instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of
initial recognition to account for the equity investment at fair value through other comprehensive income. The Group reclassifies
debt investments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in profit or loss. Measurement of cash and cash equivalents
and trade and other receivables remains at amortised cost consistent with the comparative period.
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
Cash and cash equivalents
intention to settle.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments as follows.
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments
of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at
amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or
impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collecting contractual cash flows and through
sale on specified dates. A gain or loss on a debt investment that is subsequently measured at FVOCI is recognised in other
comprehensive income. None are currently held by the Group or at any point during the year.
Fair value through profit or loss (FVPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair
value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or
loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit or loss
within other gains/(losses) in the period in which it arises. None are currently held by the Group or at any point during the
year.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
d) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing profit attributable to 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
Policies applied from 1 January 2018
Non-derivative financial assets
Classification
(i)
From 1 January 2018, the Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through other comprehensive income, or profit or loss), and
those to be measured at amortised cost.
The classification depends on the Group’s business model for managing financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For
investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity
instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of
initial recognition to account for the equity investment at fair value through other comprehensive income. The Group reclassifies
debt investments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in profit or loss. Measurement of cash and cash equivalents
and trade and other receivables remains at amortised cost consistent with the comparative period.
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.
a) Revenue recognition continued
Other revenue
Property revenue is recognised when control over the property has been transferred to the customer. This is generally at the point
when legal title has transferred to the customer as properties are not developed based on the specific needs of individual
customers. The revenue is measured at the transaction price agreed under the contract.
Rental income is recognised on a straight line basis over the term of the operating lease.
Government grant income when recognised relates to incentives received by the Group as allowed under AASB 120: Accounting for
Government grants and disclosure of Government assistance.
Interest revenue is recognised on an accruals basis, other than related party interest which is calculated using the effective interest
rate method.
b) Finance costs
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.
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.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments as follows.
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments
of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at
amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or
impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collecting contractual cash flows and through
sale on specified dates. A gain or loss on a debt investment that is subsequently measured at FVOCI is recognised in other
comprehensive income. None are currently held by the Group or at any point during the year.
Fair value through profit or loss (FVPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair
value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or
loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit or loss
within other gains/(losses) in the period in which it arises. None are currently held by the Group or at any point during the
year.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
e) Non-derivative financial instruments continued
f)
Derivative financial instruments continued
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair
value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be
recognised in profit or loss as other income when the Group’s right to receive payments is established. Impairment losses (and
reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair
value. Changes in the fair value of financial assets at fair value through profit or loss are recognised in other expenses in the
statement of profit or loss as applicable.
Impairment
(iii)
The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised
cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, contract debtors and lease receivables, the Group applies the simplified approach permitted by AASB 9,
which requires expected lifetime losses to be recognised from initial recognition of the receivables. The methodology and basis for
credit risk evaluation and impairment is detailed in Note 35(b): Financial instruments – Financial risk management.
Non-derivative financial liabilities
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.
Policies applied prior to 1 January 2018
Refer to the 2017 CIMIC Annual Report for the accounting policies applied to non-derivative financial assets and financial liabilities
prior to the adoption of AASB 9.
f)
Derivative financial instruments
Policies applied from 1 January 2018
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.
The Group documents at the inception of the hedging transaction the economic relationship between hedging instruments and
hedged items including whether the instrument is expected to offset changes in cash flows of hedged items. The Group documents
its risk management objective and strategy for undertaking various hedge transactions at the inception of each hedge relationship.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
the cash flow hedge reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value
basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss,
within other expenses.
When option contracts are used to hedge forecast transactions, the Group designates only the intrinsic value of the option contract
as the hedging instrument. Gains or losses relating to the effective portion of the change in intrinsic value of the option contracts
are recognised in the cash flow hedge reserve in equity. The changes in the time value of the option contracts that relate to the
hedged item (‘aligned time value’) are recognised within other comprehensive income in the costs of hedging reserve within equity.
When forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of
the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of
the change in the spot component of the forward contracts are recognised in the cash flow hedge reserve in equity. The change in
the forward element of the contract that relates to the hedged item is recognised within other comprehensive income in the costs
of hedging reserve within equity. In some cases, the entity may designate the full change in fair value of the forward contract
(including forward points) as the hedging instrument. In such cases, the gains or losses relating to the effective portion of the
change in fair value of the entire forward contract are recognised in the cash flow hedge reserve within equity.
Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as follows.
The gain or loss relating to the effective portion of forward and option contracts are ultimately recognised in profit or loss as
the hedged item affects profit or loss within expenses.
The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognised in
profit or loss within ‘finance cost’.
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast
transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no
longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately
reclassified to profit or loss. Hedge ineffectiveness is recognised in profit or loss within other expenses.
Refer to the 2017 CIMIC Annual Report for the accounting policies applied to non-derivative financial assets and financial liabilities
Policies applied prior to 1 January 2018
prior to the adoption of AASB 9.
g)
Inventories
Property developments
Raw materials and consumables
to their existing condition and location.
Inventories are carried at the lower of cost and net realisable value and comprise of the following.
Cost includes the costs of acquisition, development and holding costs such as rates, taxes and finance costs. Holding costs on
property developments not under active development are expensed as incurred.
Cost is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them
h) Assets held for sale and liabilities associated with assets held for sale
Assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction, rather than through continuing use, and a sale is considered highly probable. They are measured at the lower of their
carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to
sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative
impairment loss previously recognised.
Assets classified as held for sale are presented separately from the other assets in the statement of financial position. Assets are
not depreciated or amortised while they are classified as held for sale.
Liabilities associated with assets held for sale are presented separately from other liabilities in the statement of financial position.
Interest and other expenses attributable to the liabilities associated with assets held for sale continue to be recognised.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
e) Non-derivative financial instruments continued
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair
value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be
recognised in profit or loss as other income when the Group’s right to receive payments is established. Impairment losses (and
reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair
value. Changes in the fair value of financial assets at fair value through profit or loss are recognised in other expenses in the
f) Derivative financial instruments continued
When forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of
the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of
the change in the spot component of the forward contracts are recognised in the cash flow hedge reserve in equity. The change in
the forward element of the contract that relates to the hedged item is recognised within other comprehensive income in the costs
of hedging reserve within equity. In some cases, the entity may designate the full change in fair value of the forward contract
(including forward points) as the hedging instrument. In such cases, the gains or losses relating to the effective portion of the
change in fair value of the entire forward contract are recognised in the cash flow hedge reserve within equity.
Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as follows.
The gain or loss relating to the effective portion of forward and option contracts are ultimately recognised in profit or loss as
the hedged item affects profit or loss within expenses.
The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognised in
profit or loss within ‘finance cost’.
The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised
cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, contract debtors and lease receivables, the Group applies the simplified approach permitted by AASB 9,
which requires expected lifetime losses to be recognised from initial recognition of the receivables. The methodology and basis for
credit risk evaluation and impairment is detailed in Note 35(b): Financial instruments – Financial risk management.
statement of profit or loss as applicable.
(iii)
Impairment
Non-derivative financial liabilities
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
the normal commercial terms in the Group’s countries of operation.
Policies applied prior to 1 January 2018
prior to the adoption of AASB 9.
f) Derivative financial instruments
Policies applied from 1 January 2018
Refer to the 2017 CIMIC Annual Report for the accounting policies applied to non-derivative financial assets and financial liabilities
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.
The Group documents at the inception of the hedging transaction the economic relationship between hedging instruments and
hedged items including whether the instrument is expected to offset changes in cash flows of hedged items. The Group documents
its risk management objective and strategy for undertaking various hedge transactions at the inception of each hedge relationship.
Cash flow hedge
within other expenses.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
the cash flow hedge reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value
basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss,
When option contracts are used to hedge forecast transactions, the Group designates only the intrinsic value of the option contract
as the hedging instrument. Gains or losses relating to the effective portion of the change in intrinsic value of the option contracts
are recognised in the cash flow hedge reserve in equity. The changes in the time value of the option contracts that relate to the
hedged item (‘aligned time value’) are recognised within other comprehensive income in the costs of hedging reserve within equity.
Liabilities are recognised for amounts to be paid for goods or services received. Trade payables are settled on terms aligned with
g)
Inventories
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast
transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no
longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately
reclassified to profit or loss. Hedge ineffectiveness is recognised in profit or loss within other expenses.
Policies applied prior to 1 January 2018
Refer to the 2017 CIMIC Annual Report for the accounting policies applied to non-derivative financial assets and financial liabilities
prior to the adoption of AASB 9.
Inventories are carried at the lower of cost and net realisable value and comprise of the following.
Property developments
Cost includes the costs of acquisition, development and holding costs such as rates, taxes and finance costs. Holding costs on
property developments not under active development are expensed as incurred.
Raw materials and consumables
Cost is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them
to their existing condition and location.
h) Assets held for sale and liabilities associated with assets held for sale
Assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction, rather than through continuing use, and a sale is considered highly probable. They are measured at the lower of their
carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to
sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative
impairment loss previously recognised.
Assets classified as held for sale are presented separately from the other assets in the statement of financial position. Assets are
not depreciated or amortised while they are classified as held for sale.
Liabilities associated with assets held for sale are presented separately from other liabilities in the statement of financial position.
Interest and other expenses attributable to the liabilities associated with assets held for sale continue to be recognised.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
i)
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Depreciation and amortisation
Depreciation and amortisation is calculated so as to write-off the net book values of property, plant and equipment over their
estimated effective useful lives as follows:
freehold buildings: straight line method - up to 40 years;
major plant and equipment: cumulative number of hours worked - up to 10 years;
major plant and equipment - component parts: cumulative number of hours worked - up to 10 years;
leased plant and equipment: cumulative number of hours worked - up to 10 years;
office and other equipment: diminishing value method - up to 10 years; and
leasehold buildings and improvements: straight line method, over the terms of the leases - up to 40 years.
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
Brand names
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.
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.
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
IT systems are carried at cost less accumulated amortisation and any impairment losses.
IT systems
up to 8 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 life 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 FVOCI instruments, 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 is 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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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
i)
Property, plant and equipment
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 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.
Subsequent costs
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
k)
Business combinations
Payments made under operating leases are expensed on a straight line basis over the term of the lease.
The acquisition method of accounting is used to account for all business combinations. The consideration for the acquisition of a
controlled entity comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the
Group. The consideration transferred also includes the fair value of any pre-existing equity interest in the controlled entity.
Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities assumed in a business combination
are measured at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-
controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree’s net
identifiable assets. The excess of the consideration transferred over the fair value of the Group's share of the net identifiable
assets acquired is recorded as goodwill.
Where the consideration is less than the fair value of the net identifiable assets of the controlled entity acquired, the difference is
recognised directly in the statement of profit or loss as a gain on acquisition of a controlled entity.
l)
Intangible assets
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.
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 life 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 FVOCI instruments, 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 is 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 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2. REVENUE
n)
Employee benefits continued
Share-based payment transactions
Ownership based remuneration is provided to employees via the plans outlined in Note 36: Employee benefits. The fair value of
share options and share rights are recognised as an expense over the vesting period.
Shares are recognised when either options are exercised and the proceeds received or shares are issued to settle share rights.
Retention arrangements
Retention arrangements are in place ranging from three years to retirement for certain key employees which are payable upon
completion of the retention period.
The provisions are accrued on a pro-rata basis during the retention period and have been calculated based on salary rates, including
related on-costs.
Annual bonus and deferred incentive arrangements
Annual bonuses and deferred incentives are provided at reporting date and include related on-costs. The Group recognises a
provision where there is a contractual or constructive obligation.
o)
Share capital
Ordinary share capital
Issued and paid up capital is recognised at its par value, being the consideration received by the Company.
Dividends
Provision is not made for dividends unless the dividend has been declared by the Directors, but not distributed, at or before the
end of the period.
p)
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars.
Transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions are recognised in the
statement of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value are translated using the exchange rates at the date the fair value was determined.
Translation of controlled foreign entities
Assets and liabilities of controlled foreign entities are translated into the presentation currency at the rates of exchange at
reporting date and the statement of profit or loss is translated at the rates approximating foreign exchange rates ruling at the dates
of the transactions. The resulting exchange differences are taken directly to the foreign currency translation reserve. Exchange
gains and losses on transactions which form part of the net investments in foreign controlled entities together with any related
income tax effect are recognised in the foreign currency translation reserve on consolidation. On disposal of a foreign entity, the
deferred cumulative amount recognised in equity relating to that particular foreign entity is recognised in the statement of profit or
loss as part of the gain or loss on sale.
Construction revenue
Mining and mineral processing revenue
Services revenue
Other revenue
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 assets
Foreign exchange gains / (losses)
Operating lease payments
Other expenses
Total expenses
Design, engineering and technical consulting fees
12 months to
12 months to
December 2018
December 2017
Note
$m
$m
7,965.2
3,966.9
2,676.5
61.6
7,599.1
3,164.4
2,607.2
58.8
31
14,670.2
13,429.5
12 months to
12 months to
December 2018
December 2017
Note
$m
$m
14
15
15
(2,846.7)
(4,391.5)
(1,222.8)
(3,634.0)
(518.4)
(40.8)
(2.7)
13.8
3.4
(401.4)
(64.7)
(480.3)
(2,455.1)
(3,928.5)
(1,061.3)
(3,530.2)
(463.7)
(47.6)
(8.0)
12.9
3.3
(380.3)
(51.6)
(467.1)
(13,586.1)
(12,377.2)
155
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CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2. REVENUE
n)
Employee benefits continued
Share-based payment transactions
Ownership based remuneration is provided to employees via the plans outlined in Note 36: Employee benefits. The fair value of
share options and share rights are recognised as an expense over the vesting period.
Shares are recognised when either options are exercised and the proceeds received or shares are issued to settle share rights.
Retention arrangements are in place ranging from three years to retirement for certain key employees which are payable upon
The provisions are accrued on a pro-rata basis during the retention period and have been calculated based on salary rates, including
Retention arrangements
completion of the retention period.
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
Dividends
end of the period.
Issued and paid up capital is recognised at its par value, being the consideration received by the Company.
Provision is not made for dividends unless the dividend has been declared by the Directors, but not distributed, at or before the
p)
Foreign currency translation
Functional and presentation currency
Transactions
The consolidated financial statements are presented in Australian dollars.
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 the fair value was determined.
Translation of controlled foreign entities
Assets and liabilities of controlled foreign entities are translated into the presentation currency at the rates of exchange at
reporting date and the statement of profit or loss is translated at the rates approximating foreign exchange rates ruling at the dates
of the transactions. The resulting exchange differences are taken directly to the foreign currency translation reserve. Exchange
gains and losses on transactions which form part of the net investments in foreign controlled entities together with any related
income tax effect are recognised in the foreign currency translation reserve on consolidation. On disposal of a foreign entity, the
deferred cumulative amount recognised in equity relating to that particular foreign entity is recognised in the statement of profit or
loss as part of the gain or loss on sale.
Construction revenue
Mining and mineral processing revenue
Services revenue
Other revenue
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 assets
Foreign exchange gains / (losses)
Operating lease payments
Design, engineering and technical consulting fees
Other expenses
Total expenses
12 months to
December 2018
$m
12 months to
December 2017
$m
Note
7,965.2
3,966.9
2,676.5
61.6
7,599.1
3,164.4
2,607.2
58.8
31
14,670.2
13,429.5
12 months to
December 2018
$m
12 months to
December 2017
$m
Note
14
15
15
(2,846.7)
(4,391.5)
(1,222.8)
(3,634.0)
(518.4)
(40.8)
(2.7)
13.8
3.4
(401.4)
(64.7)
(480.3)
(2,455.1)
(3,928.5)
(1,061.3)
(3,530.2)
(463.7)
(47.6)
(8.0)
12.9
3.3
(380.3)
(51.6)
(467.1)
(13,586.1)
(12,377.2)
155
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
4. NET FINANCE INCOME / (COSTS)
5. AUDITORS’ REMUNERATION
Finance income
Interest income
-
Related parties
- Other parties
Unwinding of discounts on non-current receivables
-
Related parties
- Other parties
Total finance income
Finance costs
Debt interest expense
Finance charge for finance leases
Facility fees, bonding and other finance costs
Impact of discounting
-
Related parties
- Other
Total finance costs
Net finance income / (costs)
12 months to
December 2018
$m
12 months to
December 2017
$m
Note
37 (b)
37 (b)
37 (b)
25.0
27.4
2.8
0.1
55.3
(73.1)
-
(46.1)
-
(4.0)
34.1
27.6
9.7
0.2
71.6
(80.9)
(0.9)
(24.8)
(0.2)
(8.0)
(123.2)
(114.8)
(67.9)
(43.2)
Audit and review services
Deloitte Touche Tohmatsu (“Deloitte”)
Audit and review of financial statements – Deloitte Australia
Audit and review of financial statements – related overseas firms
Audit and review of financial statements – other auditors
-
-
-
Other auditors
Audit and review services
Other assurance services
Deloitte
- Other assurance services – Deloitte Australia
- Other assurance services – related overseas firms
Other auditors
- Other assurance services – other auditors
Other assurance services
- Other services – other auditors
Other services
Other auditors
Other services
Charter.
12 months to
12 months to
December 2018
December 2017
$’000
$’000
3,457
765
342
4,564
92
-
14
106
21
21
3,582
1,270
447
5,299
363
3
20
386
29
29
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
157
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158
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
4. NET FINANCE INCOME / (COSTS)
5. AUDITORS’ REMUNERATION
Unwinding of discounts on non-current receivables
Finance income
Interest income
- Related parties
- Other parties
- Related parties
- Other parties
Total finance income
Finance costs
Debt interest expense
Impact of discounting
- Related parties
- Other
Total finance costs
Net finance income / (costs)
Finance charge for finance leases
Facility fees, bonding and other finance costs
12 months to
12 months to
December 2018
December 2017
$m
$m
Note
37 (b)
37 (b)
37 (b)
25.0
27.4
2.8
0.1
55.3
(73.1)
(46.1)
-
-
(4.0)
34.1
27.6
9.7
0.2
71.6
(80.9)
(0.9)
(24.8)
(0.2)
(8.0)
(123.2)
(114.8)
(67.9)
(43.2)
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
Other auditors
- Other services – other auditors
Other services
12 months to
December 2018
$’000
12 months to
December 2017
$’000
3,457
765
342
4,564
92
-
14
106
21
21
3,582
1,270
447
5,299
363
3
20
386
29
29
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.
157
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
6.
INCOME TAX EXPENSE
7. CASH AND CASH EQUIVALENTS
As at 31 December 2018: $580.4 million (31 December 2017: $267.7 million) of cash at bank in relation to the sale of receivables and
contract milestone receipts during the reporting period and $nil (31 December 2017: $33.7 million) of cash reserved for warranties
Income tax expense recognised in the statement of profit or loss
Current tax expense
Deferred tax expense
Over provision in prior periods
Total income tax expense in statement of profit or loss
Deferred tax recognised directly in equity
Revaluation of cash flow and net investment hedges
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 2018
$m
12 months to
December 2017
$m
(111.6)
(187.8)
(1.5)
(104.9)
(164.6)
0.9
(300.9)
(268.6)
(2.8)
(2.8)
(1.8)
(1.8)
1,074.7
1,074.7
959.2
959.2
Prima facie income tax expense at 30% (31 December 2017: 30%)
(322.4)
(287.8)
The following items have affected income tax (expense) / benefit for the year:
Tax losses not recognised
Overseas income tax differential and foreign exchange
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
(Under) / Over provision in prior periods
Income tax expense
(23.1)
29.0
1.6
(20.9)
16.0
-
20.4
(14.9)
10.6
2.0
(12.2)
(27.2)
37.7
22.3
(299.4)
(269.5)
(1.5)
0.9
(300.9)
(268.6)
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents
is classified as restricted cash.
8. TRADE AND OTHER RECEIVABLES
Retentions and capitalised costs to fulfil contracts
Contract receivables
Contract assets2,5
Total contract debtors
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties3
Non-current tax asset4
Total trade and other receivables
Current2
Non-current3,4
Total trade and other receivables
policies - basis of preparation.
December 2018
December 2017
$m
$m
966.9
1,174.8
2,141.7
663.3
1,150.5
1,813.8
December 2018
December 20171
Note
$m
415.0
1,714.5
167.6
2,297.1
167.6
571.3
67.1
89.8
675.6
34.3
$m
337.5
2,006.9
151.5
2,495.9
180.7
479.9
46.2
11.5
1,087.8
5.1
3,902.8
4,307.1
3,125.4
777.4
3,902.8
3,216.3
1,090.8
4,307.1
26, 35
37 (b)
159
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1Comparative disclosure notes have been restated where appropriate as discussed in Note 1: Summary of significant accounting
2Contract assets includes an amount equal to $1.15 billion (31 December 2017: $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 (Saipem and CPB together referred to as the
Consortium) for Chevron Australia Pty Ltd (Chevron) (Gorgon Contract).
The position is:
navigation aids.
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
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.
160
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CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
6.
INCOME TAX EXPENSE
7. CASH AND CASH EQUIVALENTS
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents
December 2018
$m
December 2017
$m
966.9
1,174.8
2,141.7
663.3
1,150.5
1,813.8
As at 31 December 2018: $580.4 million (31 December 2017: $267.7 million) of cash at bank in relation to the sale of receivables and
contract milestone receipts during the reporting period and $nil (31 December 2017: $33.7 million) of cash reserved for warranties
is classified as restricted cash.
8. TRADE AND OTHER RECEIVABLES
Contract receivables
Contract assets2,5
Retentions and capitalised costs to fulfil contracts
Total contract debtors
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties3
Non-current tax asset4
Total trade and other receivables
Current2
Non-current3,4
Note
December 2018
$m
December 20171
$m
415.0
1,714.5
167.6
2,297.1
167.6
571.3
67.1
89.8
675.6
34.3
337.5
2,006.9
151.5
2,495.9
180.7
479.9
46.2
11.5
1,087.8
5.1
3,902.8
4,307.1
3,125.4
777.4
3,216.3
1,090.8
26, 35
37 (b)
Income tax expense recognised in the statement of profit or loss
Current tax expense
Deferred tax expense
Over provision in prior periods
Total income tax expense in statement of profit or loss
Deferred tax recognised directly in equity
Revaluation of cash flow and net investment hedges
Total deferred tax (expense) / benefit recognised in equity
Reconciliation of prima facie tax to income tax expense
Profit from continuing operations
Profit before tax
Tax losses not recognised
Overseas income tax differential and foreign exchange
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
(Under) / Over provision in prior periods
Income tax expense
12 months to
12 months to
December 2018
December 2017
$m
$m
(111.6)
(187.8)
(1.5)
(104.9)
(164.6)
0.9
(300.9)
(268.6)
(2.8)
(2.8)
(1.8)
(1.8)
1,074.7
1,074.7
959.2
959.2
(23.1)
29.0
1.6
(20.9)
16.0
-
20.4
(14.9)
10.6
2.0
(12.2)
(27.2)
37.7
22.3
(299.4)
(269.5)
(1.5)
0.9
(300.9)
(268.6)
Prima facie income tax expense at 30% (31 December 2017: 30%)
(322.4)
(287.8)
The following items have affected income tax (expense) / benefit for the year:
Total trade and other receivables
1Comparative disclosure notes have been restated where appropriate as discussed in Note 1: Summary of significant accounting
4,307.1
3,902.8
policies - basis of preparation.
2Contract assets includes an amount equal to $1.15 billion (31 December 2017: $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 (Saipem and CPB together referred to as the
Consortium) for Chevron Australia Pty Ltd (Chevron) (Gorgon Contract).
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.
159
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
8. TRADE AND OTHER RECEIVABLES CONTINUED
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.
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 (Chevron Arbitration).
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 arbitration.
Since December 2016, the Chevron 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 addition there is an arbitration procedure against Saipem pursuant to the Consortium Agreement seeking recovery of
outstanding amounts. The Consortium Arbitration continues in accordance with the contractual processes; arbitrators have been
appointed, orders for the conduct of the arbitration have been made, and it is anticipated that hearings will occur in 2020 with a
determination thereafter.
3The Group has trade and other receivables relating to BICC totalling US$454.9 million (31 December 2017: US$816.1 million)
equivalent to $640.7 million (31 December 2017: $1,046.3 million) with an expected repayment date of 30 September 2021. Refer
to Note 1: Summary of significant policies – basis of preparation on impact of ECL on the loan balance at 1 January 2018.
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 BICC, such as its 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.
4The non-current tax asset of $34.3 million (31 December 2017: $5.1 million) represents the amount of income taxes recoverable
from the payment of tax in excess of the amounts due to the relevant tax authority not expected to be received within twelve
months after reporting date.
5Contract assets are net of $675.0 million (31 December 2017: $675.0 million) revenue constraint on a portfolio basis.
8. TRADE AND OTHER RECEIVABLES CONTINUED
Significant changes in contract assets and liabilities
Contract assets are balances due from customers under long term contracts as work is performed and therefore a contract asset is
recognised over the period in which the performance obligation is fulfilled. This represents the entity’s right to consideration for
the services transferred to date. Amounts are generally reclassified to contract receivables when these have been certified or
invoiced to a customer.
