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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.
1
CIMIC Group I Annual Report 2019
Sydney Metro City & Southwest
CPB Contractors, Pacific Partnerships and UGL supported by EIC Activities, New South Wales, Australia
CIMIC Group I Annual Report 2019
2
Executive Chairman’s review
Marcelino Fernández Verdes
Executive Chairman
Dear shareholders, CIMIC
Group has a long-held
objective of generating
sustainable returns for
shareholders, as we deliver
projects for our clients
while providing safe,
rewarding and fulfilling
careers for our people. In
2019, our core operations
of construction, mining
and mineral processing,
services and public private
partnerships (PPPs)
advanced our progress on
this aim, achieving robust
operating performances.
We continued to win new work and
deliver positive outcomes for our
clients. Our operating companies
achieved improved returns, with net
profit after tax (NPAT) (excluding the
one-off impact from BIC Contracting
(BICC)1) up 3% on 2018 to
$800 million.
Our decision to exit our financial
investment in the Middle East will
allow us to focus our resources and
capital allocation on the growth
opportunities in our core markets
in Australia, New Zealand and Asia
Pacific.
The one-off post tax impact of
$(1.8) billion associated with this
decision has resulted in statutory
NPAT of $(1.0) billion. Consequently,
we have not declared a final
dividend for 2019. Notwithstanding
this non-recurring impact on our
2019 financial results, leaving the
region is the appropriate long-term
decision for our business and for our
shareholders.
* see page 13 for footnotes
3
CIMIC Group I Annual Report 2019
There is a total of $160 billion of
tenders relevant to CIMIC to be bid
and/or awarded in 2020, and
$380 billion of projects are coming to
the market in 2021 and beyond. This
pipeline includes around $130 billion
worth of PPP opportunities identified
for 2020 and beyond.
We are capitalising on this strong
pipeline, including the increasing
number of Alliance contracts and
long-term mining and services
contracts that are coming to the
market. This will further improve the
risk profile of our work in hand, and
gives us further confidence in the
outlook for our financial performance.
I’d like to thank our outgoing Chief
Executive Officer and Managing
Director, Michael Wright, for his
dedication and achievements during
his time in the role. With almost
25 years’ experience in our Group,
the Board and I are pleased that his
expertise will be retained within our
business. Michael has accepted an
exciting new leadership role within
CIMIC Group, on which I will provide
further details in the near future.
Our focus for 2020, led by Juan, is
on sustainable growth and returns.
The Group’s opportunities continue
to strengthen, as governments
and private clients in our markets
prioritise social, economic and
resources infrastructure projects to
support the growth in urbanisation
and respond to environmental
challenges globally.
Looking forward, our prospects are
positive, and we are confident about
the outlook for our business and our
markets, with work in hand2 of
$37.5 billion.
Our future
I am pleased to announce the
appointment of Juan Santamaria as
Chief Executive Officer and Managing
Director, effective from 5 February
2020. Juan is a highly regarded
leader with more than
18 years’ experience leading diverse
businesses within our sectors.
A civil engineer, Juan has extensive
experience in construction, services
and PPPs, and a long history of
high performance within the Group,
including in his current position
leading CPB Contractors and his
previous role leading UGL.
Juan has a strong understanding
of CIMIC’s entire operations, and
a total commitment to our clients
and to developing our people. The
Board and I are confident that he will
continue CIMIC’s sustainable growth.
Sydney Metro Northwest
CPB Contractors, UGL and Pacific Partnerships
supported by EIC Activities, New South Wales, Australia
CIMIC Group I Annual Report 2019
4
Our unique combination of PPPs,
construction, mining and mineral
processing, and services expertise
is key to our continued success,
and our focus on bidding discipline
and project delivery will ensure we
translate new opportunities into
value for our clients, shareholders,
employees and communities.
Our operating teams remained
focused on our sustainability
performance and safety, supporting
the physical and mental wellbeing
of our most important assets –
our people.
We expect to achieve NPAT in the
range of $810 million to $850 million
in 2020, subject to market conditions.
Innovation and digitalisation
As we look to the future, we
continue to invest in innovation
and digitalisation to maintain and
enhance our competitive advantage
and resilience.
Our ongoing focus in these areas
progressed through our work with
the world’s leading universities
and IT companies. Our new global
technology company, Nexplore,
is jointly undertaking a series of
research projects, including a
partnership with MIT and IBM, that
is contributing to global research
and development in artificial and
augmented intelligence relevant to
our industries.
Nexplore intends to realise the
opportunities offered by new and
emerging technologies, working as a
digital transformation integrator and
accelerator. We want to realise value
from technology today and explore
how it will transform our business
model for tomorrow.
During early 2020, Nexplore will
establish innovation hubs in Hong
Kong and Australia, within the Hong
Kong Science and Technology Park
and the University of Technology
Sydney respectively. This is one part
of a larger culture of innovation that
is present across our operations.
Our people are continually seeking
better ways to solve problems
and improve, adapt and evolve in
everything we do, including our
focus on engineering and technical
excellence championed by EIC
Activities.
A leader in sustainability
At CIMIC Group we believe that
sustainability is integral to the
creation of value. Our approach is
about building a reputation as a
provider of choice with our clients
and shareholders, and creating a
positive legacy for our stakeholders,
our people and their families, and for
the communities in which we work
and live.
Operating sustainably also provides
us with opportunities to be part
of the solution to help address
the climate change challenge and
to expand our operations as a
trusted partner to clients and other
stakeholders seeking to transition to
a low-carbon future.
Efforts to mitigate and adapt
to climate change will produce
opportunities for CIMIC, through
infrastructure and utility
development, access to new markets,
enhanced resource efficiency leading
to cost savings, the adoption of low-
emission energy sources, and the
development of new products and
services.
This year we advanced our
sustainability commitments,
achieving the highest rating for
reporting on environmental, social
and governance factors from the
Australian Council of Superannuation
Investors.
Further recognition for our leadership
in sustainability is also provided
through CIMIC’s inclusion in the
FTSE4Good Index for the fourth
year in a row. The FTSE4Good
Index Series is designed to identify
companies that demonstrate strong
environmental, social and governance
practices measured against globally
recognised standards.
I encourage you to review our
Sustainability Report within this
Annual Report.
Thank you
In summary, we continue to make
progress on our objectives and
the Group remains in a strong
financial position. Our balance
sheet provides flexibility to pursue
strategic growth initiatives and
capital allocation opportunities and
our operating companies continue
to deliver sustainable returns to our
shareholders.
Sincerely
Marcelino Fernández Verdes
Executive Chairman
WestConnex M4 East
CPB Contractors supported by EIC Activities, New South Wales, Australia
5
CIMIC Group I Annual Report 2019
CIMIC Group I Annual Report 2019
6
Sydney Metro City & Southwest
CPB Contractors, Pacific Partnerships and UGL supported by EIC Activities, New South Wales, Australia
7
CIMIC Group I Annual Report 2019
Chief Executive Officer’s review
Michael Wright
Chief Executive Officer
Violence and bullying in all forms,
both in the workplace and beyond,
impacts on the health and safety of
our people at work, their wellbeing
and those around them. The
introduction of this policy is a further
step in helping us build a strong
and inclusive culture that advances
equality and helps eliminate bullying,
harassment and discrimination.
We also continued to invest in our
people with our leadership and
graduate programs, our ongoing
focus on promoting diversity and
inclusion, and enabling career
progression across our operating
companies.
Ultimately, it was the performance
of our talented people across our
various operating companies, that
underpinned our operating results
this year.
The safety of our people remains
our number one priority. So it is with
great sadness that I report a fatality
in our operations in early 2020. Our
thoughts and profound sympathies
are with our colleague’s family and
partner, his friends and teammates,
and we are providing assistance to
all of those who were affected. There
were no fatalities in 2019.
Dear shareholders,
in 2019, CIMIC Group
achieved a solid
operating performance.
We continued to secure
a solid pipeline of new
work, building value
for our clients through
efficiency and innovation
in our operations, and
maintaining our focus
on safety.
We also worked to strengthen the
diverse and inclusive culture of our
teams and develop the careers of
our people.
Safety and culture
Our approach to safety focuses on
creating a workplace culture that
promotes safety and productivity,
with strong leadership, training and
communication, underpinned by
robust risk management systems.
We continue to proactively identify
critical risks in our operations and
implement management strategies
and engineering systems to ensure
that our people are not exposed to
any uncontrolled risks.
Our focus on the physical and
emotional safety of our people
extends beyond the workplace. This
year we introduced a new policy
which underpins our Group-wide
commitment to provide support to
our people and their families who
may be experiencing family and
domestic violence.
* see page 13 for footnotes
CIMIC Group I Annual Report 2019
8
Work winning
Our teams won $18.0 billion of new
work3 in 2019 building a solid pipeline
of opportunities for the future. We
have $37.5 billion of work in hand,
representing more than two years of
work and providing a solid outlook
for our future.
Our key wins for the year included
the selection of Pacific Partnerships,
CPB Contractors and UGL across two
packages of work for Cross River Rail
in Brisbane, the largest infrastructure
project to date in Queensland. These
works, to be delivered through an
Alliance and a PPP, provide CIMIC
with $3.6 billion in work, and are
excellent examples of how the Group
provides engineering-led solutions
that integrate the capabilities of
several of our companies.
CPB Contractors secured close
to $1 billion of work redeveloping,
expanding and building hospitals in
NSW, and won some $500 million of
construction work in New Zealand
during the year.
Other major project wins that
highlight the benefits of our
integrated approach include:
• Pacific Partnerships, UGL and
CPB Contractors, as part of the
Momentum Trains consortium, were
selected to deliver the Regional
Rail PPP in NSW, generating
revenue of $725 million
• UGL and Pacific Partnerships
were granted an extension to the
existing PPP contract at Sydney
Metro, generating revenue of
$366 million.
In the mining sector, our key wins for
the year included multibillion-dollar
extensions to Thiess’ existing mining
services projects in Botswana and
Queensland, contributing some
$3 billion in new work for these two
projects alone.
Performance overview
In 2019, our underlying operations
performed well, with growth in NPAT
(excluding BICC), solid operating
cash flow4, stable revenue5 and
diversified work in hand.
Our results include:
• Statutory NPAT of $(1.0) billion;
NPAT (excluding BICC) of
$800 million, up 3% YOY6;
Karratha Gas Plant services project
UGL Western Australia
9
CIMIC Group I Annual Report 2019
I look forward to being part of the
Group’s continued success in my
new position. Thank you to all of the
great people who contribute to our
ongoing success.
Sincerely
Michael Wright
Chief Executive Officer
• Revenue of $14.7 billion; stable
• Awarded new work9 of $18.0 billion;
operating profit7, PBT and NPAT
margins8 of 8.4%, 7.5% and 5.4%
respectively (excluding BICC)
• One-off post tax impact of
$(1.8) billion relating to the Group’s
exposure to the non-controlling
financial investment in BICC, as a
result of the decision to exit the
Middle East
• Operating cash flow of $1.7 billion,
no variation in factoring, 80%
EBITDA cash conversion (excluding
BICC)
• Operating cash flow up strongly
by more than $1 billion YOY pre
factoring
• Net cash of $832 million and
$3.0 billion of undrawn facilities
• Returned $526 million to
shareholders through dividends
($509 million) and share buyback
($17 million)
• Solid investment grade credit
ratings reaffirmed by Moody’s
(Baa2/Stable) and S&P (BBB/
Stable/A-2) in January 2020, after
the announcement to exit the
Middle East
bidding discipline maintained
• Robust work in hand of
$37.5 billion, equivalent to more
than two years’ worth of revenue,
provides good visibility
• FY20 NPAT guidance in the range
of $810 million to $850 million,
subject to market conditions.
Further details on our company’s
performance are contained in the
Operating and Financial Review
section within this Annual Report.
Our future
We will continue to build on these
achievements. CIMIC’s key priorities
for 2020 will be led by Juan, who
I congratulate on his appointment.
These priorities are: to continue our
focus on winning new work as an
integrated team, delivering value
to our clients through excellence in
our operations, nurturing our strong,
diverse and inclusive culture, and
ensuring that the safety of our people
remains our primary concern.
CIMIC Group I Annual Report 2019
10
CIMIC in 2019
1st
Safety
40,000
Employees
120
Years
We put safety first.
Looking out for each other
is an essential part of
our culture. It underpins
everything we do and
reflects our determination
to keep our people, and
those under our care, safe.
Our operating companies
each drive significant
safety and health
programs. Our target is the
elimination of fatalities and
permanent disabilities, and
the reduction of all other
injuries.
40,000 talented team
members working in more
than 20 countries.
We attract, develop and
retain top talent to deliver
projects that push the
boundaries of engineering
for better, more sustainable
solutions that take us
into the future. Each
person brings their own
story, experience and
perspective to their job and
this diversity of thought,
capability and skill makes
our business stronger.
120 years of experience –
CIMIC Group’s businesses
have a proud and diverse
history of redefining the
engineering, construction,
mining, services and
public private partnerships
industries.
Our roots run back to
railway rolling stock
production in 1899 – and
a history that includes the
earthmoving business of
five brothers established
in Queensland’s Darling
Downs in 1934 and a listing
on the Melbourne Stock
Exchange in 1962.
New Century Zinc Project
Sedgman, Queensland, Australia
11
CIMIC Group I Annual Report 2019
CIMIC has been responsible for the delivery of
more than 30 PPPs valued at over $60 billion
during the past 25 years.
30
167,000
167,000 hours spent by EIC Activities on more
than 140 tenders, 180 projects and 75 innovations
delivering over $100 million in value.
30,000
30,000 components rebuilt and/or replaced by
Thiess’ component rebuild teams in Australia
and Indonesia.
94%
94% of total waste from projects is recycled or
re-used by CPB Contractors, while 19% of all
electricity used is sourced from renewables.
15,200
15,200 training hours delivered to Leighton Asia’s
indigenous workforce in Indonesia.
35,392,550
Annual total of raw material feed tonnes
processed across Sedgman operations
sites globally.
The number of lost time injuries, incidents,
and near misses recorded during UGL’s largest
maintenance shutdown, which included over
750,000 employee hours.
CIMIC Group I Annual Report 2019
12
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).
1 Excludes the one-off item in respect of the provisions and asset impairments of the Group’s financial investment in BICC and exit from
the Middle East region in 2019
2 Work in hand (WIH) includes CIMIC’s share of work in hand from joint ventures and associates
3 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate movements
4 Operating cash flow includes cash flow from operating activities and changes in short term financial assets and investments before
interest, finance costs and taxes
5 Revenue excludes revenue from joint ventures and associates of $2,506.0m (FY18: $2,582.6m)
6 Year on year performance during the 12-month period to 31 December 2019 compared to the 12-month period to 31 December 2018
7 Operating profit is EBIT adjusted for the one-off item in respect of the provisions and asset impairment of the Group’s financial
investment in BICC and exit from the Middle East region
8 Margins are calculated on revenue which excludes revenue from joint ventures and associates. Margins excluding BICC are calculated as
the net of the one-off item in respect of the provisions and asset impairments of the Group’s financial investment in BICC and exit from
the Middle East region
9 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate movements
13
CIMIC Group I Annual Report 2019
Contents
16
Directors’ Report
Operating and Financial Review 26
Remuneration Report 46
60
Sustainability Report
138
Financial Report
242
Additional Information
Shareholdings 243
Shareholder Information 245
Glossary 246
Canberra Light Rail
Pacific Partnerships, CPB Contractors and UGL, Australian Capital Territory, Australia
CIMIC Group I Annual Report 2019
14
Peak Downs Thiess, Queensland, Australia
Thiess’ open cut mining services at Peak Downs deliver overburden
removal, and operate and maintain three ultra-class equipment
fleets.
In 2019, Thiess introduced a new state-of-the-art workshop. Similar
to a large aircraft hanger, the steel structure stands seven stories
high, has a double dome roof and allows up to four Caterpillar 797s
to be serviced simultaneously.
Designed and built in collaboration with Sedgman and CPB
Contractors, the solution integrates CIMIC Group’s civil, mechanical
and electrical engineering expertise.
Sustainable engineering ensures the structure is a moveable asset,
that can be dismantled at project completion, and reassembled at
another location or site.
15
CIMIC Group I Annual Report 2019
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CIMIC Group I Annual Report 2019
16
CIMIC Group Limited Annual Report 2019 | Directors’ Report
Directors’ Report
The Directors present their report for the 2019 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 4 February 2020.
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).
17
CIMIC Group Limited Annual Report 2019 | Directors’ Report
CIMIC Group Limited Annual Report 2019 | Directors’ Report
The Directors present their report for the 2019 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
Directors’ Report
dated 4 February 2020.
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.
Independent Non-executive Director
RUSSELL CHENU
BCom, MBA, CPA
and Nomination Committee.
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
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).
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., a member of Cobra Gestión de Infraestructuras, S.A. and is currently a member of the Supervisory
Board of HOCHTIEF AG.
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, Chairman of Dragados
S.A., Chairman of ACS Services y Concesiones S.A. and Vice Chairman ACS Servicios Comunicaniones y Energia S.A.; Chair of
Supervisory Board of HOCHTIEF AG, and Board Member of Abertis.
Mr López Jiménez is also Vice 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.
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).
18
CIMIC Group Limited Annual Report 2019 | Directors’ Report
PETER-WILHELM SASSENFELD
Non-executive Director
MBA
Appointed Non-executive Director in November 2011.
Member of the Audit and Risk Committee.
Mr Sassenfeld has an MBA from the University of Saarland.
Mr Sassenfeld was appointed as the CFO of HOCHTIEF AG in November 2011 and is 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. He
was a director of Abertis Infraestructuras, S.A.
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 and Remuneration and Nomination Committee and Member of
the Audit and Risk 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 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: 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 (March 2012 to September 2017), Xenith IP Ltd (April 2017
to August 2019), 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. 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’s Chief Financial Officer.
Mr Muriel is currently the Deputy General Manager to the CEO of ACS in Madrid, Spain.
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.
19
CIMIC Group Limited Annual Report 2019 | Directors’ Report
CIMIC Group Limited Annual Report 2019 | Directors’ Report
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.
was a director of Abertis Infraestructuras, S.A.
KATHRYN SPARGO
Independent Non-executive Director
LLB (Hons), BA, FAICD
Appointed Non-executive Director in September 2017.
the Audit and Risk 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. He
Chairman of the Ethics, Compliance and Sustainability Committee and Remuneration and Nomination Committee and Member of
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: 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 (March 2012 to September 2017), Xenith IP Ltd (April 2017
to August 2019), 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. 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’s Chief Financial Officer.
Mr Muriel is currently the Deputy General Manager to the CEO of ACS in Madrid, Spain.
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, Senior Regional Executive, APAC
Regional Office (Australia) for Hitachi Ltd and is a member of the Business Council of Australia and Asia Society’s “Asia Taskforce”.
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. From 2016 to 2019 Mr Seidler AM was the
NSW Government’s Special Envoy – Japan. 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 from October 2016 to 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.
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.
COMPANY SECRETARIES’ RESUMÉS
LOUISE GRIFFITHS
Company Secretary
BSc, BA, 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 a fellow 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 19 years experience in a company secretary
role. Ms Nikolopoulos is also the company secretary of a number of subsidiaries of CIMIC.
FORMER OFFICEHOLDERS
During the 2019 Financial Year the following people ceased to be officeholders of the Company:
Name
Trevor Gerber
Position
Independent Non-executive Director
Period
11 June 2014 to 31 December 2019
20
CIMIC Group Limited Annual Report 2019 | Directors’ Report
BOARD MEETINGS
The number of Board and Board Committee meetings held, and the number of meetings attended by each Director, during the
2019 Financial Year are set out in the table below.
Board
Audit & Risk
Committee
Ethics, Compliance &
Sustainability
Committee
Remuneration &
Nomination
Committee
Board Sub-
Committee#
Directors
M Fernández
Verdes
M Wright
R Chenu
J L del Valle Pérez
P Lopéz Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
Á Muriel1
R Seidler AM2
A Valderas3
H
6
6
6
6
6
6
6
6
-
-
-
A
6
6
6
6
6
6
6
6
6*
6*
6*
H
-
-
4
-
-
-
4
-
-
-
-
A
4+
4+
4
4+
4+
4+
4
4+
4*
4*
4*
H
-
-
4
4
4
4
-
4
-
-
-
A
4+
4+
4
3
4
4
1+
4
4*
4*
4*
H
-
-
2
2
2
-
-
-
-
-
-
A
2+
2+
2
1
2
2+
-
2+
1*
2*
2*
H
-
2
2
-
-
2
-
2
-
-
-
Former Directors
T Gerber4
H
6
4
The number of meetings held during the period the Director/Alternate Director was a member of the Board and/or Committee (including 2
meetings conducted via circular resolution).
The number of meetings attended by the Director during the period the Director/Alternate Director was a member of the Board and/or
Committee (including 2 meetings conducted via circular resolution).
4
2
2
6
4
4
-
A
A
-
2
2
-
-
2
-
2
-
2*
-
-
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.
4 Mr Gerber retired from the Board on 31 December 2019.
In addition to scheduled meetings, briefing sessions were held for Directors during the year.
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.
21
Board
Audit & Risk
Ethics, Compliance &
Remuneration &
Committee
Sustainability
Committee
Nomination
Committee
Board Sub-
Committee#
H
6
6
6
6
6
6
6
6
-
-
-
6
A
6
6
6
6
6
6
6
6
6*
6*
6*
6
H
-
-
4
-
-
-
4
-
-
-
-
4
A
4+
4+
4
4+
4+
4+
4
4+
4*
4*
4*
4
H
-
-
4
4
4
4
-
4
-
-
-
4
A
4+
4+
4
3
4
4
1+
4
4*
4*
4*
4
H
-
-
2
2
2
-
-
-
-
-
-
2
A
2+
2+
2
1
2
2+
-
2+
1*
2*
2*
2
H
-
2
2
-
-
2
-
2
-
-
-
-
A
-
2
2
-
-
2
-
2
2*
-
-
-
Directors
M Fernández
Verdes
M Wright
R Chenu
J L del Valle Pérez
P Lopéz Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
Á Muriel1
R Seidler AM2
A Valderas3
Former Directors
T Gerber4
H
The number of meetings held during the period the Director/Alternate Director was a member of the Board and/or Committee (including 2
meetings conducted via circular resolution).
A
The number of meetings attended by the Director during the period the Director/Alternate Director was a member of the Board and/or
Committee (including 2 meetings conducted via circular resolution).
# 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.
4 Mr Gerber retired from the Board on 31 December 2019.
In addition to scheduled meetings, briefing sessions were held for Directors during the year.
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.
CIMIC Group Limited Annual Report 2019 | Directors’ Report
CIMIC Group Limited Annual Report 2019 | Directors’ Report
BOARD MEETINGS
2019 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
DIRECTORS’ INTERESTS
Details of the Directors’ relevant interests in the issued capital of the Company and its related body corporates as at the date of this
Directors’ Report are listed in the table below.
Name
Relevant interests in CIMIC
Relevant interests in ACS and/or HOCHTIEF AG
Directors
M Fernández Verdes
M Wright
R Chenu
J L del Valle Pérez
P López Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
Á Muriel
R Seidler AM
A Valderas
Former Director
T Gerber
Ordinary
shares
2,7452
10,000
4,085
1,0002
1,1922
1,489
1,8582
4,000
14,991
2,941
2,500
2,000
Options1
Ordinary
shares
13,336 (ACS)
822,369 (ACS)*
12,931 (HOCHTIEF AG)
-
-
286,223 (ACS)
594,578 (ACS)~
-
15,342 (HOCHTIEF AG)
-
4,216 (ACS)
910 (ACS)
1,563 (ACS)
-
23,537
-
-
-
-
-
-
12,127
-
20,924
-
Options
over shares
500,000 (ACS)
-
-
275,000 (ACS)
-
-
-
-
275,000 (ACS)
-
200,000 (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
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 2019 Financial Year:
§
§
the Company submitted its NGER Scheme report with EY, our NGER Scheme external auditor, providing limited assurance; and
across the 147.8 million hours worked on projects there were no material breaches of legislation or conditions of approval
(ie, those resulting in prosecution, significant financial penalties or contractual action against the Company, executive officers
or individuals). However, there were 32 breaches which involved written warnings from environmental regulators and 18 fines
totalling $307,538, the detail of which is set out in the Sustainability Report.
CPB Contractors recorded 1 Level 1 incident which related to a prosecution for the WestConnex New M5 Project. After
pleading guilty in October 2018, CPB Contractors was convicted in September 2019, in the NSW Land & Environment Court, for
causing offensive odours to be emitted at the WestConnex M5 St Peters Interchange. The offences were committed on four
occasions in April, May and June 2017 in the course of construction activities. Steps have now been taken to prevent those
incidents reoccurring.
§
CPB Contractors has expressed its genuine and sincere apology to the community and residents for the odour. On 25
September 2019, CPB Contractors was ordered to pay a total of $295,000 to the Environment Trust in lieu of a fine; pay the
Environmental Protection Authority’s investigation and legal costs; publish a notice of apology in various media; and provide a
notice to nearby residents.
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.
22
CIMIC Group Limited Annual Report 2019 | Directors’ Report
OPTIONS
As at the date of this Directors’ Report, there are 104,005 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.
2015 options
Number of participants at date of grant
Date of grant
Exercise price
Expiry date
Number of options
Original number issued
On issue 5 Feb 20191
Lapsed since 5 Feb 2019
Exercised since 5 Feb 2019
On issue 4 Feb 20202
1
2
Date of the Directors’ Report contained in the 2018 CIMIC Annual Report.
Date of this Directors’ Report.
36
29 October 2015
$27.53
29 October 2020
735,636
178,513
-
(74,508)
104,005
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. On 23 October 2018, the Company determined that
all remaining options be settled in cash in lieu of an allocation of shares and accordingly, during the 2019 Financial Year all vested
options were satisfied in cash. 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.
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.
§
23
Number of participants at date of grant
2015 options
Date of grant
Exercise price
Expiry date
Number of options
Original number issued
On issue 5 Feb 20191
Lapsed since 5 Feb 2019
Exercised since 5 Feb 2019
On issue 4 Feb 20202
36
29 October 2015
$27.53
29 October 2020
735,636
178,513
-
(74,508)
104,005
Date of the Directors’ Report contained in the 2018 CIMIC Annual Report.
1
2
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. On 23 October 2018, the Company determined that
all remaining options be settled in cash in lieu of an allocation of shares and accordingly, during the 2019 Financial Year all vested
options were satisfied in cash. 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.
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.
CIMIC Group Limited Annual Report 2019 | Directors’ Report
CIMIC Group Limited Annual Report 2019 | Directors’ Report
OPTIONS
As at the date of this Directors’ Report, there are 104,005 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.
INSURANCE FOR GROUP OFFICERS
During and since the end of the 2019 Financial Year, the Company has paid or agreed to pay premiums in respect of contracts
insuring persons who are or have been an Officer against certain liabilities (including legal costs) incurred in that capacity.
Under the directors’ deeds and the deeds of indemnity described above, the Company has undertaken to the relevant Officer,
employee or former Officer or employee that it will insure the Officer or employee against certain liabilities incurred in their
applicable capacity in the Company or any Subsidiary or as an Officer or employee of a non-controlled entity where the position is,
or was, held at the request of the Company or any Subsidiary.
The insurance contracts entered into by the Company prohibit disclosure of the specific nature of the liabilities covered by the
insurance contracts and the amount of the premiums.
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 2019 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 2019 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 2019 Financial Year is compatible with the general standard of independence for
auditors imposed by the Corporations Act.
The Board is satisfied that the provision of non-audit services by Deloitte, as set out in the following table, did not compromise the
auditor independence requirements of the Corporations Act for the following reasons:
§
all non-audit services were reviewed by the Audit and Risk Committee and the Committee believes that they do not impact the
impartiality and objectivity of Deloitte because of the nature of the services provided during the 2019 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 2019 Financial Year were as follows.
Non-audit services
Other assurance services
Taxation and other services
Total
Amount paid/payable $’000
105
-
105
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 2019 Financial Year in accordance with section 295A of the Corporations Act.
24
CIMIC Group Limited Annual Report 2019 | 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
2019, 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, 4 February 2020
25
CIMIC Group Limited Annual Report 2019 | Directors’ Report
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
Operating and Financial Review
FINANCIAL OVERVIEW
Revenue of $14.7 billion in FY19 with growth in Mining and Australian Construction.
Stable operating profit1, PBT and NPAT margins (excluding BICC)2 of 8.4%, 7.5% and 5.4% respectively.
OPERATING PERFORMANCE
§
§
§ Operating profit1 of $1.2 billion, up $55.4 million on FY18.
§
§ NPAT (excluding BICC)2 of $800.3 million versus $778.5 million in FY18, up 3% YOY.
§ One-off post tax impact of $(1.8) billion relating to the financial investment of BIC Contracting (BICC) as a result of the decision
PBT (excluding BICC)2 of $1.1 billion, up $28.3 million on FY18.
to exit the Middle East region. Statutory NPAT of $(1.0) billion.
CASH FLOWS
§ Operating cash flows of $1.7 billion, up substantially by more than $1.0 billion YOY pre-factoring.
§
§
§
§ Maintained strict focus on managing working capital and generating sustainable cash-backed profits.
Factoring stable YOY at $1.96 billion.
Delivered 80% EBITDA cash conversion (excluding BICC)2 in FY19.
Gross capital expenditure of $774.4 million driving growth in mining and delivering job-costed tunnelling opportunities.
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
2019, 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, 4 February 2020
FINANCIAL POSITION
§ Net cash of $831.6 million at December 2019.
§
§
§
Ample liquidity supported by $3.0 billion of undrawn debt facilities available at 31 December 2019.
Successfully refinanced and expanded $1.9 billion syndicated bank facility reflecting balance sheet strength.
Solid investment grade credit ratings reaffirmed by Moody’s (Baa2/Stable) and S&P (BBB/Stable/A-2) in January 2020, after
the announcement to exit the Middle East.
Cost of debt down 50 basis points to 3.3%, reduced from 3.8% at December 2018.
§
§ Net contract debtors of $1.3 billion reflects the completion of various large infrastructure projects, the award of numerous
alliance style contracts with a different working capital profile and growth in mining.
WORK IN HAND AND PIPELINE
§ Work in hand of $37.5 billion, equivalent to more than two years of revenue, provides good visibility.
§ New work of $18.0 billion awarded in FY19, disciplined bidding maintained.
§ Operating Companies’ work in hand increased by 4.4% or $1.5 billion on FY18 to $35.3 billion, with a significant number of
§
§
projects announced during the year.
Expanding project pipeline across core markets/activities, providing a range of business opportunities.
$160 billion of tenders relevant to CIMIC to be bid and/or awarded in 2020, and around $380 billion of projects expected to
come to market in 2021 and beyond, including about $130 billion worth of Public Private Partnership (PPP) projects.
SHAREHOLDER RETURNS
§
Returned $525.8 million of cash to shareholders in FY19 through dividends paid ($509.1 million) and share buyback ($16.7
million).
EPS (basic) excluding BICC one-off was 246.9c cents, up 2.8% on FY18 (in line with increase in NPAT excluding BICC).
Paid an ordinary interim dividend of 71.0 cents per share, up 1.4% YOY, fully franked, on 3 October 2019.
Due to the one-off BICC impairment, CIMIC has not declared a final dividend for FY19.
§
§
§
GUIDANCE
§
§
§
FY20 NPAT expected to be in the range of $810 million to $850 million, subject to market conditions.
Guidance supported by strong level of work in hand and positive outlook across the Group’s core markets.
Disciplined focus on sustaining a strong balance sheet, generating cash, and a rigorous approach to tendering and project
delivery.
1 Operating profit is EBIT adjusted for the one-off item in respect of the provisions and asset impairments of the Group’s financial
investment in BICC and exit from the Middle East region in FY19.
2 Excludes the one-off item in respect of the provisions and asset impairments of the Group’s financial investment in BICC and exit from the
Middle East region in FY19.
26
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
FINANCIAL OVERVIEW
Financial performance
$m
Group revenue
Revenue – joint ventures and associates
Revenue4
Expenses
Share of profit/(loss) of joint ventures and associates
Operating profit5
Operating profit margin6
Net finance costs
Profit before tax (excl. BICC)7
PBT margin (excl. BICC)6
Income tax (excl. BICC)7
Profit for the year (excl. BICC)7
Non-controlling interests
NPAT (excl. BICC)7
NPAT margin (excl. BICC)6
EPS (basic) – excl. BICC
One-off BICC item8
NPAT
NPAT margin6
EPS (basic)
2019
20183
17,207.1
(2,506.0)
14,701.1
(13,538.7)
66.7
1,229.1
8.4%
(129.2)
1,099.9
7.5%
(297.0)
802.9
(2.6)
800.3
5.4%
246.9c
(1,840.2)
(1,039.9)
(7.1)%
(320.9)c
17,252.8
(2,582.6)
14,670.2
(13,555.0)
58.5
1,173.7
8.0%
(102.1)
1,071.6
7.3%
(299.9)
771.7
6.8
778.5
5.3%
240.1c
-
778.5
5.3%
240.1c
chg. $
(45.7)
76.6
30.9
16.3
8.2
55.4
40bp
(27.1)
28.3
20bp
2.9
31.2
(9.4)
21.8
10bp
6.8c
chg. %
(0.3)%
(3.0)%
0.2%
(0.1)%
14.0%
4.7%
26.5%
2.6%
(1.0)%
4.0%
-
2.8%
2.8%
Financial position
$m
Net cash/(debt) (excl. BICC)9
One-off BICC item 201910
Net cash/(debt)
Lease liabilities
Net cash/(debt) (incl. leases)
Net contract debtors11
December
2019
1,230.2
(398.6)
831.6
(902.1)
(70.5)
December
20183
1,622.4
-
1,622.4
(908.9)
713.5
1,285.7
1,098.9
chg. $
chg. %
(392.2)
(398.6)
(790.8)
6.8
(784.0)
186.8
(24.2)%
-
(48.7)%
(0.7)%
-
17.0%
3 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
4 Revenue excludes revenue from joint ventures and associates of $2,506.0 million (FY18: $2,582.6 million).
5 Operating profit is EBIT adjusted for the one-off item in respect of the provisions and asset impairments of the Group’s financial
investment in BICC and exit from the Middle East region in FY19.
6 Margins are calculated on revenue as defined above. Margins excluding BICC are calculated net of the one-off item in respect of the
provisions and asset impairments of the Group’s financial investment in BICC and exit from the Middle East region in FY19.
7 Excludes the one-off item in respect of the provisions and asset impairments of the Group’s financial investment in BICC and exit from the
Middle East region in FY19.
8 One-off relates to the provisions and asset impairments (net of tax) of the Group’s financial investment in BICC and exit from the Middle
East region in FY19.
9 Net cash/(debt) includes cash and equivalent liquid assets (which includes cash, cash equivalents and short term financial assets
investments). 2019 Net cash/(debt) excludes the $398.6 million funded to BICC in FY19.
10 Funding provided to BICC in FY19.
11 Net contract debtors represents the net amount of total contract debtors–trade and other receivables and total contract liabilities–trade
and other payables (refer to the Financial Report, ‘Note 10: Trade and other receivables’–‘Additional information on contract debtors’).
27
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
chg. $
(45.7)
76.6
30.9
16.3
8.2
55.4
40bp
(27.1)
28.3
20bp
2.9
31.2
(9.4)
21.8
10bp
6.8c
chg. %
(0.3)%
(3.0)%
0.2%
(0.1)%
14.0%
4.7%
26.5%
2.6%
(1.0)%
4.0%
-
2.8%
2.8%
FINANCIAL OVERVIEW
Financial performance
$m
Group revenue
Revenue – joint ventures and associates
Revenue4
Expenses
Share of profit/(loss) of joint ventures and associates
Operating profit5
Operating profit margin6
Net finance costs
Profit before tax (excl. BICC)7
PBT margin (excl. BICC)6
Income tax (excl. BICC)7
Profit for the year (excl. BICC)7
Non-controlling interests
NPAT (excl. BICC)7
NPAT margin (excl. BICC)6
EPS (basic) – excl. BICC
One-off BICC item8
NPAT
NPAT margin6
EPS (basic)
Financial position
$m
Net cash/(debt) (excl. BICC)9
One-off BICC item 201910
Net cash/(debt)
Lease liabilities
Net contract debtors11
2019
20183
17,207.1
(2,506.0)
14,701.1
(13,538.7)
66.7
1,229.1
8.4%
(129.2)
1,099.9
7.5%
(297.0)
802.9
(2.6)
800.3
5.4%
246.9c
(1,840.2)
(1,039.9)
(7.1)%
(320.9)c
December
2019
1,230.2
(398.6)
831.6
(902.1)
1,285.7
17,252.8
(2,582.6)
14,670.2
(13,555.0)
58.5
1,173.7
8.0%
(102.1)
1,071.6
7.3%
(299.9)
771.7
6.8
778.5
5.3%
240.1c
-
778.5
5.3%
240.1c
1,622.4
-
1,622.4
(908.9)
713.5
1,098.9
Net cash/(debt) (incl. leases)
(70.5)
December
20183
chg. $
chg. %
(392.2)
(398.6)
(790.8)
6.8
(784.0)
186.8
(24.2)%
-
(48.7)%
(0.7)%
-
17.0%
Cash flows
$m
Operating cash flow13
Interest, finance costs and taxes
Net operating cash flow14
Gross capital expenditure15
Gross capital proceeds16
Net capital expenditure
Free operating cash flow17
Pre-factoring
2019
1,707.0
(463.8)
1,243.2
(774.4)
22.5
(751.9)
491.3
Pre-factoring
201812
658.4
(150.4)
508.0
(547.4)
82.6
(464.8)
43.2
chg. $
1,048.6
(313.4)
735.2
(227.0)
(60.1)
(287.1)
448.1
Post-factoring
2019
1,714.3
(463.8)
1,250.5
(774.4)
22.5
(751.9)
498.6
Post-factoring
201812
2,053.4
(150.4)
1,903.0
(547.4)
82.6
(464.8)
1,438.2
Work in hand18
$m
Work in hand beginning of period
New work19
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
2019
36,706.1
18,011.7
(17,207.1)
37,510.7
35,316.1
2,194.6
37,510.7
December
2018
36,009.9
17,949.0
(17,252.8)
36,706.1
33,833.1
2,873.0
36,706.1
chg. $
chg. %
696.2
62.7
45.7
804.6
1,483.0
(678.4)
804.6
1.9%
0.3%
(0.3)%
2.2%
4.4%
(23.6)%
2.2%
3 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
4 Revenue excludes revenue from joint ventures and associates of $2,506.0 million (FY18: $2,582.6 million).
5 Operating profit is EBIT adjusted for the one-off item in respect of the provisions and asset impairments of the Group’s financial
investment in BICC and exit from the Middle East region in FY19.
6 Margins are calculated on revenue as defined above. Margins excluding BICC are calculated net of the one-off item in respect of the
provisions and asset impairments of the Group’s financial investment in BICC and exit from the Middle East region in FY19.
7 Excludes the one-off item in respect of the provisions and asset impairments of the Group’s financial investment in BICC and exit from the
Middle East region in FY19.
East region in FY19.
8 One-off relates to the provisions and asset impairments (net of tax) of the Group’s financial investment in BICC and exit from the Middle
9 Net cash/(debt) includes cash and equivalent liquid assets (which includes cash, cash equivalents and short term financial assets
investments). 2019 Net cash/(debt) excludes the $398.6 million funded to BICC in FY19.
10 Funding provided to BICC in FY19.
11 Net contract debtors represents the net amount of total contract debtors–trade and other receivables and total contract liabilities–trade
and other payables (refer to the Financial Report, ‘Note 10: Trade and other receivables’–‘Additional information on contract debtors’).
12 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
13 Operating cash flow includes cash flow from operating activities and changes in short term financial assets and investments, before
interest, finance costs and taxes.
14 Net operating cash flow is defined as operating cash flow after interest, finance costs and taxes.
15 Gross capital expenditure is payments for property, plant and equipment.
16 Gross capital proceeds are proceeds received from the sale of property, plant and equipment.
17 Free operating cash flow is defined as net operating cash flow less net capital expenditure for property, plant and equipment.
18 Work in hand includes CIMIC’s share of work in hand from joint ventures and associates.
19 New work includes new contracts and contract extensions and variations, including the impact of foreign exchange rate movements.
28
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
SHAREHOLDER RETURNS
TOTAL SHAREHOLDER RETURNS
Shareholder returns
Closing share price
Market capitalisation ($m)
Final dividend per share
Interim dividend per share
Total dividends per share
EPS (basic) – excluding BICC
EPS (basic)
Payout ratio for ordinary dividends*
* The payout ratio for ordinary dividends in 2019 was impacted by the Middle East one-off.
31 December
2019
$33.14
10,728.3
-
71c
71c
246.9c
(320.9)c
28.8%
31 December
2018
$43.41
14,075.9
86c
70c
156c
240.1c
240.1c
65.0%
PERFORMANCE OF CIMIC SHARES
In line with our commitment to create long-term shareholder value, over the past five years CIMIC’s share price increased by
$10.64, representing an increase of 47.3% since 31 December 2014, compared to the S&P/ASX 200 index which has increased by
23.5% to 6,684.1 points. Over this period, CIMIC has further remunerated shareholders through the payment of dividends of $6.36
per share, representing an amount of $2,081.3 million. In addition, an amount of $442.6 million has been returned to shareholders
through share buybacks leading to total payments of $2,523.9 million in the form of dividends and share buybacks over the past
five years. CIMIC’s market capitalisation represented $10.73 billion as at 31 December 2019.
Indexed performance of CIMIC shares
DIVIDENDS
CIMIC paid an interim dividend of 71 cents per share, 100% franked, on 3 October 2019.
As a consequence of the BICC one-off impairment, CIMIC has decided not to declare a final dividend for FY19.
SHARE BUYBACK PROGRAM
On 14 December 2018, CIMIC announced an on-market share buyback of up to 10% of its fully paid ordinary shares for a period of
12 months commencing on 29 December 2018. In 2019, a total of 527,341 shares were bought back under this share buyback
program for $16.7 million and the shares were subsequently cancelled.
Another on-market share buyback commenced on 29 December 2019 of up to 10% of the fully paid ordinary shares for a further 12
months. As at 4 February 2020 no additional shares have been bought back. The timing and number of any shares purchased will
depend on CIMIC’s share price and market conditions.
29
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
SHAREHOLDER RETURNS
TOTAL SHAREHOLDER RETURNS
Shareholder returns
Closing share price
Market capitalisation ($m)
Final dividend per share
Interim dividend per share
Total dividends per share
EPS (basic) – excluding BICC
EPS (basic)
31 December
31 December
2019
$33.14
10,728.3
-
71c
71c
246.9c
(320.9)c
28.8%
2018
$43.41
14,075.9
86c
70c
156c
240.1c
240.1c
65.0%
Payout ratio for ordinary dividends*
* The payout ratio for ordinary dividends in 2019 was impacted by the Middle East one-off.
PERFORMANCE OF CIMIC SHARES
In line with our commitment to create long-term shareholder value, over the past five years CIMIC’s share price increased by
$10.64, representing an increase of 47.3% since 31 December 2014, compared to the S&P/ASX 200 index which has increased by
23.5% to 6,684.1 points. Over this period, CIMIC has further remunerated shareholders through the payment of dividends of $6.36
per share, representing an amount of $2,081.3 million. In addition, an amount of $442.6 million has been returned to shareholders
through share buybacks leading to total payments of $2,523.9 million in the form of dividends and share buybacks over the past
five years. CIMIC’s market capitalisation represented $10.73 billion as at 31 December 2019.
Indexed performance of CIMIC shares
DIVIDENDS
CIMIC paid an interim dividend of 71 cents per share, 100% franked, on 3 October 2019.
As a consequence of the BICC one-off impairment, CIMIC has decided not to declare a final dividend for FY19.
SHARE BUYBACK PROGRAM
On 14 December 2018, CIMIC announced an on-market share buyback of up to 10% of its fully paid ordinary shares for a period of
12 months commencing on 29 December 2018. In 2019, a total of 527,341 shares were bought back under this share buyback
program for $16.7 million and the shares were subsequently cancelled.
Another on-market share buyback commenced on 29 December 2019 of up to 10% of the fully paid ordinary shares for a further 12
months. As at 4 February 2020 no additional shares have been bought back. The timing and number of any shares purchased will
depend on CIMIC’s share price and market conditions.
FINANCIAL PERFORMANCE
Financial performance
$m
Group revenue
Revenue – joint ventures and associates
Revenue21
Expenses
Share of profit/(loss) of joint ventures and
associates
Operating profit22
Operating profit margin23
Net finance costs
Profit before tax (excl. BICC)24
PBT margin (excl. BICC)23
Income tax (excl. BICC) 24
Profit for the year (excl. BICC)24
Non-controlling interests
NPAT (excl. BICC)24
NPAT margin (excl. BICC)23
EPS (basic) – excl. BICC
One-off BICC item25
NPAT
NPAT margin23
EPS (basic)
2019
201820
17,207.1
(2,506.0)
14,701.1
(13,538.7)
66.7
1,229.1
8.4%
(129.2)
1,099.9
7.5%
(297.0)
802.9
(2.6)
800.3
5.4%
246.9c
(1,840.2)
(1,039.9)
(7.1)%
(320.9)c
17,252.8
(2,582.6)
14,670.2
(13,555.0)
58.5
1,173.7
8.0%
(102.1)
1,071.6
7.3%
(299.9)
771.7
6.8
778.5
5.3%
240.1c
-
778.5
5.3%
240.1c
chg. $
(45.7)
76.6
30.9
16.3
8.2
55.4
40bp
(27.1)
28.3
20bp
2.9
31.2
(9.4)
21.8
10bp
6.8c
chg. %
(0.3)%
(3.0)%
0.2%
(0.1)%
14.0%
4.7%
26.5%
2.6%
(1.0)%
4.0%
-
2.8%
2.8%
REVENUE AND PROFIT BEFORE TAX BY SEGMENT
Revenue for the year was $14.7 billion, reflecting growth in Mining and Australian Construction. PBT (excluding BICC) was $1,099.9
million for FY19, an increase of 2.6%, or $28.3 million, compared to FY18. The PBT margin (excluding BICC) of 7.5% reflects our
ongoing focus on project delivery and cost discipline.
Revenue by segment
$m
Construction
Mining & Mineral Processing
Services
Corporate
Revenue
Profit before tax by segment (excl. BICC)
$m
Construction
Mining & Mineral Processing
Services
Corporate
Profit before tax (excl. BICC)
2019
2018
chg. $
chg. %
7,532.1
4,496.9
2,626.4
45.7
14,701.1
2019
470.4
603.4
154.7
(128.6)
1,099.9
7,965.2
3,966.9
2,676.5
61.6
14,670.2
201820
621.7
428.5
161.0
(139.6)
1,071.6
(433.1)
530.0
(50.1)
(15.9)
30.9
chg. $
(151.3)
174.9
(6.3)
11.0
28.3
(5.4)%
13.4%
(1.9)%
(25.8)%
0.2%
chg. %
(24.3)%
40.8%
(3.9)%
(7.9)%
2.6%
Group revenue from the various market segments was split 78:22 between domestic and international markets, compared to 73:27
in FY18.
20 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
21 Revenue excludes revenue from joint ventures and associates of $2,506.0 million (FY18: $2,582.6 million).
22 Operating profit is EBIT adjusted for the one-off item in respect of the provisions and asset impairments of the Group’s financial
investment in BICC and exit from the Middle East region in FY19.
23 Margins are calculated on revenue as defined above. Margins excluding BICC are calculated net of the one-off item in respect of the
provisions and asset impairments of the Group’s financial investment in BICC and exit from the Middle East region in FY19.
24 Excludes the one-off item in respect of the provisions and asset impairments of the Group’s financial investment in BICC and exit from
the Middle East region in FY19.
25 One-off relates to the provisions and asset impairments (net of tax) of the Group’s financial investment in BICC and exit from the Middle
East region in FY19.
30
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CONSTRUCTION REVENUE
Construction revenue was $7.5 billion for FY19, a decrease of 5.4% compared to FY18. The revenue reflects a decline in our Hong
Kong construction activities, partially offset by substantial contributions from the delivery of a number of large-scale transport
infrastructure projects in Australia.
During the period, the Group’s major construction projects included:
§
rail and road developments in Australia, including Sydney Metro ‘Northwest’ and ‘City & Southwest’, WestConnex ‘M4 East’,
‘Rozelle Interchange’ and ‘New M5’ and the Woolgoolga to Ballina upgrade in New South Wales, the West Gate Tunnel project
in Victoria, and the Logan Enhancement Project in Queensland;
social infrastructure projects including the Waikeria Corrections Facility and Christchurch Hospital in New Zealand, and the
Junee Correctional Centre in New South Wales;
infrastructure projects in Hong Kong including the Liantang/Hueng Yuen Wai Boundary Control Point, Hong Kong International
Airport ‘Terminal 1 Annex Building and Car Park’ and ‘Terminal 2 Foundation and Substructure works’, and Black Point Power
Station; and
several PPP projects, including Transmission Gully and New Zealand Schools in New Zealand, the Canberra Light Rail in the
Australian Capital Territory and the commencement of the Cross River Rail project in Queensland.
§
§
§
Construction PBT was $470.4 million for FY19 compared to $621.7 million for FY18. This reduced result is reflective of both the
trend in the revenue as well as the ongoing change in market conditions as more projects are being procured in alliance-style
contracts that have a different risk-return and also working capital profile.
MINING & MINERAL PROCESSING REVENUE
Mining & Mineral Processing revenue was $4.5 billion for FY19, an increase of 13.4%, or $530.0 million, compared to FY18. The
increase in revenue reflects a number of contract extensions, increased production levels and contributions from a diverse range of
Mining & Mineral Processing contracts, with the Group benefitting from its portfolio which is diversified across commodities and
geographic markets.
During the period, some of the Group’s most significant Mining & Mineral Processing projects included:
§
§
§
§
§
§
§
Lake Vermont, Mount Owen, Curragh North, Solomon, Mount Arthur, Peak Downs and Caval Ridge mines in Australia;
Byerwen and Mount Pleasant mineral processing projects in Australia;
Kaltim Prima Coal, Melak and Mahakam Sumber Jaya mines in Indonesia;
Ukhaa Khudag mine in Mongolia;
Pumpkin Hollow processing plant in the United States;
Encuentro Oxides mine in Chile; and
Jwaneng mine in Botswana.
Mining & Mineral Processing PBT was $603.4 million for FY19. This strong result is benefitting from revenue growth combined with
further improved margins, driven by a continued focus on leveraging efficiencies and creating value for our clients.
SERVICES REVENUE
Services revenue was $2.6 billion for FY19, a steady contribution compared to FY18, as the Group sustained its competitive position
in the operations and maintenance services market.
During the period, the Group’s major services projects included:
§ maintenance and supply chain services to over 1,200 passenger cars in Sydney’s metropolitan rail fleet;
§ mechanical and electrical works, as well as maintenance, for the Cross River Rail project in Queensland;
§
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;
delivery of operation and maintenance services in Australia’s energy sector, for companies including AGL, Stanwell and Origin;
provision of asset management services for up to 15 years to support the Royal Australian Navy; and
design, build and commissioning of high voltage substations and transmission lines that will connect the Prominent Hill
electricity grid to the South Australian electricity grid.
§
§
§
§
§
§
Services PBT was $154.7 million for FY19 compared to $161.0 million for FY18, with steady margins.
CORPORATE
Corporate PBT was $(128.6) million for FY19, which is stable compared to FY18. This segment includes Corporate, EIC Activities,
Pacific Partnerships and the Commercial & Residential business.
REVENUE – JOINT VENTURES AND ASSOCIATES
Revenue from joint ventures and associates was $2.5 billion for FY19, which includes revenue from investments such as Ventia.
31
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
CONSTRUCTION REVENUE
infrastructure projects in Australia.
Construction revenue was $7.5 billion for FY19, a decrease of 5.4% compared to FY18. The revenue reflects a decline in our Hong
Kong construction activities, partially offset by substantial contributions from the delivery of a number of large-scale transport
During the period, the Group’s major construction projects included:
rail and road developments in Australia, including Sydney Metro ‘Northwest’ and ‘City & Southwest’, WestConnex ‘M4 East’,
‘Rozelle Interchange’ and ‘New M5’ and the Woolgoolga to Ballina upgrade in New South Wales, the West Gate Tunnel project
in Victoria, and the Logan Enhancement Project in Queensland;
social infrastructure projects including the Waikeria Corrections Facility and Christchurch Hospital in New Zealand, and the
Junee Correctional Centre in New South Wales;
infrastructure projects in Hong Kong including the Liantang/Hueng Yuen Wai Boundary Control Point, Hong Kong International
Airport ‘Terminal 1 Annex Building and Car Park’ and ‘Terminal 2 Foundation and Substructure works’, and Black Point Power
Station; and
several PPP projects, including Transmission Gully and New Zealand Schools in New Zealand, the Canberra Light Rail in the
Australian Capital Territory and the commencement of the Cross River Rail project in Queensland.
Construction PBT was $470.4 million for FY19 compared to $621.7 million for FY18. This reduced result is reflective of both the
trend in the revenue as well as the ongoing change in market conditions as more projects are being procured in alliance-style
contracts that have a different risk-return and also working capital profile.
MINING & MINERAL PROCESSING REVENUE
Mining & Mineral Processing revenue was $4.5 billion for FY19, an increase of 13.4%, or $530.0 million, compared to FY18. The
increase in revenue reflects a number of contract extensions, increased production levels and contributions from a diverse range of
Mining & Mineral Processing contracts, with the Group benefitting from its portfolio which is diversified across commodities and
geographic markets.
During the period, some of the Group’s most significant Mining & Mineral Processing projects included:
Lake Vermont, Mount Owen, Curragh North, Solomon, Mount Arthur, Peak Downs and Caval Ridge mines in Australia;
Byerwen and Mount Pleasant mineral processing projects in Australia;
Kaltim Prima Coal, Melak and Mahakam Sumber Jaya mines in Indonesia;
Ukhaa Khudag mine in Mongolia;
Pumpkin Hollow processing plant in the United States;
Encuentro Oxides mine in Chile; and
Jwaneng mine in Botswana.
Mining & Mineral Processing PBT was $603.4 million for FY19. This strong result is benefitting from revenue growth combined with
further improved margins, driven by a continued focus on leveraging efficiencies and creating value for our clients.
SERVICES REVENUE
Services revenue was $2.6 billion for FY19, a steady contribution compared to FY18, as the Group sustained its competitive position
in the operations and maintenance services market.
During the period, the Group’s major services projects included:
§ maintenance and supply chain services to over 1,200 passenger cars in Sydney’s metropolitan rail fleet;
§ mechanical and electrical works, as well as maintenance, for the Cross River Rail project in Queensland;
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;
delivery of operation and maintenance services in Australia’s energy sector, for companies including AGL, Stanwell and Origin;
provision of asset management services for up to 15 years to support the Royal Australian Navy; and
design, build and commissioning of high voltage substations and transmission lines that will connect the Prominent Hill
electricity grid to the South Australian electricity grid.
Services PBT was $154.7 million for FY19 compared to $161.0 million for FY18, with steady margins.
CORPORATE
Corporate PBT was $(128.6) million for FY19, which is stable compared to FY18. This segment includes Corporate, EIC Activities,
Pacific Partnerships and the Commercial & Residential business.
REVENUE – JOINT VENTURES AND ASSOCIATES
Revenue from joint ventures and associates was $2.5 billion for FY19, which includes revenue from investments such as Ventia.
EXPENSES
Expenses were $13.5 billion for FY19, consistent with FY18. The major direct expenses were materials, subcontractors, plant costs,
depreciation and personnel costs.
Depreciation and amortisation
Depreciation and amortisation was $917.6 million for FY19, an increase of 26.2%, or $190.5 million, compared to FY18. The revenue
growth in mining, as well as increases in leased mining equipment and increased tunnelling activity on a number of large
infrastructure projects, has driven the higher level of depreciation.
OPERATING PROFIT
The Group’s operating profit was $1,229.1 million for FY19, an increase of 4.7% or $55.4 million, compared to FY18. This strong
result reflects a diligent focus on project delivery and cost discipline.
NET FINANCE COSTS
Net finance costs were $129.2 million for FY19, an increase of $27.1 million compared to FY18. Higher net finance costs were
recorded due to an increase in the total level of bonding to support the growth of work in hand, mainly in Australian Construction
and PPP projects, as well as additional working capital initiatives and increases in leased asset expenses.
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 debt27
Gross debt average (b)
Average cost of debt (-a/b)
2019
(66.1)
(119.8)
(185.9)
56.7
(129.2)
201826
(73.1)
(84.3)
(157.4)
55.3
(102.1)
chg. $
7.0
(35.5)
(28.5)
1.4
(27.1)
2019
(66.1)
922.9
2,018.4
3.3%
chg. %
(9.6)%
42.1%
18.1%
2.5%
26.5%
2018
(73.1)
522.8
1,938.7
3.8%
INCOME TAX
The income tax expense (excluding BICC) was $297.0 million for FY19, on a similar level compared to FY18. This expense equates to
an effective tax rate of 27.0%, compared with 28.0% for FY18. The reported income tax benefit of $587.5 million is a result of the
one-off item relating to the provisions and asset impairments of the Group’s financial investment in BICC and exit from the Middle
East region.
NON-CONTROLLING INTERESTS
Non-controlling interests were $(2.6) million for FY19 versus $6.8 million for FY18. This relates to gains attributable to the
shareholdings of minority owners for the period.
NET PROFIT AFTER TAX
NPAT (excluding BICC) was $800.3 million for FY19, an increase of 2.8%, or $21.8 million, compared to FY18. Earnings per share
(basic) excluding BICC one-off were 246.9 cents, an increase of 2.8% on FY18. NPAT was impacted by the one-off post tax item of
$(1.8) billion relating to the provisions and asset impairments of the Group’s investment in BICC, which led to a statutory NPAT of
$(1.0) billion.
26 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
27 Total interest bearing liabilities.
32
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
FINANCIAL POSITION
CIMIC’s balance sheet and ample liquidity was maintained in 2019, as the company continued its strict focus on managing working
capital and generating sustainable cash-backed profits.
Net cash/(debt)
$m
Cash and cash equivalent liquid assets (excl.
BICC)29
Current interest bearing liabilities
Non-current interest bearing liabilities
Net cash/(debt) (excl. BICC)30
One-off BICC item 201931
Net cash/(debt)
Lease liabilities
Net cash/(debt) (incl. leases)
Net contract debtors
$m
Net contract debtors
Assets
$m
Current assets
Cash and cash equivalent liquid assets
Trade and other receivables
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
chg. $
7.9
(113.6)
(286.5)
(392.2)
(398.6)
(790.8)
6.8
(784.0)
chg. $
186.8
chg. $
(390.7)
432.3
85.0
(1.5)
125.1
(647.2)
3.8
113.9
December
2019
2,153.1
December
201828
2,145.2
(50.7)
(472.1)
1,622.4
-
1,622.4
(908.9)
713.5
December
2018
1,098.9
December
201828
2,145.2
3,122.1
315.1
1.5
5,583.9
777.6
111.1
136.6
(164.3)
(758.6)
1,230.2
(398.6)
831.6
(902.1)
(70.5)
December
2019
1,285.7
December
2019
1,754.5
3,554.4
400.1
-
5,709.0
130.4
114.9
250.5
112.2
1,025.2
2,279.1
1,104.4
5,016.7
105.4
69.6
2,068.1
1,093.5
4,361.9
6.8
955.6
211.0
10.9
654.8
Total assets
10,725.7
9,945.8
779.9
chg. %
0.4%
-
60.7%
(24.2)%
-
(48.7)%
(0.7)%
-
chg. %
17.0%
chg. %
(18.2)%
13.8%
27.0%
-
2.2%
(83.2)%
3.4%
83.4%
6.5%
-
10.2%
1.0%
15.0%
7.8%
28 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
29 Cash and cash equivalent liquid assets includes cash, cash equivalents and short term financial assets and investments. 2019 Cash and
cash equivalent liquid assets excludes the $398.6 million funded to BICC in FY19.
30 2019 Net cash/(debt) excludes the $398.6 million funded to BICC in FY19.
31 Funding provided to BICC in FY19.
33
118.8
(1.9)
286.5
(5.4)
1.5
399.5
December
2019
December
201832
chg. $
chg. %
354.9
(8.1)
1.2
1,483.4
113.6
(1.4)
1,943.6
6.3%
(11.8)%
0.4%
-
-
(0.5)%
30.4%
6,024.6
60.3
327.2
1,483.4
164.3
277.8
8,337.6
200.8
60.5
758.6
624.3
20.9
1,665.1
5,669.7
68.4
326.0
-
50.7
279.2
6,394.0
82.0
62.4
472.1
629.7
19.4
1,265.6
Total liabilities
10,002.7
7,659.6
2,343.1
Equity
One-off BICC item33
Equity excluding one-off BICC item
723.0
1,840.2
2,563.2
2,286.2
-
2,286.2
(1,563.2)
1,840.2
277.0
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
Liabilities and equity
$m
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Financial liability
Interest bearing liabilities
Lease liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
CIMIC’s balance sheet and ample liquidity was maintained in 2019, as the company continued its strict focus on managing working
capital and generating sustainable cash-backed profits.
FINANCIAL POSITION
Net cash/(debt)
$m
BICC)29
Cash and cash equivalent liquid assets (excl.
Current interest bearing liabilities
Non-current interest bearing liabilities
Net cash/(debt) (excl. BICC)30
One-off BICC item 201931
Net cash/(debt)
Lease liabilities
Net cash/(debt) (incl. leases)
Net contract debtors
$m
Net contract debtors
Assets
$m
Current assets
properties
Assets held for sale
Total current assets
Cash and cash equivalent liquid assets
Trade and other receivables
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
December
2019
2,153.1
December
201828
2,145.2
December
December
December
2019
December
201828
(164.3)
(758.6)
1,230.2
(398.6)
831.6
(902.1)
(70.5)
2019
1,285.7
1,754.5
3,554.4
400.1
-
5,709.0
130.4
114.9
250.5
112.2
1,025.2
2,279.1
1,104.4
5,016.7
(50.7)
(472.1)
1,622.4
-
1,622.4
(908.9)
713.5
2018
1,098.9
2,145.2
3,122.1
315.1
1.5
5,583.9
777.6
111.1
136.6
105.4
69.6
2,068.1
1,093.5
4,361.9
chg. $
7.9
(113.6)
(286.5)
(392.2)
(398.6)
(790.8)
6.8
(784.0)
chg. $
186.8
chg. $
(390.7)
432.3
85.0
(1.5)
125.1
(647.2)
3.8
113.9
6.8
955.6
211.0
10.9
chg. %
0.4%
60.7%
(24.2)%
(48.7)%
(0.7)%
-
-
-
chg. %
17.0%
chg. %
(18.2)%
13.8%
27.0%
-
2.2%
(83.2)%
3.4%
83.4%
6.5%
-
10.2%
1.0%
15.0%
7.8%
Total assets
10,725.7
9,945.8
779.9
654.8
NET CASH/(DEBT)
Net cash (excluding BICC) was $1,230.2 million at 31 December 2019, compared to net cash of $1,622.4 million at 31 December
2018. Operationally, the increased number of recently awarded alliance construction projects with a different working capital
profile, the continued significant growth in Mining, as well as cash outflows from capital expenditure supporting the growth of the
business and tax payments, were the main contributing factors to this decrease.
Net cash was $831.6 million, impacted by the liquidity injections made to BICC during FY19 of $398.6 million.
Interest bearing liabilities
Current and non-current interest bearing liabilities amounted to $922.9 million at 31 December 2019.
During FY19, CIMIC successfully refinanced its core working capital cash facility, as part of its long-term financing strategy. The new
syndicated bank facility is for $1.9 billion, split equally across two tranches of four and five years. It replaced an existing tranche in
CIMIC’s current facility as well as some maturing US dollar debt.
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 2019 were $5.2 billion (31 December 2018: $4.5 billion). An additional $812.2
million (31 December 2018: $1.5 billion) was undrawn of which $753.4 million (31 December 2018: $1.1 billion) was committed and
$58.8 million (31 December 2018: $419.3 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
CIMIC has solid investment grade credit ratings by S&P (BBB/Stable/A-2) and Moody’s (Baa2/Stable), both with a stable outlook,
which reflect the strength of the Group’s financial position. These ratings were reaffirmed on 23rd and 24th January 2020 after
CIMIC’s announcement to exit the Middle East. In the reports, which have also been released to the ASX, S&P published a bulletin
titled “CIMIC’s exit from the Middle East consistent with Group strategy” and Moody’s published an issuer comment titled “Exit
from the Middle East is credit positive”.
28 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
29 Cash and cash equivalent liquid assets includes cash, cash equivalents and short term financial assets and investments. 2019 Cash and
cash equivalent liquid assets excludes the $398.6 million funded to BICC in FY19.
30 2019 Net cash/(debt) excludes the $398.6 million funded to BICC in FY19.
31 Funding provided to BICC in FY19.
32 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
33 One-off item in respect of the provisions and asset impairments (net of tax) of the Group’s financial investment in BICC and exit from the
Middle East region in FY19.
34
-
(3.0)%
60.7%
(0.9)%
7.7%
31.6%
30.6%
(68.4)%
-
12.1%
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CURRENT ASSETS
Trade and other receivables
Trade and other receivables were $3,554.4 million at 31 December 2019, an increase of 13.8%, or $432.3 million, compared to
31 December 2018. The figure includes $2,607.9 million (31 December 2018: $2,297.1 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 $1,285.7 million at 31 December 2019. The increase is partly attributable to the growth in
the Mining business where advance payments are not commonly received. CIMIC has also won a number of alliance construction
contracts in Australia over the past year with a different working capital profile compared to infrastructure projects.
The level of factoring across the Group was $1,960.3 million as at 31 December 2019, which is consistent with the 31 December
2018 position of $1,953.0 million.
The Group’s $675.0 million contract debtors portfolio provision remains unchanged as at 31 December 2019.
Inventories: consumables and development properties
Inventories: consumables and development properties were $400.1 million at 31 December 2019, an increase of $85.0 million
compared to 31 December 2018. 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 $130.4 million at 31 December 2019, a decrease of $647.2 million compared to 31 December
2018. Following the Group’s decision to exit the Middle East, the shareholder loans relating to BICC have been fully impaired to $nil
(31 December 2018: $640.7 million).
Investments accounted for using the equity method
Equity accounted investments include project-related associates, joint ventures and PPP projects.
Investments accounted for using the equity method were $250.5 million at 31 December 2019, an increase of $113.9 million
compared to 31 December 2018. The movement is mainly driven by new PPP investments in the year, partially offset by
successfully achieving financial close on other PPP projects. For further details refer to the Financial Report, ‘Note 13: Investments
accounted for using the equity method’.
Deferred tax asset
Deferred tax assets were $1,025.2 million at 31 December 2019, an increase of $955.6 million compared to 31 December 2018. This
variation is mainly due to the tax recognition of the one-off BICC impairment.
Property, plant and equipment
Property, plant and equipment was $2,279.1 million at 31 December 2019, an increase of 10.2%, or $211.0 million, compared to
31 December 2018. At 31 December 2019, $902.1 million worth of equipment was financed by the Group through leases. 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.
Intangibles
Intangibles were $1,104.4 million at 31 December 2019, an increase of 1.0%, or $10.9 million, compared to 31 December 2018. The
balance mainly consists of goodwill in relation to the Construction and Services businesses.
35
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CURRENT ASSETS
Trade and other receivables
receivables.
Net contract debtors
Trade and other receivables were $3,554.4 million at 31 December 2019, an increase of 13.8%, or $432.3 million, compared to
31 December 2018. The figure includes $2,607.9 million (31 December 2018: $2,297.1 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
The Group’s net contract debtors were $1,285.7 million at 31 December 2019. The increase is partly attributable to the growth in
the Mining business where advance payments are not commonly received. CIMIC has also won a number of alliance construction
contracts in Australia over the past year with a different working capital profile compared to infrastructure projects.
The level of factoring across the Group was $1,960.3 million as at 31 December 2019, which is consistent with the 31 December
2018 position of $1,953.0 million.
The Group’s $675.0 million contract debtors portfolio provision remains unchanged as at 31 December 2019.
Inventories: consumables and development properties
Inventories: consumables and development properties were $400.1 million at 31 December 2019, an increase of $85.0 million
compared to 31 December 2018. The increase was mainly driven by job-costed inventories held for large infrastructure projects.