There has been a significant change in contract assets in the period due to the initial application of AASB 15. Amounts were de-
recognised due to the higher threshold required under AASB 15. While the CIMIC Group continues to believe it probable the
amounts will be received, the new threshold for recognition is stated as highly probable to be received. Refer to Note 1: Summary
of significant accounting policies – basis of preparation, where the effects of the initial application of AASB 15 have been detailed.
Revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period was
$910.8 million (31 December 2017: $921.3 million). Revenue recognised in the reporting period from performance obligations
satisfied or partially satisfied in previous periods was $152.7 million (31 December 2017: $141.1 million). Partially satisfied
performance obligations continue to incur revenue and costs in the period.
Remaining performance obligations (Work in hand)
Contracts which have remaining performance obligations as at 31 December 2018 are set out below. As permitted under the
transitional provisions in AASB 15, the transaction price allocated to remaining performance obligations as of 31 December 2017 is
not disclosed.
Construction
Mining & mineral processing
Services
Corporate
Work in hand1
Additional information on contract debtors
Total contract debtors
-
trade and other receivables
Total contract liabilities
-
trade and other payables
Net contract debtors
December 2018
$m
December 2017
$m
2,297.1
2,495.9
(1,198.2)
(1,112.1)
1,098.9
1,383.8
1Includes $5,954 million of CIMIC’s share of work in hand from joint venture and associates equity accounted investments.
Contracts in the different sectors have different lengths. The average duration of contracts is given below, however some contracts
will vary from these typical lengths. Revenue is typically earned over these varying timeframes, however more of the revenue
noted above is expected to be earned in the short-term.
Construction
Services
Mining and mineral processing
1-4 years
3-6 years
4-10 years
161
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December 2018
$m
15,254
11,159
7,420
2,873
36,706
162
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CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
8. TRADE AND OTHER RECEIVABLES CONTINUED
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.
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 (Chevron Arbitration).
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 arbitration.
Since December 2016, the Chevron 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 addition there is an arbitration procedure against Saipem pursuant to the Consortium Agreement seeking recovery of
outstanding amounts. The Consortium Arbitration continues in accordance with the contractual processes; arbitrators have been
appointed, orders for the conduct of the arbitration have been made, and it is anticipated that hearings will occur in 2020 with a
determination thereafter.
3The Group has trade and other receivables relating to BICC totalling US$454.9 million (31 December 2017: US$816.1 million)
equivalent to $640.7 million (31 December 2017: $1,046.3 million) with an expected repayment date of 30 September 2021. Refer
to Note 1: Summary of significant policies – basis of preparation on impact of ECL on the loan balance at 1 January 2018.
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 BICC, such as its 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.
4The non-current tax asset of $34.3 million (31 December 2017: $5.1 million) represents the amount of income taxes recoverable
from the payment of tax in excess of the amounts due to the relevant tax authority not expected to be received within twelve
months after reporting date.
5Contract assets are net of $675.0 million (31 December 2017: $675.0 million) revenue constraint on a portfolio basis.
Additional information on contract debtors
Total contract debtors
-
trade and other receivables
Total contract liabilities
-
trade and other payables
Net contract debtors
December 2018
December 2017
$m
$m
2,297.1
2,495.9
(1,198.2)
(1,112.1)
1,098.9
1,383.8
8. TRADE AND OTHER RECEIVABLES CONTINUED
Significant changes in contract assets and liabilities
Contract assets are balances due from customers under long term contracts as work is performed and therefore a contract asset is
recognised over the period in which the performance obligation is fulfilled. This represents the entity’s right to consideration for
the services transferred to date. Amounts are generally reclassified to contract receivables when these have been certified or
invoiced to a customer.
There has been a significant change in contract assets in the period due to the initial application of AASB 15. Amounts were de-
recognised due to the higher threshold required under AASB 15. While the CIMIC Group continues to believe it probable the
amounts will be received, the new threshold for recognition is stated as highly probable to be received. Refer to Note 1: Summary
of significant accounting policies – basis of preparation, where the effects of the initial application of AASB 15 have been detailed.
Revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period was
$910.8 million (31 December 2017: $921.3 million). Revenue recognised in the reporting period from performance obligations
satisfied or partially satisfied in previous periods was $152.7 million (31 December 2017: $141.1 million). Partially satisfied
performance obligations continue to incur revenue and costs in the period.
Remaining performance obligations (Work in hand)
Contracts which have remaining performance obligations as at 31 December 2018 are set out below. As permitted under the
transitional provisions in AASB 15, the transaction price allocated to remaining performance obligations as of 31 December 2017 is
not disclosed.
December 2018
$m
Construction
Mining & mineral processing
Services
Corporate
Work in hand1
1Includes $5,954 million of CIMIC’s share of work in hand from joint venture and associates equity accounted investments.
15,254
11,159
7,420
2,873
36,706
Contracts in the different sectors have different lengths. The average duration of contracts is given below, however some contracts
will vary from these typical lengths. Revenue is typically earned over these varying timeframes, however more of the revenue
noted above is expected to be earned in the short-term.
Construction
Mining and mineral processing
Services
1-4 years
3-6 years
4-10 years
161
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
9. CURRENT TAX ASSETS
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
The current tax asset of $nil (31 December 2017: $29.0 million) represents the amount of income taxes recoverable from the
payment of tax in excess of the amounts due to the relevant tax authority.
10. INVENTORIES
Property developments
Cost of acquisition
Development expenses capitalised
Rates, taxes, finance and other costs capitalised
Total property developments
Other inventories
Raw materials and consumables at cost
Total other inventories
Total inventories
Current
Non-current
Total inventories
December 2018
$m
December 2017
$m
21.5
98.8
29.2
149.5
276.7
276.7
60.2
134.5
34.6
229.3
149.1
149.1
426.2
378.4
315.1
111.1
426.2
210.8
167.6
378.4
Finance costs capitalised to property developments during the period were $2.6 million (31 December 2017: $2.2 million).
Property developments pledged as security for interest bearing liabilities - refer to Note 35(e): Financial instruments - Assets
pledged as security.
1Call option has been transferred to derivative assets as outlined in Note 1: Significant accounting policies - basis of preparation.
Associates
Joint venture entities
Total investments accounted for using the equity method
12. OTHER INVESTMENTS
Equity and stapled securities available-for-sale
Listed investments
Unlisted investments
Other financial assets at fair value through profit or loss
Unlisted investments
Call option to acquire shares1
Current
Non-current
Total other investments
Total equity and stapled securities available-for-sale
35 (c)
Total other financial assets at fair value through profit or loss
35 (c)
105.4
December 2018
December 2017
Note
$m
$m
25
26
72.5
64.1
136.6
38.9
343.8
382.7
December 2018
December 2017
Note
$m
$m
-
-
-
-
-
105.4
105.4
105.4
1.5
5.8
7.3
92.7
69.2
161.9
-
169.2
169.2
163
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
9. CURRENT TAX ASSETS
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
The current tax asset of $nil (31 December 2017: $29.0 million) represents the amount of income taxes recoverable from the
payment of tax in excess of the amounts due to the relevant tax authority.
Associates
Joint venture entities
Total investments accounted for using the equity method
12. OTHER INVESTMENTS
December 2018
$m
December 2017
$m
Note
25
26
72.5
64.1
136.6
38.9
343.8
382.7
December 2018
$m
December 2017
$m
Note
Equity and stapled securities available-for-sale
Listed investments
Unlisted investments
Total equity and stapled securities available-for-sale
35 (c)
426.2
378.4
Other financial assets at fair value through profit or loss
Unlisted investments
Call option to acquire shares1
Total other financial assets at fair value through profit or loss
35 (c)
Current
Non-current
-
-
-
105.4
-
105.4
-
105.4
1.5
5.8
7.3
92.7
69.2
161.9
-
169.2
10. INVENTORIES
Property developments
Cost of acquisition
Development expenses capitalised
Rates, taxes, finance and other costs capitalised
Total property developments
Other inventories
Raw materials and consumables at cost
Total other inventories
Total inventories
Current
Non-current
Total inventories
pledged as security.
December 2018
December 2017
$m
$m
21.5
98.8
29.2
149.5
276.7
276.7
315.1
111.1
426.2
60.2
134.5
34.6
229.3
149.1
149.1
210.8
167.6
378.4
Finance costs capitalised to property developments during the period were $2.6 million (31 December 2017: $2.2 million).
Property developments pledged as security for interest bearing liabilities - refer to Note 35(e): Financial instruments - Assets
Total other investments
1Call option has been transferred to derivative assets as outlined in Note 1: Significant accounting policies - basis of preparation.
105.4
169.2
163
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
13. DEFERRED TAXES
14. PROPERTY, PLANT AND EQUIPMENT
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
Controlled entities
Foreign exchange
Tax losses
Other
Total deferred taxes
Comprising of:
Deferred tax assets
Deferred tax (liabilities)
Total deferred taxes
December 2018
$m
December 2017
$m
335.8
357.4
11.1
6.1
39.5
98.5
(476.4)
(104.0)
40.4
(76.4)
15.5
90.3
50.0
30.4
49.8
(19.4)
30.4
15.6
6.5
19.8
99.2
(391.3)
(83.1)
42.5
(98.9)
27.5
126.5
23.7
145.4
145.4
-
145.4
Unrecognised deferred tax assets
Deferred tax assets which have not been recognised in respect of tax losses
165.7
127.7
Land
Buildings
Leasehold land,
Plant and
Total property,
buildings and
improvements
$m
equipment
$m
plant and
equipment
$m
At 1 January 2017
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 December 2017
Opening net book amount
Additions
Disposals
Transfers1
Depreciation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2017
Cost or fair value
Accumulated depreciation and impairment
Net book amount
Year ended 31 December 2018
Opening net book amount
Additions
Acquisitions
Disposals
Transfers
Depreciation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2018
Cost or fair value
Accumulated depreciation and impairment
Net book amount
$m
2.9
-
2.9
2.9
(2.9)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$m
2.4
(0.5)
1.9
1.9
(1.6)
(0.3)
0.2
(0.2)
-
-
-
-
-
-
-
-
-
-
-
0.1
0.1
0.1
-
0.1
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
44.3
0.8
-
-
-
-
(8.1)
37.0
1,299.5
421.6
(100.8)
100.4
(454.2)
(86.8)
1,179.7
560.3
0.3
(68.4)
12.6
(510.3)
81.4
1,255.6
85.5
(41.2)
44.3
3,222.6
(2,042.9)
1,179.7
3,308.3
(2,084.3)
1,224.0
1,179.7
1,224.0
1,355.7
424.1
(105.7)
100.5
(463.7)
(86.9)
1,224.0
561.2
0.3
(68.4)
12.6
(518.4)
81.4
1,292.7
87.4
(50.4)
37.0
3,434.8
(2,179.2)
1,255.6
3,522.3
(2,229.6)
1,292.7
1This balance includes amounts for assets re-acquired by the Group following the restructuring of certain leasing agreements.
165
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166
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Withholding tax on retained earnings of non-resident and controlled entities
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
Investment revaluations
Controlled entities
Foreign exchange
Tax losses
Other
Total deferred taxes
Comprising of:
Deferred tax assets
Deferred tax (liabilities)
Total deferred taxes
December 2018
December 2017
$m
$m
335.8
357.4
11.1
6.1
39.5
98.5
(476.4)
(104.0)
40.4
(76.4)
15.5
90.3
50.0
30.4
49.8
(19.4)
30.4
15.6
6.5
19.8
99.2
(391.3)
(83.1)
42.5
(98.9)
27.5
126.5
23.7
145.4
145.4
-
145.4
Unrecognised deferred tax assets
Deferred tax assets which have not been recognised in respect of tax losses
165.7
127.7
13. DEFERRED TAXES
14. PROPERTY, PLANT AND EQUIPMENT
Land
Buildings
At 1 January 2017
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 December 2017
Opening net book amount
Additions
Disposals
Transfers1
Depreciation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2017
Cost or fair value
Accumulated depreciation and impairment
Net book amount
Year ended 31 December 2018
Opening net book amount
Additions
Acquisitions
Disposals
Transfers
Depreciation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2018
Cost or fair value
Accumulated depreciation and impairment
$m
2.9
-
2.9
2.9
-
(2.9)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$m
2.4
(0.5)
1.9
1.9
-
(1.6)
-
(0.3)
-
-
0.2
(0.2)
-
-
0.1
-
-
-
-
-
0.1
0.1
-
Leasehold land,
buildings and
improvements
$m
Plant and
equipment
$m
Total property,
plant and
equipment
$m
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
44.3
0.8
-
-
-
(8.1)
-
37.0
1,179.7
560.3
0.3
(68.4)
12.6
(510.3)
81.4
1,255.6
1,224.0
561.2
0.3
(68.4)
12.6
(518.4)
81.4
1,292.7
87.4
(50.4)
3,434.8
(2,179.2)
3,522.3
(2,229.6)
Net book amount
-
1This balance includes amounts for assets re-acquired by the Group following the restructuring of certain leasing agreements.
1,255.6
37.0
0.1
1,292.7
165
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CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
15. INTANGIBLES
15. INTANGIBLES CONTINUED
At 1 January 2017
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
Year ended 31 December 2018
Opening net book amount
Additions
Transfers
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2018
Cost or fair value
Accumulated amortisation and impairment
Net book amount
Goodwill
$m
Other
intangibles1
$m
948.6
(13.6)
935.0
935.0
-
-
-
-
(12.5)
922.5
936.1
(13.6)
922.5
922.5
21.7
-
-
-
4.0
948.2
961.8
(13.6)
948.2
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
167.2
28.3
(6.8)
(2.7)
(40.8)
0.1
145.3
384.7
(239.4)
145.3
Total intangibles
$m
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
1,089.7
50.0
(6.8)
(2.7)
(40.8)
4.1
1,093.5
1,346.5
(253.0)
1,093.5
December 2018
December 2017
$m
$m
452.1
98.1
398.0
948.2
448.1
98.1
376.3
922.5
Impairment tests for cash-generating units containing goodwill
Goodwill is attributable to cash generating units in the following segments:
Construction
Services
Mining & mineral processing
Balance at reporting date
exceeds its carrying amount.
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
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
Economic forecasts
rates:
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
Services
Mining & mineral processing
Sensitivity to changes in assumptions
Discount rate
Growth rate
range
11–17%
8–18%
11%
range
3-5%
3%
3%
The recoverable amount of intangible assets exceeds their carrying values at 31 December 2018. 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.
1Other intangibles include:
IT software systems of $74.1 million with a useful life of up to 8 years (31 December 2017: $105.6 million up to 8 years);
Customer contracts, concessions and other intangibles with useful lives of:
-
-
-
1 to 5 years $11.3 million (31 December 2017: $17.4 million);
6 to 15 years $54.4 million (31 December 2017: $36.2 million); and
Indefinite useful life $5.5 million (31 December 2017: $8.0 million).
167
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At 1 January 2017
Cost or fair value
Net book amount
Accumulated amortisation and impairment
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
Year ended 31 December 2018
Opening net book amount
Additions
Transfers
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2018
Cost or fair value
Accumulated amortisation and impairment
Net book amount
1Other intangibles include:
$m
948.6
(13.6)
935.0
935.0
-
-
-
-
-
-
-
(12.5)
922.5
936.1
(13.6)
922.5
922.5
21.7
4.0
948.2
961.8
(13.6)
948.2
intangibles1
$m
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
167.2
28.3
(6.8)
(2.7)
(40.8)
0.1
145.3
384.7
(239.4)
145.3
$m
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
1,089.7
50.0
(6.8)
(2.7)
(40.8)
4.1
1,093.5
1,346.5
(253.0)
1,093.5
IT software systems of $74.1 million with a useful life of up to 8 years (31 December 2017: $105.6 million up to 8 years);
Customer contracts, concessions and other intangibles with useful lives of:
-
-
-
1 to 5 years $11.3 million (31 December 2017: $17.4 million);
6 to 15 years $54.4 million (31 December 2017: $36.2 million); and
Indefinite useful life $5.5 million (31 December 2017: $8.0 million).
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
15. INTANGIBLES
15. INTANGIBLES CONTINUED
Goodwill
Other
Total intangibles
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 2018
$m
December 2017
$m
452.1
98.1
398.0
948.2
448.1
98.1
376.3
922.5
The recoverable amount of all cash-generating units is based on value in use calculations, using five year cash flow projections
based on forecast operating results and the 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%
8–18%
11%
3-5%
3%
3%
Sensitivity to changes in assumptions
The recoverable amount of intangible assets exceeds their carrying values at 31 December 2018. 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.
167
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
16. TRADE AND OTHER PAYABLES
19. INTEREST BEARING LIABILITIES
Interest bearing liabilities - limited recourse loans
Current
Interest bearing loans
Total current liabilities
Non-current
Interest bearing loans
Total non-current liabilities
Note
December 2018
December 2017
$m
$m
50.7
-
50.7
472.1
472.1
219.0
46.6
265.6
637.8
637.8
Total interest bearing liabilities
28 (b), 35 (d)
522.8
903.4
Trade creditors and accruals
Other creditors
Amounts payable to related parties
Trade and other payables
Note
December 2018
$m
December 2017
$m
5,207.3
4,334.4
585.9
20.2
525.0
27.8
37 (b)
35 (a,b)
5,813.4
4,887.2
Derivative financial liabilities
35 (a,b)
1.0
2.2
Total trade and other payables
Current
Non-current
Total trade and other payables
17. CURRENT TAX LIABILITIES
5,814.4
4,889.4
5,701.0
113.4
5,814.4
4,737.4
152.0
4,889.4
The current tax liability of $68.4 million (31 December 2017: $40.4 million) represents the amounts payable in respect of current
and prior periods.
18. PROVISIONS
Employee Benefits
Current
Non-current
Total provisions
December 2018
$m
December 2017
$m
326.0
62.4
388.4
311.8
69.3
381.1
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and
deferred bonuses.
169
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
16. TRADE AND OTHER PAYABLES
19. INTEREST BEARING LIABILITIES
Current
Interest bearing loans
Interest bearing liabilities - limited recourse loans
Total current liabilities
Non-current
Interest bearing loans
Total non-current liabilities
Note
December 2018
$m
December 2017
$m
50.7
-
50.7
472.1
472.1
219.0
46.6
265.6
637.8
637.8
Total interest bearing liabilities
28 (b), 35 (d)
522.8
903.4
Derivative financial liabilities
35 (a,b)
1.0
2.2
The current tax liability of $68.4 million (31 December 2017: $40.4 million) represents the amounts payable in respect of current
December 2018
December 2017
Note
$m
$m
5,207.3
4,334.4
585.9
20.2
525.0
27.8
37 (b)
35 (a,b)
5,813.4
4,887.2
5,814.4
4,889.4
5,701.0
113.4
5,814.4
4,737.4
152.0
4,889.4
December 2018
December 2017
$m
$m
326.0
62.4
388.4
311.8
69.3
381.1
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
deferred bonuses.
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and
169
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
20. SHARE CAPITAL
21. RESERVES
Issued and fully paid share capital
Balance at beginning of reporting period
Shares bought back
Balance at reporting date
Share capital
Balance at beginning of reporting period
Par value of shares bought back1
Company
December 2018
No. of shares
December 2017
No. of shares
324,254,097
324,254,097
-
-
324,254,097
324,254,097
Company
12 months to
December 2018
$m
12 months to
December 2017
$m
1,750.3
1,750.3
-
-
Balance at reporting date
1,750.3
1On 12 December 2016, the CIMIC Group Board approved an 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.
1,750.3
On 14 December 2017, the CIMIC Group Board approved an 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. No shares were bought back under this scheme.
On 14 December 2018, 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 2018. As at 31 December 2018 no shares have been bought
back under this 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.
Foreign currency translation reserve
Balance at beginning of reporting period
Adjustment on implementation of new accounting standards
1
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
Equity reserve
Balance at beginning of reporting period
Acquisition of non-controlling interests
Balance at reporting date
Share buy-back reserve
Balance at beginning of reporting period
Premium paid over par on share buy-back
Balance at reporting date
Share based payments reserve
Balance at beginning of reporting period
Included in statement of profit or loss
Transferred to liability
Share based payments
Balance at reporting date
12 months to
December 2018
12 months to
December 2017
Note
$m
$m
162.3
(80.1)
124.6
206.8
(7.1)
0.5
(6.6)
-
-
33.8
0.1
(5.1)
-
28.8
384.3
-
(222.0)
162.3
(11.5)
4.4
(7.1)
-
-
44.9
(2.5)
-
(8.6)
33.8
(619.6)
(619.6)
(619.6)
(619.6)
(123.7)
(123.7)
(123.7)
(123.7)
36
Total reserves at reporting date
(514.3)
(554.3)
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172
Issued and fully paid share capital
Balance at beginning of reporting period
Shares bought back
Balance at reporting date
Share capital
Balance at beginning of reporting period
Par value of shares bought back1
Balance at reporting date
Company
December 2018
December 2017
No. of shares
No. of shares
324,254,097
324,254,097
-
-
324,254,097
324,254,097
Company
12 months to
12 months to
December 2018
December 2017
$m
$m
1,750.3
1,750.3
-
-
1,750.3
1,750.3
1On 12 December 2016, the CIMIC Group Board approved an 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 an 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. No shares were bought back under this scheme.
On 14 December 2018, 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 2018. As at 31 December 2018 no shares have been bought
back under this 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.
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
20. SHARE CAPITAL
21. RESERVES
12 months to
December 2018
$m
12 months to
December 2017
$m
Note
Foreign currency translation reserve
Balance at beginning of reporting period
Adjustment on implementation of new accounting standards
1
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
Equity reserve
Balance at beginning of reporting period
Acquisition of non-controlling interests
Balance at reporting date
Share buy-back reserve
Balance at beginning of reporting period
Premium paid over par on share buy-back
Balance at reporting date
Share based payments reserve
Balance at beginning of reporting period
Included in statement of profit or loss
Transferred to liability
Share based payments
Balance at reporting date
36
162.3
(80.1)
124.6
206.8
(7.1)
0.5
(6.6)
384.3
-
(222.0)
162.3
(11.5)
4.4
(7.1)
(619.6)
(619.6)
-
-
(619.6)
(619.6)
(123.7)
(123.7)
-
-
(123.7)
(123.7)
33.8
0.1
(5.1)
-
28.8
44.9
(2.5)
-
(8.6)
33.8
Total reserves at reporting date
(514.3)
(554.3)
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
21. RESERVES CONTINUED
Nature and purpose of reserves
23. DIVIDENDS
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.
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
Closing balance of previous reporting period
Adjustment on implementation of new accounting standards
Balance at beginning of reporting period
Included in statement of profit or loss
Dividends paid
Balance at reporting date
Note
12 months to
December 2018
$m
12 months to
December 2017
$m
1
23
2,183.0
(1,348.2)
834.8
780.6
(470.2)
1,145.2
1,876.5
-
1,876.5
702.1
(395.6)
2,183.0
2018 final dividend
Subsequent to reporting date the Company announced a 100% franked final dividend in
respect of the year ended 31 December 2018. The dividend is payable on 4 July 2019. This
dividend has not been provided for in the statement of financial position1
Dividends recognised in the reporting period to 31 December 2018
30 June 2018 interim ordinary dividend 100% franked paid on 4 October 2018
31 December 2017 final dividend 100% franked paid on 4 July 2018
Total dividends recognised in reporting period to 31 December 2018
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
1The Board has determined a final dividend of 86 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 2018, which commenced on 29 December 2018, 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 the
number of shares on issue at the record date.
Cents per
share
$m
86.0
278.9
70.0
75.0
60.0
62.0
227.0
243.2
470.2
194.6
201.0
395.6
Company
December 2018
December 2017
$m
$m
Dividend franking account
Balance of the franking account, adjusted for franking credits / debits which arise from the
43.7
224.6
payment / refund of income tax provided for in the financial statements
The impact of the 2018 final dividend, determined after the reporting date, on the dividend franking account will be a reduction of
$119.5 million (2017: $104.2 million).
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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
instruments relating to future transactions.
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
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
Associates equity reserve
Equity reserve
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
Closing balance of previous reporting period
Adjustment on implementation of new accounting standards
Balance at beginning of reporting period
Included in statement of profit or loss
Dividends paid
Balance at reporting date
Note
12 months to
12 months to
December 2018
December 2017
$m
$m
1
23
2,183.0
(1,348.2)
834.8
780.6
(470.2)
1,145.2
1,876.5
-
1,876.5
702.1
(395.6)
2,183.0
23. DIVIDENDS
2018 final dividend
Subsequent to reporting date the Company announced a 100% franked final dividend in
respect of the year ended 31 December 2018. The dividend is payable on 4 July 2019. This
dividend has not been provided for in the statement of financial position1
Dividends recognised in the reporting period to 31 December 2018
30 June 2018 interim ordinary dividend 100% franked paid on 4 October 2018
31 December 2017 final dividend 100% franked paid on 4 July 2018
Total dividends recognised in reporting period to 31 December 2018
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
Cents per
share
$m
86.0
278.9
70.0
75.0
227.0
243.2
470.2
60.0
62.0
194.6
201.0
Total dividends recognised in reporting period to 31 December 2017
1The Board has determined a final dividend of 86 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 2018, which commenced on 29 December 2018, 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 the
number of shares on issue at the record date.
395.6
Company
December 2018
$m
December 2017
$m
Dividend franking account
Balance of the franking account, adjusted for franking credits / debits which arise from the
43.7
224.6
payment / refund of income tax provided for in the financial statements
The impact of the 2018 final dividend, determined after the reporting date, on the dividend franking account will be a reduction of
$119.5 million (2017: $104.2 million).
173
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
24. EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
Profit / (loss) attributable to shareholders of the parent entity used in the calculation of basic
and diluted earnings per share ($m)
12 months to
December 2018
12 months to
December 2017
240.7¢
240.7¢
216.5¢
216.5¢
780.6
702.1
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
Contingently issuable shares1
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
324,254,097
324,254,097
-
102,170
324,254,097
324,356,267
1Contingently issuable shares relate to share rights under plans disclosed in Note 36: Employee benefits.
Name of entity
Principal activity
Country
Ownership interest
December 2018
December 2017
25. ASSOCIATES
The Group has the following investments in associates:
A.C.N. 630 634 507 Pty Ltd (Momentum
Investment
Dunsborough Lakes Village Syndicate1
Development
Trains Pty Ltd)
Canberra Metro Holdings Trust1
Canberra Metro Holdings Pty Ltd1
Canberra Metro Pty Ltd
CIP Holdings General Partner Limited
CIP Project General Partner Limited
Cornerstone Infrastructure Partners LP
Cornerstone Infrastructure Partners
Holdings LP
LCIP Co-Investment Unit Trust2
Metro Trains Australia Pty Ltd1
Metro Trains Melbourne Pty Ltd1
Metro Trains Sydney Pty Ltd1
Momentum Trains Holding Pty Ltd
Momentum Trains Holding Trust
Momentum Trains Trust
On Talent Pty Ltd
Limited2
Construction
Construction
Construction
Investment
Investment
Investment
Investment
Investment
Services
Services
Services
Investment
Investment
Investment
Recruitment
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
%
49
30
30
30
40
40
40
40
20
11
20
20
20
49
49
49
30
15
%
-
30
30
30
-
-
-
-
-
-
-
20
11
20
20
20
30
15
Wellington Gateway General Partner No.1
Investment
New Zealand
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.
175
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176
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
24. EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
12 months to
12 months to
December 2018
December 2017
240.7¢
240.7¢
216.5¢
216.5¢
25. ASSOCIATES
The Group has the following investments in associates:
Name of entity
Principal activity
Country
Ownership interest
December 2018
%
December 2017
%
Profit / (loss) attributable to shareholders of the parent entity used in the calculation of basic
780.6
702.1
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
324,254,097
earnings per share
Contingently issuable shares1
Weighted average number of ordinary shares and potential ordinary shares used as the
324,254,097
324,356,267
denominator in calculating diluted earnings per share
1Contingently issuable shares relate to share rights under plans disclosed in Note 36: Employee benefits.
-
102,170
A.C.N. 630 634 507 Pty Ltd (Momentum
Trains Pty Ltd)
Canberra Metro Holdings Trust1
Canberra Metro Holdings Pty Ltd1
Canberra Metro Pty Ltd
CIP Holdings General Partner Limited
CIP Project General Partner Limited
Cornerstone Infrastructure Partners LP
Cornerstone Infrastructure Partners
Holdings LP
Dunsborough Lakes Village Syndicate1
LCIP Co-Investment Unit Trust2
Metro Trains Australia Pty Ltd1
Metro Trains Melbourne Pty Ltd1
Metro Trains Sydney Pty Ltd1
Momentum Trains Holding Pty Ltd
Momentum Trains Holding Trust
Momentum Trains Trust
On Talent Pty Ltd
Wellington Gateway General Partner No.1
Limited2
Investment
Australia
Construction
Construction
Construction
Investment
Investment
Investment
Investment
Development
Investment
Services
Services
Services
Investment
Investment
Investment
Recruitment
Investment
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
49
30
30
30
40
40
40
40
20
11
20
20
20
49
49
49
30
15
-
30
30
30
-
-
-
-
20
11
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.
175
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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 period
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 months to
December 2018
$m
12 months to
December 2017
$m
528.8
(503.9)
24.9
478.1
(460.7)
17.4
1.2
(6.1)
(4.9)
20.0
(4.5)
15.5
0.5
(8.8)
(8.3)
9.1
(3.0)
6.1
December 2018
$m
December 2017
$m
135.7
349.6
485.3
124.7
288.1
412.8
113.9
182.3
296.2
90.4
166.9
257.3
Equity accounted associates at reporting date1
72.5
38.9
1The Group’s shareholding in listed associates for which there are published quotations had a market value at reporting date of: $nil
(31 December 2017: $nil).
There were no impairments of equity accounted associates during the reporting period (31 December 2017: $nil).
In the opinion of the directors, there are no individually material associates as at 31 December 2018.
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Name of entity
Principal activity
Country
December 2018
December 2017
Ownership interest
Australian Terminal Operations Management Pty Ltd
Services
Australia
BIC Contracting LLC (formerly HLG Contracting LLC)
Construction
United Arab
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 Ltd
Erskineville Residential Project Pty Ltd
Great Eastern Highway Upgrade
GSJV Guyana Inc1
GSJV Limited (Barbados)1
Kings Square No.4 Unit Trust
Kings Square Pty Ltd
Leighton Abigroup Joint Venture1
Leighton BMD JV1
Leighton Kumagai Joint Venture (Metrorail)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 Limited
Services
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Construction
Construction
Construction
Construction
Construction
Construction
Development
Development
Development
Development
Development
Emirates
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
India
India
Australia
Australia
Australia
Australia
Australia
New Zealand
Contract Mining
Australia
Construction
Construction
Australia
Australia
Contract Mining
Guyana
Contract Mining
Barbados
Development
Australia
Services
Australia
Majwe Mining Joint Venture (Proprietary) Limited
Contract Mining
Botswana
%
50
45
50
50
-
-
-
-
-
-
-
50
50
50
50
50
50
50
-
75
50
50
50
50
50
-
55
50
50
60
-
30
30
-
-
-
-
50
%
50
45
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
75
50
50
50
50
50
50
55
50
50
60
50
30
30
50
50
50
50
50
178
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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 period
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Equity accounted associates at reporting date1
72.5
38.9
1The Group’s shareholding in listed associates for which there are published quotations had a market value at reporting date of: $nil
(31 December 2017: $nil).
There were no impairments of equity accounted associates during the reporting period (31 December 2017: $nil).
In the opinion of the directors, there are no individually material associates as at 31 December 2018.
12 months to
12 months to
December 2018
December 2017
$m
$m
528.8
(503.9)
24.9
478.1
(460.7)
17.4
December 2018
December 2017
$m
$m
1.2
(6.1)
(4.9)
20.0
(4.5)
15.5
135.7
349.6
485.3
124.7
288.1
412.8
0.5
(8.8)
(8.3)
9.1
(3.0)
6.1
113.9
182.3
296.2
90.4
166.9
257.3
Name of entity
Principal activity
Country
Ownership interest
December 2018
%
December 2017
%
Australian Terminal Operations Management Pty Ltd
BIC Contracting LLC (formerly HLG Contracting LLC)
Services
Construction
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 Ltd
Erskineville Residential Project Pty Ltd
Great Eastern Highway Upgrade
GSJV Guyana Inc1
GSJV Limited (Barbados)1
Kings Square No.4 Unit Trust
Kings Square Pty Ltd
Leighton Abigroup Joint Venture1
Leighton BMD JV1
Leighton Kumagai Joint Venture (Metrorail)1
Leighton-Infra 13 Joint Venture2
Leighton-Ose Joint Venture2
Majwe Mining Joint Venture (Proprietary) Limited
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 Limited
Services
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Contract Mining
Construction
Construction
Contract Mining
Contract Mining
Development
Development
Construction
Construction
Construction
Construction
Construction
Contract Mining
Construction
Development
Development
Development
Development
Development
Development
Services
Australia
United Arab
Emirates
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Guyana
Barbados
Australia
Australia
Australia
Australia
Australia
India
India
Botswana
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
50
45
50
-
50
-
-
-
-
-
-
50
50
50
50
50
50
50
-
75
50
50
50
50
50
-
55
50
50
60
-
30
30
-
-
-
-
50
50
45
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
75
50
50
50
50
50
50
55
50
50
60
50
30
30
50
50
50
50
50
177
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
26. JOINT VENTURE ENTITIES CONTINUED
26. JOINT VENTURE ENTITIES CONTINUED
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
Name of entity
Principal activity
Country
Ownership interest
December 2018
December 2017
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
Sedgman Civmec JV1
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
Wallan Project Pty Ltd1
Wallan Project Trust
Wedgewood Road Hallam No. 1 Pty Ltd
WSO M7 Stage 3 JV
New Zealand
Australia
Construction
Australia
Services
Construction
Australia
Contract Mining Australia
Construction
Contract Mining Australia
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Investment
Australia
Development
Australia
Development
Australia
Investment
Australia
Investment
Australia
Development
Australia
Construction
%
50
50
-
50
50
44
44
50
50
69
50
50
47
50
50
30
30
-
50
%
50
50
80
50
50
44
44
50
50
69
50
50
47
50
50
30
30
50
50
All joint venture entities have a statutory reporting date of 31 December with the following exceptions as they are aligned
with the joint venture partners’ reporting date and / or the reporting date is prescribed by local statutory requirements:
1Entities have a 30 June statutory reporting date.
2Entities have a 31 March statutory reporting date.
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.
BICC
As described in Note 1: Summary of significant accounting policies – basis of preparation, CIMIC’s investment in BICC is now
held at nil value due to the impact of applying AASB 15 and is therefore no longer material to the Group.
The Group continues to hold a call option to purchase the remaining 55% shareholding in BICC. This option has no current
impact on the control of the company. As at 31 December 2018 the fair value of the call option was determined to be
US$54.0 million (31 December 2017: US$54.0 million), equivalent to $76.1 million (31 December 2017: $69.2 million). In
accordance with AASB 9 the option has been classified as a derivative asset. No gain or loss was recognised in the period.
The Group also holds shareholder loans as outlined in Note 8: Trade and other receivables.
CIMIC continues to guarantee the BICC facilities with a secured and drawn amount of US$631.4 million as at 31 December
2018 (equivalent to $889.2 million) compared to US$326.1 million as at 31 December 2017 (equivalent to $418.1 million).
No amounts have been recognised in relation to these facilities at 31 December 2018 or 31 December 2017.
In the opinion of the directors, there are no other individually material joint ventures as at 31 December 2018.
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 period
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 months to
12 months to
December 2018
December 2017
$m
$m
2,053.8
(1,897.7)
156.1
2,203.1
(2,169.4)
33.7
December 2018
December 2017
$m
$m
0.8
(93.3)
(92.5)
63.6
(20.6)
43.0
1,865.4
1,309.5
3,174.9
1,819.4
1,291.4
3,110.8
0.4
(70.1)
(69.7)
(36.0)
(20.0)
(56.0)
2,086.2
1,257.6
3,343.8
1,837.1
1,162.9
3,000.0
The Group’s share of joint venture entities’ net assets at reporting date
64.1
343.8
There were no impairments of investments in joint ventures during the reporting period (31 December 2017: $nil).
Refer to Note 1: Summary of significant accounting policies – basis of preparation for details on opening balance adjustments made
on application of new accounting standards that have an impact on joint venture balances at 1 January 2018.
179
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180
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
26. JOINT VENTURE ENTITIES CONTINUED
26. JOINT VENTURE ENTITIES CONTINUED
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
Name of entity
Principal activity
Country
Ownership interest
December 2018
December 2017
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 period
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 months to
December 2018
$m
12 months to
December 2017
$m
2,053.8
2,203.1
(1,897.7)
(2,169.4)
156.1
33.7
0.8
0.4
(93.3)
(70.1)
(92.5)
(69.7)
63.6
(36.0)
(20.6)
43.0
(20.0)
(56.0)
December 2018
$m
December 2017
$m
1,865.4
1,309.5
3,174.9
1,819.4
1,291.4
3,110.8
2,086.2
1,257.6
3,343.8
1,837.1
1,162.9
3,000.0
The Group’s share of joint venture entities’ net assets at reporting date
64.1
343.8
There were no impairments of investments in joint ventures during the reporting period (31 December 2017: $nil).
Refer to Note 1: Summary of significant accounting policies – basis of preparation for details on opening balance adjustments made
on application of new accounting standards that have an impact on joint venture balances at 1 January 2018.
179
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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
Sedgman Civmec JV1
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
Wallan Project Pty Ltd1
Wallan Project Trust
Wedgewood Road Hallam No. 1 Pty Ltd
WSO M7 Stage 3 JV
Construction
Services
Construction
Australia
Australia
Australia
Contract Mining Australia
Construction
New Zealand
Contract Mining Australia
Construction
Construction
Construction
Construction
Construction
Construction
Investment
Development
Development
Investment
Investment
Development
Construction
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
%
50
50
-
50
50
44
44
50
50
69
50
50
47
50
50
30
30
-
50
%
50
50
80
50
50
44
44
50
50
69
50
50
47
50
50
30
30
50
50
All joint venture entities have a statutory reporting date of 31 December with the following exceptions as they are aligned
with the joint venture partners’ reporting date and / or the reporting date is prescribed by local statutory requirements:
1Entities have a 30 June statutory reporting date.
2Entities have a 31 March statutory reporting date.
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.
BICC
As described in Note 1: Summary of significant accounting policies – basis of preparation, CIMIC’s investment in BICC is now
held at nil value due to the impact of applying AASB 15 and is therefore no longer material to the Group.
The Group continues to hold a call option to purchase the remaining 55% shareholding in BICC. This option has no current
impact on the control of the company. As at 31 December 2018 the fair value of the call option was determined to be
US$54.0 million (31 December 2017: US$54.0 million), equivalent to $76.1 million (31 December 2017: $69.2 million). In
accordance with AASB 9 the option has been classified as a derivative asset. No gain or loss was recognised in the period.
The Group also holds shareholder loans as outlined in Note 8: Trade and other receivables.
CIMIC continues to guarantee the BICC facilities with a secured and drawn amount of US$631.4 million as at 31 December
2018 (equivalent to $889.2 million) compared to US$326.1 million as at 31 December 2017 (equivalent to $418.1 million).
No amounts have been recognised in relation to these facilities at 31 December 2018 or 31 December 2017.
In the opinion of the directors, there are no other individually material joint ventures as at 31 December 2018.
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
27. JOINT OPERATIONS
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2018
December 2017
%
%
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
December 2018
December 2017
Ownership interest
%
%
Leighton John Holland Joint Venture (formerly Leighton John
Construction
Singapore
Construction
Development
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Development
Construction
Construction
Construction
Development
Construction
Construction
Construction
Services
Construction
Baulderstone Leighton Joint Venture
Casey Fields Joint Venture1
CH2-UGL JV
China State - Leighton Joint Venture
CHT Joint Venture
CPB & BMD JV
CPB & Bombardier JV
CPB & JHG JV
CPB Black & Veatch Joint Venture1
CPB Dragados Samsung Joint Venture
CPB John Holland Dragados Joint Venture
CPB Samsung John Holland Joint Venture
CPB Seymour Whyte JV
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
JH & CPB & Ghella JV
JHCPB JV
John Holland - Leighton (South East Asia) Joint Venture
John Holland Pty Ltd, UGL Engineering Pty Ltd and GHD Pty Ltd
Trading as Malabar Alliance
Construction
Leighton - China State-Van Oord Joint Venture
Construction
Leighton - China State Joint Venture
Construction
Leighton - China State Joint Venture
Construction
Leighton - Chun Wo Joint Venture
Construction
Leighton - Chun Wo Joint Venture
Construction
Leighton - Chun Wo Joint Venture
Construction
Leighton - Gammon Joint Venture
Construction
Leighton - HEB Joint Venture
Leighton Abigroup Consortium (Epping to Thornleigh)
Construction
Leighton China State John Holland Joint Venture (City Of Dreams) Construction
Construction
Leighton China State Joint Venture (Wynn Resort)
Leighton Contractors Downer Joint Venture1
Construction
Leighton Fulton Hogan Joint Venture (Sapphire to Woolgoolga)1
Construction
Construction
Leighton Fulton Hogan Joint Venture (Sh16 Causeway Upgrade)
Australia
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
New Zealand
Australia
Macau
Macau
Australia
Australia
New Zealand
50
33
50
50
50
50
50
50
50
40
50
33
50
60
-
50
50
68
30
50
45
50
50
50
45
51
51
84
60
70
50
80
50
40
50
50
50
50
50
33
50
50
50
50
50
50
50
40
50
33
-
60
50
50
50
68
30
50
45
50
50
50
45
51
51
84
60
70
50
80
50
40
50
50
50
50
181
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Holland Joint Venture (Thomson Line))
Leighton M&E – Southa Joint Venture
Leighton Yongnam Joint Venture
Leighton York Joint Venture
Leighton-Able Joint Venture
Leighton-Chubb E&M Joint Venture
Leighton-John Holland Joint Venture
Leighton-John Holland Joint Venture (Lai Chi Kok)
Leighton-Total Joint Operation
LLECPB Crossing Removal JV
Metropolitan Road Improvement Alliance
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 (Optus Wireless JV)
Rizzani CPB Joint Venture
Swietelsky CPB Rail Joint Venture1
Task Joint Venture (Thiess & Sinclair Knight Merz)
Thiess Balfour Beatty Joint Venture
Thiess Degremont JV
Thiess Degremont Nacap Joint Venture1
Thiess John Holland Joint Venture (Airport Link)
Thiess John Holland Joint Venture (Eastlink)
Thiess KMC JV
Thiess Macdow Joint Venture1
Thiess Wirlu-Murra Joint Venture
UGL Cape
UGL Kentz
Construction
Hong Kong
Construction
Singapore
Construction
Australia
Construction
Indonesia
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Services
Services
Construction
Services
Construction
Construction
Construction
Construction
Construction
Construction
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Australia
Australia
Malaysia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Contract Mining Canada
Construction
Australia
Contract Mining Australia
Services
Construction
Australia
Australia
Veolia Water - Leighton - John Holland Joint Venture
Construction
Hong Kong
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.
50
50
70
75
51
50
55
51
67
50
71
50
50
25
50
40
50
50
60
67
65
33
50
50
51
50
50
50
50
24
50
50
50
50
-
75
51
50
55
51
67
50
71
50
50
25
50
40
50
50
60
67
65
33
50
50
51
50
50
50
50
24
182
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
27. JOINT OPERATIONS
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2018
December 2017
%
%
China State - Leighton Joint Venture
Construction
Hong Kong
Baulderstone Leighton Joint Venture
Casey Fields Joint Venture1
CH2-UGL JV
CHT Joint Venture
CPB & BMD JV
CPB & Bombardier JV
CPB & JHG JV
CPB Black & Veatch Joint Venture1
CPB Dragados Samsung Joint Venture
CPB John Holland Dragados Joint Venture
CPB Samsung John Holland Joint Venture
CPB Seymour Whyte JV
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
JH & CPB & Ghella JV
JHCPB JV
Trading as Malabar Alliance
Leighton - China State-Van Oord Joint Venture
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 - Gammon Joint Venture
Leighton - HEB Joint Venture
Construction
Development
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Construction
New Zealand
Development
Construction
Australia
Australia
Construction
Hong Kong
Construction
Development
Construction
Construction
Construction
Australia
Australia
Australia
Australia
Australia
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Construction
New Zealand
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
Leighton Abigroup Consortium (Epping to Thornleigh)
Construction
Australia
Leighton China State John Holland Joint Venture (City Of Dreams) Construction
Leighton China State Joint Venture (Wynn Resort)
Leighton Contractors Downer Joint Venture1
Construction
Construction
Leighton Fulton Hogan Joint Venture (Sapphire to Woolgoolga)1
Construction
Macau
Macau
Australia
Australia
Leighton Fulton Hogan Joint Venture (Sh16 Causeway Upgrade)
Construction
New Zealand
50
33
50
50
50
50
50
50
50
40
50
33
50
60
-
50
50
68
30
50
45
50
50
50
45
51
51
84
60
70
50
80
50
40
50
50
50
50
50
33
50
50
50
50
50
50
50
40
50
33
-
60
50
50
50
68
30
50
45
50
50
50
45
51
51
84
60
70
50
80
50
40
50
50
50
50
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2018
%
December 2017
%
Leighton John Holland Joint Venture (formerly Leighton John
Holland Joint Venture (Thomson Line))
Leighton M&E – Southa Joint Venture
Leighton Yongnam Joint Venture
Leighton York Joint Venture
Leighton-Able Joint Venture
Leighton-Chubb E&M Joint Venture
Leighton-John Holland Joint Venture
Leighton-John Holland Joint Venture (Lai Chi Kok)
Leighton-Total Joint Operation
LLECPB Crossing Removal JV
Metropolitan Road Improvement Alliance
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 (Optus Wireless JV)
Rizzani CPB Joint Venture
Swietelsky CPB Rail Joint Venture1
Task Joint Venture (Thiess & Sinclair Knight Merz)
Thiess Balfour Beatty Joint Venture
Thiess Degremont JV
Thiess Degremont Nacap Joint Venture1
Thiess John Holland Joint Venture (Airport Link)
Thiess John Holland Joint Venture (Eastlink)
Thiess KMC JV
Thiess Macdow Joint Venture1
Thiess Wirlu-Murra Joint Venture
UGL Cape
UGL Kentz
Veolia Water - Leighton - John Holland Joint Venture
Construction
Singapore
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Hong Kong
Singapore
Australia
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Indonesia
Australia
Australia
Malaysia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Construction
Construction
Construction
Services
Services
Construction
Services
Construction
Construction
Construction
Construction
Construction
Construction
Contract Mining Canada
Construction
Australia
Contract Mining Australia
Australia
Services
Australia
Construction
Hong Kong
Construction
50
50
70
75
51
50
55
51
67
50
71
50
50
25
50
40
50
50
50
60
67
65
33
50
50
51
50
50
50
50
24
50
50
-
75
51
50
55
51
67
50
71
50
50
25
50
40
50
50
50
60
67
65
33
50
50
51
50
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.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
28. NOTES TO THE STATEMENT OF CASH FLOWS
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
a) Reconciliation of profit / (loss) for the year to net cash from operating activities
Profit / (loss) for the year
Adjustments for:
-
-
Depreciation of property, plant and equipment
Amortisation of intangibles
- Net (gain) / loss on fair value of investments
- Net (gain) / loss on sale of assets
-
-
Impairment of intangibles
Foreign exchange (gain) / loss
- Net amounts set aside to provisions
-
-
Share of (profits) / losses of associates
Share based payments
Net changes in assets / liabilities:
-
-
-
-
-
-
Decrease / (increase) in receivables
Decrease / (increase) in joint ventures
Decrease / (increase) in inventories
Increase / (decrease) in payables
Increase / (decrease) in provisions
Current and deferred income tax movement
12 months to
December 2018
$m
12 months to
December 2017
$m
773.8
690.6
518.4
40.8
-
(13.8)
2.7
(3.4)
236.1
(15.5)
-
(590.7)
16.7
(34.8)
777.4
(234.5)
235.3
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
Net cash from operating activities
1,708.5
1,362.4
b) Reconciliation of liabilities arising from financing activities
December
2017
$m
.
Cash flows
Non – cash changes
$m
Acquisition
Transfer
$m
Amortisation
of borrowing
costs
Foreign
Exchange
Movement
December
2018
$m
Interest bearing loans
856.8
(427.9)
Interest bearing liabilities
– limited recourse loans
Total liabilities from
financing activities
46.6
-
903.4
(427.9)
-
-
-
46.6
(46.6)
-
3.6
-
3.6
43.7
522.8
-
-
43.7
522.8
On 1 October 2018, CIMIC through its wholly owned subsidiary LMENA Pty Ltd fully acquired an incorporated company Leighton
Services UAE Co. LLC. This company was a 50/50 joint venture between BICC and CIMIC that owns and operates a construction and
demolition waste recycling plant, Al Dhafra Recycling Industries LLC (ADRI), under an exclusive concession agreement with Abu
Dhabi Centre for Waste Management. The purchase consideration was $22.7 million cash.
The acquisition has been accounted for under AASB 3 Business Combinations.
The contribution by the acquired company to the Group from the acquisition date to the end of the period ended 31 December
2018 was immaterial. Had the acquisition occurred on 1 January 2018, the acquired joint operation’s contribution to the Group for
the year ended 31 December 2018 would have been immaterial. The business is now reported within the Services segment (refer
2018 Acquisitions
Leighton Services UAE Co. LLC
to Note 31: Segment information).
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).
There were no significant disposals of controlled entities or businesses during the 12 months to 31 December 2018 (31 December
Assets and liabilities held for sale include marine fleet of $0.6 million (31 December 2017: $31.2 million), development properties
of $0.8 million (31 December 2017: $0.9 million) and plant & equipment of $0.1 million (31 December 2017: $0.1 million) actively
Disposals
2017: $nil).