NON-CURRENT ASSETS
Trade and other receivables
(31 December 2018: $640.7 million).
Trade and other receivables were $130.4 million at 31 December 2019, a decrease of $647.2 million compared to 31 December
2018. Following the Group’s decision to exit the Middle East, the shareholder loans relating to BICC have been fully impaired to $nil
Investments accounted for using the equity method
Equity accounted investments include project-related associates, joint ventures and PPP projects.
Investments accounted for using the equity method were $250.5 million at 31 December 2019, an increase of $113.9 million
compared to 31 December 2018. The movement is mainly driven by new PPP investments in the year, partially offset by
successfully achieving financial close on other PPP projects. For further details refer to the Financial Report, ‘Note 13: Investments
accounted for using the equity method’.
Deferred tax asset
Deferred tax assets were $1,025.2 million at 31 December 2019, an increase of $955.6 million compared to 31 December 2018. This
variation is mainly due to the tax recognition of the one-off BICC impairment.
Property, plant and equipment
Property, plant and equipment was $2,279.1 million at 31 December 2019, an increase of 10.2%, or $211.0 million, compared to
31 December 2018. At 31 December 2019, $902.1 million worth of equipment was financed by the Group through leases. 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.
Intangibles
Intangibles were $1,104.4 million at 31 December 2019, an increase of 1.0%, or $10.9 million, compared to 31 December 2018. 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 $6,024.6 million at 31 December 2019, an increase of 6.3%, or $354.9 million, compared to
31 December 2018. This figure includes $1,322.2 million (31 December 2018: $1,198.2 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 $60.3 million at 31 December 2019, a decrease of $8.1 million compared to 31 December 2018. 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 $327.2 million at 31 December 2019, an increase of $1.2 million compared to 31 December 2018. The provisions
are for employee benefits and relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred
bonuses.
Financial liability
A financial liability of $1,483.4 million has been recognised as at 31 December 2019. This represents the amounts expected to be
paid in relation to BICC facilities where CIMIC provides a guarantee. Refer to the Financial Report, ‘Note 4: Significant item;
Provisions and Asset Impairment in relation to Middle East exit’ for further details.
NON-CURRENT LIABILITIES
Trade and other payables
Trade and other payables were $200.8 million at 31 December 2019, an increase of $118.8 million compared to 31 December 2018.
Provisions
Provisions were $60.5 million at 31 December 2019, a decrease of 3.0%, or $1.9 million, compared to 31 December 2018. This
figure includes employee benefits relating to long service leave, retirement benefits and deferred bonuses.
EQUITY
Equity (excluding BICC) was $2,563.2 million as at 31 December 2019, an increase of $277.0 million, or 12.1%, compared to 31
December 2018. This was driven by the Group’s operational performance resulting in net profit (excluding BICC) of $800.3 million,
offset by dividend payments of $509.1 million for the year.
Equity was $723.0 million as at 31 December 2019, a decrease of $1,563.2 million compared to 31 December 2018. The decrease is
due to the one-off item in relation to the provisions and asset impairments of the Group’s financial investment in BICC and exit
from the Middle East region.
36
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CASH FLOWS
Cash flows
$m
Operating cash flow
Interest, finance costs and taxes
Net operating cash flow
Gross capital expenditure
Gross capital proceeds
Net capital expenditure
Free operating cash flow
Pre-factoring
2019
1,707.0
(463.8)
1,243.2
(774.4)
22.5
(751.9)
491.3
Pre-factoring
201834
658.4
(150.4)
508.0
(547.4)
82.6
(464.8)
43.2
EBITDA (excl. BICC)35
EBITDA cash conversion36
2,146.7
80%
1,900.8
35%
chg. $
1,048.6
(313.4)
735.2
(227.0)
(60.1)
(287.1)
448.1
245.9
Post-factoring
2019
1,714.3
(463.8)
1,250.5
(774.4)
22.5
(751.9)
498.6
Post-factoring
201834
2,053.4
(150.4)
1,903.0
(547.4)
82.6
(464.8)
1,438.2
2,146.7
80%
1,900.8
108%
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
Payments for investments
Loans to associates and joint ventures
Net cash from investing activities (excl. BICC)37
One-off BICC item 201938
Net cash from investing activities
Cash flows from financing activities
$m
Cash payments for share buybacks
Proceeds from borrowings
Repayment of borrowings
Repayment of leases
Dividends paid to shareholders of the Company
Dividends paid to non-controlling interests
Net cash from financing activities
2019
(15.4)
(774.4)
(14.0)
22.5
-
18.0
(29.1)
-
(792.4)
(398.6)
(1,191.0)
2019
(16.7)
1,191.8
(801.8)
(320.0)
(509.1)
(4.2)
(460.0)
201834
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
(53.1)
(1.1)
(545.2)
-
(545.2)
201834
-
407.7
(835.6)
(191.8)
(470.2)
-
(1,089.9)
chg. $
chg. %
(10.0)
(227.0)
8.7
-
41.5%
(38.3)%
(60.1)
(72.8)%
(1.2)
17.3
24.0
1.1
(247.2)
(398.6)
(645.8)
-
-
(45.2)%
-
45.3%
-
-
chg. $
chg. %
(16.7)
784.1
33.8
(128.2)
(38.9)
(4.2)
629.9
-
-
(4.0)%
66.8%
8.3%
-
(57.8)%
34 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
35 2019 EBITDA excludes the one-off item in respect of the provisions and asset impairments of the Group’s financial investment in BICC
and exit from the Middle East region.
36 2019 EBITDA cash conversion is calculated on EBITDA excluding one-off BICC item.
37 Excludes the $398.6 million funded to BICC in FY19.
38 Funding provided to BICC in FY19.
37
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
Pre-factoring
Pre-factoring
chg. $
Post-factoring
Post-factoring
CASH FLOWS
Cash flows
$m
Operating cash flow
Interest, finance costs and taxes
Net operating cash flow
Gross capital expenditure
Gross capital proceeds
Net capital expenditure
Free operating cash flow
EBITDA (excl. BICC)35
EBITDA cash conversion36
2019
1,707.0
(463.8)
1,243.2
(774.4)
22.5
(751.9)
491.3
2,146.7
80%
Cash flows from investing activities
$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
Payments for investments
Loans to associates and joint ventures
Net cash from investing activities (excl. BICC)37
One-off BICC item 201938
Net cash from investing activities
Cash flows from financing activities
$m
Cash payments for share buybacks
Proceeds from borrowings
Repayment of borrowings
Repayment of leases
Dividends paid to shareholders of the Company
Dividends paid to non-controlling interests
Net cash from financing activities
201834
658.4
(150.4)
508.0
(547.4)
82.6
(464.8)
43.2
1,900.8
35%
2019
(15.4)
(774.4)
(14.0)
22.5
-
18.0
(29.1)
-
(792.4)
(398.6)
(1,191.0)
2019
(16.7)
1,191.8
(801.8)
(320.0)
(509.1)
(4.2)
(460.0)
1,048.6
(313.4)
735.2
(227.0)
(60.1)
(287.1)
448.1
245.9
201834
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
(53.1)
(1.1)
(545.2)
(545.2)
201834
407.7
(835.6)
(191.8)
(470.2)
-
-
-
(1,089.9)
2019
1,714.3
(463.8)
1,250.5
(774.4)
22.5
(751.9)
498.6
2,146.7
80%
(10.0)
(227.0)
8.7
(1.2)
17.3
24.0
1.1
(247.2)
(398.6)
(645.8)
(16.7)
784.1
33.8
(128.2)
(38.9)
(4.2)
629.9
201834
2,053.4
(150.4)
1,903.0
(547.4)
82.6
(464.8)
1,438.2
1,900.8
108%
41.5%
(38.3)%
-
-
-
-
-
-
-
-
-
(45.2)%
45.3%
(4.0)%
66.8%
8.3%
(57.8)%
chg. $
chg. %
(60.1)
(72.8)%
chg. $
chg. %
OPERATING CASH FLOWS
Operating cash flows pre-factoring have improved substantially, increasing by $1,048.6 million to $1,707.0 million in FY19. This is
attributable to a strict focus on managing working capital and generating sustainable cash-backed profits.
Operating cash flows were $1,714.3 million for FY19, with the change to the previous year being attributable to 2019’s stable
factoring balance.
The Group has maintained a solid EBITDA cash conversion rate of 80% (excluding BICC) during FY19.
Net cash from operating activities decreased by $652.5 million to $1,250.5 million in FY19. This is attributable to additional income
tax payments of $292.3 million. Changes in taxes paid are impacted by the timing of payments and receipt of refunds outside of the
financial year to which they relate.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash outflows from investing activities were $1,191.0 million for FY19 compared to an outflow of $545.2 million in FY18.
The outflow of cash was mainly due to gross capital expenditure of $774.4 million for FY19, an increase of $227.0 million compared
to FY18. 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.
During the period the Mining & Mineral Processing business acquired a controlling interest in Majwe Mining in Botswana, and the
Services business purchased an engineering company from RCR Tomlinson that operates in the infrastructure, energy and resource
sectors.
Additionally, liquidity injections of $398.6 million were made to BICC in the FY19.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash outflows from financing activities were $460.0 million for FY19 compared to $1,089.9 million in FY18. This outflow mainly
represents proceeds from borrowings, largely offset by repayment of leases, borrowings and dividends paid.
34 FY18 has been restated for the impact of AASB 16: Leases where required, effective 1 January 2019, and applied retrospectively during
2018. Refer to the Financial Report, ‘Note 1: Basis of preparation – new and amended standards adopted by the Company’ for details.
35 2019 EBITDA excludes the one-off item in respect of the provisions and asset impairments of the Group’s financial investment in BICC
and exit from the Middle East region.
36 2019 EBITDA cash conversion is calculated on EBITDA excluding one-off BICC item.
37 Excludes the $398.6 million funded to BICC in FY19.
38 Funding provided to BICC in FY19.
38
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
NEW WORK AND WORK IN HAND
CIMIC was awarded $18.0 billion worth of new work in FY19. 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 $37.5 billion at 31 December 2019, equivalent to more than two years’ worth of revenue. Work
in hand in the Group’s Operating Companies was $35.3 billion, up 4.4%, or $1.5 billion, compared to 31 December 2018.
Work in hand
$m
Work in hand beginning of period
New work
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
2019
36,706.1
18,011.7
(17,207.1)
37,510.7
35,316.1
2,194.6
37,510.7
December
2018
36,009.9
17,949.0
(17,252.8)
36,706.1
33,833.1
2,873.0
36,706.1
chg. $
chg. %
696.2
62.7
45.7
804.6
1,483.0
(678.4)
804.6
1.9%
0.3%
(0.3)%
2.2%
4.4%
(23.6)%
2.2%
In FY19, work in hand was split 82:18 between the Group’s domestic and international markets, compared with 78:22 in FY18.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 2019
CIMIC’s work in hand continues to be broadly diversified by segment as well as by activity and geography.
Work in hand by segment
$m
Construction
Mining & Mineral Processing
Services
Total Operating Companies’ work
in hand
Corporate work in hand
Total work in hand
December
2019
16,228.9
10,142.9
8,944.3
35,316.1
%
43%
27%
24%
94%
December
2018
15,254.3
11,159.3
7,419.5
33,833.1
2,194.6
37,510.7
6%
100%
2,873.0
36,706.1
%
chg. $
chg. %
42%
30%
20%
92%
8%
100%
974.6
(1,016.4)
1,524.8
1,483.0
6.4%
(9.1)%
20.6%
4.4%
(678.4)
804.6
(23.6)%
2.2%
CONSTRUCTION WORK IN HAND
Construction work in hand was $16.2 billion at 31 December 2019, an increase of 6.4%, or $974.6 million compared to
31 December 2018. 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 $10.1 billion at 31 December 2019, a decrease of 9.1%, or $1.0 billion compared to
31 December 2018. Over the course of FY19, CIMIC continued to broaden its portfolio in this segment by commodity and
geography.
SERVICES WORK IN HAND
Services work in hand was $8.9 billion at 31 December 2019, up 20.6%, or $1.5 billion compared to 31 December 2018. The services
work in hand is diversified across a range of markets in Australia and Asia-Pacific.
CORPORATE WORK IN HAND
Corporate work in hand was $2.2 billion at 31 December 2019, a decrease of 23.6%, or $678.4 million, compared to 31 December
2018. Corporate work in hand includes CIMIC’s share of work in hand from investments such as BICC and Ventia.
39
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
NEW WORK AND WORK IN HAND
CIMIC was awarded $18.0 billion worth of new work in FY19. 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 $37.5 billion at 31 December 2019, equivalent to more than two years’ worth of revenue. Work
in hand in the Group’s Operating Companies was $35.3 billion, up 4.4%, or $1.5 billion, compared to 31 December 2018.
Work in hand
$m
New work
Executed work
Work in hand beginning of period
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. %
2019
36,706.1
18,011.7
(17,207.1)
37,510.7
35,316.1
2,194.6
37,510.7
2018
36,009.9
17,949.0
(17,252.8)
36,706.1
33,833.1
2,873.0
36,706.1
696.2
62.7
45.7
804.6
1,483.0
(678.4)
804.6
1.9%
0.3%
(0.3)%
2.2%
4.4%
(23.6)%
2.2%
In FY19, work in hand was split 82:18 between the Group’s domestic and international markets, compared with 78:22 in FY18.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 2019
CIMIC’s work in hand continues to be broadly diversified by segment as well as by activity and geography.
Work in hand by segment
December
%
December
%
chg. $
chg. %
$m
Construction
Services
in hand
Mining & Mineral Processing
Total Operating Companies’ work
Corporate work in hand
Total work in hand
CONSTRUCTION WORK IN HAND
2019
16,228.9
10,142.9
8,944.3
35,316.1
2,194.6
37,510.7
43%
27%
24%
94%
6%
100%
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%
974.6
(1,016.4)
1,524.8
1,483.0
6.4%
(9.1)%
20.6%
4.4%
(678.4)
804.6
(23.6)%
2.2%
Construction work in hand was $16.2 billion at 31 December 2019, an increase of 6.4%, or $974.6 million compared to
31 December 2018. 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 $10.1 billion at 31 December 2019, a decrease of 9.1%, or $1.0 billion compared to
31 December 2018. Over the course of FY19, CIMIC continued to broaden its portfolio in this segment by commodity and
geography.
SERVICES WORK IN HAND
CORPORATE WORK IN HAND
Services work in hand was $8.9 billion at 31 December 2019, up 20.6%, or $1.5 billion compared to 31 December 2018. The services
work in hand is diversified across a range of markets in Australia and Asia-Pacific.
Corporate work in hand was $2.2 billion at 31 December 2019, a decrease of 23.6%, or $678.4 million, compared to 31 December
2018. Corporate work in hand includes CIMIC’s share of work in hand from investments such as BICC and Ventia.
NEW WORK IN 2019
In Australia and New Zealand, a number of significant projects were annouced during the year, with revenues to the Group as
follows:
§
§
§
$2.7 billion PPP project to deliver the Tunnel, Stations and Development package of Brisbane’s Cross River Rail, Queensland;
$1.3 billion contract extension at Curragh Mine, Queensland;
$900 million alliance contract to deliver the Rail, Integration and Systems package of Brisbane’s Cross River Rail Project,
Queensland;
$761 million to design and construct Stage 2 of the Monash Freeway upgrade, Victoria;
$725 million PPP project to design, construct, commission and maintain the Regional Rail Project, New South Wales;
$630 million contract extension for the delivery of maintenance services at Sydney Trains, New South Wales;
$463 million to design and construct the new Sydney Metro City & Southwest Pitt Street Station, New South Wales;
$424 million to deliver Stage 2 of the Campbelltown Hospital Redevelopment project, New South Wales;
$423 million alliance contract to deliver the Yanchep Rail Extension and the Thornlie to Cockburn Link components of Perth’s
Metronet, Western Australia;
$379 million to deliver Stage 1 of the Nepean Hospital Redevelopment, New South Wales;
$366 million PPP contract extension to the existing NRT PPP contract on Sydney Metro, New South Wales;
$331 million to deliver an upgrade to a section of Melbourne’s M80 Ring Road, Victoria;
$323 million to deliver an earthworks project for the construction of Western Sydney’s International Airport, New South
Wales;
$214 million to deliver the Christchurch Metro Sports Facility, New Zealand;
$210 million to deliver Auckland Airport’s Taxiway Mike and Remote Stands Stage 2 project, New Zealand;
$195 million to deliver the Early Works package for Melbourne’s North East Link, Victoria;
$190 million to provide implementation services on the Woodside operated Karratha Gas Plant, Western Australia;
$158 million alliance contract to construct the next stage of works on the Sunbury Line Upgrade, Victoria;
$155 million to provide engineering, procurement and construction services at Byerwen Mine, Queensland; and
$110 million to deliver stages 1 & 2 of the new Inner-city South State Secondary College in Dutton Park, Queensland.
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Significant overseas projects announced during the year included:
§
§
$1.7 billion to undertake mining services at Jwaneng Cut 9 diamond mine, Botswana; and
$172 million contract extension to expand operations at Melak coal mine, Indonesia.
40
CIMIC Group Limited Annual Report 2019 | 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 2018 Annual Report.
CIMIC’s risk management framework is tailored to its business, embedded mostly within existing processes and aligned to the
Company’s objectives, both short and longer term.
Given the diversity of the Group’s operations and the breadth of its geographies and markets, a wide range of risk factors have the
potential to affect the achievement of business objectives. Key risks, including those arising due to externalities such as the
economic, natural and social operating environments, are set out in the following table, together with the Group’s approach to
managing those risks.
Risk management approach
Risk description
The Group’s operations require planning, training and supervision to manage workplace health and safety hazards.
A workplace health and safety
incident or event may put our people
and the community at risk.
The Group is committed to the health, safety and security of our people and the
communities in which we work. Safety policies and standards apply across the Group.
Compliance is regularly reviewed. The Group seeks continual improvement in safety
performance. Governance of safety is overseen by the Board and the Ethics,
Compliance and Sustainability Committee.
The Group often works within, or adjacent to, sensitive environments.
An environmental incident or
unplanned event may occur that
adversely impacts the environment or
the communities in which we work.
The Group is committed to the highest standard of environmental performance.
Operating Companies’ environmental policies and procedures are aligned with the
Group Policy and Standards. Should an incident occur, emergency response plans will
be enacted. 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.
41
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 2018 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
markets and geographies. Regular and rigorous reviews of the Group’s current and
external events and actions, may
potential geographies, industries, activities and competitors are undertaken. Oversight
affect business development and
of key risks is maintained by the Audit and Risk Committee, supported by a quarterly
project delivery.
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 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
RISK MANAGEMENT
SIGNIFICANT CHANGES
SIGNIFICANT CHANGES DURING FY19
§ On 23 January 2020 the Group announced to the ASX that it had completed an extensive strategic review of its financial
investment in BICC, a company operating in the Middle East. After thorough evaluation of all available options, CIMIC has
decided to exit the region and to focus its resources and capital allocation on growth opportunities in its main core markets
and geographies. This has resulted in a one-off post tax impact of $(1.8) billion relating to the financial investment of BICC as a
result of the decision to exit the Middle East region.
§ On 13 December 2019, CIMIC announced a further on-market share buyback of up to 10% of CIMIC’s fully paid ordinary shares
for a period of 12 months commencing 29 December 2019; no shares have been bought back under this scheme. During the
previous share buyback which ended on 28 December 2019, 527,341 shares were bought back for $16.7 million and the shares
were subsequently been cancelled.
§ On 4 February 2020 the Group has appointed a new Chief Executive Officer and Managing Director, Juan Santamaria.
The appointment is effective from 5 February 2020.
SHAREHOLDERS
The largest shareholder in CIMIC is HOCHTIEF Australia Holdings Limited, a wholly owned subsidiary of HOCHTIEF AG, which owns
72.8% of CIMIC as at 31 December 2019. 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 2019.
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 40,000
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 are expected to continue to grow and provide a broad range of opportunities
for the foreseeable future.
OPERATING MODEL AND STRATEGY
CIMIC operates through activity-based businesses in construction, mining & 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 reduce 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, and operations and maintenance;
to selectively export the Group’s capabilities and expand into 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 a strong balance sheet, which supports organic growth and provides flexibility in
capital expenditure and investments into PPPs, as well as strategic capital allocation opportunities including acquisitions.
Our financial policy is to manage net debt to a level that supports a strong investment grade rating.
CONSTRUCTION MARKET
Across the Group’s core construction markets of Australia, New Zealand and selected countries in the Asia-Pacific region,
governments and the private sector are continuing to invest significantly to meet sustained demand for economic and social
infrastructure. This investment is necessary to address historic underinvestment, support population growth and ageing
populations, meet market and technological changes - such as the transition to renewables and the digital transformation - tackle
climate change and to facilitate economic growth and productivity. This infrastructure investment should continue to deliver a
broad and growing suite of project opportunites that underpins the Group’s positive outlook for the construction market.
42
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
Australia’s construction market is expected to remain strong, with transport infrastructure remaining a key contributor of
opportunities. Underpinning the transport sector are a number of very substantial road and rail projects in the major capital cities,
supplemented by the continued upgrading of interstate transport routes and investment to facilitate rail freight.
Federal, State and Territory Governments have all put forward substantial infrastructure programs in their most recent budgets. In
the 2019-20 Budget, the Australian Federal Government outlined a $100 billion commitment to fund national building
infrastructure over the next decade, with major investments in every state and territory39. In November 2019, the Federal
Government announced that it was bringing forward $3.8 billion of infrastructure spending to provide more economic stimulus40.
In New South Wales, the 2019-20 State Government Budget outlines a record $93 billion capital works program over the next four
years, of which $55.6 billion is to be spent on transport infrastructure - including funding commitments for the delivery of Sydney
Metro West, WestConnex and the Sydney Gateway project41. The Victorian Government’s infrastructure investment is projected to
be $53.7 billion from 2019-20 to 2022-23 – including funding commitments for the North East Link, Suburban Roads Upgrade,
Melbourne Airport Rail and the removal of additional level crossings42. In the most recent Queensland State Budget, the
government outlined a $49.5 billion infrastructure investment program over the next four years, which includes funding
commitments for the Cross River Rail project, Bruce Highway upgrades and the M1 Pacific Motorway upgrades43. The other
Australian State and Territory Governments are also expected to invest in transport projects, providing a broad range of
construction opportunities for the Group.
Within these State Government Budgets are substantial investments on hospitals and health care, reflecting the country’s ageing
and growing population. This investment should sustain a range of opportunities in the capital cities and in major regional centres.
The Budgets also earmark considerable funding for water and energy projects, many of which are expected to suit the Group’s
capabilities and offer construction opportunities.
In New Zealand, the Government remains committed to improving the nation’s infrastructure, removing bottlenecks and improving
productivity. As part of this commitment, New Zealand’s newly established independent Infrastructure Commission, Te Waihanga,
released a planned infrastructure projects pipeline of NZ$21.1 billion. The pipeline identifies over 500 credibly proposed and
committed infrastructure projects from 15 government agencies and local councils that are planned for delivery over the next
decade44.
The Group’s other international construction markets are expected to sustain high levels of investment in economic and social
infrastructure projects which should continue to deliver a broad range of opportunities.
PPP MARKET
Governments across Australia, New Zealand and the Asia-Pacific are increasingly embracing PPPs as a model for the financing and
delivery of infrastructure projects, notably in the sectors of transport and social infrastructure. PPPs are often cited as potentially
providing a range of benefits that include:
§
§
§
§
§
allowing governments to free up their budgets by leveraging access to private capital;
incentivising the private sector to deliver projects on time and within budget;
using private sector technology and innovation to provide better public services through improved operational efficiency;
imposing budgetary certainty by setting the present and future costs of infrastructure projects over time; 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 maintenance45.
In Australia, the Coalition of Governments continues to support the National PPP Policy Framework which established that projects
valued over $50 million should be considered for PPP procurement46. In New Zealand, the Government is actively pursuing non-
traditional procurement options, 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.
Growth in the PPP market - in part driven by an increasing acceptance by the public of a user-pays model - is creating a range of
opportunities. CIMIC’s PPP pipeline is currently estimated to be $130 billion. This pipeline includes some large heavy rail and light
rail projects, numerous road projects, and a range of social infrastructure projects, including schools, prisons - with scope to
provide non-custodial services, hospitals and utilities.
Our ability to provide an end-to-end service offering and strong competitive position, positions the Group to pursue the emerging
prospects in this market. Opportunities in the PPP market are likely to continue to include varying combinations of design,
construction, finance and operation and maintenance of infrastructure.
39 Commonwealth of Australia, Budget Strategy and Outlook, Budget Paper No. 1 2019-20, April 2019, p. 1-15.
40 ‘Government to bring forward infrastructure spending to help stimulate the economy’, www.news.com.au, 20 November 2019.
41 New South Wales State Budget, Infrastructure Statement 2019-20, Budget paper No. 2, 2019-20, June 2019, p. 1-1 and 2-13.
42 Victoria State Budget 2019-20, State Capital Program, Budget Paper No. 4, 2019-20, May 2019, p. 1, 3, 21 and 81.
43 Queensland State Budget, Capital Statement, Budget Paper No. 3, 2019-20, June 2019, p.1, 5 and 6.
44 New Zealand Infrastructure Commission – Te Waihanga, 11 November 2019 - https://infracom.govt.nz/news/commission-news/step-
closer-to-improved-infrastructure-planning.
45 World Bank Group, Government Objectives: Benefits and Risks of PPPs, 31 October, 2016 - https://ppp.worldbank.org/public-private-
partnership/overview/ppp-objectives.
46 Department of Infrastructure and Regional Development, National PPP Policy Framework, October 2015, p. 7.
43
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
Australia’s construction market is expected to remain strong, with transport infrastructure remaining a key contributor of
opportunities. Underpinning the transport sector are a number of very substantial road and rail projects in the major capital cities,
supplemented by the continued upgrading of interstate transport routes and investment to facilitate rail freight.
Federal, State and Territory Governments have all put forward substantial infrastructure programs in their most recent budgets. In
the 2019-20 Budget, the Australian Federal Government outlined a $100 billion commitment to fund national building
infrastructure over the next decade, with major investments in every state and territory39. In November 2019, the Federal
Government announced that it was bringing forward $3.8 billion of infrastructure spending to provide more economic stimulus40.
In New South Wales, the 2019-20 State Government Budget outlines a record $93 billion capital works program over the next four
years, of which $55.6 billion is to be spent on transport infrastructure - including funding commitments for the delivery of Sydney
Metro West, WestConnex and the Sydney Gateway project41. The Victorian Government’s infrastructure investment is projected to
be $53.7 billion from 2019-20 to 2022-23 – including funding commitments for the North East Link, Suburban Roads Upgrade,
Melbourne Airport Rail and the removal of additional level crossings42. In the most recent Queensland State Budget, the
government outlined a $49.5 billion infrastructure investment program over the next four years, which includes funding
commitments for the Cross River Rail project, Bruce Highway upgrades and the M1 Pacific Motorway upgrades43. The other
Australian State and Territory Governments are also expected to invest in transport projects, providing a broad range of
construction opportunities for the Group.
Within these State Government Budgets are substantial investments on hospitals and health care, reflecting the country’s ageing
and growing population. This investment should sustain a range of opportunities in the capital cities and in major regional centres.
The Budgets also earmark considerable funding for water and energy projects, many of which are expected to suit the Group’s
capabilities and offer construction opportunities.
In New Zealand, the Government remains committed to improving the nation’s infrastructure, removing bottlenecks and improving
productivity. As part of this commitment, New Zealand’s newly established independent Infrastructure Commission, Te Waihanga,
released a planned infrastructure projects pipeline of NZ$21.1 billion. The pipeline identifies over 500 credibly proposed and
committed infrastructure projects from 15 government agencies and local councils that are planned for delivery over the next
decade44.
PPP MARKET
§
§
§
§
§
The Group’s other international construction markets are expected to sustain high levels of investment in economic and social
infrastructure projects which should continue to deliver a broad range of opportunities.
Governments across Australia, New Zealand and the Asia-Pacific are increasingly embracing PPPs as a model for the financing and
delivery of infrastructure projects, notably in the sectors of transport and social infrastructure. PPPs are often cited as potentially
providing a range of benefits that include:
allowing governments to free up their budgets by leveraging access to private capital;
incentivising the private sector to deliver projects on time and within budget;
using private sector technology and innovation to provide better public services through improved operational efficiency;
imposing budgetary certainty by setting the present and future costs of infrastructure projects over time; 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 maintenance45.
In Australia, the Coalition of Governments continues to support the National PPP Policy Framework which established that projects
valued over $50 million should be considered for PPP procurement46. In New Zealand, the Government is actively pursuing non-
traditional procurement options, 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.
Growth in the PPP market - in part driven by an increasing acceptance by the public of a user-pays model - is creating a range of
opportunities. CIMIC’s PPP pipeline is currently estimated to be $130 billion. This pipeline includes some large heavy rail and light
rail projects, numerous road projects, and a range of social infrastructure projects, including schools, prisons - with scope to
provide non-custodial services, hospitals and utilities.
Our ability to provide an end-to-end service offering and strong competitive position, positions the Group to pursue the emerging
prospects in this market. Opportunities in the PPP market are likely to continue to include varying combinations of design,
construction, finance and operation and maintenance of infrastructure.
39 Commonwealth of Australia, Budget Strategy and Outlook, Budget Paper No. 1 2019-20, April 2019, p. 1-15.
40 ‘Government to bring forward infrastructure spending to help stimulate the economy’, www.news.com.au, 20 November 2019.
41 New South Wales State Budget, Infrastructure Statement 2019-20, Budget paper No. 2, 2019-20, June 2019, p. 1-1 and 2-13.
42 Victoria State Budget 2019-20, State Capital Program, Budget Paper No. 4, 2019-20, May 2019, p. 1, 3, 21 and 81.
43 Queensland State Budget, Capital Statement, Budget Paper No. 3, 2019-20, June 2019, p.1, 5 and 6.
44 New Zealand Infrastructure Commission – Te Waihanga, 11 November 2019 - https://infracom.govt.nz/news/commission-news/step-
45 World Bank Group, Government Objectives: Benefits and Risks of PPPs, 31 October, 2016 - https://ppp.worldbank.org/public-private-
closer-to-improved-infrastructure-planning.
partnership/overview/ppp-objectives.
46 Department of Infrastructure and Regional Development, National PPP Policy Framework, October 2015, p. 7.
MINING & MINERAL PROCESSING MARKET
Population growth, increasing urbanisation, rising living standards and sustained economic growth are expected to continue across
much of Asia for the foreseeable future and to sustain demand for energy and minerals. Additionally, limited substitutes for the
major commodities mined or processed by the Group supports a positive outlook for this market.
Australia’s resource and energy exports are forecast to increase to a record $281 billion in 2019–20, helped by a 5.9% rise in export
volumes this year. On current forecasts, Australian exports by volume are expected to grow by 3.5% per annum for metallurgical
coal, 0.9% for thermal coal, 3.0% for iron ore and 9.5% for nickel until 2020-2147. As leaders in the mining services and mineral
processing sectors, Thiess and Sedgman will continue to benefit from this robust demand.
Outside of Australia, CIMIC will continue to selectively export the Group’s mining and mineral processing capabilities and seek
opportunities to expand into markets which meet our governance, risk, and return requirements.
We are seeing increased opportunities to provide value-adding services to new and existing clients domestically and abroad,
particularly in coal and iron ore. Furthermore, the ongoing transition to cleaner energy sources and solutions will gradually create
opportunities for the extraction and processing of minerals used in alternative technologies, such as solar and batteries.
SERVICES MARKET
Sustained investment in infrastructure - creating a larger capital stock – and a degree of underinvestment in the past on
maintenance services should continue to support a growing market for the provision of operations and maintenance services. In
addition, asset owners are increasingly seeing the benefit of outsourcing their maintenance services to drive productivity
improvements and to pursue operational efficiencies.
The Australian maintenance services market is expected to be worth approximately $42.4 billion in 2018-19, of which 56.4% is
outsourced to the private sector. The outsourced maintenance market is forecast to increase by 33% over the next decade with
growth expected in the engineering, construction, maintenance, and operation services in the rail, transportation, technology,
energy, resources, water, renewable energy, and defence sectors48.
CIMIC is well positioned to benefit from this growing market, leveraging the Group’s complementary suite of activities, and will
continue to seek opportunities to grow its capabilities in existing and new markets.
47 Australian Government (Office of the Chief Economist) Department of Industry, Innovation and Science: Resources and Energy Quarterly,
December 2019, p. 7 & 14.
48 BIS Economics, Maintenance in Australia 2019-23, February 2019, p. 8 and Appendix A.1 - Australia (Outsourced).
44
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
FUTURE DEVELOPMENTS
GROUP PROSPECTS
CIMIC’s core markets – in construction, PPPs, mining & 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 projects support our
positive outlook.
CIMIC is currently bidding on, will be bidding on, or has been shortlisted for projects including:
§ Western Harbour Tunnel and Warringah Freeway Upgrade, Transport for NSW, New South Wales;
§ M6 Stage 1 (Arncliffe to Kogarah), Transport for NSW, New South Wales;
§
§
§
§ North East Link - Primary Package (Kempston Street to Southern Portal) as a PPP, Major Transport Infrastructure Authority,
Sydney Metro West – Tunnels and Excavation package/s, Transport for NSW, New South Wales;
Stage 2 of the ‘More Trains More Services’ program, Transport for NSW, New South Wales;
Supply and maintenance of locomotives for 10 years, Pacific National, New South Wales;
Victoria;
§
Suburban Roads Upgrade projects as a PPP, Major Roads Project, Victoria;
§
Inland Rail (Gowrie to Kagaru section) as a PPP, Australian Rail Track Corporation (ARTC), Queensland;
§
High capacity interconnector, ElectraNet, from South Australia to New South Wales;
§
Stage 1 of the Auckland Light Rail - Main Works, New Zealand Transport Agency, New Zealand;
§ New elective surgery unit at Auckland North Shore Hospital, Ministry of Health, New Zealand;
§
§
§
§
§
§ Olive Downs South mine, Pembroke Resources, Queensland;
§ Mining at the Eagle Downs joint venture, South 32, Queensland;
§
§
§ Mining at the Grassy Mountain metallurgical coal project, Riversdale Resources, Canada; and
§
Third Runway Concourse and Apron Works, Airport Authority, Hong Kong;
Baggage handling and people mover infrastructure, Airport Authority, Hong Kong;
Packages of the Jurong Regional Line (stations and viaducts), Land Transport Authority, Singapore;
Phase 1 of the Cross Island Line (rail tunnel at Changi airport), Land Transport Authority, Singapore;
Extension at the Lake Vermont mine, Jellinbah Group, Queensland;
Extension project at the Vickery mine, Whitehaven Coal, New South Wales;
Various other mining & processing opportunities across Queensland, New South Wales and Western Australia;
Various mining projects in Canada and Chile.
The Group has an extensive pipeline with at least $160 billion of tenders relevant to CIMIC to be bid and/or awarded in 2020.
Around $380 billion of projects are coming to the market in 2021 and beyond, including about $130 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 2020 NPAT to be in the range of $810 million to $850 million, subject to market conditions.
45
CIMIC Group Limited Annual Report 2019 | Operating and Financial Review
CIMIC Group Limited Annual Report 2019 | Remuneration Report
FUTURE DEVELOPMENTS
GROUP PROSPECTS
positive outlook.
CIMIC’s core markets – in construction, PPPs, mining & 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 projects support our
§ North East Link - Primary Package (Kempston Street to Southern Portal) as a PPP, Major Transport Infrastructure Authority,
CIMIC is currently bidding on, will be bidding on, or has been shortlisted for projects including:
§ Western Harbour Tunnel and Warringah Freeway Upgrade, Transport for NSW, New South Wales;
§ M6 Stage 1 (Arncliffe to Kogarah), Transport for NSW, New South Wales;
Sydney Metro West – Tunnels and Excavation package/s, Transport for NSW, New South Wales;
Stage 2 of the ‘More Trains More Services’ program, Transport for NSW, New South Wales;
Supply and maintenance of locomotives for 10 years, Pacific National, New South Wales;
Victoria;
Suburban Roads Upgrade projects as a PPP, Major Roads Project, Victoria;
Inland Rail (Gowrie to Kagaru section) as a PPP, Australian Rail Track Corporation (ARTC), Queensland;
High capacity interconnector, ElectraNet, from South Australia to New South Wales;
Stage 1 of the Auckland Light Rail - Main Works, New Zealand Transport Agency, New Zealand;
§ New elective surgery unit at Auckland North Shore Hospital, Ministry of Health, New Zealand;
Third Runway Concourse and Apron Works, Airport Authority, Hong Kong;
Baggage handling and people mover infrastructure, Airport Authority, Hong Kong;
Packages of the Jurong Regional Line (stations and viaducts), Land Transport Authority, Singapore;
Phase 1 of the Cross Island Line (rail tunnel at Changi airport), Land Transport Authority, Singapore;
Extension at the Lake Vermont mine, Jellinbah Group, Queensland;
§ Olive Downs South mine, Pembroke Resources, Queensland;
§ Mining at the Eagle Downs joint venture, South 32, Queensland;
Extension project at the Vickery mine, Whitehaven Coal, New South Wales;
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Various other mining & processing opportunities across Queensland, New South Wales and Western Australia;
§ Mining at the Grassy Mountain metallurgical coal project, Riversdale Resources, Canada; and
Various mining projects in Canada and Chile.
The Group has an extensive pipeline with at least $160 billion of tenders relevant to CIMIC to be bid and/or awarded in 2020.
Around $380 billion of projects are coming to the market in 2021 and beyond, including about $130 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.
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 2019) 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 2019 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.
GUIDANCE
CIMIC expects 2020 NPAT to be in the range of $810 million to $850 million, subject to market conditions.
SENIOR EXECUTIVE REMUNERATION – COMPONENTS IN DETAIL
The Senior Executives as at 31 December 2019 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
Stefan Camphausen
Deputy CEO and Chief
Operating Officer
CFO
On 1 December 2017, Mr Wright was appointed as CEO and
Managing Director.
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.
46
CIMIC Group Limited Annual Report 2019 | Remuneration Report
FIXED REMUNERATION
Fixed remuneration received by Senior Executives comprises base salary, non-monetary benefits and superannuation (as
applicable).
Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time.
There are no changes to the fixed remuneration for senior executives for 2020.
STI
Summary of 2019 STI
Senior Executive
participation
Mr Wright, Mr Segura Suriñach and Mr Camphausen participated in the 2019 STI. Mr Fernández
Verdes did not participate in the STI.
How much could Senior
Executives earn under
the 2019 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 2019 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 2019 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 2019, 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.
Personal/Non-financial measures
20% of the amount that could be earned as STI
was based on performance against safety
targets and/or other personal/non-financial
measures relevant to the role.
The personal/non-financial measures are
designed to encourage a direct relationship
between the individual Senior Executive’s role
and measures of performance set. 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 2019 Financial
Year.
Performance against financial and personal/non-financial key performance indicators (KPIs) was
assessed following the end of the 2019 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?
STI outcomes for the 2019 Financial Year
The Board determined that there are no STI payments for Senior Executives for the 2019 Financial Year.
47
FIXED REMUNERATION
applicable).
STI
Summary of 2019 STI
Senior Executive
participation
Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time.
There are no changes to the fixed remuneration for senior executives for 2020.
Mr Wright, Mr Segura Suriñach and Mr Camphausen participated in the 2019 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 2019 STI?
of fixed remuneration for the relevant executive.
The STI opportunities for 2019 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 2019 Financial Year.
performance
measured?
What were the
performance
conditions?
Financial measures
Personal/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.
targets and/or other personal/non-financial
For Senior Executives in 2019, this financial
measures relevant to the role.
component was based on NPAT and operating cash
flow.
Year.
Why were those
The financial measures are designed to encourage
The personal/non-financial measures are
performance measures
Senior Executives to focus on the key financial
designed to encourage a direct relationship
chosen?
objectives of the Group consistent with the
between the individual Senior Executive’s role
business plan for the relevant year and the Group’s
and measures of performance set. They also
strategic objectives.
ensure that contributions to critical initiatives
are recognised and rewarded.
How is the STI paid?
The STI is paid in cash following finalisation of the audited financial statements for the 2019 Financial
How was performance
Performance against financial and personal/non-financial key performance indicators (KPIs) was
against targets
assessed?
assessed following the end of the 2019 Financial Year to determine the actual STI payments. A
scorecard-based calculation was made and, the resulting STI amount adjusted, if required, following
a qualitative assessment.
Notwithstanding any STI amount determined, the Remuneration and Nomination Committee, on the
recommendation of the Executive Chairman, retains an overriding ability to adjust the STI amount
before payment taking into account all relevant circumstances.
STI outcomes for the 2019 Financial Year
The Board determined that there are no STI payments for Senior Executives for the 2019 Financial Year.
CIMIC Group Limited Annual Report 2019 | Remuneration Report
CIMIC Group Limited Annual Report 2019 | Remuneration Report
Fixed remuneration received by Senior Executives comprises base salary, non-monetary benefits and superannuation (as
LTI
There was no LTI grant in the 2019 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?
Does the LTI plan
provide for
clawback?
Can Senior
Executives hedge
their risk under the
option plan?
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 38: 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.
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.
Under the LTI plan rules the Board has the necessary discretion to withhold or vary the LTI in the event
that this is needed.
No. The Group’s Securities Trading Policy prohibits Senior Executives from entering into hedging
arrangements regarding both vested and unvested securities, which includes options.
48
CIMIC Group Limited Annual Report 2019 | Remuneration Report
REMUNERATION – EXECUTIVE CHAIRMAN
POLICY AND APPROACH
The Board approves the Executive Chairman’s remuneration arrangements following consideration by the Remuneration and
Nomination Committee.
The Board considered Mr Fernández Verdes’ 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. Mr Fernández Verdes’ ESA provides for the allowance amount to
be indexed in line with CPI changes, however this will not be applied for 2020 and so there will be no change for the year. 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
2018
2019
2020
Gross allowance amount (A$)
518,124
475,243
Reason
Effective 1 January 2018 to accommodate 1.8% CPI increase
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.
475,243 No change.
§
§
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 were exercisable for 3 years from the date of vesting. No more than 40% of the SARs
could be exercised each year for the first 2 years after vesting, and any remaining SARs could be exercised in the final year of the
exercise period.
The SARs would have lapsed on 13 March 2019 unless they had 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 would have forfeited any unvested or vested but unexercised SARs if his employment was
summarily terminated. If Mr Fernández Verdes had ceased employment with CIMIC prior to vesting but after 31 December 2014 in
any other circumstance (ie, he was not summarily terminated) but remained a member of either the Executive Board or the
Supervisory Board of HOCHTIEF AG, any unvested SARs would have remained on foot and vested and become exercisable in the
ordinary course.
On 18 February 2019, Mr Fernández Verdes exercised 240,000 SARs (20% of the total number of SARs available to exercise in the
third year after vesting, prior to the final exercise date) resulting in a gross cash payment of $7,704,000. The payment was
calculated by reference to the CIMIC closing share price on 15 February 2019 of $49.81.
There are no outstanding SARs at the end of the 2019 Financial Year.
49
REMUNERATION – EXECUTIVE CHAIRMAN
POLICY AND APPROACH
Nomination Committee.
The Board approves the Executive Chairman’s remuneration arrangements following consideration by the Remuneration and
The Board considered Mr Fernández Verdes’ roles as Executive Chairman of CIMIC, Chairman of the Executive Board of HOCHTIEF
AG and CEO of ACS Group and structured his remuneration arrangements differently from other Senior Executives, but consistent
with the Group’s remuneration framework and focused on achieving long-term financial returns.
COMPONENTS
remuneration are:
In accordance with the terms of Mr Fernández Verdes’ Executive Service Agreement (ESA), the key components of his
§
an annual allowance as a contribution to his living expenses. Mr Fernández Verdes’ ESA provides for the allowance amount to
be indexed in line with CPI changes, however this will not be applied for 2020 and so there will be no change for the year. Prior
to 2019, Mr Fernández Verdes was paid an allowance on which Fringe Benefits Tax (FBT) was payable due to his travel
patterns and living away from home arrangements while in Australia. From January 2019, Pay As You Go (PAYG) withholding
tax is payable rather than FBT to reflect a change in his travel patterns. This change in tax treatment results in a decrease in
the gross amount payable in order to maintain the net allowance (subject to CPI changes noted above):
Year
2018
2019
2020
Gross allowance amount (A$)
Reason
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.
475,243 No change.
§
§
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 were exercisable for 3 years from the date of vesting. No more than 40% of the SARs
could be exercised each year for the first 2 years after vesting, and any remaining SARs could be exercised in the final year of the
exercise period.
The SARs would have lapsed on 13 March 2019 unless they had 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 would have forfeited any unvested or vested but unexercised SARs if his employment was
summarily terminated. If Mr Fernández Verdes had ceased employment with CIMIC prior to vesting but after 31 December 2014 in
any other circumstance (ie, he was not summarily terminated) but remained a member of either the Executive Board or the
Supervisory Board of HOCHTIEF AG, any unvested SARs would have remained on foot and vested and become exercisable in the
ordinary course.
On 18 February 2019, Mr Fernández Verdes exercised 240,000 SARs (20% of the total number of SARs available to exercise in the
third year after vesting, prior to the final exercise date) resulting in a gross cash payment of $7,704,000. The payment was
calculated by reference to the CIMIC closing share price on 15 February 2019 of $49.81.
There are no outstanding SARs at the end of the 2019 Financial Year.
CIMIC Group Limited Annual Report 2019 | Remuneration Report
CIMIC Group Limited Annual Report 2019 | Remuneration Report
The current position with respect to the one-off award of SARs granted to Mr Fernández Verdes in the 2014 Financial Year are set
out in the following table.
Grant
date
Granted
(number)
10 June
2014
1,200,000
30-day
VWAP at
start of
vesting
period
(A$)
17.71
Test date
(vesting
date)
13 March
2016
Vested
(%)
Forfeited
(%)
Exercised
(number)
Outstanding
as at 31 Dec
2019
(number)
Total maximum
potential value
of remaining
grant1 (A$)
100
-
1,200,0002
-
-
1.
2.
The maximum potential value is calculated as the number of outstanding SARs multiplied by the maximum payment per SAR ($32.29).
960,000 SARs were exercised in the 2017 Financial Year. Refer to page 65 of the 2017 Annual Report for further information.
COMPANY PERFORMANCE
As required by the Corporations Act, the 5 year financial performance of the Group has been set out in the following table.
Year-on-year performance snapshot
Opening
share
price -
Jan1
(A$)
43.17
Closing
share
price -
Dec2
(A$)
33.14
FY 2019
Share
price
appreci-
ation
(%)
(23.2)
Dividend
per
share
paid (A$)
TSR3
(%)
EPS
(A$)
PBT
(A$M)
NPAT
(A$M)
Return
on
equity
(%)
Cash flow
from
operations
(A$M)
1.57
5.1
(3.21)
(1,625)
(1,040)
(69)
1,713
Gross
debt to
equity
ratio
(%)
127.6
FY 2018
51.45
43.41
(15.6)
1.45
96.2
2.404
1,0724
7794
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
374
274
16
13
2,0514
22.94
1,523
26.9
1,201
35.2
1,920
25.7
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.
For FY 2018 the metrics included here have been restated to reflect the impact of the new accounting standards on implementation of AASB
16: Leases as restated in the Financial Statements. The financial report has been restated accordingly for FY 2018 and FY 2019 has been
prepared under the new accounting standards. In addition, FY 2017 equity metrics have been restated to reflect implementation of AASB 9:
Financial instruments and AASB 15: Revenue from Contracts with Customers.
50
CIMIC Group Limited Annual Report 2019 | Remuneration Report
STATUTORY SENIOR EXECUTIVE REMUNERATION TABLE
SHORT-TERM EMPLOYEE BENEFITS
POST-EMPLOYMENT
Cash
salary
(A$)
Cash
bonuses
(STI)
(A$)
Non-
monetary
benefits
(A$)(a)
Other
(A$)(b)(c)(d)
Super-
annuation
benefits
(A$)
Termination
benefits
(A$)
SUBTOTAL
(A$)
Senior Executives
M Fernández Verdes
2019 Financial Year
2018 Financial Year
M Wright
2019 Financial Year
2018 Financial Year
I Segura Suriñach*
2019 Financial Year
2018 Financial Year1
S Camphausen
2019 Financial Year
2018 Financial Year
-
-
-
-
19,103
6,446
475,243
518,124
-
-
1,332,871
1,278,172
-
1,000,000
72,788
46,530
66,000
72,000
20,767
20,290
1,175,819
866,012
-
500,000
837,967
753,743
-
607,500
-
-
-
-
294,087
400,000
-
-
-
-
20,767
20,290
-
-
-
-
-
-
-
-
494,346
524,570
1,492,426
2,416,992
1,469,906
1,766,012
858,734
1,381,533
This table sets out the payments and benefits to each Senior Executive from the date they were appointed as a Senior Executive.
*
1. Mr Segura Suriñach commenced as Deputy CEO and Chief Operating Officer on 9 April 2018.
51
Cash
salary
(A$)
-
-
Senior Executives
M Fernández Verdes
2019 Financial Year
2018 Financial Year
M Wright
2019 Financial Year
2018 Financial Year
I Segura Suriñach*
2019 Financial Year
2018 Financial Year1
S Camphausen
2019 Financial Year
2018 Financial Year
19,103
6,446
475,243
518,124
1,332,871
1,278,172
1,000,000
72,788
46,530
66,000
72,000
20,767
20,290
1,175,819
866,012
500,000
294,087
400,000
837,967
753,743
607,500
-
-
20,767
20,290
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
494,346
524,570
1,492,426
2,416,992
1,469,906
1,766,012
858,734
1,381,533
-
-
-
-
-
*
This table sets out the payments and benefits to each Senior Executive from the date they were appointed as a Senior Executive.
1. Mr Segura Suriñach commenced as Deputy CEO and Chief Operating Officer on 9 April 2018.
CIMIC Group Limited Annual Report 2019 | Remuneration Report
CIMIC Group Limited Annual Report 2019 | Remuneration Report
STATUTORY SENIOR EXECUTIVE REMUNERATION TABLE
SHORT-TERM EMPLOYEE BENEFITS
bonuses
monetary
Non-
Other
(A$)(b)(c)(d)
Cash
(STI)
(A$)
benefits
(A$)(a)
POST-EMPLOYMENT
SUBTOTAL
Super-
Termination
(A$)
annuation
benefits
(A$)
benefits
(A$)
LONG-TERM EMPLOYEE BENEFITS
SARs fair value
(A$)(e)
Share rights fair
value (LTI) (A$)(e)
Options fair
value (A$)(e)
PERCENTAGE OF
BONUSES (%)(f)
PERCENTAGE OF
SHARE-BASED
INCENTIVE (%)(g)
TOTAL
PAYMENTS
AND
ACCRUALS
(A$)
1,630,642
(1,281,600)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,124,988
(757,030)
(210,156)
281,514
1,282,270
2,698,506
-
-
1,469,906
1,766,012
(11,025)
69,607
847,709
1,451,140
-
-
-
37.1
-
28.3
-
41.9
-
-
(16.4)
10.4
-
-
(1.3)
4.8
(a) 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.
(b) For Mr Fernández Verdes, the 2019 and 2018 Financial Year amounts pertain to the annual allowance amount approved for 2019 and 2018
(c)
(respectively).
For Mr Wright, this amount pertains to the living away from home allowance amount for 2019 and 2018 and ceased on 1 December 2019.
Refer to the ‘Summary of Executive Services Agreements’ section of this Remuneration Report for further information.
(d) For Mr Segura Suriñach, the 2019 Financial Year amount pertains to the role allowance for a 12 month period starting from 1 April 2019. The
(e)
2018 Financial Year 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.
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 2019 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 38: Employee benefits’ for further information.
(f)
The percentage calculation is based on the cash STI received in the 2019 Financial Year as a percentage of total payments and accruals.
(g) The percentage of each Senior Executive’s remuneration for the 2019 Financial Year that consisted of equity as a percentage of total payments
and accruals.
52
CIMIC Group Limited Annual Report 2019 | 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
No
No
Effective from 1 December
2017, a living away from
home allowance of $72,400
per annum to cease on the
earlier of 1 December 2019
or upon permanent
relocation to Sydney2
3 months
I Segura Suriñach
Yes
3 months
S Camphausen
Yes
3 months
No
No1
No
No
No
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
For the purposes of calculating Mr Camphausen’s long service leave entitlement, his prior service at HOCHTIEF AG will be recognised.
1.
2. Mr Wright’s living away from home allowance ceased on 1 December 2019.
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.
53
CIMIC Group Limited Annual Report 2019 | Remuneration Report
CIMIC Group Limited Annual Report 2019 | 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 are no specified payments to be made on termination (apart from any payments in lieu of notice and any payable
there is no specified term; and
statutory entitlements).
Other Senior Executives
Remuneration and other terms of employment for all other Senior Executives are formalised in ESAs.
The key terms of the ESAs for Senior Executives are:
Key terms of the ESA
Senior Executives
M Wright
I Segura Suriñach
S Camphausen
Annual review of remuneration
Yes
Length of notice period where either
6 months
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)
No
No
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 ‘one
remuneration)
home allowance of $72,400
off’ relocation payment of
per annum to cease on the
$400,000 as a contribution
earlier of 1 December 2019
to meeting relocation
or upon permanent
relocation to Sydney2
expenses
3 months
3 months
Restraint period to apply following
3 months
termination
1.
For the purposes of calculating Mr Camphausen’s long service leave entitlement, his prior service at HOCHTIEF AG will be recognised.
2. Mr Wright’s living away from home allowance ceased on 1 December 2019.
The ESAs also specify the remuneration mix that applies to a Senior Executive’s remuneration package.
The entitlement of Senior Executives to unvested LTI awards on termination of their employment is dealt with under the plan rules
and the specific terms of grant.
ENGAGEMENT OF REMUNERATION CONSULTANTS
No remuneration recommendations (as defined by the Corporations Act) were provided by any advisor.
NON-EXECUTIVE DIRECTOR REMUNERATION
The Non-executive Directors who held office during 2019 are set out in the following table.
Non-executive Directors during 2019
Name
Current Non-executive Directors
Russell Chenu
José-Luis del Valle Pérez
Pedro López Jiménez
David Robinson
Peter-Wilhelm Sassenfeld
Kathryn Spargo
Alternate Directors
Robert Seidler AM
Adolfo Valderas
Ángel Muriel
Former Non-executive Director
Trevor Gerber
Title (at 31 December 2019)
Change during the 2019 Financial Year
Independent Non-executive Director
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
Independent Non-executive Director
Ceased 31 December 2019
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
Fees have remained unchanged during 2019.
Board and Committee fees for 2019
Member (A$)
Name
189,000
Board
31,000
Audit and Risk Committee
21,000
Ethics, Compliance and Sustainability Committee
21,000
Remuneration and Nomination Committee
Board Sub-Committee2
4,000
1. Mr Fernández Verdes receives no additional remuneration from the fee pool for his duties as Executive Chairman. Details of his remuneration
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 $4.5 million (including
superannuation contributions), as approved by shareholders at the 2013 AGM.
ALTERNATE DIRECTORS
CIMIC does not pay fees for Board membership to Alternate Directors. Financial arrangements for Alternate Directors are a private
matter between the Non-executive Director and the relevant Alternate Director.
54
CIMIC Group Limited Annual Report 2019 | Remuneration Report
NON-EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non-executive Directors’ remuneration for the 2019 Financial Year and 2018 Financial Year are set out in the following
table.
Non-executive Director Remuneration
SHORT-TERM BENEFITS
Board and
Committee fees
(A$)
Other (A$)
Extra service
fees1 (A$)
POST-EMPLOYMENT
BENEFITS
Superannuation
contributions (A$)
TOTAL
REMUNERATION FOR
SERVICES
AS A NON-EXECUTIVE
DIRECTOR (A$)
Current Non-executive Directors
R Chenu
2019 Financial Year
2018 Financial Year
J del Valle Pérez
2019 Financial Year
2018 Financial Year
P López Jiménez
2019 Financial Year
2018 Financial Year
D Robinson2
2019 Financial Year
2018 Financial Year
P Sassenfeld5
2019 Financial Year
2018 Financial Year
K Spargo
2019 Financial Year
2018 Financial Year
Former Non-executive Director
T Gerber6
2019 Financial Year
2018 Financial Year
287,375
287,375
231,000
231,000
231,000
231,000
210,000
210,000
220,000
220,000
230,000
230,000
282,000
282,000
-
-
-
-
-
-
95,8903
95,8903
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,767
20,290
-
-
-
-
29,0604
29,0604
-
-
20,767
20,290
20,767
20,290
308,142
307,665
231,000
231,000
231,000
231,000
334,950
334,950
220,000
220,000
250,767
250,290
302,767
302,290
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.
4.
These amounts are inclusive of $9,110 in 2019 and $9,110 in 2018 from Devine in respect of his services as non-executive director.
5. Mr Sassenfeld received no Director fees directly from CIMIC in respect of his services as Non-executive Director. The amounts in the table
represent the payment by CIMIC to HOCHTIEF AG in respect of Mr Sassenfeld’s services.
6. Mr Gerber resigned as a Non-executive Director effective 31 December 2019.
55
CIMIC Group Limited Annual Report 2019 | Remuneration Report
CIMIC Group Limited Annual Report 2019 | Remuneration Report
NON-EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non-executive Directors’ remuneration for the 2019 Financial Year and 2018 Financial Year are set out in the following
SHORT-TERM BENEFITS
POST-EMPLOYMENT
Board and
Other (A$)
Superannuation
Extra service
fees1 (A$)
BENEFITS
REMUNERATION FOR
contributions (A$)
AS A NON-EXECUTIVE
DIRECTOR (A$)
TOTAL
SERVICES
table.
Non-executive Director Remuneration
Committee fees
(A$)
Current Non-executive Directors
R Chenu
2019 Financial Year
2018 Financial Year
J del Valle Pérez
2019 Financial Year
2018 Financial Year
P López Jiménez
2019 Financial Year
2018 Financial Year
D Robinson2
2019 Financial Year
2018 Financial Year
P Sassenfeld5
2019 Financial Year
2018 Financial Year
K Spargo
2019 Financial Year
2018 Financial Year
T Gerber6
2019 Financial Year
2018 Financial Year
287,375
287,375
231,000
231,000
231,000
231,000
210,000
210,000
220,000
220,000
230,000
230,000
282,000
282,000
95,8903
95,8903
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,767
20,290
-
-
-
-
-
-
29,0604
29,0604
20,767
20,290
20,767
20,290
308,142
307,665
231,000
231,000
231,000
231,000
334,950
334,950
220,000
220,000
250,767
250,290
302,767
302,290
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 2019 and $9,110 in 2018 from Devine in respect of his services as non-executive director.
5. Mr Sassenfeld received no Director fees directly from CIMIC in respect of his services as Non-executive Director. The amounts in the table
represent the payment by CIMIC to HOCHTIEF AG in respect of Mr Sassenfeld’s services.
6. Mr Gerber resigned as a Non-executive Director effective 31 December 2019.
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 2019 Financial Year.
Name
Directors
M Fernández Verdes
M Wright
R Chenu
J del Valle Pérez
P López Jiménez
D Robinson
P Sassenfeld
K Spargo
Former Director
T Gerber
Alternate Directors
R Seidler AM
A Valderas
Á Muriel
Senior Executives
I Segura Suriñach
S Camphausen
Balance at 31
Dec 2018
Purchases
Received on
exercise of
options/rights
Sales
Closing
Balance1
2,7452
-
4,085
1,0002
1,1922
1,489
1,8582
3,000
2,000
2,941
2,500
14,991
-
-
-
10,000
-
-
-
-
-
1,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,7452
10,000
4,085
1,0002
1,1922
1,489
1,8582
4,000
2,000
2,941
2,500
14,991
-
-
Former Non-executive Director
1.
2.
The closing balance is at 31 December 2019.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
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 2019 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
2018
(number)
Vested
(number)
Vested
(value)
(A$)
Exercised
(number)
Exercised1
(value)
(A$)
Lapsed
(number)
Lapsed
(value)
(A$)
Balance at
31 Dec
2019
(number)
Senior Executives
-
M Wright
S Camphausen
-
Former Senior Executives, now Alternate Directors
-
A Valderas
-
Á Muriel
23,537
1,642
20,924
36,377
2015
2015
2015
2015
-
-
-
-
-
-
-
-
-
24,250
-
528,456
-
-
-
-
-
-
-
-
23,537
1,642
20,924
12,127
1.
The exercised value is equivalent to the cash amount received upon the exercise of options.
56
CIMIC Group Limited Annual Report 2019 | Remuneration Report
SHARES PURCHASED ON MARKET
No shares were purchased on market in the 2019 Financial Year for the purpose of satisfying vested awards under the EIP.
The CIMIC Group Limited Directors’ Report for the 2019 Financial Year is signed at Sydney on 4 February 2020 in accordance with
a resolution of the Directors.
Marcelino Fernández Verdes
Executive Chairman
57
CIMIC Group Limited Annual Report 2019 | Remuneration Report
SHARES PURCHASED ON MARKET
No shares were purchased on market in the 2019 Financial Year for the purpose of satisfying vested awards under the EIP.
The CIMIC Group Limited Directors’ Report for the 2019 Financial Year is signed at Sydney on 4 February 2020 in accordance with
a resolution of the Directors.
Marcelino Fernández Verdes
Executive Chairman
CIMIC Group I Annual Report 2019
58
Direct
Black Point Power Station Leighton Asia, Hong Kong
Located in the New Territories region of Hong Kong, Black Point
Power Station is one of the world’s largest gas-fired combined
cycle power stations.
Leighton Asia has been involved in the ongoing development of the
station since it began operations in 1996.
Leighton Asia’s civil works for the station’s Combined Cycle Gas
Turbine project have included delivery of a new cooling water
intake and discharge facility and the construction of a turbine hall
that will be used to house the power generation equipment and
associated facilities.
Throughout the project, Leighton Asia has leveraged its expertise
in delivering complex energy and resources infrastructure, and
focused on helping the station achieve targeted operational and
sustainability outcomes.
59
CIMIC Group I Annual Report 2019
S
u
s
t
a
n
a
b
i
i
l
i
t
y
R
e
p
o
r
t
CIMIC Group I Annual Report 2019
60
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Sustainability Report
MEASURING PERFORMANCE AGAINST OUR SUSTAINABILITY COMMITMENTS AND TARGETS
COMMITMENT
Target
SAFETY
Zero work-related fatalities
Reduce Class 11 injuries
Reduce potential Class 1 injuries
Reduce TRIFR2
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 IS3 rated projects
Further develop knowledge capture
Utilise technology in the delivery of
projects
ENVIRONMENT
No Level 1 or 2 environmental
incidents
Reduce EIFR6
No legal breaches, fines or penalties
Environmental management systems in
place
Performance Commentary
FY19
result
§ No fatalities recorded
§
§
§
§
Four Class 1 injuries versus one in 2018
Reduced from 97 to 63
Decreased from 2.82 to 2.30
All Operating Companies certified to ISO 45001, ISO 18001
and/or AS/NZ 4801
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
No material breaches recorded
25,419 direct employees (88%) completed Code of
Conduct training in 2019, required every 2 years
2,250 employees in ‘high risk roles’ (80%) attended face-
to-face Code training in 2019, required every 2 years
1,639 participants attended Frontline development
program
214 participants attended Leading Managers Program
Graduate Program cohort intake increased to 225 (v 208 in
2018)
Graduate Program features an above-industry female
participation rate of 37% for the 2019 cohort
10,254 employees undertook face-to-face Equal
Employment Opportunity (EEO), Discrimination, Anti-
Bullying and Harassment training, increased completion
rate to 83% (v 40% in 2018)
1,014 staff completed unconscious bias training in
Australia, eligible staff participation of 84% (v 55% in 2018)
Female share of total Group workforce up to 12.2% (v
10.3% in 2018)
Economic value retained of $1,113m in 2019
28 cumulative certifications (v 22 in FY18)
Delivered $3.0bn of ‘Cleantech’4 or ‘green-rated’ projects
Interactive Project Knowledge Library (iPKL) increased to
include more than 3,000 projects
Continued to increase use of BIM and GIS5
CPB Contractors, Leighton Asia, UGL, Sedgman, Pacific
Partnerships and EIC Activities covered by BSI Kitemark
certification
Zero Level 1 incidents reported
29 Level 2 incidents reported
0.20 (v 0.09 in FY18)
18 legal breaches resulting in fines
100% of Operating Company management systems
certified to ISO 14001
Target
Date
Annual
Annual
Annual
Annual
Annual
Annual
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Annual
Annual
Annual
Ongoing
Achieved
Partly achieved
Not achieved
1 A Class 1 incident is a death or permanent disability including: fatality; quadriplegia; paraplegia; amputation; or permanent loss of vision.
2 Total Recordable Injury Frequency Rate.
3 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
4 Revenue earned by CPB Contractors from construction of sustainably rated or ‘green’ projects.
5 Building Information Modelling (BIM) and Geographic Information System (GIS).
6 Environmental Incident Frequency Rate.
61
61
§
This Sustainability Report section of the Annual Report is structured around five sustainability themes:
§
§
§
§
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | 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.
safety - supporting safe communities, providing safe, supportive and positive workplaces for our people;
integrity - acting with integrity, operating honestly and respectfully, and seeking sustainable supply chain outcomes;
culture - promoting a culture that builds capability and supports opportunities for sustainability, diversity and inclusion;
innovation - targeting innovation through knowledge sharing and collaboration, seeking competitive advantage with a focus
on the future; and
environment - promoting environmentally responsible outcomes by using resources efficiently, minimising waste and building
resilience to climate risks.
Sustainability Report
MEASURING PERFORMANCE AGAINST OUR SUSTAINABILITY COMMITMENTS AND TARGETS
COMMITMENT
Target
SAFETY
Zero work-related fatalities
Reduce Class 11 injuries
Reduce potential Class 1 injuries
Reduce TRIFR2
Performance Commentary
FY19
result
§ No fatalities recorded
Four Class 1 injuries versus one in 2018
Reduced from 97 to 63
Decreased from 2.82 to 2.30
and/or AS/NZ 4801
No material breaches of Code of
No material breaches recorded
Target
Date
Annual
Annual
Annual
Annual
Annual
Annual
Maintain Group-wide Code training
25,419 direct employees (88%) completed Code of
Ongoing
Conduct training in 2019, required every 2 years
2,250 employees in ‘high risk roles’ (80%) attended face-
to-face Code training in 2019, required every 2 years
Roll out ‘One’ leadership program
1,639 participants attended Frontline development
Ongoing
Train and develop future leaders
Graduate Program cohort intake increased to 225 (v 208 in
Ongoing
214 participants attended Leading Managers Program
program
2018)
INTEGRITY
Conduct
CULTURE
Promote diversity
10,254 employees undertook face-to-face Equal
Ongoing
Foster female participation
Female share of total Group workforce up to 12.2% (v
Ongoing
Further develop knowledge capture
Interactive Project Knowledge Library (iPKL) increased to
Ongoing
participation rate of 37% for the 2019 cohort
Employment Opportunity (EEO), Discrimination, Anti-
Bullying and Harassment training, increased completion
rate to 83% (v 40% in 2018)
1,014 staff completed unconscious bias training in
Australia, eligible staff participation of 84% (v 55% in 2018)
10.3% in 2018)
Economic value retained of $1,113m in 2019
28 cumulative certifications (v 22 in FY18)
Delivered $3.0bn of ‘Cleantech’4 or ‘green-rated’ projects
Ongoing
Ongoing
include more than 3,000 projects
Continued to increase use of BIM and GIS5
CPB Contractors, Leighton Asia, UGL, Sedgman, Pacific
Partnerships and EIC Activities covered by BSI Kitemark
certification
Zero Level 1 incidents reported
29 Level 2 incidents reported
0.20 (v 0.09 in FY18)
18 legal breaches resulting in fines
100% of Operating Company management systems
certified to ISO 14001
Ongoing
Annual
Annual
Annual
Ongoing
INNOVATION
Delivering sustainable returns
Increase IS3 rated projects
Utilise technology in the delivery of
projects
ENVIRONMENT
No Level 1 or 2 environmental
incidents
Reduce EIFR6
No legal breaches, fines or penalties
Environmental management systems in
place
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Achieved
Partly achieved
Not achieved
1 A Class 1 incident is a death or permanent disability including: fatality; quadriplegia; paraplegia; amputation; or permanent loss of vision.