30. HELD FOR SALE
marketed for sale.
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184
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
28. NOTES TO THE STATEMENT OF CASH FLOWS
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
a) Reconciliation of profit / (loss) for the year to net cash from operating activities
2018 Acquisitions
Leighton Services UAE Co. LLC
On 1 October 2018, CIMIC through its wholly owned subsidiary LMENA Pty Ltd fully acquired an incorporated company Leighton
Services UAE Co. LLC. This company was a 50/50 joint venture between BICC and CIMIC that owns and operates a construction and
demolition waste recycling plant, Al Dhafra Recycling Industries LLC (ADRI), under an exclusive concession agreement with Abu
Dhabi Centre for Waste Management. The purchase consideration was $22.7 million cash.
The acquisition has been accounted for under AASB 3 Business Combinations.
The contribution by the acquired company to the Group from the acquisition date to the end of the period ended 31 December
2018 was immaterial. Had the acquisition occurred on 1 January 2018, the acquired joint operation’s contribution to the Group for
the year ended 31 December 2018 would have been immaterial. The business is now reported within the Services segment (refer
to Note 31: Segment information).
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).
Disposals
There were no significant disposals of controlled entities or businesses during the 12 months to 31 December 2018 (31 December
2017: $nil).
30. HELD FOR SALE
Assets and liabilities held for sale include marine fleet of $0.6 million (31 December 2017: $31.2 million), development properties
of $0.8 million (31 December 2017: $0.9 million) and plant & equipment of $0.1 million (31 December 2017: $0.1 million) actively
marketed for sale.
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Profit / (loss) for the year
Adjustments for:
- Depreciation of property, plant and equipment
- Amortisation of intangibles
- Net (gain) / loss on fair value of investments
- Net (gain) / loss on sale of assets
Impairment of intangibles
Foreign exchange (gain) / loss
- Net amounts set aside to provisions
Share of (profits) / losses of associates
Share based payments
Net changes in assets / liabilities:
- Decrease / (increase) in receivables
- Decrease / (increase) in joint ventures
- Decrease / (increase) in inventories
Increase / (decrease) in payables
Increase / (decrease) in provisions
- Current and deferred income tax movement
-
-
-
-
-
-
12 months to
12 months to
December 2018
December 2017
$m
773.8
$m
690.6
518.4
40.8
-
(13.8)
2.7
(3.4)
236.1
(15.5)
-
(590.7)
16.7
(34.8)
777.4
(234.5)
235.3
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
Net cash from operating activities
1,708.5
1,362.4
b) Reconciliation of liabilities arising from financing activities
December
Cash flows
Non – cash changes
2017
$m
.
$m
December
2018
$m
Acquisition
Transfer
$m
Amortisation
of borrowing
Foreign
Exchange
Movement
Interest bearing loans
856.8
(427.9)
Interest bearing liabilities
– limited recourse loans
Total liabilities from
financing activities
46.6
-
903.4
(427.9)
-
-
-
46.6
(46.6)
-
costs
3.6
-
3.6
43.7
522.8
-
-
43.7
522.8
Construction
Services
Corporate
Mining & Mineral Processing
Public Private Partnerships (PPPs)
Engineering
Commercial & Residential
BICC
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
31. SEGMENT INFORMATION
Description of segments
31. SEGMENT INFORMATION CONTINUED
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
Services
Corporate
Eliminations
Total
Mining &
Mineral
Processing
$m
$m
$m
$m
$m
7,972.6
4,125.7
-
3,152.9
-
2,001.6
-
Segment associates and joint
(158.8)
(476.4)
(1,940.0)
7,965.2
3,966.9
2,676.5
61.6
12 months to
December 2018
Revenue
Segment revenue
Inter-segment revenue
venture revenue
Revenue
Result
Segment EBIT
Net finance income / (costs)
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
$m
-
(7.4)
635.2
(9.1)
626.1
453.0
(22.1)
430.9
162.0
(2.5)
159.5
(107.6)
(34.2)
(141.8)
(Profit) / loss for the year attributable to non-controlling interests
Profit / (loss) for the year attributable to shareholders of the parent entity
Other
Share of profit / (loss) of associates
and joint venture entities
Depreciation & amortisation
Other material non-cash income /
(expenses)
3.6
16.3
(149.9)
-
(374.3)
-
17.1
(30.0)
-
21.5
(5.0)
4.2
-
-
-
-
-
-
-
-
-
-
17,252.8
-
(2,582.6)
14,670.2
1,142.6
(67.9)
1,074.7
(300.9)
773.8
6.8
780.6
58.5
(559.2)
4.2
The performance of each segment forms the primary basis for all management reporting to the CODM.
The BICC segment does not meet the size threshold of a reportable segment at 31 December 2018. The 2017 comparatives have
been restated to include the results of the BICC segment within the Corporate segment results. Consistent with prior years, PPPs,
Engineering and Commercial & Residential segments are also included within the Corporate segment results.
The types of activities from which segments derive revenue, are included in Note 1(a): Significant accounting policies – revenue
recognition. 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 2018
$m
12 months to
December 2017
$m
December 2018
$m
December 2017
$m
10,873.2
10,053.8
3,797.0
3,375.7
14,670.2
13,429.5
1,195.9
1,301.4
2,497.3
1,203.5
1,277.8
2,481.3
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.
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186
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
31. SEGMENT INFORMATION CONTINUED
Construction
$m
Mining &
Mineral
Processing
$m
Services
Corporate
Eliminations
Total
$m
$m
$m
$m
12 months to
December 2018
Revenue
Segment revenue
Inter-segment revenue
Segment associates and joint
venture revenue
Revenue
Result
Segment EBIT
Net finance income / (costs)
Segment result
7,972.6
-
4,125.7
-
3,152.9
-
2,001.6
-
(7.4)
(158.8)
(476.4)
(1,940.0)
7,965.2
3,966.9
2,676.5
61.6
635.2
(9.1)
626.1
453.0
(22.1)
430.9
162.0
(2.5)
159.5
(107.6)
(34.2)
(141.8)
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
Other
Share of profit / (loss) of associates
and joint venture entities
Depreciation & amortisation
Other material non-cash income /
(expenses)
3.6
16.3
(149.9)
-
(374.3)
-
17.1
(30.0)
-
21.5
(5.0)
4.2
-
-
-
-
-
-
-
-
-
-
17,252.8
-
(2,582.6)
14,670.2
1,142.6
(67.9)
1,074.7
(300.9)
773.8
6.8
780.6
58.5
(559.2)
4.2
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:
Mining & Mineral Processing
Construction
Services
Corporate
Public Private Partnerships (PPPs)
Engineering
Commercial & Residential
BICC
The performance of each segment forms the primary basis for all management reporting to the CODM.
The BICC segment does not meet the size threshold of a reportable segment at 31 December 2018. The 2017 comparatives have
been restated to include the results of the BICC segment within the Corporate segment results. Consistent with prior years, PPPs,
Engineering and Commercial & Residential segments are also included within the Corporate segment results.
The types of activities from which segments derive revenue, are included in Note 1(a): Significant accounting policies – revenue
recognition. 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
12 months to
December 2018
December 2017
December 2018
December 2017
$m
$m
$m
$m
10,873.2
10,053.8
3,797.0
3,375.7
14,670.2
13,429.5
1,195.9
1,301.4
2,497.3
1,203.5
1,277.8
2,481.3
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.
185
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
31. SEGMENT INFORMATION CONTINUED
32. COMMITMENTS
Services
Corporate
Eliminations
Total
December 2018
December 2017
$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:
12 months to
December 2017
Construction
Revenue
Segment revenue
Inter-segment revenue
Segment associates and joint venture
revenue
Revenue
Result
Segment EBIT
Net finance income / (costs)
Segment result
$m
7,611.1
(0.6)
(11.4)
7,599.1
626.5
(2.8)
623.7
Mining &
Mineral
Processing
$m
3,312.0
-
(147.6)
3,164.4
352.4
(13.6)
338.8
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
2,983.0
-
2,205.2
-
(375.8)
(2,146.4)
2,607.2
58.8
166.0
(1.2)
164.8
(142.5)
(25.6)
(168.1)
Other
Share of profit / (loss) of
associates and joint venture
entities
Depreciation & amortisation
Other material non-cash income /
(expenses)
(0.6)
9.7
10.2
(69.2)
(156.9)
(314.5)
-
-
(35.0)
-
(4.9)
30.1
(0.6)
0.6
-
-
-
-
-
-
-
-
16,110.7
-
(2,681.2)
13,429.5
1,002.4
(43.2)
959.2
(268.6)
690.6
11.5
702.1
(49.9)
(511.3)
30.1
later than one year but not later than five years
later than five years
- within one year
-
-
Total
Representing:
Cancellable operating leases
Plant and equipment
Property
Other
Non-cancellable operating leases
Plant and equipment
- within one year
-
-
-
-
-
-
later than five years
Property
- within one year
later than five years
Other
- within one year
later than five years
Operating leases
later than one year but not later than five years
later than one year but not later than five years
later than one year but not later than five years
340.9
618.0
108.0
1,066.9
6.4
8.1
-
225.4
361.4
0.4
101.8
251.5
106.8
2.2
2.1
0.8
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
-
-
Total operating lease commitments
1,066.9
997.1
The Group leases plant and equipment used in mining and mineral processing, construction and services activities. Operating
leases generally provide the Group with a right of renewal. Under certain property operating leases, contingent rentals may be
payable for periodic rent reviews. The Group’s leasing arrangements impose no restrictions on any of its financial arrangements.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Mining &
Mineral
Processing
$m
3,312.0
-
(147.6)
3,164.4
352.4
(13.6)
338.8
$m
7,611.1
(0.6)
(11.4)
7,599.1
626.5
(2.8)
623.7
2,983.0
2,205.2
-
-
(375.8)
(2,146.4)
2,607.2
58.8
166.0
(1.2)
164.8
(142.5)
(25.6)
(168.1)
(0.6)
9.7
10.2
(69.2)
(156.9)
(314.5)
-
-
(35.0)
-
(4.9)
30.1
(0.6)
0.6
-
-
-
-
-
-
-
-
16,110.7
-
(2,681.2)
13,429.5
1,002.4
(43.2)
959.2
(268.6)
690.6
11.5
702.1
(49.9)
(511.3)
30.1
Revenue
Segment revenue
Inter-segment revenue
Segment associates and joint venture
revenue
Revenue
Result
Segment EBIT
Net finance income / (costs)
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
Other
entities
Share of profit / (loss) of
associates and joint venture
Depreciation & amortisation
Other material non-cash income /
(expenses)
(Profit) / loss for the year attributable to non-controlling interests
Profit / (loss) for the year attributable to shareholders of the parent entity
31. SEGMENT INFORMATION CONTINUED
32. COMMITMENTS
12 months to
December 2017
Construction
Services
Corporate
Eliminations
Total
$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:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
Representing:
Cancellable operating leases
Plant and equipment
Property
Other
Non-cancellable operating leases
Plant and equipment
- within one year
-
-
later than one year but not later than five years
later than five years
Property
- within one year
-
-
later than one year but not later than five years
later than five years
Other
- within one year
-
-
later than one year but not later than five years
later than five years
December 2018
$m
December 2017
$m
340.9
618.0
108.0
1,066.9
6.4
8.1
-
225.4
361.4
0.4
101.8
251.5
106.8
2.2
2.1
0.8
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
-
-
Total operating lease commitments
1,066.9
997.1
Operating leases
The Group leases plant and equipment used in mining and mineral processing, construction and services activities. Operating
leases generally provide the Group with a right of renewal. Under certain property operating leases, contingent rentals may be
payable for periodic rent reviews. The Group’s leasing arrangements impose no restrictions on any of its financial arrangements.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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:
Property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
Investments
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
Share of Joint Ventures’ commitments - property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
Share of Associates’ commitments - property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
December 2018
$m
December 2017
$m
157.1
13.1
-
170.2
120.1
13.0
-
133.1
15.3
15.5
-
-
-
-
15.3
15.5
1.9
-
-
1.9
0.3
-
-
0.3
7.1
-
-
7.1
0.8
-
-
0.8
December 2018
December 2017
$m
$m
2,771.8
1,579.3
129.0
2,411.3
1,077.5
106.9
Bank guarantees
Letters of credit
Insurance, performance and payment bonds
2017: $620.9 million).
Other contingencies
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 $598.1 million (31 December
projects.
of the Group.
companies.
i)
The Company gives, in the ordinary course of business, guarantees and indemnities in respect of the performance by
controlled entities, associates and related parties of their contractual and financial obligations. The value of these guarantees
and indemnities is indeterminable in amount.
ii)
There exists in some entities within the Group the normal design liability in relation to completed design and construction
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
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
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 has become aware that the UK Serious Fraud Office (SFO) and the US Department of Justice are inquiring into
related matters. The SFO has announced it has charged individuals, neither of whom are employees of the Company, and a
company, which is not a member of the CIMIC Group, with offences. Those matters will be tried in the UK Crown Court
commencing 6 January 2020.
concluded.
The Company continues to cooperate with the AFP investigation. The Company does not know when the investigation will be
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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 2018
December 2017
$m
$m
157.1
13.1
-
170.2
120.1
13.0
-
133.1
15.3
15.5
15.3
15.5
-
-
1.9
-
-
1.9
0.3
-
-
0.3
-
-
7.1
-
-
7.1
0.8
-
-
0.8
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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 2018
$m
December 2017
$m
2,771.8
1,579.3
129.0
2,411.3
1,077.5
106.9
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 $598.1 million (31 December
2017: $620.9 million).
Other contingencies
i)
The Company gives, 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 has become aware that the UK Serious Fraud Office (SFO) and the US Department of Justice are inquiring into
related matters. The SFO has announced it has charged individuals, neither of whom are employees of the Company, and a
company, which is not a member of the CIMIC Group, with offences. Those matters will be tried in the UK Crown Court
commencing 6 January 2020.
The Company continues to cooperate with the AFP investigation. The Company does not know when the investigation will be
concluded.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
33. CONTINGENT LIABILITIES CONTINUED
Other contingencies continued
35. FINANCIAL INSTRUMENTS
a)
Classification of financial assets and financial liabilities
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.
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 reported to the Senate on 28 March 2018.
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.
xi) During 2018, ASIC brought proceedings against a former CFO of the Company relating to falsification of company records in the
2010/11 financial year. During the proceedings, ASIC stated that there was no misstatement of the accounts of the Company.
The Company has not been charged with any offence.
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.
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents
Contract debtors
Trade debtors
Amounts receivable from related parties
Other amounts receivable
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Derivative financial instruments:
Used for hedging
Held for trading at fair value through profit or loss
Balance at reporting date
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables
Interest bearing liabilities
Derivative financial instruments:
Used for hedging
Balance at reporting date
12 months to
12 months to
December 2018
December 2017
$m
$m
2,141.7
2,297.1
167.6
675.6
672.7
-
105.4
13.7
76.1
1,813.8
2,495.9
180.7
1,087.8
531.2
7.3
161.9
11.5
-
6,149.9
6,290.1
12 months to
12 months to
December 2018
December 2017
$m
$m
5,813.4
522.8
4,887.2
903.4
1.0
2.2
6,337.2
5,792.8
The Group’s exposure to various risks associated with the financial instruments is discussed in Note 35(b): Financial risk
management – Credit risk. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each
class of financial asset mentioned above.
Where carrying amounts differ from fair value, these amounts are shown in Note 35(c): Financial instruments – Fair value
hierarchy. All other assets and liabilities in the Group’s consolidated statement of financial position approximate fair values.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
33. CONTINGENT LIABILITIES CONTINUED
Other contingencies continued
35. FINANCIAL INSTRUMENTS
a) Classification of financial assets and financial liabilities
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.
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 reported to the Senate on 28 March 2018.
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.
xi) During 2018, ASIC brought proceedings against a former CFO of the Company relating to falsification of company records in the
2010/11 financial year. During the proceedings, ASIC stated that there was no misstatement of the accounts of the Company.
The Company has not been charged with any offence.
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.
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents
Contract debtors
Trade debtors
Amounts receivable from related parties
Other amounts receivable
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Derivative financial instruments:
Used for hedging
Held for trading at fair value through profit or loss
Balance at reporting date
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables
Interest bearing liabilities
Derivative financial instruments:
Used for hedging
Balance at reporting date
12 months to
December 2018
$m
12 months to
December 2017
$m
2,141.7
2,297.1
167.6
675.6
672.7
-
105.4
13.7
76.1
1,813.8
2,495.9
180.7
1,087.8
531.2
7.3
161.9
11.5
-
6,149.9
6,290.1
12 months to
December 2018
$m
12 months to
December 2017
$m
5,813.4
522.8
4,887.2
903.4
1.0
2.2
6,337.2
5,792.8
The Group’s exposure to various risks associated with the financial instruments is discussed in Note 35(b): Financial risk
management – Credit risk. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each
class of financial asset mentioned above.
Where carrying amounts differ from fair value, these amounts are shown in Note 35(c): Financial instruments – Fair value
hierarchy. All other assets and liabilities in the Group’s consolidated statement of financial position approximate fair values.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
a)
Classification of financial asset and financial liabilities continued
The Group’s financial instruments resulted in the following income, expenses and gains and losses recognised in the consolidated
statement of profit or loss:
Income, expenses and gains and losses recognised in the statement of profit or loss:
12 months to
December 2018
$m
12 months to
December 2017
$m
Interest from assets held at amortised cost
Net fair value gain (loss) on equity investments mandatorily measured at FVPL
Total net foreign exchange (losses) recognised in profit before income tax for the period
55.3
6.9
3.4
71.6
38.1
3.3
b)
Financial risk management
The activities of the Group result in exposure to credit, liquidity and market risk (equity price, foreign currency and interest rate).
To minimise any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign
exchange forward contracts, are used to hedge certain foreign currency risk exposures. These instruments reduce the uncertainty
of foreign currency transactions.
Risk management is predominately controlled by a central treasury department under policies approved by the Board. The central
treasury department identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The
Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange
risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment
of excess liquidity.
Hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. The
effective portion of the change in the fair value of the hedging instrument is deferred into the cash flow hedge reserve through OCI
and will be recognised in profit or loss when the hedged item affects profit or loss. This will effectively result in recognising non-
financial assets at the fixed foreign currency rate for the hedged purchases.
Derivatives used for hedging
The Group has the following derivative financial instruments used for hedging:
Current and non-current assets
Forward foreign exchange contracts – cash flow hedges
Current and non-current liabilities
Forward foreign exchange contracts – cash flow hedges
12 months to
December 2018
$m
12 months to
December 2017
$m
13.7
11.5
1.0
2.2
The Group’s accounting policy for its cash flow hedges is set out in Note 1(f): Derivative financial instruments. For hedged forecast
transactions that result in the recognition of a non-financial asset, the related hedging gains and losses are included in the initial
measurement of the cost of the asset.
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
i)
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.
The ageing of the Group’s receivables at the reporting date was: not past due: $400.0 million (31 December 2017: $314.0 million);
past due: $261.8 million (31 December 2017: $264.9 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:
5% (31 December 2017: 6%).
Impairment of financial assets
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model as opposed to an incurred credit
loss model under AASB 139. The expected credit loss model requires the Group to account for expected credit losses at each
reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is no longer
necessary for a credit event to have occurred before credit losses are recognised.
In particular, AASB 9 requires the Group to measure the loss allowance for a financial instrument at an amount equal to the
lifetime expected credit losses (ECL) if the credit risk of that financial instrument has increased significantly since initial recognition,
or if the financial instrument is a purchased or originated credit-impaired financial asset. However, if the credit risk on a financial
instrument has not increased significantly since initial recognition (except for a purchased or originated credit-impaired financial
asset), the Group is required to measure the loss allowance for that financial instrument at an amount equal to 12-months ECL.
AASB 9 also requires a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL for trade
receivables, contract assets and lease receivables in certain circumstances. The Group has elected to apply this simplified
approach, applying the accounting policy set out in Note 1(e)(iii): Non-derivative financial instruments – impairment.
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at
amortised cost, lease receivables, amounts due from customers, as well as on loan commitments and financial guarantee contracts.
No impairment loss is recognised for investments in equity instruments. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
Low credit risk financial instruments
Some financial instruments are considered low credit risk due to contracts held with certain counterparties, including government
organisations with strong capacity to meet contractual cash flow obligations in the near term and not expected to be affected by
changes in economic and business conditions.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
a) Classification of financial asset and financial liabilities continued
35. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
The Group’s financial instruments resulted in the following income, expenses and gains and losses recognised in the consolidated
i)
Credit risk
statement of profit or loss:
Income, expenses and gains and losses recognised in the statement of profit or loss:
12 months to
12 months to
December 2018
December 2017
$m
$m
Interest from assets held at amortised cost
Net fair value gain (loss) on equity investments mandatorily measured at FVPL
Total net foreign exchange (losses) recognised in profit before income tax for the period
55.3
6.9
3.4
71.6
38.1
3.3
b) Financial risk management
The activities of the Group result in exposure to credit, liquidity and market risk (equity price, foreign currency and interest rate).
To minimise any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign
exchange forward contracts, are used to hedge certain foreign currency risk exposures. These instruments reduce the uncertainty
of foreign currency transactions.
Risk management is predominately controlled by a central treasury department under policies approved by the Board. The central
treasury department identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The
Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange
risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment
of excess liquidity.
Hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. The
effective portion of the change in the fair value of the hedging instrument is deferred into the cash flow hedge reserve through OCI
and will be recognised in profit or loss when the hedged item affects profit or loss. This will effectively result in recognising non-
financial assets at the fixed foreign currency rate for the hedged purchases.
Derivatives used for hedging
The Group has the following derivative financial instruments used for hedging:
Current and non-current assets
Forward foreign exchange contracts – cash flow hedges
Current and non-current liabilities
Forward foreign exchange contracts – cash flow hedges
The Group’s accounting policy for its cash flow hedges is set out in Note 1(f): Derivative financial instruments. For hedged forecast
transactions that result in the recognition of a non-financial asset, the related hedging gains and losses are included in the initial
measurement of the cost of the asset.
12 months to
12 months to
December 2018
December 2017
$m
13.7
$m
11.5
1.0
2.2
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.
The ageing of the Group’s receivables at the reporting date was: not past due: $400.0 million (31 December 2017: $314.0 million);
past due: $261.8 million (31 December 2017: $264.9 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:
5% (31 December 2017: 6%).
Impairment of financial assets
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model as opposed to an incurred credit
loss model under AASB 139. The expected credit loss model requires the Group to account for expected credit losses at each
reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is no longer
necessary for a credit event to have occurred before credit losses are recognised.
In particular, AASB 9 requires the Group to measure the loss allowance for a financial instrument at an amount equal to the
lifetime expected credit losses (ECL) if the credit risk of that financial instrument has increased significantly since initial recognition,
or if the financial instrument is a purchased or originated credit-impaired financial asset. However, if the credit risk on a financial
instrument has not increased significantly since initial recognition (except for a purchased or originated credit-impaired financial
asset), the Group is required to measure the loss allowance for that financial instrument at an amount equal to 12-months ECL.
AASB 9 also requires a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL for trade
receivables, contract assets and lease receivables in certain circumstances. The Group has elected to apply this simplified
approach, applying the accounting policy set out in Note 1(e)(iii): Non-derivative financial instruments – impairment.
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at
amortised cost, lease receivables, amounts due from customers, as well as on loan commitments and financial guarantee contracts.
No impairment loss is recognised for investments in equity instruments. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
Low credit risk financial instruments
Some financial instruments are considered low credit risk due to contracts held with certain counterparties, including government
organisations with strong capacity to meet contractual cash flow obligations in the near term and not expected to be affected by
changes in economic and business conditions.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
Credit risk continued
Definition of default
i)
The Group considers the following as constituting an event of default for internal credit risk management purposes as historical
experience indicates that receivables that meet either of the following criteria are generally not recoverable.
if there is a material breach of financial covenants by the counterparty and this is not expected to be remedied in the
foreseeable future; or
information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collaterals held by the Group). Irrespective of the above analysis,
the Group considers that default has occurred when a financial asset is significantly past due unless the Group has reasonable
and supportable information to demonstrate that a more lagging default criterion is more appropriate.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following
events:
significant financial difficulty of the issuer or the borrower;
a breach of contract, such as a default or past due event;
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having
granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for that financial asset because of financial difficulties.
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or entered into bankruptcy
proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures,
taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
i)
Credit risk continued
Measuring movements in credit risk
A summary of the categories used to measure credit risk are as follows:
Category
Company definition of category
Performing
Customers have a low risk of default, no past due
amounts.
Underperforming Amount is initially past due (unless there is reasonable
and supportable information to prove otherwise) or
there has been a significant increase in credit risk since
initial recognition.
Non-performing
Amount is significantly past due (unless there is
reasonable and supportable information to prove
otherwise) and there is evidence indicating the asset is
credit impaired.