2 Total Recordable Injury Frequency Rate.
3 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
4 Revenue earned by CPB Contractors from construction of sustainably rated or ‘green’ projects.
5 Building Information Modelling (BIM) and Geographic Information System (GIS).
6 Environmental Incident Frequency Rate.
61
Safety management systems in place
All Operating Companies certified to ISO 45001, ISO 18001
These themes provide the framework for addressing CIMIC’s sustainability commitments and performance.
Our approach is derived from, and based on, our Principles of 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 performance 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
leave a positive legacy.
These objectives help to deliver value by growing revenue, reducing costs, mitigating risk and building our reputation.
Promote gender equity
Graduate Program features an above-industry female
Ongoing
STRUCTURE OF THE SUSTAINABILITY REPORT
REPORTING APPROACH
CIMIC Group is committed to operating sustainably and reporting on our ESG performance and progress. This Sustainability Report,
integrated into our Annual Report, demonstrates 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, demonstrating the diversity of the Group’s activities, and reinforcing that acting sustainably creates value.
For the 2019 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 performance against these measures, as well as against our opportunities and risks. The GRI index can
be found on pages 131 - 135.
REPORT BOUNDARY AND SCOPE
The Report is for the 2019 Financial Year, unless otherwise noted. The scope of the Report covers CIMIC Group and its Operating
Companies which include:
§
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.
62
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CIMIC Group Limited Annual Report 2019 | 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 targets7 were initially 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 Reports in
the 2017 and 2018 Annual Reports.
In 2019, CIMIC again 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 85% 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 O&M of hospitals and health facilities.
4) Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
§
Construction and O&M of universities, schools and educational facilities.
6) Ensure availability and sustainable management of water and sanitation for all
§
Construction and O&M of water facilities, waste treatment plants, recycling facilities, dams and water
utilities.
Construction and O&M of renewable energy plants including solar and wind.
Construction of electricity transmissions lines.
Construction and O&M of gas related infrastructure.
7) Ensure access to affordable, reliable, sustainable and modern energy for all
§
§
§
9) Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
§
§
§
§ Mining, construction and O&M of minerals processing facilities for iron ore, nickel, copper and other metals.
11) Make cities and human settlements inclusive, safe, resilient and sustainable
§
Construction and O&M of ‘green rated’8 infrastructure and buildings.
Construction and O&M of telecommunications infrastructure.
Construction of technology promoting facilities such as research centres.
Construction and O&M of safe, affordable, accessible and sustainable transport systems, notably by
expanding public transport infrastructure such as busways, and passenger and light rail projects.
Construction and 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 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 O&M of projects that promote the rule of law such as defence facilities, courts and
correctional facilities.
While some of the Group’s projects may not directly align with the SDGs, this does not mean that CIMIC should not deliver this
work for our clients. For example, CIMIC would prefer to construct ‘green rated’ infrastructure or buildings but, if a client has not
mandated or is able to contribute towards the achievement of a ‘green rated’ asset, CIMIC has to make a commercial decision
whether to tender for that work.
The Report references the SDGs, with their relevant logos, when the goals and targets align with CIMIC’s sustainability themes,
commitments and reporting.
7 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’.
8 Includes projects with a nationally or internationally recognised sustainability rating such as Green Star, LEED, ISCA and Greenroads.
63
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | 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 material and of most 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
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 targets7 were initially 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 Reports in
the 2017 and 2018 Annual Reports.
In 2019, CIMIC again 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 85% 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 O&M of hospitals and health facilities.
§
§
§
§
§
§
§
§
§
§
§
§
§
4) Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
Construction and O&M of universities, schools and educational facilities.
6) Ensure availability and sustainable management of water and sanitation for all
Construction and O&M of water facilities, waste treatment plants, recycling facilities, dams and water
utilities.
7) Ensure access to affordable, reliable, sustainable and modern energy for all
Construction and O&M of renewable energy plants including solar and wind.
Construction of electricity transmissions lines.
Construction and O&M of gas related infrastructure.
9) Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
Construction and O&M of ‘green rated’8 infrastructure and buildings.
Construction and O&M of telecommunications infrastructure.
Construction of technology promoting facilities such as research centres.
§ Mining, construction and O&M of minerals processing facilities for iron ore, nickel, copper and other metals.
11) Make cities and human settlements inclusive, safe, resilient and sustainable
Construction and O&M of safe, affordable, accessible and sustainable transport systems, notably by
expanding public transport infrastructure such as busways, and passenger and light rail projects.
Construction and 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 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 O&M of projects that promote the rule of law such as defence facilities, courts and
correctional facilities.
While some of the Group’s projects may not directly align with the SDGs, this does not mean that CIMIC should not deliver this
work for our clients. For example, CIMIC would prefer to construct ‘green rated’ infrastructure or buildings but, if a client has not
mandated or is able to contribute towards the achievement of a ‘green rated’ asset, CIMIC has to make a commercial decision
whether to tender for that work.
commitments and reporting.
The Report references the SDGs, with their relevant logos, when the goals and targets align with CIMIC’s sustainability themes,
Economic
§
Availability of funding for future infrastructure projects given
government budget constraints and competing demands
Changes in economic factors (regulation, government policy, new
technology and availability of capital) 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
Encouraging free, fair and open competition, and complying with all
applicable competition laws
§
§
§
§
§
§
§
§
§
§
§
§
7 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’.
63
8 Includes projects with a nationally or internationally recognised sustainability rating such as Green Star, LEED, ISCA and Greenroads.
9 OFR - Operating and Financial Review section of this Annual Report
General Disclosures OFR9
General Disclosures OFR
Customer Health and Safety
Innovation, pg 115;
Safety, pg 75 - 76
General Disclosures OFR
General Disclosures OFR;
General Disclosures
Environment,
pg 127
Environment,
pg 127
General Disclosures OFR
General Disclosures OFR
Environment,
pg 120, pg 127
Environment,
pgs 119 - 120
Energy Environment,
pgs 120 - 123
Materials Environment,
pgs 125 - 126
Biodiversity Environment,
pgs 126 - 127
Environment,
pg 123
Environment,
pgs 124 - 125
Emissions, Economic
Performance
Environmental Compliance,
Effluents and Waste
Effluents and Waste
Water, Effluents and Waste
General Disclosures,
Employment
Public Policy, Marketing
and Labelling, Customer
Privacy
General Disclosures
Anti-competitive Behaviour
Culture, pg 103
Integrity, pg 81
Innovation, pg 114
Integrity, pg 82
64
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Material issues (by ESG factors)
Governance (cont.)
§
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
Applicable GRI Standard Section/Page
number
Integrity,
pgs 78 - 79, pg 82
Anti-corruption, Anti-
competitive Behaviour,
Socioeconomic Compliance
Supplier Environmental
Assessment, Supplier Social
Assessment
General Disclosures OFR
Integrity,
pgs 82 - 84
General Disclosures OFR; Innovation,
pg 115
§ Maintain the integrity of the Company’s tax payment and disclosure
Economic Performance OFR; Integrity,
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) 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
pgs 81 - 82
Culture,
pgs 89 - 92
Culture,
pgs 89 - 103
Culture, pg 88-89;
Innovation, pg 112
Integrity,
pgs 78 - 82
Culture, pg 90
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 OFR
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
Integrity, pg 85
Safety, pgs 68 - 76
Innovation, pg 105;
Culture, pgs 92 -
103
Safety, pgs 75 - 76
Culture, pgs 97 -
103
Integrity,
pgs 84 - 87
Culture, pgs 98 -
100
Integrity,
pgs 84 - 87
Integrity, pg 85-87
AVAILABILITY OF INFORMATION
CIMIC acquired Sedgman in 2016 and completed the acquisition of UGL in early 2017. Information for Sedgman has been
aggregated from 2016 and for UGL from 2017.
65
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Applicable GRI Standard Section/Page
number
SUMMARY OF GROUP PERFORMANCE
CREATING SHAREHOLDER VALUE
Human Capital Return on
Investment10
Revenue per employee
Labour (revenue) productivity
Profit per employee11
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
INTEGRITY
Employees undertaking formal, on-
line Code training
Continuous Disclosure breaches
Significant breaches of Code
CULTURE
Total direct employees12
Total employees13
Personnel costs
Payroll ratio14
Average tenure of employment
Number of new hires
Of which: Male
Female
Total turnover rate15
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
Local participation in International
workforce
#
$k
$m/MhW
$k/emp’e
#
#
#
#
#
#
TRIs/MhW
LTI/MhW
#
MhW
#
#
#
#
#
$m
$k/emp’e
years
#
#
#
%
%
%
%
%
# / %
%
%
%
2019
1.31
415.6
100.5
22.6
0
0
0
4
1
3
2.30
0.95
63
147.8
2019
25,419
0
0
2019
35,373
40,234
3,710
104.9
3.9
16,245
14,676
1,569
48.9
11.9
3.8
7.6
1.4
1 / 12.5
12.2
13.9
94.1
2018
1.31
381.8
92.2
20.3
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
19,685
18,108
1,577
51.3
13.1
4.2
4.5
1.2
1 / 12.5
10.3
12.2
94.2
2017
1.30
355.5
85.1
18.6
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
93.9
2016
1.33
380.1
88.6
16.4
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
016 / 0
9.3
9.1
97.7
2015
1.28
475.0
101.3
18.5
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
96.8
10 Total Revenue less Total Operating Expenses less Total Employee Related Costs (TERC) divided by TERC. As reported to DJSI.
11 Net profit after tax (NPAT) divided by Total direct employees. For 2019, the ratio reflects UNPAT.
12 The 2016 direct employee numbers include all those of UGL. UGL was consolidated from 24 Nov 2016 and other financial metrics were only
consolidated from that date as CIMIC did not have operational control until that date.
13 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 2019.
14 Total personnel costs divided by the total number of direct employees.
15 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.
16 This figure is measured at year end, CIMIC had one female for most of the 2016 year.
66
66
Material issues (by ESG factors)
Governance (cont.)
different cultures and languages
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Ensuring compliance in overseas markets when operating across
Anti-corruption, Anti-
Integrity,
competitive Behaviour,
pgs 78 - 79, pg 82
Socioeconomic Compliance
Ensuring environmentally and socially responsible sourcing and
Supplier Environmental
Integrity,
governance factors are integrated into procurement processes
Assessment, Supplier Social
pgs 82 - 84
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 the integrity of the Company’s tax payment and disclosure
Economic Performance OFR; Integrity,
pg 115
pgs 81 - 82
geographies
regime
Social
§
Application of appropriate labour standards, where people are
Non-discrimination,
Culture,
treated fairly and with respect
Freedom of Association and
pgs 89 - 92
Attracting, developing and retaining employees to meet the evolving
Employment, Labour/
Culture,
Collective Bargaining,
Human Rights Assessment
Management Relations,
pgs 89 - 103
Training and Education
Education
Innovation, pg 112
Policy
pgs 78 - 82
needs of the business
and manage the business
payments
Availability of a skilled and trained workforce that can deliver projects
Employment, Training and
Culture, pg 88-89;
Avoidance of all forms of bribery and corruption including facilitation
Anti-corruption, Public
Integrity,
Avoidance of all forms of child or forced labour in the supply chain
Child labour, Forced or
Culture, pg 90
Changes in social factors (government policy, industrial relations, new
General Disclosures OFR
technology) that could impact labour productivity
Contributing to the development of local communities who can affect
Local Communities, Indirect
Integrity, pg 85
or be affected by the Group's activities
employees and all those in the Group's care
looking for new and better ways of doing things
Creating safer and healthier workplaces for the well-being of
Occupational Health and
Safety, pgs 68 - 76
Encouraging a culture of innovation where people are continually
Training and Education
Innovation, pg 105;
compulsory labour, Human
Rights Assessment
Economic Impacts
Safety
Culture, pgs 92 -
103
Ensuring the safety of the public while delivering projects
Customer Health and Safety
Safety, pgs 75 - 76
Fostering a more diverse workforce that reflects the communities in
Employment, Diversity and
Culture, pgs 97 -
which the Group operates
Equal Opportunity
103
Providing local communities with full, fair and reasonable opportunity
General Disclosures,
Integrity,
to participate in the economic benefits (i.e. employment,
procurement, or as subcontractors) of the Group’s activities
Procurement Practices,
pgs 84 - 87
Indirect Economic Impacts
Promoting gender equity in remuneration and promotion decisions
Employment, Diversity and
Culture, pgs 98 -
Respecting the rights of local communities when delivering projects
Rights of Indigenous
Integrity,
Equal Opportunity
100
Peoples, Local Communities
pgs 84 - 87
Supporting corporate community investment (i.e. sponsorship,
Indirect Economic Impacts
Integrity, pg 85-87
donations and corporate partnerships) in local communities and
for clients
society
CIMIC acquired Sedgman in 2016 and completed the acquisition of UGL in early 2017. Information for Sedgman has been
AVAILABILITY OF INFORMATION
aggregated from 2016 and for UGL from 2017.
65
CIMIC Group Limited Annual Report 2019 | Sustainability Report
INNOVATION
Cumulative green buildings completed
Cumulative ISCA17 certified and rated
projects
Green Standard project registrations
Green Standard project certifications
Cleantech or ‘green-rated’ revenue
Green Standard employee
certifications
#
#
#
#
$m
#
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
EIFR18
Energy consumption - Diesel
Energy consumption - Electricity
Energy consumption - Other
Total energy consumption
Energy intensity19
Water: Withdrawals
Discharges
Water consumption
Water reuse
Recycled/reuse20
Water intensity21
GHG emissions - Scope 122
GHG emissions - Scope 2
GHG emissions - Scope 323
Carbon intensity24
Total material volumes
#
#
#
#
#
#
#
#
#
#
#
$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
2019
80
28
12
11
3,020
81
2019
1
29
7
22
447
347
100
32
7
25
1
295
0.20
10,410
141
96
10,647
0.72
17,188
11,567
5,621
4,313
20.1
0.38
2,634
122
1,143
0.19
2018
76
22
5
8
4,932
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
1,000
0.19
2017
65
19
5
7
2,703
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
2,083
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
1,922
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
6,753
4,295
3,990
4,845
3,977
17 Infrastructure Sustainability Council of Australia.
18 Environmental Incident Frequency Rate (EIFR) is total number of Level 1 and Level 2 environmental incidents per million hours worked.
19 Energy intensity is ‘Total energy consumption’ divided by ‘Total revenue’ (excluding revenue from joint ventures and associates).
20 Recycled/reused % equals total water recycled and reused divided by total water recycled and reused plus total water withdrawals.
21 Water intensity is ‘Total water consumption divided by ‘Total revenue’ (excluding revenue from joint ventures and associates).
22 Includes internal reporting of emissions regardless of who has operational control of facilities.
23 Scope 3 emissions have been adjusted for the 2016 year when they were previously over-stated.
24 Carbon intensity is ‘Total Scope 1’ and ‘Total Scope 2’ emissions divided by ‘Total revenue’ (excluding revenue from joint ventures and associates).
67
67
Cleantech or ‘green-rated’ revenue
$m
3,020
2,083
1,922
INNOVATION
Cumulative green buildings completed
Cumulative ISCA17 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
EIFR18
Energy consumption - Diesel
Energy consumption - Electricity
Energy consumption - Other
Total energy consumption
Energy intensity19
Water: Withdrawals
Discharges
Water consumption
Water reuse
Recycled/reuse20
Water intensity21
GHG emissions - Scope 122
GHG emissions - Scope 2
GHG emissions - Scope 323
Carbon intensity24
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
$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
2019
2018
2017
2016
2015
2019
80
28
12
11
81
1
29
7
22
447
347
100
32
7
25
1
295
0.20
10,410
141
96
10,647
0.72
17,188
11,567
5,621
4,313
20.1
0.38
2,634
122
1,143
0.19
2018
76
22
5
8
4,932
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
1,000
0.19
2017
65
19
5
7
2,703
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
Total material volumes
6,753
4,295
3,990
4,845
3,977
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
2016
2015
SAFETY
OUR APPROACH
At CIMIC, we put health and safety first. Looking out for each other is an essential part of our culture. It underpins everything we do
and reflects our determination to keep our people, and those under our care, safe. Our priorities are minimising harm in
workplaces, promoting physical and mental wellbeing, and protecting the public. Our commitment extends to our subcontractors,
our suppliers and any other person who is impacted by the work we deliver.
Minimising harm in workplaces
Measures in place
§
§
§
§
100% of Operating Company management systems certified to ISO45001, ISO 18001 and/or
AS/NZS 4801
Critical Risk programs, such as Safety Essentials and Class 1 Practices in place across CPB
Contractors, Leighton Asia, Thiess, Sedgman and UGL, providing the systems, procedures and
knowledge to manage our activities
Focus on ‘above-the-line’ controls used to eliminate, substitute, isolate or engineer out risk
Thiess, Sedgman and Leighton Asia focus on delivering our management systems and
communications in multiple languages or by using simple illustration and diagrams to tackle
the potential literacy issues
§ Quarterly Managing Director Health & Safety Reviews in which Managing Directors
Actions taken during 2019
§
§
§
§
§
Performance
Promote physical and mental health
Measures in place
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Actions taken during 2019
Performance
Protect the public
Measures in place
Actions taken during 2019
Performance
individually report performance in face-to-face meetings to the CIMIC CEO
556 safety experts employed across the Group
All Operating Companies maintained management system certification
291 internal safety audits conducted and 42 external audits – all to ISO18001 and/or
AS/NZ4801 standards
Almost 18,900 hours spent on training in occupational health and safety
Requirement for the use of dynamic load moment indicators on all articulated mobile cranes;
if this cannot be achieved, the affected crane is de-rated by 50% of its lifting capacity
Achieved reduction in TRIFR from 2.82 to 2.30
Employee Assistance Program is in place for all Australian based operations, and globally for
Thiess
All Operating Companies have developed formal strategies or are implementing plans to
support positive mental health outcomes and address psycho-social risk
Thiess and UGL have delivered a variety of mental health education programs targeting
Managers and Supervisors, these have been shared with all other Operating Companies
International medical and security program supported by 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
Introduced a Group-wide Occupational Hygiene Standard aimed at achieving consistency in
the management of key exposure hazards
Developed a Group-wide International Travel Training E-Learning package providing
information and strategies to support health, safety and security of international travelers
Formed a mental health working group to share strategies and work toward a consistent
Group-wide approach to mental health initiatives
AIA Vitality program which promotes preventative health strategies and physical fitness
launched across the Australian mainland offices and projects with
47% of eligible employees have activated their AIA Vitality accounts
Public safety integrated into Safety Essentials and at the design phase of projects
Numerous, project-by-project initiatives tailored to manage risks as appropriate
Undertook a range of initiatives to protect the public appropriate to each project
24 Carbon intensity is ‘Total Scope 1’ and ‘Total Scope 2’ emissions divided by ‘Total revenue’ (excluding revenue from joint ventures and associates).
25 Controls used to eliminate, substitute, isolate or engineer out the risk from causing harm.
68
68
MINIMISING HARM IN WORKPLACES
CIMIC’s priority is the elimination of fatalities and permanent disabilities, and the reduction of all other injuries.
We seek to create workplaces with a culture that focuses on safety and productivity, while also enhancing the
wellbeing of our teams. We are committed to treating everyone - subcontractors, clients, suppliers, representatives of our business
partners or visitors - with the same degree of care as our employees, irrespective of their role.
Strong risk management systems underpin our commitment to safe workplaces. 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’ controls25.
17 Infrastructure Sustainability Council of Australia.
18 Environmental Incident Frequency Rate (EIFR) is total number of Level 1 and Level 2 environmental incidents per million hours worked.
19 Energy intensity is ‘Total energy consumption’ divided by ‘Total revenue’ (excluding revenue from joint ventures and associates).
20 Recycled/reused % equals total water recycled and reused divided by total water recycled and reused plus total water withdrawals.
21 Water intensity is ‘Total water consumption divided by ‘Total revenue’ (excluding revenue from joint ventures and associates).
22 Includes internal reporting of emissions regardless of who has operational control of facilities.
23 Scope 3 emissions have been adjusted for the 2016 year when they were previously over-stated.
67
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Safety award for innovative approach to crane safety
In New Zealand, the innovative safety approach of CPB Contractors’ team on the Transmission Gully project was recognised at the
2019 New Zealand Workplace Health and Safety Awards. The team was awarded the ‘3M best use of New Zealand design
technology’ award for an in-crane GPS warning system that keeps crane operators safe during lifts under high voltage power lines.
To ensure the safety of workers and the public, 3D models were created of the four metre safety envelope (safe operating distance)
around overhead transmission lines where CPB Contractors was using cranes to erect bridges on the route. Two crawler cranes
were equipped with dual mast GPS receivers and the software that uses real-time kinematic (RTK) GPS to map the position of the
crane’s main boom, fixed jib and main body to within 30mm accuracy. Onboard, a touch screen shows the driver a 3D view of the
crane boom’s proximity to the closest conductor and the closest section of the safety envelope, ensuring safe operation near the
live lines. It is believed that this is a world first use of this system in this type of application.
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 ISO45001, 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.
Fatalities and Permanent Disabilities
No fatalities were recorded by the Group in 2019. While we are pleased with this outcome, disappointingly there were four injuries
that resulted in disabilities. The details of these Class 1 events were:
§ while conducting maintenance on a tunnel boring machine cutterhead on the Sydney Metro Stage 2 project in New South
§
§
§
Wales, a cutter disc fell and struck a worker’s foot. As a result of the injury two toes were amputated;
while conducting continuity testing on the Liantang Project in Hong Kong, an arc flash occurred resulting in significant burns to
a worker’s face, arms, hands and upper thighs;
a banksperson on the Liantang Project was struck by the mobile elevated work platform she was directing and received crush
injuries to her upper arm resulting in nerve damage and impaired hand movement; and
while discharging a load at the Melak Coal Mine in Indonesia, the dump slumped causing a truck to sink, raising its front
wheels off the ground. The operator jumped, landing awkwardly, resulting in fractured vertebrae and nerve damage.
The CIMIC Group remains focussed on the identification of critical risks and the effective implementation of critical risk
management strategies to avoid serious incidents. This includes the use of training, education, audits, workplace inspections and
the ongoing in-field verification of critical controls.
The safety of our people remains our number one priority. So it is with great sadness that we report a fatality in our operations in
early 2020. Our thoughts and profound sympathies are with our colleague’s family and partner, his friends and teammates, and we
are providing assistance to all of those who were affected.
Injury measurement
The Group’s preferred lag measure for reporting is Recordable Injuries (RIs)26 and we calculate the Total Recordable Injury
Frequency Rate (TRIFR)27, 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)28, 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 2019 of 2.30, which represents an 18% decrease from the 2018 result of 2.82.
Group TRIFR (TRIs/MhW)
2019
2.30
2018
2.82
2017
2.64
2016
2.74
The Group also tracks the number of LTIs, a widely-recognised safety metric, and the Lost Time Injury Frequency Rate (LTIFR)29.
LTIFR is a commonly used lag indicator of both injury prevention and management performance. Like TRIFR it is often benchmarked
across industries. In 2019, the Group’s LTIFR decreased from 1.27 to 0.95.
26 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.
27 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.
28 An occurrence that results in a fatality, permanent disability or time lost from work of one day/shift or more.
29 Accidents (defined as LTIs on the current page) per MhW.
69
69
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Safety award for innovative approach to crane safety
In New Zealand, the innovative safety approach of CPB Contractors’ team on the Transmission Gully project was recognised at the
2019 New Zealand Workplace Health and Safety Awards. The team was awarded the ‘3M best use of New Zealand design
technology’ award for an in-crane GPS warning system that keeps crane operators safe during lifts under high voltage power lines.
Group30 LTIFR (accidents/MhW)
Employee LTIFR (accidents/MhW)
Contractor LTIFR (accidents/MhW)
2019
0.95
0.42
1.84
2018
1.27
0.53
2.46
2017
1.07
0.74
1.72
2016
1.00
0.47
2.04
To ensure the safety of workers and the public, 3D models were created of the four metre safety envelope (safe operating distance)
around overhead transmission lines where CPB Contractors was using cranes to erect bridges on the route. Two crawler cranes
were equipped with dual mast GPS receivers and the software that uses real-time kinematic (RTK) GPS to map the position of the
crane’s main boom, fixed jib and main body to within 30mm accuracy. Onboard, a touch screen shows the driver a 3D view of the
crane boom’s proximity to the closest conductor and the closest section of the safety envelope, ensuring safe operation near the
live lines. It is believed that this is a world first use of this system in this type of application.
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 ISO45001, 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.
Fatalities and Permanent Disabilities
No fatalities were recorded by the Group in 2019. While we are pleased with this outcome, disappointingly there were four injuries
that resulted in disabilities. The details of these Class 1 events were:
§ while conducting maintenance on a tunnel boring machine cutterhead on the Sydney Metro Stage 2 project in New South
Wales, a cutter disc fell and struck a worker’s foot. As a result of the injury two toes were amputated;
while conducting continuity testing on the Liantang Project in Hong Kong, an arc flash occurred resulting in significant burns to
a worker’s face, arms, hands and upper thighs;
a banksperson on the Liantang Project was struck by the mobile elevated work platform she was directing and received crush
injuries to her upper arm resulting in nerve damage and impaired hand movement; and
while discharging a load at the Melak Coal Mine in Indonesia, the dump slumped causing a truck to sink, raising its front
wheels off the ground. The operator jumped, landing awkwardly, resulting in fractured vertebrae and nerve damage.
The CIMIC Group remains focussed on the identification of critical risks and the effective implementation of critical risk
management strategies to avoid serious incidents. This includes the use of training, education, audits, workplace inspections and
the ongoing in-field verification of critical controls.
The safety of our people remains our number one priority. So it is with great sadness that we report a fatality in our operations in
early 2020. Our thoughts and profound sympathies are with our colleague’s family and partner, his friends and teammates, and we
are providing assistance to all of those who were affected.
Injury measurement
The Group’s preferred lag measure for reporting is Recordable Injuries (RIs)26 and we calculate the Total Recordable Injury
Frequency Rate (TRIFR)27, 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)28, 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 2019 of 2.30, which represents an 18% decrease from the 2018 result of 2.82.
Group TRIFR (TRIs/MhW)
2019
2.30
2018
2.82
2017
2.64
2016
2.74
The Group also tracks the number of LTIs, a widely-recognised safety metric, and the Lost Time Injury Frequency Rate (LTIFR)29.
LTIFR is a commonly used lag indicator of both injury prevention and management performance. Like TRIFR it is often benchmarked
across industries. In 2019, the Group’s LTIFR decreased from 1.27 to 0.95.
26 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.
27 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
28 An occurrence that results in a fatality, permanent disability or time lost from work of one day/shift or more.
29 Accidents (defined as LTIs on the current page) per MhW.
reported by 5.
69
The Group also tracks numerous other safety metrics - 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;
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 2019, there were no material incidents of non-compliance with regulations and/or voluntary codes.
During 2019, CPB Contractors incurred 2 fines totalling A$7,200 for non-compliance to a scaffolding Safe Work Method Statement
at the Mackay Ring Road project, Queensland and for non-compliance regarding maintaining a Hazardous Chemical Register at the
New Parallel Runway project at the Brisbane Airport, Queensland. Leighton Asia incurred 2 fines totalling A$7,671 for two instances
of failing to maintain a safe work environment.
Lead indicators
The Group actively utilises a number of lead indicators of safety performance to identify and help prioritise where effort is needed
in order to reduce the potential risk of injury to our people. Lead indicators, used in this way, become important tools for risk
avoidance and minimisation of harm across any business.
Tracking the timeliness of investigations and the sharing of learnings from Potential Class 1 (PC1) events is a key lead indicator
measured by the Group. A PC1 is an incident that may have, but did not, result in a fatality or a permanent disabling injury. This
lead indicator drives accountability of Executive Management Teams31 - in each of the Operating Companies - for the efficient and
effective investigation of all PC1 events. In addition, it ensures that learnings from these investigations are quickly and efficiently
communicated across the Group, reducing the potential for recurrence.
Performance against this lead indicator is monitored and managed in the Quarterly MD Health and Safety Reviews, which are
chaired by CIMIC’s CEO.
Of note, the total number of PC1 injuries decreased by 34 in 2019 to 63.
Group PC1 (#)
2019
63
2018
97
2017
103
2016
138
The Group’s Operating Companies utilise a range of other lead indicators which 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 on time versus overdue; and
The number of Leadership Reviews/Walks - planned versus actual.
The Group Health and Safety team is currently reviewing all lead indicators with a focus on measuring the quality of outcomes from
audits, inspections, critical risk reviews and the like, rather than measuring counts of planned versus actual.
Safety in construction
Each of CIMIC’s Operating Company has safety management systems that, while similar in their structure, are tailored to meet the
unique risks and hazards they deal with. The most commonly reported critical risks giving rise to safety incidents in the Group’s
construction businesses are currently: working at heights; crane and lifting operations; stored energy; working in and around
mobile plant; working near live services; and working near live traffic.
Lifting safety on cranes
Working together to make mobile articulated pick and carry cranes safer, our Operating Companies have formed a collaborative
working group with crane manufacturers and industry peers to improve crane stability during operations. The team has identified
new technology that can be retrofitted to a crane’s computer system to dynamically alert operators and limit functions when
movement with a load affects the crane’s centre of gravity and overall stability. All cranes coming onto CIMIC Group sites are now
required to be fitted with the new technology.
30 Includes employees and contractors.
31 Generally defined as direct reports to an Operating Company Managing Director.
70
70
CIMIC Group Limited Annual Report 2019 | Sustainability Report
For CPB Contractors, the Group’s construction company in Australia, New Zealand and Papua New Guinea, 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.
How to work from heights when underground
CPB Contractors is delivering a water infrastructure project, relining Victoria’s Maribyrnong River sewer along an 8km alignment,
rehabilitating 52 manholes and decommissioning another 13. Before major works can begin, CPB Contractors must modify the
manholes to improve access, which requires people to be lowered into enclosed spaces with depths of up to 43 metres. The work
requires the application of controls more likely to be seen when working at heights, despite working underground.
While only one safety line is mandated by legislation, the significant and varying depths prompted the team to consider alternative
approaches. The team has adopted additional precautions for work in manholes deeper than 10 metres using a twin rope system.
They work on one main line and have a secondary, back-up line attached to their harness and the winch. In the event of an
emergency, the back-up line can operate as a fall arrest system – providing a safe system of work, and greater security and
reassurance for the team. This extra step has been embraced by the team and had a positive result on its safety culture.
With operations in countries as diverse as India, Hong Kong, Philippines, Singapore, Indonesia and Malaysia, Leighton Asia
communicates its safety standards and process controls in different languages, including English, Chinese (Cantonese & Mandarin),
Hindi, Tamil, Bahasa and Tagalog. The company also addresses the challenge of relatively low literacy rates in some of these regions
by 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.
Operating safely in remote Indonesia
Starting with a contract for less than US$1 million in 2006, Leighton Asia’s Freeport team in Indonesia is now delivering their 51st
project for one of our long-term clients; PT Freeport Indonesia. The team has been constructing critical facilities to support the
client’s exploration and mining activities in the remote highlands of the Sudirman Mountain Range in Indonesia, which is located at
an altitude of approximately 3,000m. Completed and ongoing projects range from a 12,000sqm five-storey accommodation
building, replacement of platforms at a processing plant, to the construction of a bus station and medical clinic.
Works for PT Freeport are delivered in an exposed cold and wet environment with season-long precipitation. Leighton Asia has
been working closely with its client to ensure a safe workplace which delivers to the timeframes promised. The team’s track record
on safety performance is reflected in their achievement of 4.8 million safe work hours without a lost-time incident between March
2014 and November 2019. On top of their repeated success in project delivery and unwavering focus on safety, the team fosters a
positive working culture through regular team building activities, supported by the client.
Leighton Asia operates its ‘Strive for L.I.F.E.’ training centres to support their mandatory safety training curriculum. The objective is
to provide staff and workers with a world-class program of training that is interactive and dynamic, whilst also being informative.
Since opening in 2010, it is estimated that in excess of 500,000 training courses have been completed 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.
Innovative hydraulic arm banishes heavy lifting at Mt Owen
The maintenance team at Thiess’ Mt Owen operations in New South Wales has collaborated with local company Nivek Industries to
develop the ingenious new Lift Assist 40 (LA40) tool manipulator arm, to provide a more efficient and safer way to carry out daily
duties on the project’s fleet. The LA40 design aims to take the weight out of a wide range of tools including rattle guns, impact
drivers, pneumatic torque guns, air sanders and more, removing the strain from the operator. The LA40 enables operators to more
safely perform maintenance duties in the workshop with substantial efficiency gains. The arm can handle a safe working load of up
to 40kg and is designed to reduce fatigue and improve productivity on every shift. The goal of the LA40 is to always keep fitters’
hands safe and to ensure fingers and hands avoid crush zones – especially when loosening and tightening nuts and bolts.
The innovation embedded in the hydraulic arm has also generated improvements to productivity. The 360-degree movement of the
arm allows fitters to undertake two tasks at once. The LA40 has turned cleaning dozers into a one-person job rather than two,
which creates efficiencies. The collaboration with Nivek Industries is a good example of how Thiess is working with suppliers to
bring innovative ideas to life, giving back to the industry and creating value for clients.
71
71
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
For CPB Contractors, the Group’s construction company in Australia, New Zealand and Papua New Guinea, 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.
How to work from heights when underground
CPB Contractors is delivering a water infrastructure project, relining Victoria’s Maribyrnong River sewer along an 8km alignment,
rehabilitating 52 manholes and decommissioning another 13. Before major works can begin, CPB Contractors must modify the
manholes to improve access, which requires people to be lowered into enclosed spaces with depths of up to 43 metres. The work
requires the application of controls more likely to be seen when working at heights, despite working underground.
While only one safety line is mandated by legislation, the significant and varying depths prompted the team to consider alternative
approaches. The team has adopted additional precautions for work in manholes deeper than 10 metres using a twin rope system.
They work on one main line and have a secondary, back-up line attached to their harness and the winch. In the event of an
emergency, the back-up line can operate as a fall arrest system – providing a safe system of work, and greater security and
reassurance for the team. This extra step has been embraced by the team and had a positive result on its safety culture.
With operations in countries as diverse as India, Hong Kong, Philippines, Singapore, Indonesia and Malaysia, Leighton Asia
communicates its safety standards and process controls in different languages, including English, Chinese (Cantonese & Mandarin),
Hindi, Tamil, Bahasa and Tagalog. The company also addresses the challenge of relatively low literacy rates in some of these regions
by 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.
Operating safely in remote Indonesia
Starting with a contract for less than US$1 million in 2006, Leighton Asia’s Freeport team in Indonesia is now delivering their 51st
project for one of our long-term clients; PT Freeport Indonesia. The team has been constructing critical facilities to support the
client’s exploration and mining activities in the remote highlands of the Sudirman Mountain Range in Indonesia, which is located at
an altitude of approximately 3,000m. Completed and ongoing projects range from a 12,000sqm five-storey accommodation
building, replacement of platforms at a processing plant, to the construction of a bus station and medical clinic.
Works for PT Freeport are delivered in an exposed cold and wet environment with season-long precipitation. Leighton Asia has
been working closely with its client to ensure a safe workplace which delivers to the timeframes promised. The team’s track record
on safety performance is reflected in their achievement of 4.8 million safe work hours without a lost-time incident between March
2014 and November 2019. On top of their repeated success in project delivery and unwavering focus on safety, the team fosters a
positive working culture through regular team building activities, supported by the client.
Leighton Asia operates its ‘Strive for L.I.F.E.’ training centres to support their mandatory safety training curriculum. The objective is
to provide staff and workers with a world-class program of training that is interactive and dynamic, whilst also being informative.
Since opening in 2010, it is estimated that in excess of 500,000 training courses have been completed 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.
Innovative hydraulic arm banishes heavy lifting at Mt Owen
The maintenance team at Thiess’ Mt Owen operations in New South Wales has collaborated with local company Nivek Industries to
develop the ingenious new Lift Assist 40 (LA40) tool manipulator arm, to provide a more efficient and safer way to carry out daily
duties on the project’s fleet. The LA40 design aims to take the weight out of a wide range of tools including rattle guns, impact
drivers, pneumatic torque guns, air sanders and more, removing the strain from the operator. The LA40 enables operators to more
safely perform maintenance duties in the workshop with substantial efficiency gains. The arm can handle a safe working load of up
to 40kg and is designed to reduce fatigue and improve productivity on every shift. The goal of the LA40 is to always keep fitters’
hands safe and to ensure fingers and hands avoid crush zones – especially when loosening and tightening nuts and bolts.
The innovation embedded in the hydraulic arm has also generated improvements to productivity. The 360-degree movement of the
arm allows fitters to undertake two tasks at once. The LA40 has turned cleaning dozers into a one-person job rather than two,
which creates efficiencies. The collaboration with Nivek Industries is a good example of how Thiess is working with suppliers to
bring innovative ideas to life, giving back to the industry and creating value for clients.
71
Sedgman implemented Safety Essentials in 2019 to manage their critical risks. The Safety Essentials are mandatory and are applied
at all Sedgman sites. To ensure their effectiveness, Critical Control Verifications and Site Critical Risk Reviews were also introduced.
Design decisions deliver safety
Sedgman designers practice safety in design every day by applying a risk-based methodology to design decision making. On a day-
to-day basis, this means having reviews and checks in place, consulting with project stakeholders such as clients, operators and
constructors, and ensuring risk is continually assessed throughout the design process.
Sedgman’s design team has been developing a filtration building for a copper concentrator project. The risks were evaluated
through major reviews which considered factors such as layout and maintenance, and hazard and operability studies to evaluate
the operation of the plant. One outcome has been the inclusion of a maintenance platform which reduces maintenance time,
improves operator access to the filter components and reduces the crane travel required.
A key feature of Sedgman's safety in design is the ‘Hazard in Operations’ review, which is part of the delivery of every project.
Working with the design teams, project managers can take clients on a walk-through of a 3D model. Being able to get the client's
operational team engaged with Sedgman’s design team, before the start of construction, aligns expectations around safety. Clients
can be assured that designs robustly address their safety requirements, and that Sedgman is effectively addressing the key risks to
the operations team.
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 most often occurring 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.
In 2019, 3 new critical risk training modules were developed and delivered across UGL. These programs are designed to increase
awareness and understanding of our critical risks and their critical controls. Over 3,400 individual eLearning modules were
completed with a focus on the overall Critical Risk Management Program, Working at Heights and Energy Isolation. This is in
addition to face-to-face training sessions held across the business.
The UGL One HSE Leadership Program was also developed in 2019. The program was designed to build the capability of Leaders
within our business, to help us reach new levels of health, safety and environmental performance. The program drives a focus on
practical skills to build a strong One HSE Culture and an increased understanding of our Critical Risk Management program. During
2019, over 260 leaders participated in the 2 day program.
Flying high to eliminate manual handling risks
UGL’s Rope Access team spends their days high above the ground in areas previously perceived as inaccessible. In areas where a
sound platform isn’t possible or practical, rope access can provide an option. Rope access is a means of entry for much of the work
in the offshore oil and gas industry, as well as in a range of projects in construction, civil engineering, the built and natural
environment, and more. The UGL team is currently working on a range of energy and resources projects around Australia.
While rope access reduces manual handling risks, it does pose safety risks of its own. To ensure success, the teams participate in
thorough training and strict work guidelines to deliver a safe working record year after year. As part of the works on the Chevron
Gorgon project, UGL’s maintenance crew was tasked with assisting with the installation of rigging and aiding in the installation of
piping. To eliminate manual handling of roller plates, weighing approximately 15kg each, the team rigged a tight line system (a
flying fox) horizontally along the 50 metre length of the workspace. This allowed the plates to be safely moved and manoeuvred
over obstacles to the required location. It eliminated potential risk to personnel but also created time and cost-savings for the
client.
In June 2019, UGL became an Operator member of the Industrial Rope Access Trade Association (IRATA). IRATA International is
recognised as the world’s leading authority on industrial rope access and is dedicated to promoting and maintaining high standards,
safety, work quality and working practices for the industrial rope access industry.
Occupational illnesses
CIMIC’s commitment to health and safety includes monitoring for, and seeking to mitigate any potential impacts of, occupational
illnesses32 that the Group’s activities may cause. The most common types of occupational hygiene risks experienced across the
Group include hearing loss, dermatitis or other skin irritations, 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.
32 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).
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CIMIC Operating Companies have comprehensive occupational health programs in place to ensure adequate monitoring,
assessment and control of any of the health hazards associated with their respective working environments. In addition, all
Operating Companies worked with CIMIC 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 was implemented in 2019.
Innovative approach to reducing dust
Air quality is an important safety aspect in frontline operating environments. At UGL’s rail facility at Bassendean in Western
Australia, two mechanical fitters identified dust as a potential safety hazard at their site and took ownership of the issue to design
and manufacture an extraction system to mitigate the risk of dust to themselves and their team mates.
The system extracts the very fine dust, which is created by the valve dressing tool during the overhaul of power assemblies, directly
from the work station. As the dust is produced it is deposited it into a sealed container for safe disposal later. Notable features of
the system include that it is built on a mobile work station, the same height as the work benches, to help each operator achieve
more accurate cutting, and it is made entirely from recycled and reused parts which reduced waste and operating costs. The dust
extraction system is currently being assessed for use by teams at the other UGL rail workshops and is an excellent example of
teamwork, ingenuity and innovation.
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 2019, Group Operating Companies reported 79 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)33 of 0.53 for CIMIC Group employees.
Group Occupational illnesses or injuries (#)34
Group OIFR (# / MhW)
2019
79
0.53
2018
48
0.30
2017
15
0.09
Due to the outdoor nature of construction and mining activities, skin cancer is a potential risk for employees. 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.
Curragh leads cancer prevention message
At Thiess’ Curragh operation in Central Queensland, the launch of a newly painted 793F haul truck tray marked the beginning of a
two month cancer prevention campaign by the team on site. Coloured blue and pink for Prostate and Breast Cancer, the tray aimed
to raise awareness of early prevention and encourage regular health checks. More than 100 employees attended the unveiling of
the truck tray, hearing important prevention messages from Thiess’ Chief Medical Advisor, Doctor Robert McCartney, and local
Breast and Prostate Cancer Association nurses.
Education sessions were held across the site throughout May and June which included providing information on prostate, breast,
bowel and skin cancer detection. Curragh employees were also provided with access to free skin health checks. The prevention
campaign not only seeks to raise awareness, allowing people to take the lead on their health, but also to go home better informed
on how to help their family and friends to do the same. The Thiess project team also recognised the ongoing service of the Breast
and Prostate Cancer Association to the local community with a campaign-led donation.
Rehabilitation
It is widely recognised that “returning to work after an injury or illness helps an individual recover and reduces the risk of long-term
disability.”35 Getting back to work often means an employee has also returned to a normal life, reducing the financial and
emotional impact on them and their family.
Each of the Group’s Operating Companies provides 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 programs
work to assist injured workers to either remain at work, or to return to work safely and as soon as possible, following a workplace
injury or illness. 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 a comprehensive injury management strategy.
33 Occupational Illness Frequency Rate: the number of occupational illnesses reported per million hours worked.
34 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.
35 Comcare, Australian Government, 9 October 2019.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Operating Companies have comprehensive occupational health programs in place to ensure adequate monitoring,
assessment and control of any of the health hazards associated with their respective working environments. In addition, all
Operating Companies worked with CIMIC 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 was implemented in 2019.
Innovative approach to reducing dust
Air quality is an important safety aspect in frontline operating environments. At UGL’s rail facility at Bassendean in Western
Australia, two mechanical fitters identified dust as a potential safety hazard at their site and took ownership of the issue to design
and manufacture an extraction system to mitigate the risk of dust to themselves and their team mates.
The system extracts the very fine dust, which is created by the valve dressing tool during the overhaul of power assemblies, directly
from the work station. As the dust is produced it is deposited it into a sealed container for safe disposal later. Notable features of
the system include that it is built on a mobile work station, the same height as the work benches, to help each operator achieve
more accurate cutting, and it is made entirely from recycled and reused parts which reduced waste and operating costs. The dust
extraction system is currently being assessed for use by teams at the other UGL rail workshops and is an excellent example of
teamwork, ingenuity and innovation.
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 2019, Group Operating Companies reported 79 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)33 of 0.53 for CIMIC Group employees.
Group Occupational illnesses or injuries (#)34
Group OIFR (# / MhW)
2019
79
0.53
2018
48
0.30
2017
15
0.09
Due to the outdoor nature of construction and mining activities, skin cancer is a potential risk for employees. 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.
Curragh leads cancer prevention message
At Thiess’ Curragh operation in Central Queensland, the launch of a newly painted 793F haul truck tray marked the beginning of a
two month cancer prevention campaign by the team on site. Coloured blue and pink for Prostate and Breast Cancer, the tray aimed
to raise awareness of early prevention and encourage regular health checks. More than 100 employees attended the unveiling of
the truck tray, hearing important prevention messages from Thiess’ Chief Medical Advisor, Doctor Robert McCartney, and local
Breast and Prostate Cancer Association nurses.
Education sessions were held across the site throughout May and June which included providing information on prostate, breast,
bowel and skin cancer detection. Curragh employees were also provided with access to free skin health checks. The prevention
campaign not only seeks to raise awareness, allowing people to take the lead on their health, but also to go home better informed
on how to help their family and friends to do the same. The Thiess project team also recognised the ongoing service of the Breast
and Prostate Cancer Association to the local community with a campaign-led donation.
Rehabilitation
It is widely recognised that “returning to work after an injury or illness helps an individual recover and reduces the risk of long-term
disability.”35 Getting back to work often means an employee has also returned to a normal life, reducing the financial and
emotional impact on them and their family.
Each of the Group’s Operating Companies provides 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 programs
work to assist injured workers to either remain at work, or to return to work safely and as soon as possible, following a workplace
injury or illness. 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 a comprehensive injury management strategy.
PROMOTE PHYSICAL AND MENTAL HEALTH
CIMIC actively promotes the physical and mental health of its employees. Our ‘Fit for work + Fit for life’ and
employee assistance programs support our people while they’re building safe, rewarding and fulfilling careers
with us. These programs consider the whole person, promote physical and mental health, drive a proactive approach to wellbeing
and care for ourselves and others, and support access to specialist services.
The ‘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.
An important initiative is the Employee Assistance Program36 (EAP), a free, voluntary and confidential healthy promotion program
available 24/7 to all CIMIC Group employees and their immediate families. It aims to assist with the resolution of personal and
work-related issues which may affect an employee’s work performance or quality of life. Gryphon Psychology, an external
counselling service (or their global affiliate in overseas markets), provides short-term personal counselling. The counsellors from
Gryphon Psychology are recognised for their professional qualifications and experience in the provision of employee assistance
programs.
The Group’s intranet area 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, our EAP, health and income protection benefits and information about specialists
including Beyond Blue, Lifeline, Mates in Construction and Mates in Mining.
Mental health strategy launched at Sedgman
As Mental Health Week kicked off in Queensland in early October, Sedgman launched its mental health strategy with get-togethers
and sharing sessions across offices and sites. The strategy demonstrates a commitment to the protection and promotion of the
psychological safety of all Sedgman people.
Underpinned by research, the strategy targets 13 workplace factors that play a role in fostering good mental health. These factors
are the focus of planned activities, including health checks, various exercise options and education sessions on sleep and nutrition.
Supported by initiatives and actions spanning three years, the strategy outlines key focus areas for embedding mental health
awareness. The team behind the strategy are passionate about its value and the role it plays in fostering an environment of
support.
In Australia, we provide access to eligible salaried employees to the AIA Vitality health and wellbeing program. This is a science-
backed health and wellbeing program that rewards employees for being healthy. AIA Vitality helps employees to understand the
current state of their health, provides tools to improve it and offers great incentives to keep them motivated on the journey. These
include lifestyle rewards and savings on everyday expenses.
As of 30 September 2019, the AIA Vitality Program37 had an overall activation rate38 of 47% (versus 42% at 31 December 2018) and
an overall engagement rate39 of 31% (versus 20% at 31 December 2018). Over the 9 months to 30 September 2019, employees
have made savings or earned benefits totalling $533k which recognise the healthy lifestyle choices they are making.
In Australia, we provide all eligible salaried employees with access to discounted Medibank private health insurance and access to
salary continuance insurance. In New Zealand, we provide income protection insurance to eligible salaried employees.
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.
As a part of the 2019 CIMIC Graduate Induction, all 225 graduates attended a mental health resilience program. This program has
been designed to provide graduates with the skills to identify early warning signals, build their resilience and to know how to seek
assistance if necessary. This program - now in its second year - has been well received and is seen an essential element in their
preparation, as many moved from education to their first full-time employment experience.
33 Occupational Illness Frequency Rate: the number of occupational illnesses reported per million hours worked.
34 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.
35 Comcare, Australian Government, 9 October 2019.
73
36 Provided to all Australian employees and all of Thiess’ international employees.
37 Figures are to 30 September 2019 as December 2019 figures are not available until after the Sustainability Report is finalised.
38 Measured as those eligible employees who have registered for the Program.
39 Measures by the percentage of activated employees who have accumulated points to achieve a status above the entry level of Bronze.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Thiess’ India Hub promotes inclusion through meditation
Thiess’ India Hub has introduced a new wellness and wellbeing program as part of its commitment to keep everyone safe every
day. Their Mind Over Matter program seeks to reduce injuries in the workplace and supports the emotional wellbeing of
employees. The program engages employees through weekly meditation sessions that focused on physical, mental, emotional and
spiritual wellbeing.
Thiess India and Leighton India joined forces during the year to celebrate the 2019 International Day of Yoga. Employees were
guided through basic yoga practices of conscious breathing and stretching exercises. The program had the benefits of promoting an
inclusive workplace, leading to happier and healthier employees, but also prompted employees from both companies to connect
which encourages collaboration.
Across the Group in 2019, 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.
Celebration of R U OK? Day
Across the Group, teams of people celebrated R U OK? Day, taking time out to discuss the importance of checking-in with their
teammates. Founded in 2009, R U OK? is an Australian non-profit suicide prevention organisation which encourages Australians to
connect with people to address social isolation and promote community cohesiveness. R U OK? works collaboratively with experts
in suicide prevention and mental health, as well as government departments, corporate leaders, teachers, universities, students
and community groups. Its activities also align with the Australian Government's LIFE Framework.
The Group’s commitment to mental wellbeing is delivered to employees through a range of initiatives, resources and tools,
including the provision of training to help people to recognise the signs of when someone is not OK.
PROTECT THE PUBLIC
CIMIC’s commitment to safety and care extends to our clients, partners, suppliers, communities and the wider public. We
seek to preserve the health and safety of anyone who may be exposed to our activities.
Many of the Group’s projects are being constructed, operated or maintained in heavily populated urban areas. Safety is
incorporated into the design and results in a range of preventative measures to protect people, including passing motorist,
passengers of public transport and pedestrians.
Keeping safety on track
The Canberra Metro consortium, which includes CPB Contractors, UGL and Pacific Partnerships, successfully delivered the first
stage of Canberra’s 12km Light Rail project as a public private partnership (PPP). With the light rail service operating since April
2019, the safety of our workers, operators and members of the public remains the highest priority of the consortium.
Central to the safe operation of the new light rail system is the Operations Control Centre (OCC). From a secure control room,
operators and supervisors in the OCC are responsible for the safe movement of light rail vehicles (LRVs), monitoring their progress
using CCTV cameras and GPS tracking. The OCC is also responsible for the overall supervision of the system, coordinating incident
responses and interfacing with emergency services.
On the ground, the role of customer service officers (CSOs) is to provide a safe and world leading service for passengers and the
community. The CSOs have speciality training in rail safety, disability awareness, conflict management, vision impairment and
cultural awareness. They have also completed first aid, sharps and CPR training to ensure they are professionally equipped for any
situation.
Embedding safety into the design of Canberra’s new LRV’s has been critically important. The LRVs are fully accessible with low
floors and double doors reducing the potential for tripping hazards, while there are dedicated areas for wheelchairs and bicycles.
Seating is modular, interchangeable and ergonomically designed. Coloured hand grips near the doors make it easier for passengers
to board and alight the vehicle, and handrails inside the cabin provide support when the LRV is in motion. Audio alarms and pilot
lights have been installed to warn passengers when the doors open and close. LRVs are also fitted with an integrated emergency
communication help point system.
Passenger safety has been considered in the design of Canberra’s light rail stops. Safety elements include; auditory
announcements, digital information displays, accessible ramps and level boarding areas. Security has also been considered through
the provision of lighting, closed circuit television cameras and help points. Wind break screenings at Canberra Metro rail stops are
adorned with local artwork.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
During 2019, there was one incident resulting in a near-miss to a member of the public. This involved a sign, installed by CPB
Contractors on the Tullamarine Freeway in Melbourne, falling onto a car. The driver escaped serious injury. CPB Contractors has
undertaken a full investigation and taken steps to prevent similar incidents in future. They include: increasing surveillance of offsite
subcontractors and suppliers; improving processes to ensure subcontractors show that fabrication, construction and installation
follow approved designs; and including ‘hold points’ in the design and construction processes to ensure vital quality and safety
elements are verified before works continue.
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 ensures appropriate Group capabilities are in place to respond if required. CIMIC undertakes regular
testing of its ability to respond to a crisis.
OUTLOOK AND FUTURE PLANS
We are committed to our people returning home safely at the end of each day’s work. In 2020, 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; and
-
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;
analyse 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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Thiess’ India Hub promotes inclusion through meditation
Thiess’ India Hub has introduced a new wellness and wellbeing program as part of its commitment to keep everyone safe every
day. Their Mind Over Matter program seeks to reduce injuries in the workplace and supports the emotional wellbeing of
employees. The program engages employees through weekly meditation sessions that focused on physical, mental, emotional and
spiritual wellbeing.
Thiess India and Leighton India joined forces during the year to celebrate the 2019 International Day of Yoga. Employees were
guided through basic yoga practices of conscious breathing and stretching exercises. The program had the benefits of promoting an
inclusive workplace, leading to happier and healthier employees, but also prompted employees from both companies to connect
which encourages collaboration.
Across the Group in 2019, 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.
§
§
§
§
§
Celebration of R U OK? Day
Across the Group, teams of people celebrated R U OK? Day, taking time out to discuss the importance of checking-in with their
teammates. Founded in 2009, R U OK? is an Australian non-profit suicide prevention organisation which encourages Australians to
connect with people to address social isolation and promote community cohesiveness. R U OK? works collaboratively with experts
in suicide prevention and mental health, as well as government departments, corporate leaders, teachers, universities, students
and community groups. Its activities also align with the Australian Government's LIFE Framework.
The Group’s commitment to mental wellbeing is delivered to employees through a range of initiatives, resources and tools,
including the provision of training to help people to recognise the signs of when someone is not OK.
PROTECT THE PUBLIC
CIMIC’s commitment to safety and care extends to our clients, partners, suppliers, communities and the wider public. We
seek to preserve the health and safety of anyone who may be exposed to our activities.
Many of the Group’s projects are being constructed, operated or maintained in heavily populated urban areas. Safety is
incorporated into the design and results in a range of preventative measures to protect people, including passing motorist,
passengers of public transport and pedestrians.
Keeping safety on track
The Canberra Metro consortium, which includes CPB Contractors, UGL and Pacific Partnerships, successfully delivered the first
stage of Canberra’s 12km Light Rail project as a public private partnership (PPP). With the light rail service operating since April
2019, the safety of our workers, operators and members of the public remains the highest priority of the consortium.
Central to the safe operation of the new light rail system is the Operations Control Centre (OCC). From a secure control room,
operators and supervisors in the OCC are responsible for the safe movement of light rail vehicles (LRVs), monitoring their progress
using CCTV cameras and GPS tracking. The OCC is also responsible for the overall supervision of the system, coordinating incident
responses and interfacing with emergency services.
On the ground, the role of customer service officers (CSOs) is to provide a safe and world leading service for passengers and the
community. The CSOs have speciality training in rail safety, disability awareness, conflict management, vision impairment and
cultural awareness. They have also completed first aid, sharps and CPR training to ensure they are professionally equipped for any
situation.
Embedding safety into the design of Canberra’s new LRV’s has been critically important. The LRVs are fully accessible with low
floors and double doors reducing the potential for tripping hazards, while there are dedicated areas for wheelchairs and bicycles.
Seating is modular, interchangeable and ergonomically designed. Coloured hand grips near the doors make it easier for passengers
to board and alight the vehicle, and handrails inside the cabin provide support when the LRV is in motion. Audio alarms and pilot
lights have been installed to warn passengers when the doors open and close. LRVs are also fitted with an integrated emergency
communication help point system.
Passenger safety has been considered in the design of Canberra’s light rail stops. Safety elements include; auditory
announcements, digital information displays, accessible ramps and level boarding areas. Security has also been considered through
the provision of lighting, closed circuit television cameras and help points. Wind break screenings at Canberra Metro rail stops are
adorned with local artwork.
75
CIMIC Group Limited Annual Report 2019 | Sustainability Report
INTEGRITY
OUR APPROACH
Integrity, which is based on respect and honesty, is one of CIMIC’s four fundamental Principles. Acting with integrity means that we
must respect ourselves, and our colleagues, clients, suppliers and shareholders. Our commitment to acting with integrity is
enshrined in our Group Code of Conduct (‘the Code’) which can be found on the Group’s website.
The Code sets the requirement and standards of behaviour we expect, across CIMIC Group Limited and entities it controls,
regardless of Operating Company, role or country. The Code applies to all employees of the Group, our directors, any third parties
we do business with, and all alliances and joint ventures in all jurisdictions. Where the Code or a policy sets higher standards of
behaviour than local laws, rules, customs or norms, the higher standards will apply.
While the Code provides a framework, it cannot describe every situation, law or policy that may apply to our people. We expect
them to exercise good judgement, to justify their actions, and try to prevent any potential breaches. The Code is supported by
training and the CIMIC Ethics Line. It 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
Anti-Bribery and Corruption Policy; Gifts and Hospitality Policy; Dealing with Third Parties
Policy; Whistleblower Policy; Approval to Operate Internationally Policy
§
Actions taken during 2019
Performance
§ Group-wide, independently operated, confidential Ethics Line available for reporting concerns
§
25,419 employees have 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
Separated the Whistleblower Policy to a stand-alone policy
8,188 people undertook on-line whistleblower training
§
§
§
§ Made STOPLine App available for reporting of business concerns
§ 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
§
82 potential ethical issues reported to the CIMIC Board’s Ethics, Compliance & Sustainability
Committee (ECSC), all matters were dealt with internally under the supervision of the
Reportable Conduct Group and the ECSC
Operate honestly and transparently
Measures in place
§ Market Disclosure and Communications Framework; Privacy Policy; Record Retention Policy;
Actions taken during 2019
Performance
Securities Trading Policy
Made 90 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
30,027 vendors and suppliers screened using due diligence solution
13% of suppliers and vendors required further investigation and assessment related to their
identified risk rating and justification for continued use by CIMIC Group with corrective action
plans in place
§ Diversity & Social 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 the Group to leaving positive legacies
§
CPB Contractors, Thiess and UGL all have a Reconciliation Action Plan (RAP) in place
§
CPB Contractors partners with CareerSeekers, a humanitarian employment program
§
Numerous, project-by-project initiatives tailored to meet the needs of local communities
§ Operating Companies investing $1,045k to support a range of corporate community programs
Actions taken during 2019
Performance
Leave a positive legacy
Measures in place
Actions taken during 2019
Performance
77
77
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
-
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.
ZERO TOLERANCE FOR BRIBERY AND CORRUPTION
CIMIC Group prohibits, and has zero tolerance for, all forms of bribery and corruption and is committed
to the prevention and detection of, and initiatives to eliminate, bribery and corruption. Our
commitment is supported by additional governance documents including: Group Code of Conduct - Management, Monitoring and
Reporting Policy; an explicit Anti-Bribery and Corruption Policy; Whistleblower Policy; Dealing with Third Parties Policy; and Third
Party Anti-Bribery, Corruption and Business Integrity Declaration. Collectively, these documents:
§
§
§
INTEGRITY
OUR APPROACH
Integrity, which is based on respect and honesty, is one of CIMIC’s four fundamental Principles. Acting with integrity means that we
must respect ourselves, and our colleagues, clients, suppliers and shareholders. Our commitment to acting with integrity is
enshrined in our Group Code of Conduct (‘the Code’) which can be found on the Group’s website.
The Code sets the requirement and standards of behaviour we expect, across CIMIC Group Limited and entities it controls,
regardless of Operating Company, role or country. The Code applies to all employees of the Group, our directors, any third parties
we do business with, and all alliances and joint ventures in all jurisdictions. Where the Code or a policy sets higher standards of
behaviour than local laws, rules, customs or norms, the higher standards will apply.
While the Code provides a framework, it cannot describe every situation, law or policy that may apply to our people. We expect
them to exercise good judgement, to justify their actions, and try to prevent any potential breaches. The Code is supported by
training and the CIMIC Ethics Line. It 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
Anti-Bribery and Corruption Policy; Gifts and Hospitality Policy; Dealing with Third Parties
Policy; Whistleblower Policy; Approval to Operate Internationally Policy
§ Group-wide, independently operated, confidential Ethics Line available for reporting concerns
Actions taken during 2019
25,419 employees have 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
Separated the Whistleblower Policy to a stand-alone policy
8,188 people undertook on-line whistleblower training
§ Made STOPLine App available for reporting of business concerns
Performance
§ 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
82 potential ethical issues reported to the CIMIC Board’s Ethics, Compliance & Sustainability
Committee (ECSC), all matters were dealt with internally under the supervision of the
Reportable Conduct Group and the ECSC
Operate honestly and transparently
Measures in place
§ Market Disclosure and Communications Framework; Privacy Policy; Record Retention Policy;
Actions taken during 2019
§
Made 90 announcements and disclosures via ASX
Performance
§ No breaches of continuous disclosure
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 with
Third Parties Procedure
Sustainability Policy commits the Group to integrating environmentally and socially
responsible sourcing into procurement
Actions taken during 2019
30,027 vendors and suppliers screened using due diligence solution
Performance
13% of suppliers and vendors required further investigation and assessment related to their
identified risk rating and justification for continued use by CIMIC Group with corrective action
Leave a positive legacy
Measures in place
plans in place
§ Diversity & Social 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 the Group to leaving positive legacies
CPB Contractors, Thiess and UGL all have a Reconciliation Action Plan (RAP) in place
CPB Contractors partners with CareerSeekers, a humanitarian employment program
Actions taken during 2019
Numerous, project-by-project initiatives tailored to meet the needs of local communities
Performance
§ Operating Companies investing $1,045k to support a range of corporate community programs
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
CIMIC is committed to abiding by Principle 10 of the United Nations Global Compact which states that “Businesses should work
against corruption in all its forms, including extortion and bribery” .40
We expect our people to comply with all relevant laws and regulations, wherever we operate, and they 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. CIMIC’s commitment includes facilitation payments41, even if these are allowed under local laws or customs.
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 Reportable Conduct Group (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 in more
detail.
Business Conduct Representatives (BCR) are also appointed within CIMIC and each Operating Company. Their accountabilities
include to: provide advice and guidance to the Company and to individuals on the application of the Code and related policies and
procedures; assist individuals with business conduct concerns; deal with any allegations of victimisation following a concern being
raised; report serious business conduct concerns to the Reportable Conduct Group where appropriate; assist the RCG to
implement, monitor and maintain anti-bribery and corruption controls; maintain a register of all alleged and proven breaches of
the Code; and to ensure all employees attend Code training as required and that records of attendance are kept.
Dealing with third parties
Given the Group’s diverse portfolio of projects, we enter into business relationships with a range of third-party entities and
individuals which may include clients, joint venture partners, subcontractors, consultants and suppliers, agents or intermediaries
(as defined by our Dealing with Third Parties Policy). The Group will only do business with any of these third parties for legitimate
purposes, in accordance with the Code, relevant laws and where that business relationship will benefit the Group.
When the Group has a controlling position in a joint venture or similar arrangement, the Code (or another code containing
equivalent standards of behaviour) must be adopted for the joint venture or other arrangement. In all circumstances we will seek
to have our business partners adopt the Code.
Appropriate due diligence must be conducted, in accordance with the Dealing with Third Parties Policy, before entering into a
commercial relationship with a third party on behalf of the Group. 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 signed before works, supply or services commence, and must be approved in accordance with
the Group Delegations of Authority.
77
40 The Ten Principles of the UN Global Compact.
41 Facilitation payments are payments of cash or in kind made to secure or expedite a routine service, or to ‘facilitate’ a routine Government action.
78
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Implementation of Group-wide Supplier Due Diligence solution
In 2019, CIMIC implemented an internationally recognised due diligence solution to screen third parties for a range of risk factors.
The solution is used to screen third parties (including vendors, suppliers and business partners) against a range of factors which
include:
§
§
§
§
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; and
searches that address Modern Slavery, bribery and corruption due diligence requirements.
The findings indicated that, across 30,027 vendors and suppliers, 13% of suppliers required further investigation and assessment
related to their identified risk rating and justification for continued use by CIMIC Group.
The Group utilises a rating system for the assessment of all third parties before entering into formal business relationships. This
rates third parties as Low, Medium or High risk 42 to ensure that risks are appropriately assessed and then 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 Declaration43. Where either the 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 the use of traffic lights system - to rate a country’s approval status or its prospective risk - which
was described in detail on page 76 of the Sustainability Report in the 2018 Annual Report.
CIMIC maintains a Register of Approved Countries which is integrated with the Group Delegations of Authority and Group
Tendering Policy.
Political donations
As per the Corporate Affairs Policy, the Group does not make donations, either in kind or directly, to political organisations, political
parties, politicians, or trade unions, and will not make or solicit payments to organisations which predominantly act as conduits to
fund political parties or individuals holding or standing for elective office. Prohibited political activities or contributions include free
or discounted use of the Group’s premises or equipment as a donation to a political party.
Attendance is not permitted by employees, who are representing the Company, at a function or event which is a political
fundraiser. This includes fundraising events where employees do not pay for attendance.
In keeping with this Policy, the Group has not made any donations, either directly or in-kind, to political organisations, political
parties, politicians, or trade unions between 2015 and 2019.
Supporting and protecting whistle-blowers
Our employees, subcontractors and partners are encouraged to voice their concerns should they identify potentially unethical
practices. CIMIC will support people who speak up in good faith and do 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.
42 The Dealing with Third Parties Policy has a detailed definition for ‘High Risk’ third parties.
43 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.
79
79
§
§
§
§
CIMIC has undertaken an employee communication and training program to ensure that the legislative changes, and obligations
under it, are well understood. The program included:
§
emailed messages from the CEO and publication of an article about the new legislation on Pulse, the Group’s internal
newsletter;
development and distribution of posters and materials for the delivery of toolbox talks by managers and supervisors;
a refresh of the intranet information page which outlines the channels by which people can raise concerns and also provides
contact details for the Business Conduct Representatives and the Ethics Line;
the Ethics Line branding on each Operating Company’s intranet – linking employees to the relevant intranet page and Pulse
article – has been refreshed; and
online training available to all staff on ‘One Learning’, the Group’s new cloud-based learning management system.
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Compliance with new Whistleblower legislation
A standalone Whistleblower Policy was created in 2019 in line with changes to the Corporations Act concerning laws protecting
whistleblowers. The Policy manages whistleblower disclosures and provides clarity around how the Group supports and protects
whistleblowers when a disclosure is made. This Policy builds on the Group’s long-standing commitment to support whistleblowers
enshrined in the Company’s Code and the Code of Conduct – Management, Monitoring and Reporting Policy.
Implementation of Group-wide Supplier Due Diligence solution
In 2019, CIMIC implemented an internationally recognised due diligence solution to screen third parties for a range of risk factors.
The solution is used to screen third parties (including vendors, suppliers and business partners) against a range of factors which
include:
§
§
§
§
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; and
searches that address Modern Slavery, bribery and corruption due diligence requirements.
The findings indicated that, across 30,027 vendors and suppliers, 13% of suppliers required further investigation and assessment
related to their identified risk rating and justification for continued use by CIMIC Group.
The Group utilises a rating system for the assessment of all third parties before entering into formal business relationships. This
rates third parties as Low, Medium or High risk 42 to ensure that risks are appropriately assessed and then 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 Declaration43. Where either the 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 the use of traffic lights system - to rate a country’s approval status or its prospective risk - which
was described in detail on page 76 of the Sustainability Report in the 2018 Annual Report.