Basis for recognition of expected credit loss
provision
12 month expected losses or
Lifetime expected losses (simplified
approach) where asset life is less than 12
months
Lifetime expected losses – not credit
impaired
Lifetime expected losses – credit impaired
Write-off
There is evidence indicating that the debtor is in severe
financial difficulty and the Group has no realistic
prospect of recovery.
Asset is written off
The Company considers the probability of default upon initial recognition of the asset and whether there has been a significant
increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in
credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at
the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is
reasonable and supportable, including historical experience and forward-looking information that is available without undue cost
or effort. Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors
operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar
organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the
Group’s core operations. In particular, the following information is taken into account when assessing significant movements in
credit risk:
internal credit rating;
external credit rating (as far as available);
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a
significant change to the borrower’s ability to meet its obligations;
actual or expected significant changes in the operating results of the borrower;
significant increases in credit risk on other financial instruments of the same borrower;
significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit
enhancements;
significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of
borrowers in the Group and changes in the operating results of the borrower; and
macroeconomic information such as market interest rates and growth rates.
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196
35. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
i)
Credit risk continued
Measuring movements in credit risk
A summary of the categories used to measure credit risk are as follows:
Category
Company definition of category
Basis for recognition of expected credit loss
provision
months
Lifetime expected losses (simplified
approach) where asset life is less than 12
Underperforming Amount is initially past due (unless there is reasonable
Lifetime expected losses – not credit
and supportable information to prove otherwise) or
impaired
there has been a significant increase in credit risk since
initial recognition.
Non-performing
Amount is significantly past due (unless there is
Lifetime expected losses – credit impaired
reasonable and supportable information to prove
otherwise) and there is evidence indicating the asset is
credit impaired.
Write-off
There is evidence indicating that the debtor is in severe
Asset is written off
financial difficulty and the Group has no realistic
prospect of recovery.
The Company considers the probability of default upon initial recognition of the asset and whether there has been a significant
increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in
credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at
the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is
reasonable and supportable, including historical experience and forward-looking information that is available without undue cost
or effort. Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors
operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar
organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the
Group’s core operations. In particular, the following information is taken into account when assessing significant movements in
credit risk:
internal credit rating;
external credit rating (as far as available);
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a
significant change to the borrower’s ability to meet its obligations;
actual or expected significant changes in the operating results of the borrower;
significant increases in credit risk on other financial instruments of the same borrower;
significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit
enhancements;
significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of
borrowers in the Group and changes in the operating results of the borrower; and
macroeconomic information such as market interest rates and growth rates.
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
i)
Credit risk continued
Performing
Customers have a low risk of default, no past due
12 month expected losses or
amounts.
Definition of default
The Group considers the following as constituting an event of default for internal credit risk management purposes as historical
experience indicates that receivables that meet either of the following criteria are generally not recoverable.
if there is a material breach of financial covenants by the counterparty and this is not expected to be remedied in the
foreseeable future; or
information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collaterals held by the Group). Irrespective of the above analysis,
the Group considers that default has occurred when a financial asset is significantly past due unless the Group has reasonable
and supportable information to demonstrate that a more lagging default criterion is more appropriate.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following
events:
significant financial difficulty of the issuer or the borrower;
a breach of contract, such as a default or past due event;
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having
granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for that financial asset because of financial difficulties.
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or entered into bankruptcy
proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures,
taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
i)
Credit risk continued
Credit risk exposure
The information below details the credit quality of the Group’s financial assets and other items, as well as the Group’s maximum
exposure to credit risk by categories.
Contract debtors, trade and other receivables
The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of
the lifetime expected loss provision for all trade receivables. Other than trade receivables relating to the Gorgon Contract disclosed
in Note 8: Trade and other receivables, there were no other significant concentrations of credit risk. The Group’s maximum
exposure to credit risk for receivables at the reporting date by geographic region was: Australia Pacific $1,623.5 million (31
December 2017: $1,262.4 million) and Asia, Middle East, Americas & Africa $2,279.3 million (31 December 2017: $3,044.7 million).
Contract debtors, trade and other receivables are rated performing, assessed under the lifetime ECL simplified method and have a
net carrying amount of $3,137.5 million (31 December 2017: $3,207.6 million). The loss allowance recognised is less than 3% of the
total balance. Related party receivables and loans to joint ventures and associates excluding BICC are rated performing, assessed
under the 12 month ECL and have a carrying amount of $34.9 million (31 December 2017: $41.5 million). The loss allowance
recognised is less than 3% of the total balance.
Loans to BICC are rated as non-performing, assessed under lifetime ECL – credit impaired with a net carrying amount of $640.7
million (31 December 2017: $1,046.3 million). The loss allowance is detailed in the following table.
Shareholder loans and interest receivable from BICC are assessed on a collective basis and are considered credit impaired hence
the impairment provision is based on lifetime expected credit losses and the effective interest is calculated on the net book value
of the shareholder loan.
At 1 January – calculated under AASB 139
Amounts restated through opening retained earnings
Opening loss allowance as at 1 January 2018 – calculated under AASB 9
Increase in loss allowance recognised in profit or loss during the period
Foreign exchange movement
Receivables written off during the year as uncollectible
At 31 December 2018
12 months to
December 2018
$m
-
487.4
487.4
23.1
48.1
-
558.6
The significant loss allowance recognised above is solely for BICC shareholder loans and is recognised due to the status of the
business performance. There has been no default during the period and the Group did not obtain financial or non-financial assets
as collateral during the period (31 December 2017: $nil). The Group is still entitled to the gross value of the receivable.
197
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35. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
ii)
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 2018 the Group had undrawn bank facilities of $2,775.0 million (31 December 2017: $2,531.0 million), and
undrawn guarantee facilities of $1,089.0 million (31 December 2017: $875.0 million).
Contractual maturities are outlined below however we are not currently aware of any circumstances where the outflows could be
significantly different or occur earlier than indicated.
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2018 are as follows:
Trade and other payables
5,813.4
(5,813.4)
(5,700.0)
(113.4)
December 2018
Non-derivative financial liabilities
Interest bearing loans
Total interest bearing liabilities
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)1
Other cashflow hedges:
Net derivative financial (assets)
Inflow
Outflow
Inflow
Outflow
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1-5 years
More than
$m
5 years
$m
522.8
522.8
(618.9)
(618.9)
(77.5)
(77.5)
(541.4)
(541.4)
(7.5)
(5.2)
534.7
(527.2)
533.5
(526.0)
1.0
(1.0)
0.2
(0.2)
5.2
-
5.2
-
-
-
-
-
-
-
-
-
-
198
Total net derivative financial liabilities / (assets)
(12.7)
12.7
12.7
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $8.6 million (31 December 2017: $4.4
million) of derivatives in an asset position and $1.0 million (31 December 2017: $2.2 million) of derivatives in a liability position.
35. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
i)
Credit risk continued
Credit risk exposure
exposure to credit risk by categories.
Contract debtors, trade and other receivables
The information below details the credit quality of the Group’s financial assets and other items, as well as the Group’s maximum
The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of
the lifetime expected loss provision for all trade receivables. Other than trade receivables relating to the Gorgon Contract disclosed
in Note 8: Trade and other receivables, there were no other significant concentrations of credit risk. The Group’s maximum
exposure to credit risk for receivables at the reporting date by geographic region was: Australia Pacific $1,623.5 million (31
December 2017: $1,262.4 million) and Asia, Middle East, Americas & Africa $2,279.3 million (31 December 2017: $3,044.7 million).
Contract debtors, trade and other receivables are rated performing, assessed under the lifetime ECL simplified method and have a
net carrying amount of $3,137.5 million (31 December 2017: $3,207.6 million). The loss allowance recognised is less than 3% of the
total balance. Related party receivables and loans to joint ventures and associates excluding BICC are rated performing, assessed
under the 12 month ECL and have a carrying amount of $34.9 million (31 December 2017: $41.5 million). The loss allowance
recognised is less than 3% of the total balance.
Loans to BICC are rated as non-performing, assessed under lifetime ECL – credit impaired with a net carrying amount of $640.7
million (31 December 2017: $1,046.3 million). The loss allowance is detailed in the following table.
Shareholder loans and interest receivable from BICC are assessed on a collective basis and are considered credit impaired hence
the impairment provision is based on lifetime expected credit losses and the effective interest is calculated on the net book value
of the shareholder loan.
At 1 January – calculated under AASB 139
Amounts restated through opening retained earnings
Opening loss allowance as at 1 January 2018 – calculated under AASB 9
Increase in loss allowance recognised in profit or loss during the period
Foreign exchange movement
Receivables written off during the year as uncollectible
At 31 December 2018
The significant loss allowance recognised above is solely for BICC shareholder loans and is recognised due to the status of the
business performance. There has been no default during the period and the Group did not obtain financial or non-financial assets
as collateral during the period (31 December 2017: $nil). The Group is still entitled to the gross value of the receivable.
12 months to
December 2018
$m
-
487.4
487.4
23.1
48.1
-
558.6
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
ii)
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 2018 the Group had undrawn bank facilities of $2,775.0 million (31 December 2017: $2,531.0 million), and
undrawn guarantee facilities of $1,089.0 million (31 December 2017: $875.0 million).
Contractual maturities are outlined below however we are not currently aware of any circumstances where the outflows could be
significantly different or occur earlier than indicated.
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2018 are as follows:
December 2018
Non-derivative financial liabilities
Interest bearing loans
Total interest bearing liabilities
Inflow
Outflow
Other cashflow hedges:
Net derivative financial (assets)
Inflow
Outflow
Trade and other payables
5,813.4
(5,813.4)
(5,700.0)
(113.4)
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)1
(7.5)
Carrying
amount
Contractual
cash flows
$m
$m
Less than
1 year
$m
1-5 years
More than
5 years
$m
$m
522.8
522.8
(618.9)
(618.9)
(77.5)
(77.5)
(541.4)
(541.4)
-
-
-
534.7
533.5
(527.2)
(526.0)
1.0
(1.0)
0.2
(0.2)
(5.2)
5.2
-
5.2
-
-
-
-
-
-
-
Total net derivative financial liabilities / (assets)
(12.7)
12.7
12.7
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $8.6 million (31 December 2017: $4.4
million) of derivatives in an asset position and $1.0 million (31 December 2017: $2.2 million) of derivatives in a liability position.
197
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
ii)
Liquidity risk continued
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2017:
December 2017
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
856.8
(980.8)
(251.8)
(729.0)
-
46.6
-
-
(47.0)
(47.0)
-
-
Total interest bearing liabilities
903.4
(1,027.8)
(298.8)
(729.0)
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)1
(2.2)
Inflow
Outflow
Other cashflow hedges:
Net derivative financial liabilities / (assets)1
(7.1)
Inflow
Outflow
Total net derivative financial liabilities / (assets)
(9.3)
128.9
127.4
(133.6)
(118.7)
1.5
(14.9)
5.2
-
0.5
5.2
-
-
-
13.9
(13.4)
-
-
-
-
-
-
-
-
-
-
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $8.6 million (31 December 2017: $4.4
million) of derivatives in an asset position and $1.0 million (31 December 2017: $2.2 million) of derivatives in a liability position.
Exposure to foreign currency risk
Trade finance arrangements
The Group enters into various factoring agreements with banks and financial institutions to sell its receivables. The factoring of
these receivables is done on a non-recourse basis for which the Group may incur a fee in certain instances. The amounts are de-
recognised where the risks and rewards of the receivables have been transferred.
The Group also enters into supply chain factoring arrangements with financial institutions for suppliers which may elect to receive
early payment for goods and services to improve their liquidity. The terms of the arrangements mirror normal credit terms and do
not modify the original liability, therefore the amounts continue to be classified within trade and other payables.
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 2017: $nil), are disclosed in Note 26: Joint Venture Entities.
199
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200
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
iii)
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 (c) 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.
iv)
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 $7.5 million (31 December 2017: $2.0 million). It is expected that the current hedged forecast transactions will occur
during the periods outlined in section (b(ii)) above and will affect the statement of profit or loss in the same periods. There are no
gains or losses recognised in the statement of profit or loss during the period due to hedge ineffectiveness.
The most significant foreign currencies the Group is exposed to is the United States dollar (US$) along with the U.A.E Dirham (AED)
and Hong Kong dollar (HKD), both of which are pegged to the US$. The applicable Australian dollar to US$ exchange rates during or
at the end of the relevant reporting period, were as follows:
Assets and liabilities
Statement of Profit or Loss
December 2018 December 2017
December 2018
December 2017
12 months to
12 months to
US$ United States dollar
0.71
0.78
0.74
0.76
At 31 December 2018, the share of the Group’s assets and liabilities denominated in US$ was: assets US$3,298.6 million (31
December 2017: US$4,238.3 million); liabilities US$1,434.4 million (31 December 2017: US$1,795.6 million). The majority of these
US$ balances are held in entities with a US$ functional currency.
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
ii)
Liquidity risk continued
December 2017
Non-derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2017:
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1-5 years
More than
1 year
$m
$m
5 years
$m
856.8
(980.8)
(251.8)
(729.0)
-
46.6
-
-
(47.0)
(47.0)
-
-
-
-
-
-
-
-
-
-
-
-
Total interest bearing liabilities
903.4
(1,027.8)
(298.8)
(729.0)
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)1
(2.2)
Other cashflow hedges:
Net derivative financial liabilities / (assets)1
(7.1)
Inflow
Outflow
Inflow
Outflow
128.9
127.4
(133.6)
(118.7)
1.5
(14.9)
5.2
-
0.5
5.2
-
-
-
Total net derivative financial liabilities / (assets)
(9.3)
13.9
(13.4)
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $8.6 million (31 December 2017: $4.4
million) of derivatives in an asset position and $1.0 million (31 December 2017: $2.2 million) of derivatives in a liability position.
Trade finance arrangements
The Group enters into various factoring agreements with banks and financial institutions to sell its receivables. The factoring of
these receivables is done on a non-recourse basis for which the Group may incur a fee in certain instances. The amounts are de-
recognised where the risks and rewards of the receivables have been transferred.
The Group also enters into supply chain factoring arrangements with financial institutions for suppliers which may elect to receive
early payment for goods and services to improve their liquidity. The terms of the arrangements mirror normal credit terms and do
not modify the original liability, therefore the amounts continue to be classified within trade and other payables.
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 2017: $nil), are disclosed in Note 26: Joint Venture Entities.
35. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
iii)
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 (c) 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.
iv)
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 $7.5 million (31 December 2017: $2.0 million). It is expected that the current hedged forecast transactions will occur
during the periods outlined in section (b(ii)) above and will affect the statement of profit or loss in the same periods. There are no
gains or losses recognised in the statement of profit or loss during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currencies the Group is exposed to is the United States dollar (US$) along with the U.A.E Dirham (AED)
and Hong Kong dollar (HKD), both of which are pegged to the US$. The applicable Australian dollar to US$ exchange rates during or
at the end of the relevant reporting period, were as follows:
Assets and liabilities
Statement of Profit or Loss
December 2018 December 2017
12 months to
December 2018
12 months to
December 2017
US$ United States dollar
0.71
0.78
0.74
0.76
At 31 December 2018, the share of the Group’s assets and liabilities denominated in US$ was: assets US$3,298.6 million (31
December 2017: US$4,238.3 million); liabilities US$1,434.4 million (31 December 2017: US$1,795.6 million). The majority of these
US$ balances are held in entities with a US$ functional currency.
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Financial risk management continued
iv)
Foreign currency risk continued
Sensitivity analysis
A movement in the US$ against the Australian dollar 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 2017.
Equity
Statement of Profit or Loss
December 2018
$m
December 2017
$m
12 months to
December 2018
$m
12 months to
December 2017
$m
US$ depreciates by 5% against AU$ (AU$ appreciates)
US$ appreciates by 5% against AU$ (AU$ depreciates)
(125.0)
125.0
(144.3)
144.3
(3.5)
3.2
(2.1)
1.9
35. FINANCIAL INSTRUMENTS CONTINUED
c) 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 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
Level 3:
inputs for the asset or liability that are not based on observable market data.
v)
Interest rate risk
Financial assets at fair value through profit or loss
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 $12.6 million (31 December 2017: increased by $14.9 million). A one percentage
point decrease in interest rates would have an equal and opposite effect.
Profile
At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:
Fixed rate instruments
Financial liabilities
Total fixed rate instruments
Variable rate instruments
Financial assets
Financial liabilities
Total variable rate instruments
December 2018
$m
December 2017
$m
(445.5)
(506.8)
(445.5)
(506.8)
2,141.7
1,813.8
(77.3)
(396.6)
2,064.4
1,417.2
201
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31 December 2018
Assets
- Unlisted
Derivatives
-
-
Total assets
Liabilities
Derivatives
Total liabilities
Used for hedging
Held for trading at fair value through profit or loss1
31 December 2017
Assets
Equity and stapled securities available-for-sale
Financial assets at fair value through profit or loss
- Option to acquire shares1
-
Listed
- Unlisted
- Unlisted
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
105.4
105.4
-
-
-
-
-
-
1.5
-
-
-
-
-
-
-
-
13.7
13.7
(1.0)
(1.0)
-
-
-
-
11.5
11.5
(2.2)
(2.2)
76.1
181.5
-
-
-
-
5.8
92.7
69.2
-
-
-
13.7
76.1
195.2
(1.0)
(1.0)
Total
$m
1.5
5.8
92.7
69.2
11.5
(2.2)
(2.2)
1.5
167.7
180.7
Level 1
$m
Level 2
$m
Level 3
$m
1Option to acquire shares has been reclassed to derivatives as disclosed in Note 1: Significant accounting policies – basis of preparation
on transition to AASB 9
202
35. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
iv)
Foreign currency risk continued
Sensitivity analysis
A movement in the US$ against the Australian dollar 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 2017.
Equity
Statement of Profit or Loss
December 2018
December 2017
December 2018
December 2017
$m
$m
$m
$m
12 months to
12 months to
US$ depreciates by 5% against AU$ (AU$ appreciates)
US$ appreciates by 5% against AU$ (AU$ depreciates)
(125.0)
125.0
(144.3)
144.3
(3.5)
3.2
(2.1)
1.9
v)
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 $12.6 million (31 December 2017: increased by $14.9 million). A one percentage
point decrease in interest rates would have an equal and opposite effect.
Profile
At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:
Fixed rate instruments
Financial liabilities
Total fixed rate instruments
Variable rate instruments
Financial assets
Financial liabilities
Total variable rate instruments
December 2018
December 2017
$m
$m
(445.5)
(506.8)
(445.5)
(506.8)
2,141.7
1,813.8
(77.3)
(396.6)
2,064.4
1,417.2
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
c) 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 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 2018
Assets
Financial assets at fair value through profit or loss
- Unlisted
Derivatives
-
-
Used for hedging
Held for trading at fair value through profit or loss1
Total assets
Liabilities
Derivatives
Total liabilities
31 December 2017
Assets
Equity and stapled securities available-for-sale
-
Listed
- Unlisted
Financial assets at fair value through profit or loss
- Unlisted
- Option to acquire shares1
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
105.4
105.4
-
-
-
-
-
-
13.7
-
13.7
(1.0)
(1.0)
-
76.1
181.5
-
-
Level 1
$m
Level 2
$m
Level 3
$m
1.5
-
-
-
-
1.5
-
-
-
-
-
-
11.5
11.5
(2.2)
(2.2)
-
5.8
92.7
69.2
-
167.7
180.7
-
-
(2.2)
(2.2)
13.7
76.1
195.2
(1.0)
(1.0)
Total
$m
1.5
5.8
92.7
69.2
11.5
1Option to acquire shares has been reclassed to derivatives as disclosed in Note 1: Significant accounting policies – basis of preparation
on transition to AASB 9
201
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
c) Net fair values of financial assets and liabilities continued
Fair value hierarchy continued
During the period there were no transfers between Level 1, Level 2 and Level 3 fair value hierarchies. Level 3 instruments comprise
unlisted equity and stapled securities and unlisted financial assets at fair value through profit and loss; the determination of the
fair value of these securities is discussed below. The tables below analyse the changes in Level 3 instruments as follows:
35. FINANCIAL INSTRUMENTS CONTINUED
c) Net fair values of financial assets and liabilities continued
Methods and valuation techniques continued
The fair value of interest bearing liabilities is:
Unlisted equity and stapled securities available-for-sale
Balance at beginning of reporting period
Transfer to fair value through profit or loss on transition to AASB 9 on 1 January 2018
Additions
Disposals
Balance at reporting date
Financial assets at fair value through profit or loss
Balance at beginning of reporting period
Transfer from available-for-sale on transition to AASB 9 on 1 January 2018
Transfer to derivative financial assets on transition to AASB 9 on 1 January 2018
Additions
Disposals
Gains recognised through profit or loss
Foreign exchange recognised in other comprehensive income
Balance at reporting date
12 months to
December 2018
$m
12 months to
December 2017
$m
7.3
(7.3)
-
-
-
7.3
-
0.8
(0.8)
7.3
12 months to
December 2018
$m
12 months to
December 2017
$m
161.9
7.3
(69.2)
0.1
(1.5)
6.9
(0.1)
105.4
128.1
-
-
2.0
-
37.6
(5.8)
161.9
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.
Listed debt: 10-Year-Fixed-Rate Guaranteed Notes fair value US$208.3 million, equivalent to $293.4 million; carrying value
US$201.3 million, equivalent to $283.5 million (31 December 2017: fair value US$214.3 million, equivalent to $274.8 million;
carrying value US $201.3 million, equivalent to $258.1 million).
Unlisted debt: Guaranteed Senior Notes fair value US$123.9 million, equivalent to $174.6 million; carrying value US$115.0
million, equivalent to $162.0 million (31 December 2017: fair value US$210.5 million, equivalent to $269.9 million; carrying
value US$194.0 million, equivalent to $248.7 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 carrying amounts of other financial assets and liabilities in the Group’s statement of financial position approximate fair
values.
Valuation process
reporting period.
Valuation inputs
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
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
Significant unobservable inputs
Range of inputs
Relationship of unobservable inputs
liabilities
Unlisted investments
Internal rate of return
Growth rates
Discount rates
Expected exercise period
Option to acquire shares
EBITDA multiple
Discount rates
to fair value
The impact on a change in the
unobservable inputs would not
change significantly amounts
recognised in profit or loss, total
assets or total liabilities or total
equity
2.5% - 3.0%
9%
10% - 15%
1 – 10 years
6 - 12 times
15%
203
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204
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
c) Net fair values of financial assets and liabilities continued
Fair value hierarchy continued
During the period there were no transfers between Level 1, Level 2 and Level 3 fair value hierarchies. Level 3 instruments comprise
unlisted equity and stapled securities and unlisted financial assets at fair value through profit and loss; the determination of the
fair value of these securities is discussed below. The tables below analyse the changes in Level 3 instruments as follows:
Unlisted equity and stapled securities available-for-sale
Balance at beginning of reporting period
Transfer to fair value through profit or loss on transition to AASB 9 on 1 January 2018
Additions
Disposals
Balance at reporting date
Financial assets at fair value through profit or loss
Balance at beginning of reporting period
Transfer from available-for-sale on transition to AASB 9 on 1 January 2018
Transfer to derivative financial assets on transition to AASB 9 on 1 January 2018
Additions
Disposals
Gains recognised through profit or loss
Foreign exchange recognised in other comprehensive income
Balance at reporting date
12 months to
12 months to
December 2018
December 2017
$m
$m
12 months to
12 months to
December 2018
December 2017
$m
$m
7.3
(7.3)
-
-
-
161.9
7.3
(69.2)
0.1
(1.5)
6.9
(0.1)
105.4
7.3
-
0.8
(0.8)
7.3
128.1
-
-
-
2.0
37.6
(5.8)
161.9
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.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous
Methods and valuation techniques
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
interest.
Fair value has been determined based on either the listed price or the net present value of cash flows using current market rates of
35. FINANCIAL INSTRUMENTS CONTINUED
c) 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$208.3 million, equivalent to $293.4 million; carrying value
US$201.3 million, equivalent to $283.5 million (31 December 2017: fair value US$214.3 million, equivalent to $274.8 million;
carrying value US $201.3 million, equivalent to $258.1 million).
Unlisted debt: Guaranteed Senior Notes fair value US$123.9 million, equivalent to $174.6 million; carrying value US$115.0
million, equivalent to $162.0 million (31 December 2017: fair value US$210.5 million, equivalent to $269.9 million; carrying
value US$194.0 million, equivalent to $248.7 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.
The carrying amounts of other financial assets and liabilities in the Group’s statement of financial position approximate fair
values.
Valuation process
The internal valuation process for unlisted investments, unlisted debt and cash flow hedges is managed by a team in the Group
finance department which performs the valuations required for financial reporting purposes. The valuation team reports to the
CIMIC’s CFO. Discussions on valuation processes and outcomes are held between the valuation team and CFO as required. The
methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous
reporting period.
Valuation inputs
The following table summarises the quantitative information about the significant unobservable inputs used in Level 3 fair value
measurements. There were no significant inter-relationships between unobservable inputs that materially affect fair values.