CIMIC maintains a Register of Approved Countries which is integrated with the Group Delegations of Authority and Group
Tendering Policy.
Political donations
As per the Corporate Affairs Policy, the Group does not make donations, either in kind or directly, to political organisations, political
parties, politicians, or trade unions, and will not make or solicit payments to organisations which predominantly act as conduits to
fund political parties or individuals holding or standing for elective office. Prohibited political activities or contributions include free
or discounted use of the Group’s premises or equipment as a donation to a political party.
Attendance is not permitted by employees, who are representing the Company, at a function or event which is a political
fundraiser. This includes fundraising events where employees do not pay for attendance.
In keeping with this Policy, the Group has not made any donations, either directly or in-kind, to political organisations, political
parties, politicians, or trade unions between 2015 and 2019.
Supporting and protecting whistle-blowers
Our employees, subcontractors and partners are encouraged to voice their concerns should they identify potentially unethical
practices. CIMIC will support people who speak up in good faith and do 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.
There may be circumstances when people will prefer to speak to someone other than their manager about their ethical questions
or concerns. CIMIC provides access to the Ethics Line, at zero cost to our employees, subcontractors, partner and other
stakeholders, so they can raise issues and have them investigated while remaining anonymous should they wish to.
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.
Matters can be reported to the Ethics Line via phone, fax, online, email or post. This year, a free App has been made available – via
the iTunes App Store or Google Play – to facilitate the reporting of an issue to STOPLine.
The nature of the matters considered by Operating Company RCGs in 2019 have been as follows:
Issues reported to the ECSC (#)
Conflicts
Breaches of code/procedures
Misappropriation/theft
Fraud
Human resources related
Other
Total
2019
5
28
9
1
28
11
82
2018
16
30
11
5
47
12
121
Of the matters reported in 2019, all were investigated by the respective Operating Company’s RCG and the ECSC apprised of the
material details.
Communication and training
On induction to the Group all employees are provided with a copy of the Code and supporting documents. The Code is to be
accessible in each office and project site and is published on the intranets of CIMIC and each of the Operating Companies. Any
updates to the Code are promptly communicated to all employees.
All employees are given training in the Code. 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).
It is mandatory for all decision-makers in senior management, as well as ‘high risk’44 roles, in addition to the on-line module, 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 2019, 2,580
employees undertook this face-to-face training.
42 The Dealing with Third Parties Policy has a detailed definition for ‘High Risk’ third parties.
43 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.
79
44 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.
80
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
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 thereafter. Training records must be maintained. Across the Group, 25,419
employees completed some form of training on the Code in 2019 versus 23,837 in 2018.
Employee completing Code training (#)
Total
2019
25,419
2018
23,837
2017
18,870
OPERATE HONESTLY AND TRANSPARENTLY
Our people are expected to operate and communicate honestly and transparently, to build and maintain the confidence
and trust of shareholders and other stakeholders, and to work collaboratively with the communities that we work in.
CIMIC is also committed to providing continuous disclosure of information to keep the market informed in a manner which is
consistent with the meaning and intention of ASX Listing Rules.
Continuous disclosure and insider trading
As a publicly listed company, CIMIC is required to comply with the continuous disclosure obligations set out in the ASX Listing Rules
and the Corporations Act. CIMIC’s comprehensive Market Disclosure and Communications Framework sets out the principles,
policy and procedures which have been adopted. This is essential for the maintenance of shareholder confidence and market trust.
CIMIC maintains a comprehensive Securities Trading Policy which sets out the requirements and responsibilities of officers,
executives, certain contractors of, and people connected to, CIMIC Group regarding dealings in CIMIC Securities. The purpose of the
Policy is to ensure that CIMIC Group officers and executives comply with the law, including the law prohibiting insider trading. This
Policy also contains obligations to keep CIMIC Group information confidential.
Under the Policy, CIMIC Group people 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 prescribed by the Policy must obtain
prior approval from the CIMIC Company Secretary before trading and a record of these approvals is maintained.
CIMIC’s Policy prohibits short term dealing (i.e. buying and selling within a 3-month period), entering into other short-term dealings
(i.e. forward contracts), margin lending arrangements and the hedging of CIMIC securities.
During 2019, there were no reported breaches of the Group’s continuous disclosure obligations.
Privacy and record retention
CIMIC regards the fair and lawful treatment of personal information as being of the utmost importance. Our commitment is
enshrined in the Group’s Privacy Policy which applies to all employees, third parties engaged by the Group, and all alliances and
joint ventures in all jurisdictions.
enable CIMIC to deliver services or information to individuals or to an organisation;
CIMIC will only collect, hold, use or disclose 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/or
fulfil legal or regulatory obligations.
§
The Group is unaware of any substantiated complaints regarding breaches of privacy by employees, clients or other stakeholders
during 2019.
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.
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 enter into transactions that do not have a legitimate business
purpose. CIMIC is committed to the management and payment of taxes in a sustainable manner considering the commercial and
81
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
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 thereafter. Training records must be maintained. Across the Group, 25,419
employees completed some form of training on the Code in 2019 versus 23,837 in 2018.
Employee completing Code training (#)
Total
2019
25,419
2018
23,837
2017
18,870
OPERATE HONESTLY AND TRANSPARENTLY
Our people are expected to operate and communicate honestly and transparently, to build and maintain the confidence
and trust of shareholders and other stakeholders, and to work collaboratively with the communities that we work in.
CIMIC is also committed to providing continuous disclosure of information to keep the market informed in a manner which is
consistent with the meaning and intention of ASX Listing Rules.
Continuous disclosure and insider trading
As a publicly listed company, CIMIC is required to comply with the continuous disclosure obligations set out in the ASX Listing Rules
and the Corporations Act. CIMIC’s comprehensive Market Disclosure and Communications Framework sets out the principles,
policy and procedures which have been adopted. This is essential for the maintenance of shareholder confidence and market trust.
CIMIC maintains a comprehensive Securities Trading Policy which sets out the requirements and responsibilities of officers,
executives, certain contractors of, and people connected to, CIMIC Group regarding dealings in CIMIC Securities. The purpose of the
Policy is to ensure that CIMIC Group officers and executives comply with the law, including the law prohibiting insider trading. This
Policy also contains obligations to keep CIMIC Group information confidential.
Under the Policy, CIMIC Group people 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 prescribed by the Policy must obtain
prior approval from the CIMIC Company Secretary before trading and a record of these approvals is maintained.
CIMIC’s Policy prohibits short term dealing (i.e. buying and selling within a 3-month period), entering into other short-term dealings
(i.e. forward contracts), margin lending arrangements and the hedging of CIMIC securities.
During 2019, there were no reported breaches of the Group’s continuous disclosure obligations.
CIMIC regards the fair and lawful treatment of personal information as being of the utmost importance. Our commitment is
enshrined in the Group’s Privacy Policy which applies to all employees, third parties engaged by the Group, and all alliances and
Privacy and record retention
joint ventures in all jurisdictions.
CIMIC will only collect, hold, use or disclose 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/or
fulfil legal or regulatory obligations.
The Group is unaware of any substantiated complaints regarding breaches of privacy by employees, clients or other stakeholders
during 2019.
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.
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 enter into transactions that do not have a legitimate business
purpose. CIMIC is committed to the management and payment of taxes in a sustainable manner considering the commercial and
§
§
§
81
social imperatives of governments, our business and our stakeholders, and this commitment is supported by strong corporate
governance policies.
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-lodgment Compliance Review and
the Justified Trust assurance review programs. These programs are 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 reports an aggregated tax expense in the Financial Report section of the Annual Report. In 2019, the Group’s effective
tax rate was 27.0% (versus 28.0% in 2018), compared to the Australian corporate tax rate of 30%. The Group has maintained an
average effective tax rate of approximately 30% over the past five years which can be seen in the previous year’s Financial Reports.
The difference between the effective tax rate and the Australian corporate rate is reconciled in the Financial Report45 and is
primarily impacted by:
§
§
§
the blend of different tax rates on profits and losses from the various jurisdictions in which the Group operates;
entitlements under the Australian Government’s Research and Development tax incentive; and
taxes on the gains and losses of divestments.
We note that, in addition to the corporate tax expense incurred, 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
2018/19 year CIMIC paid more than $138 million of State payroll tax in Australia (v $123 million in 2017/18).
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.46
Open and transparent relationships
The Code sets out the Group’s commitment to the principles of free and fair competition and avoiding any anti-competitive
conduct. We encourage our people 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 2019, there were no instances of significant fines or sanctions for non-compliance
with Australian and international laws and regulations.
No legal actions were commenced during 2019 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.47, 48
The Group does not sell banned or disputed products or services.
SUPPORT SUSTAINABLE PROCUREMENT
Procurement is vital to the Group’s operations and integral to successful project delivery, control of
costs, sustainability of outcomes and reliable 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.
45 The amounts of which are disclosed in Note 6: Income tax expense – Reconciliation of prima facie tax to income tax expense, in the Financial
Report within the Annual Report.
46 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.
47 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.
48 In 2019, a former CFO of the Company was sentenced by the New South Wales District Court and convicted on 2 counts of contravening section
1307(1) of the Corporations Act 2001 by having engaged in conduct that resulted in the falsification of the Company’s 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.
82
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC joins the Supply Chain Sustainability School of Australia
In 2019, CIMIC joined the Supply Chain Sustainability School as a Full Partner. The School was established in 2015 to increase
sustainability knowledge and competency along the construction and infrastructure supply chains.
With an emphasis on supporting small-to-medium enterprises, the School provides free e-learning, information and face-to-face
training for construction and infrastructure suppliers, contractors and service providers. Companies, teams or individuals signing up
can access a wealth of free resources and tools to meet increasing sustainability demands and performance benchmarks, and to
help build clever, collaborative and competitive construction and infrastructure sectors.
The resources of the Australian School are provided free to all supply chain members. These free resources complement existing
construction sector standards, rating schemes and frameworks developed by the Infrastructure Sustainability Council of Australia,
the Green Building Council of Australia and Federal and State Government Departments. The Supply Chain Sustainability School
provides targeted learning and support to address all the main sustainability issues including materials, carbon, environmental
management, waste, water, biodiversity, ethics, community, climate adaptation, procurement, as well as human rights and modern
slavery.
All suppliers must comply with the Code and 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.
When evaluating suppliers, a comprehensive assessment must be undertaken that includes pricing criteria 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.
World sourcing for local tunnels
The first underground section of WestConnex, the New M4 Tunnels, part of Australia’s largest road infrastructure project, opened
to motorists in August 2019. The 5.5km twin tunnels and supporting infrastructure, linking Homebush to Haberfield in Sydney’s
inner west, were delivered utilising the local construction expertise of CPB Contractors’ multidisciplinary teams and an international
procurement strategy to secure specialist equipment.
The project’s Mechanical and Electrical implementation team were responsible for managing the global procurement and
production of the equipment required to support the tunnels’ operations. The team worked with nearly 100 suppliers and
production centres across Europe, Americas, Asia and Australia, sourcing specialist systems and equipment for the operation of the
tunnels, driving suppliers to deliver on time, ready for installation. More than 3,000 mechanical and electrical workers were
inducted into the site to install the globally sourced equipment, such as the large-scale ventilation and fire systems used to finalise
underground works and the Parramatta Road Ventilation Facility.
As a result of the screening process applied to third parties of the due diligence solution (see page 79), CIMIC has been able to
capture and analyse more detailed supplier information as set our below.
Supplier information
Absolute number of
suppliers (#)
Share of total
procurement spend
(%)
Total Tier 1 suppliers49
Critical Tier 1 suppliers52
Critical non-Tier 1 suppliers53
Tier 1 suppliers classified as ‘high risk’54
Critical non-Tier 1 suppliers classified as ‘high risk’
Local suppliers55
30,02750
419
1,465
3,844
13,454
24,022
100
68
Not available
6
Not available
60
Percentage of
suppliers assessed
for risk in the last 3
years (%)
10051
We encourage support for local suppliers where this makes commercial sense and they can meet the requirements of the project.
Locally sourced goods and services can provide support for local employment, boost regional economic growth and create
49 Refers to suppliers that directly supply goods, materials or services (including intellectual property (IP) / patents) to the company.
50 Each of CIMIC’s Operating Companies maintains its own supplier database and the cumulative number of suppliers is currently 30,027.
51 The implementation of the third party due diligence solution and supporting processes across all Operating Companies, outlined on page 79, has
enable the confirmation of 100% of all suppliers being assessed. The implementation started late in 2018 and was completed mid-2019. All existing
suppliers were risk assessed as part of this implementation by July 2019.
52 Critical suppliers include high-volume suppliers, suppliers of critical components and non-substitutable suppliers.
53 Refers to suppliers that are considered critical (see definition above) and provide their products and services to the supplier at the next level in
the chain (Tier-2 suppliers provide goods and services to Tier-1 suppliers).
54 High-risk supplier: The suppliers with an extreme or high risk rating identified through the third party due diligence solution outlined on page 79.
55 Local suppliers: Suppliers located within the country or region of the entity’s operations.
83
83
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC joins the Supply Chain Sustainability School of Australia
In 2019, CIMIC joined the Supply Chain Sustainability School as a Full Partner. The School was established in 2015 to increase
sustainability knowledge and competency along the construction and infrastructure supply chains.
With an emphasis on supporting small-to-medium enterprises, the School provides free e-learning, information and face-to-face
training for construction and infrastructure suppliers, contractors and service providers. Companies, teams or individuals signing up
can access a wealth of free resources and tools to meet increasing sustainability demands and performance benchmarks, and to
help build clever, collaborative and competitive construction and infrastructure sectors.
The resources of the Australian School are provided free to all supply chain members. These free resources complement existing
construction sector standards, rating schemes and frameworks developed by the Infrastructure Sustainability Council of Australia,
the Green Building Council of Australia and Federal and State Government Departments. The Supply Chain Sustainability School
provides targeted learning and support to address all the main sustainability issues including materials, carbon, environmental
management, waste, water, biodiversity, ethics, community, climate adaptation, procurement, as well as human rights and modern
slavery.
All suppliers must comply with the Code and 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.
When evaluating suppliers, a comprehensive assessment must be undertaken that includes pricing criteria 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.
World sourcing for local tunnels
The first underground section of WestConnex, the New M4 Tunnels, part of Australia’s largest road infrastructure project, opened
to motorists in August 2019. The 5.5km twin tunnels and supporting infrastructure, linking Homebush to Haberfield in Sydney’s
inner west, were delivered utilising the local construction expertise of CPB Contractors’ multidisciplinary teams and an international
procurement strategy to secure specialist equipment.
The project’s Mechanical and Electrical implementation team were responsible for managing the global procurement and
production of the equipment required to support the tunnels’ operations. The team worked with nearly 100 suppliers and
production centres across Europe, Americas, Asia and Australia, sourcing specialist systems and equipment for the operation of the
tunnels, driving suppliers to deliver on time, ready for installation. More than 3,000 mechanical and electrical workers were
inducted into the site to install the globally sourced equipment, such as the large-scale ventilation and fire systems used to finalise
underground works and the Parramatta Road Ventilation Facility.
As a result of the screening process applied to third parties of the due diligence solution (see page 79), CIMIC has been able to
capture and analyse more detailed supplier information as set our below.
Supplier information
Absolute number of
Share of total
Percentage of
suppliers (#)
procurement spend
suppliers assessed
Total Tier 1 suppliers49
Critical Tier 1 suppliers52
Critical non-Tier 1 suppliers53
Tier 1 suppliers classified as ‘high risk’54
Critical non-Tier 1 suppliers classified as ‘high risk’
Local suppliers55
30,02750
419
1,465
3,844
13,454
24,022
100
68
6
60
Not available
Not available
We encourage support for local suppliers where this makes commercial sense and they can meet the requirements of the project.
Locally sourced goods and services can provide support for local employment, boost regional economic growth and create
49 Refers to suppliers that directly supply goods, materials or services (including intellectual property (IP) / patents) to the company.
50 Each of CIMIC’s Operating Companies maintains its own supplier database and the cumulative number of suppliers is currently 30,027.
51 The implementation of the third party due diligence solution and supporting processes across all Operating Companies, outlined on page 79, has
enable the confirmation of 100% of all suppliers being assessed. The implementation started late in 2018 and was completed mid-2019. All existing
suppliers were risk assessed as part of this implementation by July 2019.
52 Critical suppliers include high-volume suppliers, suppliers of critical components and non-substitutable suppliers.
53 Refers to suppliers that are considered critical (see definition above) and provide their products and services to the supplier at the next level in
the chain (Tier-2 suppliers provide goods and services to Tier-1 suppliers).
54 High-risk supplier: The suppliers with an extreme or high risk rating identified through the third party due diligence solution outlined on page 79.
55 Local suppliers: Suppliers located within the country or region of the entity’s operations.
83
upskilling opportunities for the workforce. In some cases, purchasing local products and services can minimise transport costs,
reducing fuel consumption and the associated greenhouse gas emissions.
Thiess support inmates to develop trade skills
In the heart of New South Wales’ Hunter Valley mining region, Thiess’ Mount Pleasant Operations and Mount Arthur Coal mine
teams are working with Corrective Services Industries (CSI) to equip inmates at the nearby St Heliers Correctional Centre with skills
to prepare them for life beyond their sentence.
The partnership is the first of its kind, engaging over 45 inmates from St Heliers Gundi program, which is set-up to support inmates
to build trade skills and employment prospects for when they are released. Despite not having supplied to Thiess or a mine site
previously, CSI has partnered to deliver quality, new and refurbished buildings to meet both the requirements of both mines.
During the installation phase of the project, Thiess also engaged with two local Indigenous companies Blackrock Industries and
Bodycote Constructions who both utilise workers from the Gundi program, taking advantage of their newly acquired skills. Thiess
has been provided with modern, fit for purpose facilities, built to specification and a high-quality finish, that are durable and can be
relocated to another site at project completion, making them a viable economic solution.
The partnership was named as a finalist for the 2019 Australian Mining Prospect Awards for its commitment to building skills and
opportunities for inmates in New South Wales’ Hunter Valley. Thiess was recognised in the category of ‘Community Interaction’
celebrating industry programs that benefit the broader community. The national awards recognise and celebrate the contributions
and achievements of individuals and businesses within the mining and resource sector.
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, fuel and subcontractors (such as
electricians, plumbers, glaziers, steel fixers and other tradespeople). We work with our suppliers to identify measures to improve
the efficient use of resources and seek to minimise the impact of our construction materials such as steel, timber and concrete.
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.
The Shanghai team behind the well-oiled machine
Sedgman’s procurement hub in Shanghai, China has been operating for more than 10 years, successfully delivering low-cost
sourcing solutions that meet stringent quality standards. The hub has delivered fabrication works for several significant projects,
including the most recent components and modules for Sedgman’s stage 2 Coal Processing Plant (CPP) at the Byerwen mine in
Queensland.
On the Byerwen CPP project, Sedgman coordinated the fabrication of steel components and modules in China, Canada and
Germany, shipping to Mackay, trucking 200km west to the site and the erection. The process, from first drawings going to the
fabricator to onsite installation, was completed in only eight months. It involved 12 shipments of 194 40ft containers from China
and 10 40ft containers from Canada, and 252 trailer loads of overseas supplied goods.
(%)
for risk in the last 3
years (%)
10051
With a full range of procurement capabilities, supporting Sedgman and other CIMIC Group companies, the team is constantly
evolving and expanding their competencies. Behind this well-oiled machine is a small, hardworking team of eight in Shanghai.
Importantly, the team can bridge any communication gap when relaying the needs of the Australian engineering and procurement
teams to Chinese fabricators.
CIMIC appreciates the valuable role played by suppliers and subcontractors and promotes their fair treatment and payment within
negotiated and contractually agreed terms. CIMIC will continue to comply with all payment terms prescribed by the Federal and
State Governments.
Thiess highly commended at QRC Indigenous Awards
Thiess’ Supply Chain team were recognised at the Queensland Resources Council (QRC) Indigenous Awards during 2019, receiving a
highly commended award for ‘Best Company Indigenous Procurement Initiative’ for their Indigenous Networking Breakfast. The
event connected key stakeholders with the Thiess team and Indigenous business community to discuss creating opportunities for
Aboriginal and Torres Strait Islander peoples.
LEAVE A POSITIVE LEGACY
The diverse nature of the Group’s projects means that our work has the potential to impact on many people
including nearby workers, residents, communities, commuters and visitors, amongst others. CIMIC seeks to
leave positive legacies by identifying the potential impacts of its projects and finding ways to minimise any harm to those who
might potentially be impacted.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Minimise community disruption
Our Operating Companies work to minimise disruption, as much as practically possible, to those communities impacted by the
Group's activities as we deliver infrastructure, mining, services and public private partnership projects for our clients. When there is
some disruption, the Group tries to minimise the effect by engaging proactively, being approachable and developing positive
relationships with potentially impacted community members.
Launch of Rail Safety Week in Canberra
Rail Safety Week in Canberra was officially launched in September 2019 with Canberra Metro Operations (CMET) organising a
community event to showcase the importance of safe behaviour around the light rail system. The event was attended by the ACT’s
Minister for Transport and City Services, Chris Steel, as well as students from local schools and representatives from the
Australasian Rail Association and TrackSAFE Foundation. UGL and CPB Contractors are proud sponsors of the TrackSAFE Foundation
which represents a holistic all-of-industry approach to tackling safety issues impacting on the rail sector and its people.
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 developed its own community
engagement policy and framework, relevant to its individual stakeholders.
Stakeholder Engagement Plans are incorporated in the planning process for many projects, which include the recording and
tracking of community concerns. Some of the tools used to support interaction with 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; and sending SMS updates.
Project life cycle
The Group delivers infrastructure, building and resources projects whose life will extend for many years beyond our construction
involvement. On behalf of our clients, the Group’s Operating Companies regularly collaborate with clients to evaluate the lifecycle
consequences of these projects and, where possible, work to deliver solutions that add value over the longer-term.
Increasingly clients are engaging CIMIC Operating Companies to undertake lifecycle evaluations of projects - such as climate risk
assessments, under a range of scenarios – to determine the best outcome over the life of that project. Additionally, our Operating
Companies often provide value adding engineering solutions which may well deliver a more cost-effective project for clients in the
long-run, when operations and maintenance cost are considered.
Cross River Rail incorporates lifecycle approach
CIMIC Group companies, Pacific Partnerships, CPB Contractors, and UGL, as part of the Pulse consortium, have been awarded a
contract, as a PPP, to deliver the tunnelling works, new underground stations, and ongoing maintenance services for Brisbane’s
Cross River Rail project. Cross River Rail is a new 10.2km rail line which includes 5.9km of twin tunnels under the Brisbane River and
CBD. In addition, CPB Contractors and UGL, along with their Unity Alliance partners, will deliver the Rail, Integration and Systems
(RIS) package of the Cross River Rail project.
The contractual arrangements require the contractors to manage the detailed design process to achieve a range of environmental
outcomes. Sustainability initiatives, particularly in relation to energy consumptions and savings throughout the project’s lifecycle,
are to be incorporated into the detailed design and tracked via a Sustainability Tool (e.g. ISCA’s rating tool) through to the project’s
implementation.
Community investment
CIMIC is proud to contribute to the communities impacted by our projects and services and will do so by supporting local charities
and community groups, and by facilitating employee volunteering and charity support. We support a range of initiatives that aim to
make a tangible, genuine and lasting improvement to the quality of people’s lives.
Volunteers rolling up their sleeves
Sedgman has developed a formal program of corporate volunteering which is strengthening its community partnerships and
providing opportunities for people to give their time when help is needed. Since the beginning of March 2019, every Sedgman
employee can undertake volunteering for up to two days per year. The first group of volunteers recently assisted a community
organisation hosting a Harmony Day event.
Ten people from Sedgman’s Vancouver, Canada office used their two days of paid volunteers leave to help build safe, affordable
houses for low income families in their local community with Habitat for Humanity. This charity work towards a world where
everyone can have the opportunity to afford home ownership. Lack of affordable housing is a key issue in this community and the
team thoroughly enjoyed working together and helping out.
A pilot team has also been given access to an online platform where individuals can provide digital support rather than the
traditional ‘hands-on’ activities associated with volunteering. Opportunities taken up via this platform have included grant writing,
development of a marketing flyer and Skype mentoring. Time spent volunteering is tracked allowing Sedgman to accurately report
on its impact.
85
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Minimise community disruption
Our Operating Companies work to minimise disruption, as much as practically possible, to those communities impacted by the
Group's activities as we deliver infrastructure, mining, services and public private partnership projects for our clients. When there is
some disruption, the Group tries to minimise the effect by engaging proactively, being approachable and developing positive
relationships with potentially impacted community members.
Launch of Rail Safety Week in Canberra
Rail Safety Week in Canberra was officially launched in September 2019 with Canberra Metro Operations (CMET) organising a
community event to showcase the importance of safe behaviour around the light rail system. The event was attended by the ACT’s
Minister for Transport and City Services, Chris Steel, as well as students from local schools and representatives from the
Australasian Rail Association and TrackSAFE Foundation. UGL and CPB Contractors are proud sponsors of the TrackSAFE Foundation
which represents a holistic all-of-industry approach to tackling safety issues impacting on the rail sector and its people.
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 developed its own community
engagement policy and framework, relevant to its individual stakeholders.
Stakeholder Engagement Plans are incorporated in the planning process for many projects, which include the recording and
tracking of community concerns. Some of the tools used to support interaction with 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; and sending SMS updates.
Project life cycle
The Group delivers infrastructure, building and resources projects whose life will extend for many years beyond our construction
involvement. On behalf of our clients, the Group’s Operating Companies regularly collaborate with clients to evaluate the lifecycle
consequences of these projects and, where possible, work to deliver solutions that add value over the longer-term.
Increasingly clients are engaging CIMIC Operating Companies to undertake lifecycle evaluations of projects - such as climate risk
assessments, under a range of scenarios – to determine the best outcome over the life of that project. Additionally, our Operating
Companies often provide value adding engineering solutions which may well deliver a more cost-effective project for clients in the
long-run, when operations and maintenance cost are considered.
Cross River Rail incorporates lifecycle approach
CIMIC Group companies, Pacific Partnerships, CPB Contractors, and UGL, as part of the Pulse consortium, have been awarded a
contract, as a PPP, to deliver the tunnelling works, new underground stations, and ongoing maintenance services for Brisbane’s
Cross River Rail project. Cross River Rail is a new 10.2km rail line which includes 5.9km of twin tunnels under the Brisbane River and
CBD. In addition, CPB Contractors and UGL, along with their Unity Alliance partners, will deliver the Rail, Integration and Systems
(RIS) package of the Cross River Rail project.
The contractual arrangements require the contractors to manage the detailed design process to achieve a range of environmental
outcomes. Sustainability initiatives, particularly in relation to energy consumptions and savings throughout the project’s lifecycle,
are to be incorporated into the detailed design and tracked via a Sustainability Tool (e.g. ISCA’s rating tool) through to the project’s
implementation.
Community investment
make a tangible, genuine and lasting improvement to the quality of people’s lives.
Volunteers rolling up their sleeves
Sedgman has developed a formal program of corporate volunteering which is strengthening its community partnerships and
providing opportunities for people to give their time when help is needed. Since the beginning of March 2019, every Sedgman
employee can undertake volunteering for up to two days per year. The first group of volunteers recently assisted a community
organisation hosting a Harmony Day event.
Ten people from Sedgman’s Vancouver, Canada office used their two days of paid volunteers leave to help build safe, affordable
houses for low income families in their local community with Habitat for Humanity. This charity work towards a world where
everyone can have the opportunity to afford home ownership. Lack of affordable housing is a key issue in this community and the
team thoroughly enjoyed working together and helping out.
A pilot team has also been given access to an online platform where individuals can provide digital support rather than the
traditional ‘hands-on’ activities associated with volunteering. Opportunities taken up via this platform have included grant writing,
development of a marketing flyer and Skype mentoring. Time spent volunteering is tracked allowing Sedgman to accurately report
on its impact.
85
In 2019, CIMIC directly invested ~$1,045k in corporate community investment programs, up from $715k in 2018 and $500k 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.
CIMIC supports Bridges to Prosperity in Rwanda
In October 2019, two volunteers sponsored by CIMIC Group, alongside colleagues from HOCHTIEF, completed the construction of
the 34 metre Rufuha footbridge over the Kagaga River in the Western Province of Rwanda. The Kagaga River can become
dangerous to cross, especially during one of the two - the big and small - rainy seasons. Last year, 2 primary school children – aged
8 and 10 – lost their lives on the way to school. In the past three years, five more people have died attempting to cross near where
the new Rufaha Bridge has been built. The new bridge now provides safe, year-round access for members of the Munini and Karehe
communities to access their school, markets and health centre.
The Rufuha Bridge was delivered in partnership with not-for-profit charity organisation Bridges to Prosperity (B2P), which has
signed a Memorandum of Understanding with the Rwandan government to build 350 footbridges across the country over the next
five years. B2P is one of HOCHTIEF’s main areas of sponsorship and CIMIC Group was pleased to again support this worthwhile
initiative by contributing the time and effort of two of our people. Tim Anderson, a Site Engineer with CPB Contractors currently
working on the West Gate Tunnel Project in Melbourne, and Caitlin Ziviani, an Environmental Graduate with UGL in Brisbane, were
selected from amongst the many high calibre applicants across CIMIC Group to work on the two-week project.
An important aspect of the bridge build was teaching the local workers engineering and construction skills. Working together in
small teams, the CIMIC/HOCHTIEF/B2P members were able to pass on their knowledge to the locals. The team trained the workers
in the safe use of fall arrest systems and harnesses when working at heights. An emphasis on working safely was set right from the
beginning of the project. Each day would start with a safety pre-start meeting to discuss risks and hazards of each activity and near
misses were reported to the supervisors.
Ahead of the trip, Tim started a GoFundMe campaign to buy sports equipment for the local kids. Employees, friends and family of
CIMIC, HOCHTIEF and ACS raised A$1,515 for footballs, soccer balls, frisbees and skipping ropes to donate to the local primary
school. The children were thrilled with the sports equipment, which was greatly welcomed as, prior to the visit, the school had one
soccer ball for 300 students. The fundraiser exceeded its target of A$1,000 so an extra A$515 was donated to the school for vital
supplies such as stationery and school books.
Thiess leads STEM education
Thiess has partnered with the Queensland Minerals and Energy Academy (QMEA) to deliver the first ever Collinsville STEM56 Proud
Robotics Competition in the Whitsundays, Queensland. The competition wraps up the first of QMEA’s STEM Proud programs,
sponsored by Thiess. The program is designed to build the skills and capabilities of teachers and students in the Whitsunday region.
Year four to six students from Scottville State Primary School, Collinsville State School and St John Bosco Catholic Primary
programmed LEGO® MINDSTORMS® EV3 robots through a series of mining and agricultural challenges. The competition was won
by Scottsville State Primary School. The STEM Proud program helps demonstrate to students the education pathways that lead to
jobs in the mining sector. As a business focused on technology and innovation, we recognise that an increased emphasis on STEM
education is critical for the future. Enhancing STEM capabilities will provide a bridge to new jobs, new skills and help deliver
sustainable growth in the Collinsville and Scottville communities. Thiess has continued its commitment to STEM development in the
Bowen Basin, donating 24 LEGO® MINDSTORMS® EV3 robotic kits to local schools.
CIMIC is proud to contribute to the communities impacted by our projects and services and will do so by supporting local charities
and community groups, and by facilitating employee volunteering and charity support. We support a range of initiatives that aim to
Each Operating Company develops its own program which underpins their social licence to operate and empowers our clients to
achieve their community objectives.
Pedal Power - Thiess helps raise funds for Hunter Valley Families
Thiess cyclists have helped raise more than A$44,000 for Singleton Family Support Services, as part of the Hunter Valley’s annual
Mailrun Charity Bike Ride. The Thiess team again joined community cyclists to pedal a collective 1,200km through the Singleton
countryside. The popular event, inspired by the original organiser - Ken Dreaper and his childhood mail route - raises funds to help
local families through programs that build confidence and empower positive, independent decision making. The peloton was ably
supported by Thiess volunteers who lined the streets, staffed drink stops and cheered riders along the course.
56 Science, technology, engineering, and mathematics.
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Respect local cultures and peoples
CIMIC is committed to respecting local cultures and Indigenous peoples. We also support opportunities to aid national
development in overseas markets where we have a presence.
Thiess and Sedgman celebrate National Women’s Day in South Africa
The Sedgman and Thiess teams in South Africa joined together on 6 August to celebrate National Women’s Day, which is
recognised as a public holiday in South Africa. National Women’s Day commemorates the 1956 march in Pretoria, where over
20,000 women of all races and ages banded together to protest laws that restricted the movement of women in South Africa. The
Day is celebrated now to commemorate the protest and to recognise the achievements of women from all corners of life in South
Africa.
The teams were joined via video conference by Zenzi Awases, President of Women in Mining Namibia. Zenzi shared her story of
being one of the first women in South Africa to take up a career as a geologist in the mining industry, which was illegal at the time.
She explained the challenges she faced in the early years of her career when she was the only woman working in the sector, and
how she now aims to empower and promote women in mining by developing mentoring partnerships. A motivational leader and
speaker, Zenzi’s contagious enthusiasm and passionate belief in people encouraged our Sedgman and Thiess teams to share their
personal career goals in an exercise to understand each other as both professional colleagues and individuals.
The Group has not identified any incidents of violations involving the rights of Indigenous people during the reporting period.
Use of local employees and businesses
Where possible, CIMIC’s Operating Companies seek opportunities to engage local employees and businesses, and to give
preference to the employment of nationals over expatriates when practical. This approach is reflected in both the Sustainability
Policy and the Procurement Policy, which both encourage Indigenous employment and the involvement of local communities.
Increasing diversity within our workplace and procurement processes
CIMIC Group has demonstrated its commitment to supplier diversity and providing more opportunities to Indigenous businesses by
taking up a Group-wide membership of Supply Nation. This membership now encompasses CPB Contractors, Thiess, Sedgman, UGL,
Pacific Partnerships and EIC Activities.
CPB Contractors was a founding member of Supply Nation, a non-profit organisation that aims to grow the Aboriginal and Torres
Strait Islander business sector through the promotion of supplier diversity in Australia. Since then, other Group Operating
Companies have also developed relationships with Supply Nation. CIMIC believes it is appropriate to coordinate this membership to
ensure it aligns with our strategic objective of increasing both Indigenous employment and the use of Indigenous businesses across
our supply chain(s). Supply Nation aims to connect companies, such as CIMIC Group, with Indigenous suppliers to build a vibrant
and prosperous Indigenous business sector.