Financial assets/ financial
liabilities
Significant unobservable inputs
Range of inputs
Relationship of unobservable inputs
to fair value
Unlisted investments
Internal rate of return
Growth rates
Discount rates
Expected exercise period
Option to acquire shares
EBITDA multiple
Discount rates
2.5% - 3.0%
9%
10% - 15%
1 – 10 years
6 - 12 times
15%
The impact on a change in the
unobservable inputs would not
change significantly amounts
recognised in profit or loss, total
assets or total liabilities or total
equity
203
CIMIC AR 20 - Main Text.indd 204
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
d)
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 2018: $nil (carrying amount at 31 December 2017: $245.0 million). There are $9.4 million of
capitalised borrowing costs recognised against the loan facility (31 December 2017: $12.7 million).
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$79.0 million Guaranteed Senior Notes at the rate of 7.66% which matured on 15 October 2018.
Interest on the above notes is paid semi-annually on the 15th day of April and October in each year. Carrying amount at 31
December 2018: US$nil (31 December 2017: US$79.0 million) equivalent to $nil (31 December 2017: $101.3 million) as the
remaining amount has matured and been paid in the period.
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 2018: US$115.0 million (31 December 2017: US$115.0 million) equivalent to $162.0 million (31 December 2017:
$147.4 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 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 2018:
US$201.3 million (31 December 2017: US$201.3 million) equivalent to $283.5 million (31 December 2017: $258.1 million).
Bilateral loans
At 31 December 2018, bilateral and other unsecured loan facilities outstanding were $86.7 million (31 December 2017: $112.0
million).
Limited recourse loans
The Group has limited recourse property development loans secured against certain property development assets of the Group
and borrowings by subsidiaries secured against the assets of the subsidiaries. Carrying amount as at 31 December 2018: $nil (31
December 2017: $46.6 million).
205
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206
35. FINANCIAL INSTRUMENTS CONTINUED
e) 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 2018
December 2017
$m
$m
-
-
-
158.9
78.4
237.3
Loans relating to development properties were secured by mortgages over the Group’s development property inventories. At the
reporting date, these loans were no longer secured by mortgages.
f)
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 to
Net amount
bank accounts with a
bank accounts with
debit balance
a credit balance
(financial asset)
(financial liability)
master netting
arrangements
$m
$m
$m
$m
84.3
(31.3)
$m
53.0
-
-
-
-
December 2018
Cash1
December 2017
Cash1
1The Group has transactional banking facilities that notionally pool grouped bank accounts with credit and debit balances.
48.6
(4.9)
43.7
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
35. FINANCIAL INSTRUMENTS CONTINUED
e) 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 2018
$m
December 2017
$m
-
-
-
158.9
78.4
237.3
Loans relating to development properties were secured by mortgages over the Group’s development property inventories. At the
reporting date, these loans were no longer secured by mortgages.
Series C Notes: US$79.0 million Guaranteed Senior Notes at the rate of 7.66% which matured on 15 October 2018.
f) 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)
Gross amounts of
bank accounts with
a credit balance
(financial liability)
Net cash amount
Amounts subject to
master netting
arrangements
Net amount
$m
$m
$m
$m
$m
84.3
(31.3)
53.0
48.6
(4.9)
43.7
-
-
-
-
December 2018
Cash1
December 2017
Cash1
1The Group has transactional banking facilities that notionally pool grouped bank accounts with credit and debit balances.
35. FINANCIAL INSTRUMENTS CONTINUED
d)
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 2018: $nil (carrying amount at 31 December 2017: $245.0 million). There are $9.4 million of
capitalised borrowing costs recognised against the loan facility (31 December 2017: $12.7 million).
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$90.0 million Guaranteed Senior Notes at the rate of 7.19% which matured on 15 October 2015
Interest on the above notes is paid semi-annually on the 15th day of April and October in each year. Carrying amount at 31
December 2018: US$nil (31 December 2017: US$79.0 million) equivalent to $nil (31 December 2017: $101.3 million) as the
remaining amount has matured and been paid in the period.
CIMIC Finance (USA) Pty Limited (2010)
Guaranteed Senior Notes in three series:
On 21 July 2010, CIMIC Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, issued a total of US$350.0 million
Series A Notes: US$90.0 million Guaranteed Senior Notes at the rate of 4.51% which matured on 21 July 2015
Series B Notes: US$145.0 million Guaranteed Senior Notes at the rate of 5.22% 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 2018: US$115.0 million (31 December 2017: US$115.0 million) equivalent to $162.0 million (31 December 2017:
$147.4 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 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 2018:
US$201.3 million (31 December 2017: US$201.3 million) equivalent to $283.5 million (31 December 2017: $258.1 million).
At 31 December 2018, bilateral and other unsecured loan facilities outstanding were $86.7 million (31 December 2017: $112.0
Bilateral loans
million).
Limited recourse loans
The Group has limited recourse property development loans secured against certain property development assets of the Group
and borrowings by subsidiaries secured against the assets of the subsidiaries. Carrying amount as at 31 December 2018: $nil (31
December 2017: $46.6 million).
205
CIMIC AR 20 - Main Text.indd 206
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206
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
36. EMPLOYEE BENEFITS
a) Rights plans
36. EMPLOYEE BENEFITS CONTINUED
b)
Share Appreciation Rights
Equity Incentive Plans – 2012, 2013, and 2014 Awards
Shareholder approval was obtained at the Annual General Meeting on 22 May 2012 for the Equity Incentive Plan (EIP). The EIP
provides the legal framework for the awards of share rights made in 2012, 2013 and 2014 under the Long-Term Incentive Plan (LTI),
Short-Term Incentive Plan (Deferral) (STI) and One-off Awards described below.
Long-Term Incentive Plan – 2012, 2013 and 2014 Awards
At 31 December 2017 the 2012, 2013 and 2014 awards had been fully vested or lapsed. Therefore, there has been no movement
recognised in the current year profit or loss or reserves for these schemes which were disclosed in the 2016 and 2017 CIMIC Annual
Report as these were fully complete at that date.
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.
At 31 December 2017 the 2012, 2013 and 2014 awards had been fully vested or lapsed. Therefore, there has been no movement
recognised in the current year profit or loss or reserves for these schemes which were disclosed in the 2017 CIMIC Annual Report as
these were fully complete at that date.
One-Off Awards
One-off awards of Deferred Share Rights were granted under the 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.
At 31 December 2017 the 2012, 2013 and 2014 awards had been fully vested or lapsed. Therefore, there has been no movement
recognised in the current year profit or loss or reserves for these schemes which were disclosed in the 2017 CIMIC Annual Report as
these were fully complete at that date.
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 (SARs) to Mr Fernández Verdes
subject to a two year vesting period. The SARs 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 SAR is exercised, with a maximum payment per SAR 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 SARs 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 AG for the period up to and including 13 March 2017.
The SARs vested in full on 13 March 2016 and are exercisable for three years from the date of vesting. No more than 40% of the
SARs can be exercised each year for the first two years after vesting, and any remaining SARs can be exercised in the final year of
the exercise period. On 18 October 2016 Mr Valderas was appointed as CEO however Mr Fernández Verdes continues in his
capacity as Executive Chairman.
Amount recognised during the reporting period: Gain $1.3 million (31 December 2017: Expense $9.8 million).
Share Appreciation Rights - 2014 One-off Award to M Fernández Verdes
207
CIMIC AR 20 - Main Text.indd 207
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11/2/19 1:44 pm
Unexercised rights at 31 December 2016
Unexercised rights at 31 December 2017
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised rights
Granted
Exercised2
Forfeited/Lapsed
Granted
Exercised
Forfeited/Lapsed
-
-
-
-
-
-
-
-
-
-
Unexercised rights at 31 December 2018
Exercisable rights
At 31 December 2017
At 31 December 20183
Non-exercisable rights
At 31 December 2017
At 31 December 2018
1 The fair value was re-evaluated on 31 December 2018 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 the 2017 CIMIC Annual Report.
3 This represents the remaining vested share appreciation rights which became available to exercise in the final year of the exercise
period.
10 June 2014
13 March 2019
$25.26
1,200,000
1,200,000
(960,000)
240,000
240,000
240,000
240,000
-
-
-
-
-
-
-
208
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
36. EMPLOYEE BENEFITS
a) Rights plans
36. EMPLOYEE BENEFITS CONTINUED
b) Share Appreciation Rights
Equity Incentive Plans – 2012, 2013, and 2014 Awards
Shareholder approval was obtained at the Annual General Meeting on 22 May 2012 for the Equity Incentive Plan (EIP). The EIP
provides the legal framework for the awards of share rights made in 2012, 2013 and 2014 under the Long-Term Incentive Plan (LTI),
Short-Term Incentive Plan (Deferral) (STI) and One-off Awards described below.
Long-Term Incentive Plan – 2012, 2013 and 2014 Awards
At 31 December 2017 the 2012, 2013 and 2014 awards had been fully vested or lapsed. Therefore, there has been no movement
recognised in the current year profit or loss or reserves for these schemes which were disclosed in the 2016 and 2017 CIMIC Annual
Report as these were fully complete at that date.
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.
At 31 December 2017 the 2012, 2013 and 2014 awards had been fully vested or lapsed. Therefore, there has been no movement
recognised in the current year profit or loss or reserves for these schemes which were disclosed in the 2017 CIMIC Annual Report as
these were fully complete at that date.
One-Off Awards
One-off awards of Deferred Share Rights were granted under the 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.
At 31 December 2017 the 2012, 2013 and 2014 awards had been fully vested or lapsed. Therefore, there has been no movement
recognised in the current year profit or loss or reserves for these schemes which were disclosed in the 2017 CIMIC Annual Report as
these were fully complete at that date.
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 (SARs) to Mr Fernández Verdes
subject to a two year vesting period. The SARs 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 SAR is exercised, with a maximum payment per SAR 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 SARs 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 AG for the period up to and including 13 March 2017.
The SARs vested in full on 13 March 2016 and are exercisable for three years from the date of vesting. No more than 40% of the
SARs can be exercised each year for the first two years after vesting, and any remaining SARs can be exercised in the final year of
the exercise period. On 18 October 2016 Mr Valderas was appointed as CEO however Mr Fernández Verdes continues in his
capacity as Executive Chairman.
Amount recognised during the reporting period: Gain $1.3 million (31 December 2017: Expense $9.8 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 2016
- Granted
-
-
Exercised2
Forfeited/Lapsed
Unexercised rights at 31 December 2017
- Granted
-
-
Exercised
Forfeited/Lapsed
Unexercised rights at 31 December 2018
Exercisable rights
- At 31 December 2017
- At 31 December 20183
Non-exercisable rights
- At 31 December 2017
- At 31 December 2018
10 June 2014
13 March 2019
$25.26
1,200,000
1,200,000
-
(960,000)
-
240,000
-
-
-
240,000
-
240,000
240,000
-
1 The fair value was re-evaluated on 31 December 2018 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 the 2017 CIMIC Annual Report.
3 This represents the remaining vested share appreciation rights which became available to exercise in the final year of the exercise
period.
207
CIMIC AR 20 - Main Text.indd 208
208
208
11/2/19 1:44 pm
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Amount recognised during the reporting period: Expense $0.1 million (31 December 2017: Expense $1.0 million).
Options – 2015 Long-Term Incentive
29 October 2015
29 October 2020
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. 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. In accordance
with 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.
On 23 October 2018, the Company determined that all options available to be exercised in years 2 and 3 of the exercise window
will be paid in cash in lieu of an allocation of shares. In accordance with AASB 2 Share-based payment, this decision to cash settle is
considered a modification of the year 2 and 3 options from equity-settled to cash-settled.
Accordingly, a liability was recognised for cash settlement at each of the dates 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 continued
Unexercised options at 31 December 2016
Unexercised options at 31 December 2017
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised options
Granted
Exercised2
Lapsed
Granted
Exercised3
Lapsed
-
-
-
-
-
-
-
-
-
-
Unexercised options at 31 December 2018
Exercisable options
At 31 December 2017
At 31 December 20184
Non-exercisable options
At 31 December 2017
At 31 December 20185
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 2017 was $40.99.
3 The volume weighted average share price during the reporting period to 31 December 2018 was $45.83.
4 This represents the unexercised vested options in year 2 of the exercise window.
5 This represents the unexercised vested options available to exercise in the final year of the exercise window.
Other information
No further offers will be made under the Short-Term Incentive Plan (STI) Deferral.
d) Defined contribution superannuation funds
During the period, the Group recognised $205.3 million (31 December 2017: $192.8 million) of defined contribution expenses.
209
CIMIC AR 20 - Main Text.indd 209
209
11/2/19 1:44 pm
$4.53
735,636
552,231
-
-
(191,282)
(49,861)
311,088
(121,131)
(11,444)
178,513
9,656
81,390
301,432
97,123
210
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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. 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. In accordance
with 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.
On 23 October 2018, the Company determined that all options available to be exercised in years 2 and 3 of the exercise window
will be paid in cash in lieu of an allocation of shares. In accordance with AASB 2 Share-based payment, this decision to cash settle is
considered a modification of the year 2 and 3 options from equity-settled to cash-settled.
Accordingly, a liability was recognised for cash settlement at each of the dates 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 continued
Amount recognised during the reporting period: Expense $0.1 million (31 December 2017: Expense $1.0 million).
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised options
Unexercised options at 31 December 2016
- Granted
-
-
Exercised2
Lapsed
Unexercised options at 31 December 2017
- Granted
-
-
Exercised3
Lapsed
Unexercised options at 31 December 2018
Exercisable options
- At 31 December 2017
- At 31 December 20184
Non-exercisable options
- At 31 December 2017
- At 31 December 20185
Options – 2015 Long-Term Incentive
29 October 2015
29 October 2020
$4.53
735,636
552,231
-
(191,282)
(49,861)
311,088
-
(121,131)
(11,444)
178,513
9,656
81,390
301,432
97,123
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 2017 was $40.99.
3 The volume weighted average share price during the reporting period to 31 December 2018 was $45.83.
4 This represents the unexercised vested options in year 2 of the exercise window.
5 This represents the unexercised vested options available to exercise in the final year of the exercise window.
Other information
No further offers will be made under the Short-Term Incentive Plan (STI) Deferral.
d) Defined contribution superannuation funds
During the period, the Group recognised $205.3 million (31 December 2017: $192.8 million) of defined contribution expenses.
209
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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 2018
$’000
12 months to
December 2017
$’000
7,836
131
-
-
(930)
7,037
8,145
93
-
-
10,773
19,011
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 and Principal of Harveys Consulting, both of 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.
1Refer to Note 8: Trade and other receivables, which contains the disclosure of interest free and interest bearing loan receivables
Aggregate amounts receivable from related parties at reporting date
Aggregate amounts payable to related parties at reporting date
Associates1
Joint venture entities1
Associates
Joint venture entities
from BICC.
Associates
Joint venture entities
Associates
Joint venture entities
Revenue – income from related parties
Associates
Joint venture entities
Revenue - interest received / receivable from related parties
Revenue - unwinding of discounts on non-current receivables - related parties
Finance costs - impact of discounting - related parties
Associates
December 2018
December 2017
$’000
$’000
13,927
12,261
661,663
1,075,520
(3,389)
(16,793)
(2,124)
(25,649)
12 months to
12 months to
December 2018
December 2017
$’000
$’000
4,075
7,947
3,600
3,224
1,074
23,891
-
2,808
34,066
-
-
9,678
(49)
(197)
211
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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
12 months to
December 2018
December 2017
$’000
$’000
7,836
131
-
-
(930)
7,037
8,145
93
-
-
10,773
19,011
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
D Robinson is a partner of ESV Accounting and Business Advisors and Principal of Harveys Consulting, both of 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.
basis.
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.
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 2018
$’000
December 2017
$’000
13,927
12,261
661,663
1,075,520
(3,389)
(16,793)
(2,124)
(25,649)
1Refer to Note 8: Trade and other receivables, which contains the disclosure of interest free and interest bearing loan receivables
from BICC.
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 2018
$’000
12 months to
December 2017
$’000
4,075
7,947
3,600
3,224
1,074
23,891
-
34,066
-
2,808
-
9,678
(49)
(197)
211
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
37. RELATED PARTY DISCLOSURES CONTINUED
b)
Transactions with other related parties continued
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
Number of employees
Number of employees at reporting date1
1Includes a proportional share of employees of Ventia and BICC.
c)
Company information
December 2018
Number of
employees
December 2017
Number of
employees
47,000
51,000
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 2017: 7).
The Group operates in the infrastructure, resources and property markets. Principal activities of the Group within these markets
are construction, mining and mineral processing, public private partnerships, engineering 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 and alternate director Mr R Seidler were directors of HOCHTIEF Australia Holdings
Limited during the period.
CIMIC Directors Messrs Fernández Verdes, del Valle Pérez and López Jiménez were officers of ACS during the period.
At the date of this financial report, being 5 February 2019, HOCHTIEF Australia Holdings Limited held 235,661,965 shares in the
Company.
As at, and throughout, the financial year ended 31 December 2018 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 2018 is set out below:
Comprehensive income
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income for the period
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
Company
12 months to
12 months to
December 2018
December 2017
$m
$m
(11.9)
-
(11.9)
22.9
-
22.9
December 2018
December 2017
$m
$m
68.6
4,446.3
4,514.9
30.9
1,348.4
1,379.3
64.9
4,814.5
4,879.4
29.1
1,227.7
1,256.8
3,135.6
3,622.6
1,750.3
1,750.3
(91.9)
1,477.2
3,135.6
(87.0)
1,959.3
3,622.6
213
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214
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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 2018 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 2018 is set out below:
The ultimate Australian parent entity is HOCHTIEF Australia Holdings Limited and the ultimate parent entity is Actividades de
Statement of Financial Position
Comprehensive income
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income for the period
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 2018
$m
12 months to
December 2017
$m
(11.9)
-
(11.9)
22.9
-
22.9
December 2018
$m
December 2017
$m
68.6
4,446.3
4,514.9
30.9
1,348.4
1,379.3
64.9
4,814.5
4,879.4
29.1
1,227.7
1,256.8
3,135.6
3,622.6
1,750.3
(91.9)
1,477.2
3,135.6
1,750.3
(87.0)
1,959.3
3,622.6
December 2018
December 2017
Number of
employees
Number of
employees
47,000
51,000
Number of employees
Number of employees at reporting date1
1Includes a proportional share of employees of Ventia and BICC.
c) Company information
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 2017: 7).
The Group operates in the infrastructure, resources and property markets. Principal activities of the Group within these markets
are construction, mining and mineral processing, public private partnerships, engineering and other services (including
environmental, telecommunications and operations and maintenance).
d) Ultimate parent entity
Limited during the period.
Company.
Construcción y Servicios, SA (ACS) incorporated in Spain.
CIMIC Directors, Mr D Robinson, Mr P Sassenfeld and alternate director Mr R Seidler were directors of HOCHTIEF Australia Holdings
CIMIC Directors Messrs Fernández Verdes, del Valle Pérez and López Jiménez were officers of ACS during the period.
At the date of this financial report, being 5 February 2019, HOCHTIEF Australia Holdings Limited held 235,661,965 shares in the
213
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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 Limited3
Boggo Road Project Pty Limited
Boggo Road Project Trust
Broad Construction Pty Ltd1
Broad Construction Services (NSW/VIC) Pty Ltd
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 No. 2 Pty Limited1
CIMIC Group Investments Pty Limited
CIMIC Group Limited5
CIMIC Residential Investments Pty Ltd
CMENA No. 1 Pty Limited
CMENA Pty Limited
CPB Contractors (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
Interest
held
Place of
incorporation
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)
(A)(B)
(A)(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%
NSW
NSW
VIC
VIC
Malaysia
NSW
Singapore
VIC
VIC
Fiji
QLD
QLD
QLD
WA
WA
WA
NSW
NSW
NSW
VIC
VIC
VIC
VIC
VIC
VIC
100% Papua New Guinea
100%
100%
59%
59%
59%
59%
59%
59%
59%
NSW
VIC
QLD
QLD
QLD
QLD
QLD
VIC
QLD
215
CIMIC AR 20 - Main Text.indd 215
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DoubleOne 3 Building Management Services Pty Ltd
b)
Controlled entities continued
Name of entity
Devine Homes Pty Ltd
Devine Land Pty Ltd
Devine Limited
Devine Management Services Pty Ltd
Devine Projects (VIC) Pty Ltd
Devine Queensland No.10 Pty Ltd
Devine SA Land Pty Ltd
Devine Springwood No. 1 Pty Ltd
Devine Springwood No. 2 Pty Ltd
Devine Springwood No. 3 Pty Ltd
Devine Woodforde Pty Ltd
DoubleOne 3 Pty Ltd
EIC Activities Pty Ltd
EIC Activities Pty Ltd (NZ)
Fleetco Canada Rentals Ltd
Fleetco Chile SPA
Fleetco Holdings Pty Limited
Fleetco Management Pty Limited
Fleetco Rentals 2017 Pty. Limited
Fleetco Rentals AN Pty. Limited
Fleetco Rentals CT Pty. Limited
Fleetco Rentals HD Pty. Limited
Fleetco Rentals No. 1 Pty Limited
Limited)
Fleetco Rentals OO Pty. Limited
Fleetco Rentals Pty Limited
Fleetco Rentals RR Pty. Limited
Fleetco Rentals UG Pty. Limited
Fleetco Services Pty Limited
Giddens Investment Limited
Hamilton Harbour Developments Pty Ltd
Hamilton Harbour Unit Trust (Devine Hamilton Unit Trust)
Hunter Valley Earthmoving Co Pty Ltd
Fleetco Rentals Omega Pty Limited (formerly known as Fleetco Finance Pty
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
80%
100%
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
New Zealand
Canada
Chile
QLD
QLD
QLD
QLD
QLD
QLD
QLD
NSW
QLD
QLD
QLD
QLD
QLD
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
Hong Kong
QLD
VIC
NSW
216
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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 Limited3
Boggo Road Project Pty Limited
Boggo Road Project Trust
Broad Construction Pty Ltd1
Broad Construction Services (NSW/VIC) Pty Ltd
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 No. 2 Pty Limited1
CIMIC Group Investments Pty Limited
CIMIC Group Limited5
CIMIC Residential Investments Pty Ltd
CMENA No. 1 Pty Limited
CMENA Pty Limited
CPB Contractors (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
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)
(A)(B)
(A)(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%
100%
59%
59%
59%
59%
59%
59%
59%
Malaysia
NSW
Singapore
NSW
NSW
VIC
VIC
VIC
VIC
Fiji
QLD
QLD
QLD
WA
WA
WA
NSW
NSW
NSW
VIC
VIC
VIC
VIC
VIC
VIC
NSW
VIC
QLD
QLD
QLD
QLD
QLD
VIC
QLD
b) Controlled entities continued
Name of entity
Devine Homes Pty Ltd
Devine Land Pty Ltd
Devine Limited
Devine Management Services Pty Ltd
Devine Projects (VIC) Pty Ltd
Devine Queensland No.10 Pty Ltd
Devine SA Land Pty Ltd
Devine Springwood No. 1 Pty Ltd
Devine Springwood No. 2 Pty Ltd
Devine Springwood No. 3 Pty Ltd
Devine Woodforde Pty Ltd
DoubleOne 3 Building Management Services Pty Ltd
DoubleOne 3 Pty Ltd
EIC Activities Pty Ltd
EIC Activities Pty Ltd (NZ)
Fleetco Canada Rentals Ltd
Fleetco Chile SPA
Fleetco Holdings Pty Limited
Fleetco Management Pty Limited
Fleetco Rentals 2017 Pty. Limited
Fleetco Rentals AN Pty. Limited
Fleetco Rentals CT Pty. Limited
Fleetco Rentals HD Pty. Limited
Fleetco Rentals No. 1 Pty Limited
100% Papua New Guinea
Fleetco Rentals Omega Pty Limited (formerly known as Fleetco Finance 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
Giddens Investment Limited
Hamilton Harbour Developments Pty Ltd
Hamilton Harbour Unit Trust (Devine Hamilton Unit Trust)
Hunter Valley Earthmoving Co Pty Ltd
Interest
held
Place of
incorporation
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
80%
100%
QLD
QLD
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
Hong Kong
QLD
VIC
NSW
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
215
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216
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b)
Controlled entities continued
Name of entity
HWE Cockatoo Pty Ltd
HWE Mining Pty Limited
Inspection Testing & Certification Pty Ltd
Jarrah Wood Pty Ltd
JH ServicesCo Pty Ltd
JHAS Pty Ltd
JHI Investment Pty Ltd
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
Leighton Contractors Pty Ltd
Leighton Engineering & Construction (Singapore) Pte Ltd
Leighton Engineering Snd Bhd
Leighton Equity Incentive Plan Trust
Leighton Foundation Engineering (Asia) Limited
Leighton Group Property Services Pty Ltd
Interest
held
Place of
incorporation
b)
Controlled entities continued
Name of entity
Interest
held
Place of
incorporation
(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%
NT
VIC
WA
WA
VIC
VIC
VIC
QLD
QLD
VIC
100% Papua New Guinea
100%
100%
100%
49%
100%
100%
100%
100%
100%
40%
100%
100%
100%
100%
100%
100%
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
NSW
Singapore
Malaysia
NSW
Hong Kong
VIC
Leighton Harbour Trust
Leighton Holdings Infrastructure Nominees Pty Ltd
Leighton Holdings Infrastructure Pty Ltd
Leighton Holdings Infrastructure Trust
Leighton India Contractors Private Limited4
Leighton Infrastructure Investments Pty Limited
Leighton International Limited
Leighton International Mauritius Holdings Limited No. 4
Leighton Investments Mauritius Limited No. 4
Leighton Joint Venture
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
Leighton Services UAE Co LLC
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
Momentum Trains Finance Pty Limited
Moorookyle Devine Pty Ltd
(A)(B)
217
CIMIC AR 20 - Main Text.indd 217
217
11/2/19 1:44 pm
(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%
100%
80%
100%
100%
100%
100%
100%
100%
59%
QLD
VIC
VIC
VIC
India
NSW
Cayman Islands
Cayman Islands
Mauritius
Mauritius
Hong Kong
Hong Kong
Singapore
Singapore
Singapore
Singapore
Malaysia
Singapore
United Arab
Emirates
United States
Hong Kong
ACT
China
QLD
VIC
NSW
QLD
VIC
VIC
VIC
VIC
NSW
VIC
VIC
218
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
Interest
held
Place of
incorporation
b) Controlled entities continued
Name of entity
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
100% Papua New Guinea
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
40%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
NT
VIC
WA
WA
VIC
VIC
VIC
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
Sri Lanka
NSW
Singapore
Malaysia
NSW
Hong Kong
VIC
Leighton Harbour Trust
Leighton Holdings Infrastructure Nominees Pty Ltd
Leighton Holdings Infrastructure Pty Ltd
Leighton Holdings Infrastructure Trust
Leighton India Contractors Private Limited4
Leighton Infrastructure Investments Pty Limited
Leighton International Limited
Leighton International Mauritius Holdings Limited No. 4
Leighton Investments Mauritius Limited No. 4
Leighton Joint Venture
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
Leighton Services UAE Co LLC
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
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Momentum Trains Finance Pty Limited
Moorookyle Devine Pty Ltd
(A)(B)
b) Controlled entities continued
Name of entity
Inspection Testing & Certification Pty Ltd
HWE Cockatoo Pty Ltd
HWE Mining Pty Limited
Jarrah Wood Pty Ltd
JH ServicesCo Pty Ltd
JHAS Pty Ltd
JHI Investment Pty Ltd
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
Leighton Contractors Pty Ltd
Leighton Engineering & Construction (Singapore) Pte Ltd
Leighton Engineering Snd Bhd
Leighton Equity Incentive Plan Trust
Leighton Foundation Engineering (Asia) Limited
Leighton Group Property Services Pty Ltd
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
59%
QLD
VIC
VIC
VIC
India
NSW
Cayman Islands
Mauritius
Mauritius
Hong Kong
Hong Kong
Cayman Islands
Singapore
Singapore
Singapore
Singapore
Malaysia
Singapore
ACT
China
QLD
VIC
NSW
QLD
United Arab
Emirates
United States
Hong Kong
VIC
VIC
VIC
VIC
NSW
VIC
VIC
217
CIMIC AR 20 - Main Text.indd 218
218
218
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b)
Controlled entities continued
Name of entity
MTCT Services Pty Ltd1
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
Pioneer Homes Australia Pty Ltd
PT Leighton Contractors Indonesia
PT Thiess Contractors Indonesia
Pulse Partners Finance Pty Limited
RailFleet Maintenance Services Pty Ltd
Regional Trading Limited
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Sedgman Asia Ltd
Sedgman Botswana (Pty) Ltd
Sedgman Canada Limited
Sedgman Chile SPA
Sedgman Consulting Pty Ltd
Sedgman Employment Services Pty Ltd
Sedgman Engineering Technology (Beijing) Company Limited
Sedgman International Employment Services Pty Ltd
Sedgman LLC
Sedgman Malaysia SND BHD
Sedgman Mozambique Limitada
Sedgman Operations Employment Services Pty Ltd
Sedgman Operations Pty Ltd
Sedgman Pty Ltd
Sedgman SAS (Colombia)
Interest
held
Place of
incorporation
Interest
held
Place of
incorporation
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(A)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
95%
99%
100%
100%
100%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
WA
NSW
Canada
SA
Singapore
NSW
VIC
VIC
VIC
VIC
New Zealand
QLD
Indonesia
Indonesia
VIC
NSW
Hong Kong
QLD
QLD
Hong Kong
Botswana
Canada
Chile
QLD
QLD
China
QLD
Mongolia
Malaysia
Mozambique
QLD
QLD
QLD
Colombia
219
CIMIC AR 20 - Main Text.indd 219
219
11/2/19 1:44 pm
b)
Controlled entities continued
Name of entity
Sedgman South Africa (Proprietary) Ltd
Sedgman South Africa Holdings (Proprietary) Ltd
Sedgman USA Inc
Silverton Group Pty Ltd
Sustaining Works Pty Limited
Talcliff Pty Ltd
Tambala Pty Ltd
Telecommunication Infrastructure Pty Ltd
Thai Leighton Limited
Thiess (Mauritius) Pty Ltd
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 Canada Oil Sands No. 1 Ltd
Thiess India Pvt Ltd4
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Thiess Khishig Arvin JV LLC
Thiess Minecs India Pvt Ltd4
Thiess Mining Maintenance Pty Ltd
Thiess Mongolia LLC
Thiess Mozambique Limitada
Thiess NZ Limited
Thiess Pty Ltd
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
(A)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
100% Papua New Guinea
100%
100%
100%
100%
100%
59%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
90%
100%
100%
100%
100%
100%
100%
100%
80%
80%
59%
59%
South Africa
South Africa
United States
WA
QLD
QLD
VIC
Mauritius
Thailand
Mauritius
South Africa
Botswana
Chile
Malaysia
Canada
Canada
India
VIC
VIC
VIC
Mongolia
India
QLD
Mongolia
Mozambique
New Zealand
South Africa
QLD
VIC
NSW
QLD
QLD
QLD
220
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
MTCT Services Pty Ltd1
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
Pioneer Homes Australia Pty Ltd
PT Leighton Contractors Indonesia
PT Thiess Contractors Indonesia
Pulse Partners Finance Pty Limited
RailFleet Maintenance Services Pty Ltd
Regional Trading Limited
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Sedgman Asia Ltd
Sedgman Botswana (Pty) Ltd
Sedgman Canada Limited
Sedgman Chile SPA
Sedgman Consulting Pty Ltd
Sedgman Employment Services Pty Ltd
Sedgman Engineering Technology (Beijing) Company Limited
Sedgman International Employment Services Pty Ltd
Sedgman Operations Employment Services Pty Ltd
Sedgman LLC
Sedgman Malaysia SND BHD
Sedgman Mozambique Limitada
Sedgman Operations Pty Ltd
Sedgman Pty Ltd
Sedgman SAS (Colombia)
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
95%
99%
100%
100%
100%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
WA
NSW
Canada
SA
Singapore
NSW
VIC
VIC
VIC
VIC
New Zealand
QLD
Indonesia
Indonesia
Hong Kong
Hong Kong
Botswana
Canada
VIC
NSW
QLD
QLD
Chile
QLD
QLD
China
QLD
Mongolia
Malaysia
Mozambique
QLD
QLD
QLD
Colombia
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(A)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
b) Controlled entities continued
Name of entity
Sedgman South Africa (Proprietary) Ltd
Sedgman South Africa Holdings (Proprietary) Ltd
Sedgman USA Inc
Silverton Group Pty Ltd
Sustaining Works Pty Limited
Talcliff Pty Ltd
Tambala Pty Ltd
Telecommunication Infrastructure Pty Ltd
Thai Leighton Limited
Thiess (Mauritius) Pty Ltd
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 Canada Oil Sands No. 1 Ltd
Thiess India Pvt Ltd4
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Thiess Khishig Arvin JV LLC
Thiess Minecs India Pvt Ltd4
Thiess Mining Maintenance Pty Ltd
Thiess Mongolia LLC
Thiess Mozambique Limitada
Thiess NZ Limited
Thiess Pty Ltd
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
(A)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
59%
100%
100%
49%
100%
100%
100%
100%
100%
South Africa
South Africa
United States
WA
QLD
QLD
Mauritius
VIC
Thailand
Mauritius
South Africa
Botswana
Chile
Malaysia
100% Papua New Guinea
100%
100%
100%
100%
100%
100%
80%
90%
100%
100%
100%
100%
100%
100%
100%
80%
80%
59%
59%
Canada
Canada
India
VIC
VIC
VIC
Mongolia
India
QLD
Mongolia
Mozambique
New Zealand
QLD
South Africa
VIC
NSW
QLD
QLD
QLD
219
CIMIC AR 20 - Main Text.indd 220
220
220
11/2/19 1:44 pm
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b)
Controlled entities continued
Name of entity
United KG Maintenance Pty Ltd
Western Port Highway Trust
Wood Buffalo Employment Ltd
Interest
held
Place of
incorporation
(B)
(B)
(A)
100%
100%
100%
WA
VIC
Canada
1These companies have the benefit of ASIC Instrument 2016/785 as at 31 December 2018.
2These companies are parties to the Deed of Cross Guarantee but do not have the benefit of the ASIC Instrument 2016/785 as at 31
December 2018.
3Entity has a 30 June reporting date.
4Entity has a 31 March reporting date.
5This company is a party to the Deed of Cross Guarantee as Holding Entity.
(A) Incorporated / established in the 2018 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.
c)
Acquisition and disposal of controlled entities
Refer to Note 29: Acquisitions and disposals of controlled entities and businesses for further details.
b)
Controlled entities continued
Name of entity
Tribune SB Pty Ltd
Tribune SB Unit Trust
UGL (Asia) Snd Bhd
UGL (NZ) Limited
UGL (Singapore) Pte Ltd
UGL Canada Inc3
UGL Engineering Private Limited
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
UGL Utilities Pty Ltd (Formerly known as Newcastle Engineering Pty Ltd)
United Goninan Construction Pty Ltd
United Group Infrastructure (NZ) Limited
United Group Infrastructure (Services) Pty Ltd
United Group International Pty Ltd
United Group Investment Partnership3
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
Interest
held
Place of
incorporation
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
QLD
QLD
Malaysia
New Zealand
Singapore
Canada
India
NSW
QLD
VIC
WA
QLD
NSW
NSW
NSW
VIC
Malaysia
VIC
NSW
NSW
New Zealand
NSW
NSW
USA
VIC
NSW
VIC
NSW
VIC
ACT
VIC
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
221
CIMIC AR 20 - Main Text.indd 221
221
11/2/19 1:44 pm
222
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
United KG Maintenance Pty Ltd
Western Port Highway Trust
Wood Buffalo Employment Ltd
Interest
held
Place of
incorporation
(B)
(B)
(A)
100%
100%
100%
WA
VIC
Canada
1These companies have the benefit of ASIC Instrument 2016/785 as at 31 December 2018.
2These companies are parties to the Deed of Cross Guarantee but do not have the benefit of the ASIC Instrument 2016/785 as at 31
December 2018.
3Entity has a 30 June reporting date.
4Entity has a 31 March reporting date.
5This company is a party to the Deed of Cross Guarantee as Holding Entity.
(A) Incorporated / established in the 2018 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.
c) Acquisition and disposal of controlled entities
Refer to Note 29: Acquisitions and disposals of controlled entities and businesses for further details.
UGL Operations and Maintenance (Services) Pty Limited1
UGL Operations and Maintenance Pty Ltd1
b) Controlled entities continued
Name of entity
Tribune SB Pty Ltd
Tribune SB Unit Trust
UGL (Asia) Snd Bhd
UGL (NZ) Limited
UGL (Singapore) Pte Ltd
UGL Canada Inc3
UGL Engineering Private Limited
UGL Engineering 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
United Group Infrastructure (Services) Pty Ltd
United Group International Pty Ltd
United Group Investment Partnership3
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
UGL Utilities Pty Ltd (Formerly known as Newcastle Engineering Pty Ltd)
Interest
held
Place of
incorporation
QLD
QLD
Malaysia
New Zealand
Singapore
Canada
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Malaysia
New Zealand
India
NSW
QLD
VIC
WA
QLD
NSW
NSW
NSW
VIC
VIC
NSW
NSW
NSW
NSW
USA
VIC
NSW
VIC
NSW
VIC
ACT
VIC
221
CIMIC AR 20 - Main Text.indd 222
222
222
11/2/19 1:44 pm
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
d)
Liquidation of controlled entities
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
f) Material subsidiaries including consolidated structured entities
The following controlled entities have been liquidated during the period to 31 December 2018 as they are no longer required by
the Group in the ordinary course of business:
Set out below are the Company’s principal subsidiaries at 31 December 2018. 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
Contrelec Engineering Pty Ltd
Ganu Puri Sdn Bhd
Intermet Engineering 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
Joetel Pty. Limited
Leighton Investments Mauritius Limited No. 2
Leighton Investments Mauritius Limited
LPWRAP Pty Ltd
Martox Pty. Limited
Moving Melbourne Together Finance Pty Limited
Western Improvement Network Finance Pty Limited
Pacific Partnerships Services Pty Limited
Ruby Equation Sdn Bhd
Sedgman Consulting Unit Trust
Thiess NC
Yoltax Pty. Limited
Zelmex 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: $2,699.8
million (31 December 2017: $2,307.1 million); insurance bonds: $1,566.4 million (31 December 2017: $1,060.3 million); letters of
credit: $128.9 million (31 December 2017: $102.4 million).
During the reporting period, the parent was released from bank guarantees totalling $nil (31 December 2017: $nil), insurance,
performance and payments bonds totalling $nil (31 December 2017: $nil) and letters of credit totalling $nil (31 December 2017:
$nil) 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
2017: $nil).
223
CIMIC AR 20 - Main Text.indd 223
223
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ownership interests held equals to the voting rights held by the Company.
Name of entity
Principal activity
Country of
incorporation
CPB Contractors Pty Limited1
Construction
Australia
Thiess Pty Ltd
Contract Mining &
Australia
Leighton Asia Limited
Leighton International Limited Construction
Construction
Construction
UGL Pty Limited1
Services
Hong Kong
Cayman
Islands
Australia
Ownership interest held by the
Ownership interest held by non-
Company
controlling interests
December 2018
December 2017
December 2018
December 2017
%
100
100
100
100
100
%
100
100
100
100
100
%
-
-
-
-
-
%
-
-
-
-
-
1CPB Contractors Pty Limited and UGL Pty Limited have the benefit of ASIC Instrument 2016/785 as at 31 December 2018. For further
information, refer to section (i).
Non-controlling interests
g)
Unconsolidated structured entities
There were no material non-controlling interests relating to the Company’s material subsidiaries disclosed above as at 31 December
2018. There were no material transactions with non-controlling interests during the period to 31 December 2018.
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
December 2018
December 2017
Finance lease liabilities
Total on balance sheet liabilities
Operating lease commitments
Total liabilities due to unconsolidated structured entities
$m
-
-
$m
-
-
309.4
309.4
189.5
189.5
224
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
d)
Liquidation of controlled entities
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
f) Material subsidiaries including consolidated structured entities
The following controlled entities have been liquidated during the period to 31 December 2018 as they are no longer required by
the Group in the ordinary course of business:
Contrelec Engineering Pty Ltd
Ganu Puri Sdn Bhd
Intermet Engineering 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
Joetel Pty. Limited
Leighton Investments Mauritius Limited No. 2
Leighton Investments Mauritius Limited
LPWRAP Pty Ltd
Martox Pty. Limited
Moving Melbourne Together Finance Pty Limited
Pacific Partnerships Services Pty Limited
Ruby Equation Sdn Bhd
Sedgman Consulting Unit Trust
Thiess NC
Western Improvement Network Finance Pty Limited
Yoltax Pty. Limited
Zelmex 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: $2,699.8
million (31 December 2017: $2,307.1 million); insurance bonds: $1,566.4 million (31 December 2017: $1,060.3 million); letters of
credit: $128.9 million (31 December 2017: $102.4 million).
During the reporting period, the parent was released from bank guarantees totalling $nil (31 December 2017: $nil), insurance,
performance and payments bonds totalling $nil (31 December 2017: $nil) and letters of credit totalling $nil (31 December 2017:
$nil) 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
2017: $nil).
Set out below are the Company’s principal subsidiaries at 31 December 2018. 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 Limited1
Services
Cayman
Islands
Australia
Ownership interest held by the
Company
Ownership interest held by non-
controlling interests
December 2018
December 2017
December 2018
December 2017
%
100
100
100
100
100
%
100
100
100
100
100
%
-
-
-
-
-
%
-
-
-
-
-
1CPB Contractors Pty Limited and UGL Pty Limited have the benefit of ASIC Instrument 2016/785 as at 31 December 2018. For further
information, refer to section (i).
Non-controlling interests
There were no material non-controlling interests relating to the Company’s material subsidiaries disclosed above as at 31 December
2018. There were no material transactions with non-controlling interests during the period to 31 December 2018.
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 2018
$m
December 2017
$m
-
-
309.4
309.4
-
-
189.5
189.5
223
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224
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CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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
A consolidated statement of profit or loss and statement of financial position, comprising the Company and entities which are a
party to the CIMIC Deed, after eliminating all transactions between parties to the CIMIC Deed, at 31 December 2018 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
Dividends paid
Retained earnings at reporting date
Adjustments for entities added/removed and new accounting standards
12 months to
12 months to
December 2018
December 2017
$m
$m
707.4
678.1
(167.9)
539.5
4,187.6
(159.3)
(470.2)
(194.8)
483.3
4,102.3
(2.4)
(395.6)
4,097.6
4,187.6
Transactions with wholly-owned controlled entities were as follows: aggregate amounts receivable: $1,318.1 million (31 December
2017: 1,698.4 million); aggregate amounts payable: $1,347.3 million (31 December 2017: $1,226.5 million); interest received /
receivable: $36.1 million (31 December 2017: $37.4 million); interest paid / payable: $24.2 million (31 December 2017: $19.3
million); fees charged: $nil (31 December 2017: $nil); dividends received: $nil (31 December 2017: $nil); fees paid: $118.0 million
(31 December 2017: $105.0 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 CIMIC Deed under certain provisions of the Corporations Act. 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.
The following entities lodged with ASIC an Assumption Deed dated 17 December 2018 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 the financial year ended 31 December 2018:
MTCT Services Pty Limited (ACN 070 140 251); and
CIMIC Group Investments No.2 Pty Ltd (ACN 610 264 189).
As at 31 December 2018, the following entities are party to the CIMIC Deed and seek to rely on financial reporting relief in respect
of the financial year ended 31 December 2018:
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);
CIMIC Group Investments No.2 Pty Ltd (ACN 610 264 189);
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);
MTCT Services Pty Ltd ) (ACN 070 140 251)
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).
225
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226
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
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: $1,318.1 million (31 December
2017: 1,698.4 million); aggregate amounts payable: $1,347.3 million (31 December 2017: $1,226.5 million); interest received /
receivable: $36.1 million (31 December 2017: $37.4 million); interest paid / payable: $24.2 million (31 December 2017: $19.3
million); fees charged: $nil (31 December 2017: $nil); dividends received: $nil (31 December 2017: $nil); fees paid: $118.0 million
A consolidated statement of profit or loss and statement of financial position, comprising the Company and entities which are a
party to the CIMIC Deed, after eliminating all transactions between parties to the CIMIC Deed, at 31 December 2018 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
Adjustments for entities added/removed and new accounting standards
Dividends paid
Retained earnings at reporting date
12 months to
December 2018
$m
12 months to
December 2017
$m
707.4
(167.9)
539.5
4,187.6
(159.3)
(470.2)
4,097.6
678.1
(194.8)
483.3
4,102.3
(2.4)
(395.6)
4,187.6
(31 December 2017: $105.0 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 CIMIC Deed under certain provisions of the Corporations Act. 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
The following entities lodged with ASIC an Assumption Deed dated 17 December 2018 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 the financial year ended 31 December 2018:
MTCT Services Pty Limited (ACN 070 140 251); and
CIMIC Group Investments No.2 Pty Ltd (ACN 610 264 189).
As at 31 December 2018, the following entities are party to the CIMIC Deed and seek to rely on financial reporting relief in respect
of the financial year ended 31 December 2018:
up.
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);
CIMIC Group Investments No.2 Pty Ltd (ACN 610 264 189);
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);
MTCT Services Pty Ltd ) (ACN 070 140 251)
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).
225
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226
226
11/2/19 1:44 pm
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
i)
Deed of Cross Guarantee continued
Deed of Cross Guarantee
Statement of Financial Position
Assets
Cash and cash equivalents
Trade and other receivables
Inventories: consumables and development properties
Assets held for sale
Total current assets
Trade and other receivables
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
227
CIMIC AR 20 - Main Text.indd 227
39. NEW ACCOUNTING STANDARDS
AASB 15 Revenue
December 2018
$m
December 2017
$m
Had AASB 15 Revenue from Contracts with Customers not been applied and the financial statements were still produced under
previous guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and related interpretations, the financial report
for the year ended 31 December 2018 would have been impacted as follows:
1,363.0
2,360.4
109.2
-
1,018.4
2,559.4
40.1
31.2
3,832.6
3,649.1
3,706.8
1,518.7
287.0
613.3
6,125.8
9,958.4
4,039.7
1,537.7
170.0
413.7
6,161.1
9,810.2
4,365.2
3,181.4
8.8
144.3
50.7
31.0
151.4
219.0
4,569.0
3,582.8
757.8
36.2
-
249.9
1,043.9
5,612.9
746.9
45.7
232.3
252.2
1,277.1
4,859.9
4,345.5
4,950.3
of approximately $900 million as at 31 December 2018.
Based on the current assessment, upon adoption of AASB 16 the net cash / debt after leases is expected to include lease liabilities
1,750.3
(1,502.4)
4,097.6
4,345.5
1,750.3
(987.6)
4,187.6
4,950.3
227
11/2/19 1:44 pm
the consolidated statement of financial position as at 31 December 2018 would be impacted by adding back $953.3 million of
transition adjustments to both net assets and equity. Refer to Note 1: Summary of significant accounting policies – basis of
preparation for the impact on each balance sheet line item; and
the impact on all line items reported in the consolidated statement of profit or loss and the consolidated statement of other
comprehensive income for the 12 months to 31 December 2018 would not be material. Accordingly there would be no
additional material impact on the consolidated statement of financial position as at 31 December 2018 after adding back the
transition adjustments noted above.
Standards in issue but not yet effective
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 16 Leases
AASB 16 replaces AASB 17 ‘Leases’, IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, SIC-15 ‘Operating Leases
Incentives’ and SIC-27 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’.
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to
account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117. Lessor
accounting under AASB 16 is substantially unchanged from today’s accounting under AASB 117 and has no material impact to the
From a lessee perspective, at the commencement date of a lease, a lessee will recognise a liability to make lease payments (‘lease
liability’) and an asset representing the right to use the underlying asset during the lease term (‘right-of-use asset’). Lessees will be
required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees will also be required to remeasure the lease liability upon the occurrence of certain events (such as a change in the lease
term or lease payments). The amount of the re-measurement of the lease liability is recognised as an adjustment to the right-of-
Group.
use asset.
The Group plans to adopt AASB 16 using the full retrospective method, with the effect of initially applying this standard recognised
at the date of 1 January 2019. As a result, the Group will apply the requirements of AASB 16 to the financial year ended
31 December 2019 and the comparative period presented.
CIMIC did apply the practical expedient not to reassess whether a contract is, or contains, a lease at the date of initial application.
It will apply the definition of a lease requirement only to contracts entered into (or changed) on or after the date of initial
application.
228
CIMIC Group Limited Annual Report 2018 | Financial Report
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
i) Deed of Cross Guarantee continued
39. NEW ACCOUNTING STANDARDS
AASB 15 Revenue
December 2018
December 2017
$m
$m
Had AASB 15 Revenue from Contracts with Customers not been applied and the financial statements were still produced under
previous guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and related interpretations, the financial report
for the year ended 31 December 2018 would have been impacted as follows:
3,832.6
3,649.1
1,363.0
2,360.4
109.2
-
3,706.8
1,518.7
287.0
613.3
6,125.8
9,958.4
8.8
144.3
50.7
757.8
36.2
-
249.9
1,043.9
5,612.9
1,018.4
2,559.4
40.1
31.2
4,039.7
1,537.7
170.0
413.7
6,161.1
9,810.2
31.0
151.4
219.0
746.9
45.7
232.3
252.2
1,277.1
4,859.9
4,365.2
3,181.4
4,569.0
3,582.8
4,345.5
4,950.3
1,750.3
(1,502.4)
4,097.6
4,345.5
1,750.3
(987.6)
4,187.6
4,950.3
the consolidated statement of financial position as at 31 December 2018 would be impacted by adding back $953.3 million of
transition adjustments to both net assets and equity. Refer to Note 1: Summary of significant accounting policies – basis of
preparation for the impact on each balance sheet line item; and
the impact on all line items reported in the consolidated statement of profit or loss and the consolidated statement of other
comprehensive income for the 12 months to 31 December 2018 would not be material. Accordingly there would be no
additional material impact on the consolidated statement of financial position as at 31 December 2018 after adding back the
transition adjustments noted above.
Standards in issue but not yet effective
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 16 Leases
AASB 16 replaces AASB 17 ‘Leases’, IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, SIC-15 ‘Operating Leases
Incentives’ and SIC-27 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’.
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to
account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117. Lessor
accounting under AASB 16 is substantially unchanged from today’s accounting under AASB 117 and has no material impact to the
Group.
From a lessee perspective, at the commencement date of a lease, a lessee will recognise a liability to make lease payments (‘lease
liability’) and an asset representing the right to use the underlying asset during the lease term (‘right-of-use asset’). Lessees will be
required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees will also be required to remeasure the lease liability upon the occurrence of certain events (such as a change in the lease
term or lease payments). The amount of the re-measurement of the lease liability is recognised as an adjustment to the right-of-
use asset.
The Group plans to adopt AASB 16 using the full retrospective method, with the effect of initially applying this standard recognised
at the date of 1 January 2019. As a result, the Group will apply the requirements of AASB 16 to the financial year ended
31 December 2019 and the comparative period presented.
Based on the current assessment, upon adoption of AASB 16 the net cash / debt after leases is expected to include lease liabilities
of approximately $900 million as at 31 December 2018.
CIMIC did apply the practical expedient not to reassess whether a contract is, or contains, a lease at the date of initial application.
It will apply the definition of a lease requirement only to contracts entered into (or changed) on or after the date of initial
application.
227
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228
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11/2/19 1:44 pm
Inventories: consumables and development properties
Deed of Cross Guarantee
Statement of Financial Position
Assets
Cash and cash equivalents
Trade and other receivables
Assets held for sale
Total current assets
Trade and other receivables
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
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
CIMIC Group Limited Annual Report 2018 | Financial Report
Statutory Statements
DIRECTORS’ DECLARATION
39. NEW ACCOUNTING STANDARDS continued
b) 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;
Annual Improvements to IFRS Standards 2015-2017 Cycle - Amendments to IFRS 3 Business Combinations, IFRS 11 Joint
Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs;
AASB 2017-7 Amendments to Australian Accounting Standards – Long term interests in joint ventures and associates; 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
Subsequent to reporting date:
The Group determined a 100% franked dividend of 86 cents per share to be paid on 4 July 2019.
The Directors approved the financial report on 5 February 2019.
1.
In the opinion of the Directors of CIMIC Group Limited (the Company):
a)
The financial statements and notes, set out on pages 132-229, are in accordance with the Corporations Act 2001,
including:
and payable.
i)
giving a true and fair view of the Company’s and the Consolidated Entity’s financial position as at 31 December
2018 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
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 2018.
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 5th day of February 2019.
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
229
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230
39. NEW ACCOUNTING STANDARDS continued
b) Other new accounting standards
statements:
Associate or Joint Venture;
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial
AASB 2014-10 Amendments to Australian Accounting Standards: Sale or Contribution of Assets Between an Investor and its
Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs;
AASB 2017-7 Amendments to Australian Accounting Standards – Long term interests in joint ventures and associates; 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
Subsequent to reporting date:
The Group determined a 100% franked dividend of 86 cents per share to be paid on 4 July 2019.
The Directors approved the financial report on 5 February 2019.
CIMIC Group Limited Annual Report 2018 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2018
CIMIC Group Limited Annual Report 2018 | Financial Report
Statutory Statements
DIRECTORS’ DECLARATION
Annual Improvements to IFRS Standards 2015-2017 Cycle - Amendments to IFRS 3 Business Combinations, IFRS 11 Joint
ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
1.
In the opinion of the Directors of CIMIC Group Limited (the Company):
a)
The financial statements and notes, set out on pages 132-229, 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
2018 and of their performance for the financial year ended on that date; and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2. 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 2018.
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 5th day of February 2019.
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
229
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11/2/19 1:44 pm
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 2018, 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 2018 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
231
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Key Audit Matter
How the scope of our audit responded to the
Recognition of construction revenue and
recovery of related contract receivables and
contract assets including recovery of Gorgon
LNG Jetty and Marine Structures Project contract
assets
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 over
time as performance
obligations are fulfilled over time. 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 and
measurement
of
progress
towards
satisfaction of performance obligations;
•
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 changes in scope and/or price;
and
•
Estimation of project completion date.
The Group recognises in contract asset and
contract receivables progressive measurement of
the value to customers of goods and services
transferred and 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 Saipem SA and Saipem
Portugal Comercio Maritime LDA (“Saipem”)
(together “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 2018, contract assets include
an amount of $1.15 billion in relation to the
Gorgon Contract being revenue CIMIC has
recognised in prior reporting periods for which is
highly probable that a significant reversal of
Key Audit Matter
Our procedures included, amongst others:
•
Evaluating management’s
processes
and
controls
in respect of the recognition of
construction revenue. As part of this process we
tested key controls including:
-
the review process conducted at the
tendering phase by the Group’s Tender
Review Management Committee;
-
the
preparation,
review
and
authorisation
of monthly
valuation
reports for all contracts; and
-
the comprehensive project reviews that
are undertaken by Group management
on a quarterly basis.
•
•
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
contract
modifications
resulting
in
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 as appropriate,
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 measurement of the value
to customers of goods and services
transferred, and evaluating evidence of
such transfer;
-
assessing the forecast costs to complete
through discussion and challenging of
project
managers
and
finance
personnel;
-
testing contractual entitlement relating
to contract modifications, variations and
claims
recognised within
contract
-
-
-
-
-
-
-
-
232
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 2018, 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 2018 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
auditor’s report.
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
Recognition of construction revenue and
recovery of related contract receivables and
contract assets including recovery of Gorgon
LNG Jetty and Marine Structures Project contract
assets
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 over
time as performance
obligations are fulfilled over time. Construction
revenue is recognised by management after
assessing all factors relevant to each contract,
including specifically assessing the following as
applicable:
Basis for Opinion
•
• Determination of stage of completion and
towards
measurement
of
satisfaction of performance obligations;
Estimation of total contract revenue and costs
including
cost
contingencies;
estimation
progress
the
of
• Determination of contractual entitlement and
assessment of the probability of customer
approval of changes in scope and/or price;
and
Estimation of project completion date.
•
The Group recognises in contract asset and
contract receivables progressive measurement of
the value to customers of goods and services
transferred and 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.
How the scope of our audit responded to the
Key Audit Matter
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
-
-
-
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:
-
-
contract modifications
changes,
history of issues identified;
significant
resulting
variations and claims;
delay risk;
high potential impact and high likelihood
of risk events;
in unapproved
-
-
- material new contracts;
-
-
high value contracts; and
loss making contracts.
the contracts selected
For
following
procedures were performed as appropriate,
amongst others:
the
-
-
-
-
-
the
obtaining an understanding of
contract
to
terms and conditions
evaluate whether these were reflected in
management’s estimate of forecast costs
and revenue;
testing a sample of costs incurred to date
to supporting
these
and agreeing
documentation;
assessing the measurement of the value
to customers of goods and services
transferred, and evaluating evidence of
such transfer;
assessing the forecast costs to complete
through discussion and challenging of
project managers
finance
personnel;
testing contractual entitlement relating
to contract modifications, variations and
contract
recognised within
claims
and
•
In November 2009, CIMIC, together with its
consortium partners Saipem SA and Saipem
Portugal Comercio Maritime LDA (“Saipem”)
(together “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 2018, contract assets include
an amount of $1.15 billion in relation to the
Gorgon Contract being revenue CIMIC has
recognised in prior reporting periods for which is
highly probable that a significant reversal of
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
231
CIMIC AR 20 - Main Text.indd 232
232
232
11/2/19 1:44 pm
revenue will not occur in respect of the Gorgon
Contract
relevant
accounting standards.
in accordance with
the
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
it had also commenced
proceedings in the United States against Chevron
Corporation
related
companies.
Inc., KBR
Inc. and
that
Additionally, there is an arbitration procedure
against Saipem pursuant to the Consortium
Agreement seeking recovery of outstanding
amounts. The arbitration continues in accordance
with the contractual processes; arbitrators have
been appointed, orders for the conduct of the
arbitration have been made, and it is anticipated
that hearings will commence in 2020 with a
determination thereafter.
We
focused on recognition of construction
revenue and recovery of related contract assets
and contract receivables including recovery of
Gorgon LNG Jetty and Marine Structures Project
contract assets 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 receivables and
contract assets.
-
-
-
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
supporting
recoveries
documentation.
other
and
•
In respect of the Gorgon Contract, the following
procedures were performed:
-
-
-
-
-
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 and internal
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
Recoverability of
loans receivable from BIC
In
conjunction with valuation experts, our
Contracting LLC (Formerly Habtoor Leighton
procedures included, amongst others:
Group “HLG”)
receivables’.
Refer to Note 26 ‘Joint Venture Entities –
assumptions:
BICC’ and Note 8 ‘Trade and other
Included in the Group’s consolidated statement of
financial position at 31 December 2018 are the
loans (including interest) receivable from BICC
totalling $641 million.
As disclosed in Note 1, following the adoption of
AASB 9: Financial instruments, the Group’s loans
receivable from BICC is $559 million as at 1
January 2018 as a result of moving from an
incurred loss to an expected credit loss model.
The recoverability of the loans receivable from
BICC as at 31 December 2018 involves significant
judgement in respect of assumptions such as
discount rates, current work in hand, future
contract wins and the recoverability of certain
legacy contract receivables, as well as economic
assumptions such as growth rate and foreign
currency exchange rates.
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, as
well as the impact of the adoption of AASB 9.
•
Assessing in respect of the expected credit loss
for
calculating
impairment
the
following
probability
of
default
upon
initial
recognition of the loans receivable; and
significant
increases
in credit risk,
including assessing a risk of default, both
as at 1 January 2018 and 31 December
2018.
•
Assessing the credit rating and expected credit
loss rate used by management to calculate the
expected credit loss by:
Evaluating the report prepared by a
management appointed
independent
advisory expert to determine a credit
Agreeing the expected credit loss rate to
third party rating agency published
rating; and
rates.
o
o
o
o
•
Evaluating the discounted cash flow model
developed by management
to assess
the
recoverable amount of the loans receivable and
its expected repayment date, including critically
assessing the discount rate, the forecast cash
flows and capital expenditure, the forecast
recoverability
of
certain
legacy
contract
receivables and contract assets, the terminal
growth rate and the foreign currency exchange
rates.
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 BICC 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
contract
assets
and
on
revenue
assumptions.
Assessing the appropriateness of the relevant
disclosures in the financial statements.
•
•
•
•
233
CIMIC AR 20 - Main Text.indd 233
233
11/2/19 1:44 pm
234
revenue will not occur in respect of the Gorgon
Contract
in accordance with
the
relevant
revenue to supporting documentation
and by reference to the underlying
accounting standards.
contract;
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
Corporation
Inc., KBR
Inc. and
related
companies.
Additionally, there is an arbitration procedure
against Saipem pursuant to the Consortium
Agreement seeking recovery of outstanding
amounts. The arbitration continues in accordance
with the contractual processes; arbitrators have
been appointed, orders for the conduct of the
arbitration have been made, and it is anticipated
that hearings will commence in 2020 with a
determination thereafter.
We
focused on recognition of construction
revenue and recovery of related contract assets
and contract receivables including recovery of
Gorgon LNG Jetty and Marine Structures Project
contract assets 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 receivables and
contract assets.
-
-
-
-
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:
-
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 and internal
legal counsel in respect of the current
status of negotiations;
enquiring of internal legal counsel of
status of proceedings in the United
States
courts
against
Chevron
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.
Recoverability of loans receivable from BIC
Contracting LLC (Formerly Habtoor Leighton
Group “HLG”)
Refer to Note 26 ‘Joint Venture Entities –
BICC’ and Note 8
‘Trade and other
receivables’.
Included in the Group’s consolidated statement of
financial position at 31 December 2018 are the
loans (including interest) receivable from BICC
totalling $641 million.
As disclosed in Note 1, following the adoption of
AASB 9: Financial instruments, the Group’s loans
receivable from BICC is $559 million as at 1
January 2018 as a result of moving from an
incurred loss to an expected credit loss model.
The recoverability of the loans receivable from
BICC as at 31 December 2018 involves significant
judgement in respect of assumptions such as
discount rates, current work in hand, future
contract wins and the recoverability of certain
legacy contract receivables, as well as economic
assumptions such as growth rate and foreign
currency exchange rates.
•
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, as
well as the impact of the adoption of AASB 9.
conjunction with valuation experts, our
In
procedures included, amongst others:
• Assessing in respect of the expected credit loss
following
impairment
calculating
the
for
assumptions:
o
o probability of default upon
initial
recognition of the loans receivable; and
significant
in credit risk,
including assessing a risk of default, both
as at 1 January 2018 and 31 December
2018.
increases
• Assessing the credit rating and expected credit
loss rate used by management to calculate the
expected credit loss by:
o Evaluating the report prepared by a
management appointed independent
advisory expert to determine a credit
rating; and
o Agreeing the expected credit loss rate to
third party rating agency published
rates.
Evaluating the discounted cash flow model
developed by management to assess the
recoverable amount of the loans receivable and
its expected repayment date, including critically
assessing the discount rate, the forecast cash
flows and capital expenditure, the forecast
contract
certain
recoverability of
receivables and contract assets, the terminal
growth rate and the foreign currency exchange
rates.
legacy
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 BICC 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
revenue
assumptions.
contract
assets
and
on
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
233
CIMIC AR 20 - Main Text.indd 234
234
234
11/2/19 1:44 pm
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.
Carrying value of construction goodwill
Refer to Note 15 ‘Intangibles’.
Included in the Group’s consolidated statement of
financial position at 31 December 2018 is goodwill
relating to the Construction segment of $452
million.
the goodwill
Management has assessed the recoverable
the
amount of
Construction segment 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.
relating
to
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.
conjunction with valuation experts, our
In
procedures included, amongst others:
•
Evaluating the ‘value in use’ discounted cash
flow models developed by management to
assess the recoverable amount of the goodwill,
including critically assessing
following
assumptions:
the
-
-
-
-
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.
Assessing the appropriateness of the relevant
disclosures in the financial statements.
including discount
•
•
•
•
Other Information
The directors are responsible for the other information within the Company’s annual report for the year
ended 31 December 2018, 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.
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.
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.
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.
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236
Carrying value of construction goodwill
Auditor’s Responsibilities for the Audit of the Financial Report
Refer to Note 15 ‘Intangibles’.
In
conjunction with valuation experts, our
Included in the Group’s consolidated statement of
financial position at 31 December 2018 is goodwill
relating to the Construction segment of $452
million.
Management has assessed the recoverable
amount of
the goodwill
relating
to
the
Construction segment 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.
procedures included, amongst others:
•
Evaluating the ‘value in use’ discounted cash
flow models developed by management to
assess the recoverable amount of the goodwill,
including critically assessing
the
following
assumptions:
discount rate;
-
-
-
-
forecast
cash
flows
and
capital
expenditure;
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 2018, 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.
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.
235
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236
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Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 42 to 53 of the Directors’ Report for the year
ended 31 December 2018.
In our opinion, the Remuneration Report of CIMIC Group Limited, for the year ended 31 December 2018,
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, 5 February 2019
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CIMIC Group I Annual Report 2018
238
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12/2/19 9:59 am
CIMIC Group I Annual Report 2018
238
239
CIMIC Group I Annual Report 2018
CIMIC AR 20.indd 30
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disciplined
n
o
i
t
a
m
r
o
f
n
I
l
a
n
o
i
t
i
d
d
A
CIMIC AR 20.indd 31
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CIMIC Group I Annual Report 2018
240
Sonoma Coal Project and OperationsThiess and Sedgman, Queensland, AustraliaThrough a partnership that has lasted more than a decade, our teams at Thiess and Sedgman have provided expert solutions for our client, QCoal, at the Sonoma Mine in Queensland’s Bowen Basin.Sedgman undertook the engineering design, construction and commissioning of the coal handling and preparation plant and has operated it since commissioning in 2007. The facility produces thermal and metallurgical quality coal products.At the same site, Thiess provides mining services, including mine planning, drill and blast, overburden removal and coal mining, having commenced operations at the QCoal Northern Hub (which comprises four mines including Sonoma) in 2007.Throughout the projects, both Thiess and Sedgman have been disciplined in the pursuit of continual improvement for our client.
241
CIMIC Group I Annual Report 2018
CIMIC AR 20.indd 32
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CIMIC Group Limited Annual Report 2018 | Additional Information
Shareholdings
The information below is current as at 21 January 2019.
TWENTY LARGEST SHAREHOLDERS
The 20 largest shareholders on the Company’s register of members held 93.46% of the Company’s issued capital.
Name
HOCHTIEF AUSTRALIA HOLDINGS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
JP MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MILTON CORPORATION LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
GWYNVILL INVESTMENTS PTY LIMITED
AMP LIFE LIMITED
CITICORP NOMINEES PTY LIMITED
GWYNVILL TRADING PTY LIMITED
MR JONATHAN LEIGHTON STANLEY ELLIS
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS (NZ) LTD
NATIONAL NOMINEES LIMITED
DAVILIAN INVESTMENTS PTY LTD
MRS ELIZABETH APRIESKA
Total
Total shares on issue
No. of shares
235,661,965
31,842,356
15,297,604
10,089,044
3,108,051
1,551,289
1,376,413
831,507
791,239
573,302
427,188
344,942
320,132
244,791
138,150
100,071
92,019
90,138
85,094
74,638
% of issued
capital
72.68
9.82
4.72
3.11
0.96
0.48
0.42
0.26
0.24
0.18
0.13
0.11
0.10
0.08
0.04
0.03
0.03
0.03
0.03
0.02
303,039,933
324,254,097
93.46
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
24,883
4,202
398
183
16
29,682
Ordinary shares held
6,291,672
8,556,287
2,801,170
3,906,924
302,698,044
324,254,097
% of issued capital
1.94
2.64
0.86
1.20
93.35
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.
CIMIC Group I Annual Report 2018
241
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242
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CIMIC Group Limited Annual Report 2018 | Additional Information
CIMIC Group Limited Annual Report 2018 | Additional Information
There were 596 shareholders with less than a marketable parcel (12 shares), based on the closing market price of $44.72 on 21
January 2019.
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.
# On 29 October 2018, Atlantia S.p.A. became a substantial holder as reflected in the substantial shareholding notice given to the Company on
6 November 2018.
SHARE RIGHTS
The Company has zero share rights on issue.
OPTIONS
The Company has 178,513 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
-
12
8
4
-
24
Options
-
30,827
52,891
94,795
-
178,513
If you have any questions about your shareholding, dividend payments, tax file number, change of address or any other enquiry,
Shareholder information
ENQUIRIES AND SHARE REGISTRY
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)
Online: 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
The CIMIC Group corporate governance statement is available on our website, in the section titled Corporate Governance
The 58th 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 11 April 2019. Shareholders will be notified of the meeting and any resolutions
Report.
CORPORATE GOVERNANCE STATEMENT
(www.cimic.com.au/corporate-governance).
ANNUAL GENERAL MEETING
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/en/contact-us.
243
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244
There were 596 shareholders with less than a marketable parcel (12 shares), based on the closing market price of $44.72 on 21
January 2019.
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.
# On 29 October 2018, Atlantia S.p.A. became a substantial holder as reflected in the substantial shareholding notice given to the Company on
The Company has zero share rights on issue.
The Company has 178,513 options on issue. The distribution is as follows:
6 November 2018.
SHARE RIGHTS
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
-
12
8
4
-
24
Options
30,827
52,891
94,795
-
-
178,513
CIMIC Group Limited Annual Report 2018 | Directors’ Report
CIMIC Group Limited Annual Report 2018 | Additional Information
Shareholder information
ENQUIRIES AND SHARE REGISTRY
If you have any questions about your shareholding, dividend payments, tax file number, change of address or any other enquiry,
please contact Computershare Investor Services Pty Limited:
Online: www.investorcentre.com/contact
Telephone: 1300 850 505 (local) or +61 3 9415 4000 (international)
Fax: (03) 9473 2500 (local) or +61 3 9473 2500 (international)
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/corporate-governance).
ANNUAL GENERAL MEETING
The 58th 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 11 April 2019. 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/en/contact-us.
243
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244
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CIMIC Group Limited Annual Report 2018 | Glossary
CIMIC Group Limited Annual Report 2018 | Glossary
Glossary
Term
2Q18
3Q18
4Q18
2017 Financial Year or FY17
2018 Financial Year or FY18
FY19
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
Atlantia
Australian Accounting Standards
BIC Contracting or BICC
BIM
Board
Broad Construction
CDP
CEO
CEO and Managing Director
CFO
Class 1 Injury / C1I
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
DJSI Australia Index
Dragados
Description
Second quarter of the 2018 Financial Year
Third quarter of the 2018 Financial Year
Fourth quarter of the 2018 Financial Year
Financial year ending 31 December 2017
Financial year ending 31 December 2018
Financial year ending 31 December 2019
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)
Atlantia S.p.A.
Australian Accounting Standards developed, issued and maintained by the AASB
BIC Contracting LLC (formerly HLG Contracting LLC)
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
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
Pacific Partnerships or PP
Pacific Partnerships Pty Ltd
Profit before tax
245
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11/2/19 1:44 pm
Description
Earnings before interest and taxes
Earnings before interest, taxes, depreciation and amortisation
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.
Geographic Information Systems capture, store, manipulate, analyse, manage, and present
Financial year
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.
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
Group or CIMIC Group
CIMIC Group Limited and certain entities it controls
HLG Contracting or HLG
HOCHTIEF Australia
HLG Contracting LLC
HOCHTIEF Australia Holdings Limited, a wholly owned subsidiary of HOCHTIEF AG
HOCHTIEF or HOCHTIEF AG
HOCHTIEF Aktiengesellschaft
Independent Non-executive Director
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
Leighton International
A controlled entity of CIMIC that is responsible for the Group’s offshore oil and gas
Leighton Properties
Leighton Properties Pty Limited
Key performance indicators
Leighton Asia Limited
Leighton India Contractors Private Limited
business
Liquefied natural gas
Long-Term Incentive
Macmahon Holdings Limited
Moody's Investors Service
Term
EBIT
EBITDA
EIC Activities
FleetCo
Former Director
FTSE4Good Index
Graduate
Graduate Program
Green Standard projects
HAZOP
EIP
EPS
ESA
ESG
FY
GIS
GRI
ISCA
ISO
JV
KMP
KPI
John Holland or JHG
John Holland sale
Leighton Asia
Leighton India
LNG
LTI
Macmahon
Moody's
Nextgen
NGER Scheme
NGO
NPAT
PBT
Non-executive Director
Operating Companies
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
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CIMIC Group Limited Annual Report 2018 | Glossary
CIMIC Group Limited Annual Report 2018 | Glossary
Term
2Q18
3Q18
4Q18
FY19
A$ or $
AASB
ASIC
AS/NZ
ASX
Atlantia
BIM
Board
CDP
CEO
CFO
Glossary
2017 Financial Year or FY17
2018 Financial Year or FY18
Description
Second quarter of the 2018 Financial Year
Third quarter of the 2018 Financial Year
Fourth quarter of the 2018 Financial Year
Financial year ending 31 December 2017
Financial year ending 31 December 2018
Financial year ending 31 December 2019
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)
Atlantia S.p.A.
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
BIC Contracting or BICC
BIC Contracting LLC (formerly HLG Contracting LLC)
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 / C1I
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
Dow Jones Sustainability Australia Index
Code of Conduct
Committee
Company or CIMIC
Constitution
Corporations Act
CPB Contractors or CPB
Deferred Right
Deputy CEO
Deloitte
Devine
Director
DJSI
DJSI Australia Index
Dragados
Term
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
Leighton Properties
LNG
LTI
Macmahon
Moody's
Nextgen
NGER Scheme
NGO
NPAT
Non-executive Director
Operating Companies
Is an international contractor established in 1941 and is the construction arm of the ACS
Group specialising in major infrastructure projects
Pacific Partnerships or PP
PBT
Description
Earnings before interest and taxes
Earnings before interest, taxes, depreciation and amortisation
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
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
Leighton Properties Pty Limited
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
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CIMIC Group Limited Annual Report 2018 | Glossary
Term
Performance Right
Potential Class 1 Injury or PC1
PPP
Principles
Safety Essentials
SAR
Sedgman
Special Committee
S&P
STI
Subsidiary
SDG
TFR
Thiess
TRIFR
TSR
Turner
UGL or Services
Ventia
VWAP
Description
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
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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CIMIC Group I Annual Report 2018
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CIMIC Group I Annual Report 2018
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Trusted experience.
Integrated solutions.
249
CIMIC Group I Annual Report 2018
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CIMIC Group I Annual Report 2018
250
For more information please contact CIMIC:
Level 25, 177 Pacific Highway, North Sydney NSW 2060, Australia
PO Box 1002, Crows Nest NSW 1585, Australia
T +61 2 9925 6666 F +61 2 9925 6000 www.cimic.com.au
CIMIC.COM.AU
© CIMIC Group Limited
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