CPB Contractors wins national award for helping provide employment for disadvantaged Australians
At the 2019 Social Traders Awards, CPB Contractors was presented with the prestigious ‘Social Procurement Partnership of the
Year’ award for an innovative partnership between Metro Tunnel Project's Rail Systems Alliance (RSA) and Kinfolk Enterprise.
Kinfolk is a café and catering company that is actively addressing social inclusion by channelling 100% of its profits towards local
and international charitable projects. CPB Contractors, who are part of the Rail System Alliance on Melbourne’s Metro Tunnel
Project, work in partnership with Kinfolk Enterprises as the social enterprise business of choice for special events, meetings and
professional development sessions.
CPB Contractors is committed to supporting the communities in which its people live and work. By choosing to partner with social
enterprises like Kinfolk, we are not only getting excellent service and value for money, but we also get the added value of creating
jobs and opportunities for people who have struggled to find work or have been marginalised. This partnership demonstrates the
very real impact and power of social procurement and the mutually beneficially outcomes for both Kinfolk and RSA.
OUTLOOK AND FUTURE PLANS
We are committed to acting with integrity and doing the right thing, regardless of where we operate. In 2020, we plan to:
§
§
continue to reinforce the Code through senior management roadshows and presentations;
implement legislative requirements relating to Modern Slavery to ensure CIMIC Group’s policies and procedures meet all
requirements and are fit for purpose; and
maintain our focus on Code training for all employees.
§
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CULTURE
OUR APPROACH
Our people – more than 40,000 talented team members working in more than 20 countries – are delivering projects that engineer
better, more sustainable solutions that take us into the future. The continued success of CIMIC is driven largely by the skills, passion
and expertise of those people. We aspire to build a culture that encourages a can-do attitude and harnesses the talents of our
people to deliver solutions for our clients and results for our stakeholders.
At CIMIC, we are committed to: providing supportive inclusive workplaces; developing our people; encouraging diversity; and
rewarding performance.
Provide supportive workplaces
Measures in place
§ Workplace Behaviour Policy; Anti-Bullying, Harassment and Discrimination Policy; Diversity &
§
§
Social 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
Respect local cultures and peoples
CIMIC is committed to respecting local cultures and Indigenous peoples. We also support opportunities to aid national
development in overseas markets where we have a presence.
Thiess and Sedgman celebrate National Women’s Day in South Africa
The Sedgman and Thiess teams in South Africa joined together on 6 August to celebrate National Women’s Day, which is
recognised as a public holiday in South Africa. National Women’s Day commemorates the 1956 march in Pretoria, where over
20,000 women of all races and ages banded together to protest laws that restricted the movement of women in South Africa. The
Day is celebrated now to commemorate the protest and to recognise the achievements of women from all corners of life in South
Africa.
The teams were joined via video conference by Zenzi Awases, President of Women in Mining Namibia. Zenzi shared her story of
being one of the first women in South Africa to take up a career as a geologist in the mining industry, which was illegal at the time.
She explained the challenges she faced in the early years of her career when she was the only woman working in the sector, and
how she now aims to empower and promote women in mining by developing mentoring partnerships. A motivational leader and
speaker, Zenzi’s contagious enthusiasm and passionate belief in people encouraged our Sedgman and Thiess teams to share their
personal career goals in an exercise to understand each other as both professional colleagues and individuals.
Use of local employees and businesses
Where possible, CIMIC’s Operating Companies seek opportunities to engage local employees and businesses, and to give
preference to the employment of nationals over expatriates when practical. This approach is reflected in both the Sustainability
Policy and the Procurement Policy, which both encourage Indigenous employment and the involvement of local communities.
Increasing diversity within our workplace and procurement processes
CIMIC Group has demonstrated its commitment to supplier diversity and providing more opportunities to Indigenous businesses by
taking up a Group-wide membership of Supply Nation. This membership now encompasses CPB Contractors, Thiess, Sedgman, UGL,
Pacific Partnerships and EIC Activities.
CPB Contractors was a founding member of Supply Nation, a non-profit organisation that aims to grow the Aboriginal and Torres
Strait Islander business sector through the promotion of supplier diversity in Australia. Since then, other Group Operating
Companies have also developed relationships with Supply Nation. CIMIC believes it is appropriate to coordinate this membership to
ensure it aligns with our strategic objective of increasing both Indigenous employment and the use of Indigenous businesses across
our supply chain(s). Supply Nation aims to connect companies, such as CIMIC Group, with Indigenous suppliers to build a vibrant
and prosperous Indigenous business sector.
CPB Contractors wins national award for helping provide employment for disadvantaged Australians
At the 2019 Social Traders Awards, CPB Contractors was presented with the prestigious ‘Social Procurement Partnership of the
Year’ award for an innovative partnership between Metro Tunnel Project's Rail Systems Alliance (RSA) and Kinfolk Enterprise.
Kinfolk is a café and catering company that is actively addressing social inclusion by channelling 100% of its profits towards local
and international charitable projects. CPB Contractors, who are part of the Rail System Alliance on Melbourne’s Metro Tunnel
Project, work in partnership with Kinfolk Enterprises as the social enterprise business of choice for special events, meetings and
professional development sessions.
CPB Contractors is committed to supporting the communities in which its people live and work. By choosing to partner with social
enterprises like Kinfolk, we are not only getting excellent service and value for money, but we also get the added value of creating
jobs and opportunities for people who have struggled to find work or have been marginalised. This partnership demonstrates the
very real impact and power of social procurement and the mutually beneficially outcomes for both Kinfolk and RSA.
OUTLOOK AND FUTURE PLANS
We are committed to acting with integrity and doing the right thing, regardless of where we operate. In 2020, we plan to:
continue to reinforce the Code through senior management roadshows and presentations;
implement legislative requirements relating to 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.
§
§
§
87
The Group has not identified any incidents of violations involving the rights of Indigenous people during the reporting period.
Actions taken during 2019
Performance
Train and develop people
Measures in place
Actions taken during 2019
Performance
Encourage diversity
Measures in place
§
§
§
§ Measuring employee experience through onboarding, engagement and exit surveys
§
Implemented program to support employees and their families experiencing family and
domestic violence
Entered Group-wide membership with Supply Nation to increase supplier diversity and
provide more Aboriginal and Torres Strait Islanders businesses the opportunity to partner
Expanded the Career Tracker program to provide workplace internships for Aboriginal and
Torres Strait Islander university students
Expanded the Neurodiversity program with the inclusion of people on the Autism Spectrum or
people with a disability
Launched the Thiess Allies network for employees who are LGBTIQ+
§
§ Developed on-line learning using standards which supports those with disabilities
§
CIMIC Group recognised by LinkedIn as the seventh most sought-after company where
Australians want to work
§
§
§
Comprehensive learning and development plans in place across all Operating Companies
Professional Development Policy
Provided 282 (versus 222 in 2018) intern/vacation positions which placed students into short-
term programs with CPB Contractors, Thiess, Sedgman, EIC Activities and UGL
§ Delivered workshop training to 107 leaders on how to recognise, respond and refer an
employee experiencing family and domestic violence
§ Developed awareness training workshop material to raise awareness of risks of Modern
Slavery in operations and supply chain
§ Delivered EEO Anti-bullying and Harassment and Unconscious bias training to 10,254
employees
§ 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 2019: Financial Management and Business
Acumen completed by 165 graduates, 182 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
Continued roll out of Program One leadership courses
Contract management training delivered to 1,738 employees
§ Graduate committee run by six graduate volunteers
§
§
§ Developed online whistleblower training which has been delivered to over 8,000 employees
§
§
§
Conducted 551 Leadership evaluations of mid-level Leaders across the Group
Increased the number of graduates to 225 from 208 in 2018
Ranked 32nd in a survey of Top 100 Graduate Employer of 2019 by GradConnection57 /
Financial Review (versus 44 in 2018)
Ranked 37th in the ‘2019 Top Intern Programs’ by AAGE58
Recognised as an Endorsed Employer of women by Work180
§
§
§ Diversity and Social Inclusion Policy; Anti-Bullying, Harassment and Discrimination Policy
57 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.
58 Australian Association of Graduate Employers - the peak industry body representing organisations that recruit and develop Australian graduates.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
§ Diversity & Social 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 2019
§ Group’s Operating Companies are supporters of and registered employers on Work18059
§
Continued to deliver Equal Employment Opportunity (EEO), Discrimination, Anti-Bullying and
Harassment training
Acknowledged International Women’s Day across Australian and overseas businesses to raise
awareness of gender equality
Continued to report workforce composition under the Australian Government’s Workplace
Gender Equality Act 2012
Continued the roll out of Unconscious Bias training to 1,014 employees including across the
Asia-Pacific region
Conducted Human Rights Impact Assessment in the Philippines
§
§ Developed an operational self-assessment tool to assess and address the risks of modern
§
§
§
Performance
Reward performance
Measures in place
Actions taken during 2019
§
§
§
§
§
slavery in the Group’s operations and supply chain
10,254 employees undertook EEO, Discrimination, Anti-Bullying and Harassment training
which increased completion rates to 83% (versus 40% in 2018)
Sedgman supported programs such as METS STEM Career Pathways60 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
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
§ Group Executive leadership team (CEO & Managing Directors) WGEA61 Pay Ambassadors
promoting pay equity
Employee details
As at 31 December 2019, the Group directly employed 35,373 people, 16,959 in Australia and 18,414 in international operations,
up from 38,423 last year (17,373 in Australia and 21,050 in international operations).
Direct Group employees (#)
Of which: Male
Female
Total Group employees (#)
Of which: Male
Female
2019
35,373
40,234
34,452
3,971
42,260
4,699
2018
38,423
46,959
34,260
3,519
46,679
4,322
2017
37,779
51,001
31,073
4,300
35,320
4,914
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 40,234, down from 46,959 last year.
PROVIDE SUPPORTIVE WORKPLACES
CIMIC strives to provide workplaces where our people are supported, encouraged to reach their potential, and
are free from harassment and bullying. We promote a culture that seeks to foster the innovation of our people
and provide support for new initiatives.
In 2019, the CIMIC Group was again pleased to be recognised as one of the top 10 best companies in Australia for attracting and
keeping top talent, ranking seventh overall in LinkedIn’s Top Companies list62. This list is based on the actions taken by LinkedIn's
more than 575+ million members and looks at four main pillars: interest in the company, engagement with the company’s
employees, job demand and employee retention.
59 WORK180 is an international jobs network that connects employers with talented women.
60 METS - Mining Equipment Technology Services, STEM - science, technology, engineering and mathematics.
61 Australian Government’s Workplace Gender Equality Agency.
62 https://www.linkedin.com/pulse/top-companies-2019-where-australia-wants-work-now-natalie-macdonald/
89
89
§
§
§
During 2019, CIMIC continued to build on its Group-wide leadership framework ‘Program One’ which was launched in 2016. The
framework has 4 key training modules:
§
Self-leadership – provides techniques for working with our Principles, and working as part of a team and building personal
resilience;
Frontline Leadership – provides tools and techniques for developing and motivating teams;
Leading Managers – provides tools and methods on how to lead a function or business unit; and
Executive Leadership – supports leaders to envision and enact high-performance in our Group.
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Visible leadership
At CIMIC Group, we understand that successful leadership and accountability are intrinsically linked, for leadership without action
and accountability cannot produce great outcomes. In essence, it’s about ‘leading with principle’ – the central concept of the CIMIC
Group leadership framework. It means being consistent, fair and resilient, owning our decisions and understanding the risks and
consequences.
§
§
§
§
§
§
§
§
§
§
§
§
§
§ Diversity & Social 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 Work18059
Actions taken during 2019
Continued to deliver Equal Employment Opportunity (EEO), Discrimination, Anti-Bullying and
Harassment training
awareness of gender equality
Gender Equality Act 2012
Asia-Pacific region
Acknowledged International Women’s Day across Australian and overseas businesses to raise
Continued to report workforce composition under the Australian Government’s Workplace
Continued the roll out of Unconscious Bias training to 1,014 employees including across the
Conducted Human Rights Impact Assessment in the Philippines
§ Developed an operational self-assessment tool to assess and address the risks of modern
slavery in the Group’s operations and supply chain
Performance
10,254 employees undertook EEO, Discrimination, Anti-Bullying and Harassment training
which increased completion rates to 83% (versus 40% in 2018)
Sedgman supported programs such as METS STEM Career Pathways60 program supporting
women studying engineering and connecting them with work placements and experience
Reward performance
Measures in place
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
Actions taken during 2019
Conducted Group-wide pay equity review as part of the annual remuneration review and
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
Performance
All remuneration increases and bonuses have a recent performance review rating of ‘meets
unconscious bias
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) WGEA61 Pay Ambassadors
promoting pay equity
Employee details
As at 31 December 2019, the Group directly employed 35,373 people, 16,959 in Australia and 18,414 in international operations,
up from 38,423 last year (17,373 in Australia and 21,050 in international operations).
Direct Group employees (#)
Total Group employees (#)
Of which: Male
Female
Of which: Male
Female
2019
35,373
2018
38,423
2017
37,779
40,234
46,959
51,001
34,452
3,971
42,260
4,699
34,260
3,519
46,679
4,322
31,073
4,300
35,320
4,914
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 40,234, down from 46,959 last year.
PROVIDE SUPPORTIVE WORKPLACES
CIMIC strives to provide workplaces where our people are supported, encouraged to reach their potential, and
are free from harassment and bullying. We promote a culture that seeks to foster the innovation of our people
and provide support for new initiatives.
In 2019, the CIMIC Group was again pleased to be recognised as one of the top 10 best companies in Australia for attracting and
keeping top talent, ranking seventh overall in LinkedIn’s Top Companies list62. This list is based on the actions taken by LinkedIn's
more than 575+ million members and looks at four main pillars: interest in the company, engagement with the company’s
employees, job demand and employee retention.
During 2019, CIMIC continued to conduct ‘Program One’ workshops for members of frontline leadership across all Australian key
states and Hong Kong. Training was provided for 1,639 participants (versus 1,926 in 2018) and delivered across other countries in
Asia, as well as in Canada and Chile.
Communication is a critical element of visible leadership and underpins the development of a consistent culture across the Group.
The Group’s internal, digitally delivered newsletter ‘Pulse’, which was launched in 2016, continues to be an important tool. Pulse
connects our more than 40,000 employees across multiple offices, projects and geographies, delivering consistent messaging and
communication. In 2019, Pulse featured more than 150 articles; sharing ideas, launching new campaigns, announcing projects wins
and encouraging performance. Pulse is an important initiative in building and solidifying a unified culture across the Group.
CIMIC continued to undertake on-boarding and exit surveys to better understand the employee experience of employees.
Human Rights and Modern Slavery
CIMIC is aware of its duty of care and is committed to respecting and observing human rights and actively avoiding human rights
violations. Our commitment includes abiding by the human rights and civil liberties included in the Universal Declaration of Human
Rights, and, specifically, the ten principles of the United Nations Global Compact63 which explicitly identify - in relation to Human
Rights and Labour - that businesses should:
§
§ make sure that they are not complicit in human rights abuses - Principle 2;
§
§
§
§
uphold the freedom of association and the effective recognition of the right to collective bargaining - Principle 3;
uphold the elimination of all forms of forced and compulsory labour - Principle 4;
uphold the effective abolition of child labour - Principle 5; and
uphold the elimination of discrimination in respect of employment and occupation - Principle 6.
support and respect the protection of internationally proclaimed human rights - Principle 1;
Principles 7-10, relating to Environment and Anti-Corruption, are addressed in their respective sections of this Sustainability Report.
CIMIC’s commitment to abiding by the principles of the United Nations Global Compact is embedded in the Sustainability Policy.
Humanitarian partnership provides pathway to employment
CPB Contractors is proud to partner with CareerSeekers, a non-profit organisation supporting Australia’s humanitarian entrants into
professional careers. The program provides in-depth preparation and support to both refugees and people seeking asylum who are
either currently studying at university or looking to restart their professional career in Australia.
The program provides refugees and asylum seekers the chance to gain invaluable work experience in Australia and to establish
important networks, which for most has proved extremely challenging since arriving in Australia. Since the formalisation of the
CareerSeekers partnership in June 2019, CPB Contractors has provided 28 refugees and asylum seekers with internships for a 12-
week paid period. Of these, 9 have gained full-time employment with CPB Contractors.
CPB Contractors was the first corporate organisation to sign-up to the ‘10x10 Program’ with CareerTrackers – a 10-year
commitment providing meaningful internships for Indigenous students around Australia. The 10x10 partnership includes a
commitment to engage 25 new and existing Indigenous interns per year. Through our partnership with CareerTrackers, more than
100 Indigenous university students have completed internships with CPB Contractors since 2010. Many have been accepted into
the CIMIC Group Graduate Program and we now have a talented and growing Alumni connected to our company.
We understand and recognise that we operate in some industries and geographies that are considered as being of higher risk in
terms of Modern Slavery. These risks include bonded labour, forced labour, child labour and human trafficking which demands that
we apply a high standard of vigilance.
59 WORK180 is an international jobs network that connects employers with talented women.
60 METS - Mining Equipment Technology Services, STEM - science, technology, engineering and mathematics.
61 Australian Government’s Workplace Gender Equality Agency.
62 https://www.linkedin.com/pulse/top-companies-2019-where-australia-wants-work-now-natalie-macdonald/
89
63 The Ten Principles of the UN Global Compact.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
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.
Our Code enshrines these commitments stating that, “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”.
These commitments are supported by the Group’s Dealing with Third Parties Policy which requires, amongst other things, for
specific due diligence to be undertaken regarding modern slavery. Third parties are required to sign a declaration asking whether
“slavery, forced or child labour [has] been used anywhere by the third party or, to the best of the third party’s knowledge, by any
direct suppliers to the third party?”
CIMIC has established an internal assessment process to support its Human Rights commitments. This process is premised on the
Human Rights Compliance Assessment (HRCA) Quick Check developed by the Danish Institute for Human Rights.
Over the last 3 years, CIMIC has undertaken Human Rights Impact Assessments (HRIA) of operations in the following countries:
§
§
§
2017 - construction business in India;
2018 - mining operations in Indonesia; and
2019 - construction operations in the Philippines.
These countries were chosen based on a risk assessment which includes: the size of each country’s workforce as a portion of the
overall overseas workforce, the size of the Group’s business in each country, each country’s ranking in the Global Slavery Index64
and an internal assessment of potential risk when reviewed against the HRCA Quick Check.
With more than 13,895 direct employees in India, Indonesia and the Philippines as at 31 December 2019, these HRIAs represent
more than 39% of the Group’s direct workforce or, based on 2019 activity, approximately 10% of annual revenue that has been
assessed in the last 3 years.
The HRIAs aimed to develop greater awareness around human rights and modern slavery, and to assess the risk to our operations
on a range of areas relating to human rights and modern slavery. 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.
Since the HRIAs have been undertaken, remedial action plans have been put in place and all outstanding matters have been
addressed in India and Indonesia. In the Philippines, the main areas of non-compliance, or where further attention is required,
include: use of overtime, provision of appropriate accommodation facilities, ensuring all safety practices are observed, provision of
sanitation and welfare facilities, and promoting opportunities for employee grievances to be voiced. The outstanding issues in the
Philippines are currently being addressed.
Pleasingly, the HRIAs have also 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 has an established process for any human rights grievances to be reported via the Group’s Ethics Line as outlined on page 80.
CIMIC is preparing to comply with the new Modern Slavery reporting framework introduced by the Australian Federal Government.
Group wide Modern Slavery committees have been established to respond and have taken action across these key areas:
§
§
governance – updating related policies including the Code, Dealing with Third Parties and Procurement;
risk management – implemented internationally recognised due diligence solution to assess supplier risks including risk of
Modern Slavery;
supplier procurement – includes updating supplier standard contract terms and reviewing onboarding processes for new
suppliers;
assurance – includes the HRIAs already undertaken, and development of a self-assessment tool for Operating Companies
which will be piloted later this year with Thiess and Mongolia;
grievance process – embedded through Whistleblower Policy and the Ethics Line;
capability and training – includes providing workshops for leaders and those in high risk roles involved in procurement, and
development of an online, 10 minute awareness modules which will be supplemented in 2020 with focused supplier education
and utilisation of the resources accessible through membership of the Supply Chain Sustainability School;
communication – program underway to build employee awareness using Intranet resource page and Pulse articles; intention
to broaden to external stakeholder communication and publication of statement via CIMIC website; and
leadership – accountable for leadership of the program and actively driving communication.
§
§
§
§
§
§
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, nor for immigration detention centres.
64 Global Slavery Index.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Freedom from harassment
Our Code enshrines our commitment to not tolerating harassment, discrimination, bullying, vilification, occupational violence or
victimisation on any grounds, whether by race, gender, sexual preference, marital status, age, religion, colour, national extraction,
social origin, political opinion, disability, family or carer’s responsibilities, or pregnancy. This commitment is supported by our
Diversity and Social Inclusion Policy, the Anti-Bullying, Harassment and Discrimination Policy, and our Workplace Behaviour Policy.
In 2019, CIMIC issued its Family and Domestic Violence Policy. The objectives of this Policy and our commitment is to:
§
recognise that family and domestic violence is a serious, identifiable and preventable health and safety issue that impacts
peoples’ health and wellbeing; and
play an active role in supporting the impact of family and domestic violence amongst our employees and their families, by
providing awareness, assistance and support.
§
Rocky’s Reward takes a stand against domestic violence
Thiess’ team at the Rocky’s Reward open-pit nickel mine, 400km north of Kalgoorlie in Western Australia, have partnered with the
local community health partners in the town of Leonora to support victims of domestic violence. The team undertook fundraising
activities on site as part of White Ribbon Day and donated the proceeds to the local Leonora community. The money raised was
used to create personal care packages that were then distributed throughout the year to local families impacted by domestic
violence. The personal care packages contain basic items to maintain health and hygiene including hairbrushes, towels, toothpaste,
soap and other necessities for a family.
We have supported the White Ribbon movement and the United Nations International Day for the Elimination of Violence against
Women, encouraging our people to gain a greater understanding of the impact of violence against women.
Learning how to recognise and respond to family and domestic violence
To ensure our people are supported, we are preparing leaders by building their knowledge and skills to recognise the signs and
understand the complexities of family and domestic violence, know how to respond to disclosures in the workplace, and
appropriately refer employees for support. In 2019, CIMIC Group provided training to 107 leaders on how to recognise family and
domestic violence, how to appropriately respond and how to refer to support available.
Training was delivered by Australia’s CEO Challenge (ACEOC). ACEOC is a not-for-profit organisation with over 17 years’ experience
in designing and delivering customised training to support those experiencing family and domestic violence. Additionally, online
training has been be made available for any interested employees on our new learning management system, One Learning – which
is being progressively introduced at our Operating Companies.
Freedom of association and collective bargaining
As per the Human Rights sub-chapter (page 90), CIMIC is committed to abiding by the UN Global Compact and upholding the rights
of employees to the freedom of association and the effective recognition of the right to collective bargaining. We undertake to
fairly, consultatively and constructively engage with workers, union representatives and regulators.
Responsibility for managing workplace relations is delegated to our Operating Companies, reflecting the diverse nature of their
market focused businesses. 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 and industries.
Of the Group’s Australian employees, approximately 53.4% are covered by collective bargaining agreements; 25.5% at CPB
Contractors, 71.4% at Thiess, 22.5% at Sedgman and 67.0% at UGL. CIMIC complies with all of the industrial relations laws and
obligations of the jurisdictions in which our Companies operate.
Under Australian law, employers are not able to ask employees directly if they are a member of a trade union. However, all workers
across the CIMIC Group are entitled to be a union member. Union membership is open to both staff and wages employees.
Similarly, we do not track trade union membership within our international operations.
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.
TRAIN AND DEVELOP PEOPLE
At CIMIC, we invest in the training and development of our people so that we can maintain our position as a
leader in the industries in which we operate. 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.
92
92
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.
Our Code enshrines these commitments stating that, “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”.
These commitments are supported by the Group’s Dealing with Third Parties Policy which requires, amongst other things, for
specific due diligence to be undertaken regarding modern slavery. Third parties are required to sign a declaration asking whether
“slavery, forced or child labour [has] been used anywhere by the third party or, to the best of the third party’s knowledge, by any
direct suppliers to the third party?”
CIMIC has established an internal assessment process to support its Human Rights commitments. This process is premised on the
Human Rights Compliance Assessment (HRCA) Quick Check developed by the Danish Institute for Human Rights.
Over the last 3 years, CIMIC has undertaken Human Rights Impact Assessments (HRIA) of operations in the following countries:
§
§
§
2017 - construction business in India;
2018 - mining operations in Indonesia; and
2019 - construction operations in the Philippines.
These countries were chosen based on a risk assessment which includes: the size of each country’s workforce as a portion of the
overall overseas workforce, the size of the Group’s business in each country, each country’s ranking in the Global Slavery Index64
and an internal assessment of potential risk when reviewed against the HRCA Quick Check.
With more than 13,895 direct employees in India, Indonesia and the Philippines as at 31 December 2019, these HRIAs represent
more than 39% of the Group’s direct workforce or, based on 2019 activity, approximately 10% of annual revenue that has been
assessed in the last 3 years.
The HRIAs aimed to develop greater awareness around human rights and modern slavery, and to assess the risk to our operations
on a range of areas relating to human rights and modern slavery. 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.
Since the HRIAs have been undertaken, remedial action plans have been put in place and all outstanding matters have been
addressed in India and Indonesia. In the Philippines, the main areas of non-compliance, or where further attention is required,
include: use of overtime, provision of appropriate accommodation facilities, ensuring all safety practices are observed, provision of
sanitation and welfare facilities, and promoting opportunities for employee grievances to be voiced. The outstanding issues in the
Philippines are currently being addressed.
Pleasingly, the HRIAs have also 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 has an established process for any human rights grievances to be reported via the Group’s Ethics Line as outlined on page 80.
CIMIC is preparing to comply with the new Modern Slavery reporting framework introduced by the Australian Federal Government.
Group wide Modern Slavery committees have been established to respond and have taken action across these key areas:
governance – updating related policies including the Code, Dealing with Third Parties and Procurement;
risk management – implemented internationally recognised due diligence solution to assess supplier risks including risk of
Modern Slavery;
suppliers;
supplier procurement – includes updating supplier standard contract terms and reviewing onboarding processes for new
assurance – includes the HRIAs already undertaken, and development of a self-assessment tool for Operating Companies
which will be piloted later this year with Thiess and Mongolia;
grievance process – embedded through Whistleblower Policy and the Ethics Line;
capability and training – includes providing workshops for leaders and those in high risk roles involved in procurement, and
development of an online, 10 minute awareness modules which will be supplemented in 2020 with focused supplier education
and utilisation of the resources accessible through membership of the Supply Chain Sustainability School;
communication – program underway to build employee awareness using Intranet resource page and Pulse articles; intention
to broaden to external stakeholder communication and publication of statement via CIMIC website; and
leadership – accountable for leadership of the program and actively driving communication.
§
§
§
§
§
§
§
§
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, nor for immigration detention centres.
64 Global Slavery Index.
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Connecting with youth
Leighton Asia is committed to nurturing young talent, seeking opportunities to encourage young people to see a future for
themselves in the construction industry. From job tasting to mentoring programs, teams from across Leighton Asia have
participated in a variety of initiatives to inspire and provide support to young talent to better plan their careers and promote job
interest in the construction industry.
In July 2019, Leighton Asia delivered a two-day job tasting program for participants from three secondary schools in Hong Kong, as
part of the Hong Kong Government’s ‘Life Buddies’ Mentoring Scheme. The customised program introduced the essence of the
construction industry, including a real-life opportunity to experience the industry work environment, providing students with a
deeper understanding of their possible future careers. Selected subject matter experts from Leighton Asia also shared their career
advice, work experiences and job interview skills with students. In addition, Leighton Asia has also designed and conducted various
career-focused mentoring activities for participating students.
Investing in training
CIMIC values its employees and seeks to support their ongoing learning and development journey. We invest in a range of different
types of training - including skills-based, vocational and technical - to support their personal development and the Group’s ability to
deliver its projects.
One Learning: a new way to learn
CIMIC has introduced a new system, One Learning, to deliver an improved online learning experience across the Group. One
Learning is a ‘one stop shop’ for online training, replacing other learning management systems that have been in use. It enables a
flexible approach to learning with improved functionality, usability and onboarding experience accessible via the internet. A phased
rollout of One Learning is underway, with Australian salaried employees migrating to the new system progressively.
Initially, the system is being used to complete mandatory compliance training e.g. Code of Conduct, Equal Employment
Opportunity, and IT Security. The functionality will be progressively expanded to include other learning activities throughout 2020.
People receive an email notification when training is due and a link in the email directs them to One Learning to complete their
learning activity which logs and collates their results.
CIMIC has developed a Group-wide ‘Capability Framework’ based on the core capabilities that are a priority for our business. This
Framework is designed to deliver consistent training across the Group. Each Operating Company 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 2019, we delivered 825,220 hours of training across the Group (versus 810,015 in 2018), which equates to more than 23.3 hours
per annum for each direct employee. The average amount spent per FTE65 on training and development was $360k (up from $337k
in 2018). Group training courses included:
§
Program One leadership training;
§
equal opportunity, anti-bullying, harassment and discrimination;
§
recognising and responding to family and domestic violence;
§
unconscious bias;
§ modern slavery awareness;
§ whistleblower;
§
§
§
§
technical training;
foundation topics (for Graduates) which included applied technical and engineering training across a range of disciplines;
contract management; and
online financial management (EIS66) training modules.
65 Full-time equivalent.
66 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.
93
93
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Connecting with youth
Leighton Asia is committed to nurturing young talent, seeking opportunities to encourage young people to see a future for
themselves in the construction industry. From job tasting to mentoring programs, teams from across Leighton Asia have
participated in a variety of initiatives to inspire and provide support to young talent to better plan their careers and promote job
interest in the construction industry.
In July 2019, Leighton Asia delivered a two-day job tasting program for participants from three secondary schools in Hong Kong, as
part of the Hong Kong Government’s ‘Life Buddies’ Mentoring Scheme. The customised program introduced the essence of the
construction industry, including a real-life opportunity to experience the industry work environment, providing students with a
deeper understanding of their possible future careers. Selected subject matter experts from Leighton Asia also shared their career
advice, work experiences and job interview skills with students. In addition, Leighton Asia has also designed and conducted various
career-focused mentoring activities for participating students.
CIMIC values its employees and seeks to support their ongoing learning and development journey. We invest in a range of different
types of training - including skills-based, vocational and technical - to support their personal development and the Group’s ability to
Investing in training
deliver its projects.
One Learning: a new way to learn
CIMIC has introduced a new system, One Learning, to deliver an improved online learning experience across the Group. One
Learning is a ‘one stop shop’ for online training, replacing other learning management systems that have been in use. It enables a
flexible approach to learning with improved functionality, usability and onboarding experience accessible via the internet. A phased
rollout of One Learning is underway, with Australian salaried employees migrating to the new system progressively.
Initially, the system is being used to complete mandatory compliance training e.g. Code of Conduct, Equal Employment
Opportunity, and IT Security. The functionality will be progressively expanded to include other learning activities throughout 2020.
People receive an email notification when training is due and a link in the email directs them to One Learning to complete their
learning activity which logs and collates their results.
CIMIC has developed a Group-wide ‘Capability Framework’ based on the core capabilities that are a priority for our business. This
Framework is designed to deliver consistent training across the Group. Each Operating Company 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 2019, we delivered 825,220 hours of training across the Group (versus 810,015 in 2018), which equates to more than 23.3 hours
per annum for each direct employee. The average amount spent per FTE65 on training and development was $360k (up from $337k
in 2018). Group training courses included:
Program One leadership training;
equal opportunity, anti-bullying, harassment and discrimination;
recognising and responding to family and domestic violence;
unconscious bias;
§ modern slavery awareness;
§ whistleblower;
technical training;
§
§
§
§
§
§
§
§
foundation topics (for Graduates) which included applied technical and engineering training across a range of disciplines;
contract management; and
online financial management (EIS66) training modules.
Komatsu training academy partners with Thiess
Thiess has entered into a national apprenticeship training contract with the Komatsu Training Academy (KTA) in Brisbane,
Queensland. The KTA is a nationally registered training organisation that provides technical, operator and management courses for
Komatsu customers, and is one of the region’s most advanced technical training facilities for mining, earthmoving and utility
equipment.
The KTA is offering three sets of qualifications, which have been customised, as part of a targeted training package specifically
developed for Thiess apprentices. The qualifications being provided to Thiess are AUR30316 Certificate III in Automotive - Electrical
Technology, MEM30205 Certificate III in Engineering - Mechanical Trade, and MEM30305 Certificate III in Engineering - Fabrication
Trade.
The KTA focuses on the needs of our clients and examples of its training include up-skilling for production improvements, improved
fuel efficiency, reduced wear and tear, lower operating costs, better preventive maintenance, and greater safety. This partnership
brings together two organisations passionate about delivering quality training and achieving quality outcomes.
Invest in future leaders
CIMIC is actively investing to create its own future leaders by recruiting graduates and further developing their skills. We have
created, and continue to expand, our Group-wide, two-year Graduate Program during which graduates participate in structured
development days providing in-depth information on key areas of the business. We are proud of this program which provides
graduates with exposure to a global organisation across multiple industries and sets them on an exciting career path.
The 2019 graduate intake commenced in February, with an induction held in Sydney. This year, 225 graduates (up from 208 in
2018), 141 males and 84 females, commenced with CPB Contractors, Leighton Asia, Broad, Thiess, Sedgman, UGL and EIC Activities,
with opportunity for exposure to Pacific Partnerships and CIMIC.
Annual intake to the Graduate Program (#)
2019
2018
2017
Female
84
51
38
Male
141
157
136
Total
225
208
174
The program mirrors the Group’s operations and currently involves graduates from Australia, New Zealand, Indonesia, Hong Kong,
Chile, Canada, Botswana, Mongolia. We will continue to expand the program to include the rest of the countries in which we
operate over time.
Total graduates, trainees and apprentices employed at end of 2019 (#)
Graduates
Trainees and apprentices
Female
124
169
Male
268
544
The Operating Companies also offer a range of apprenticeship and traineeships. The Thiess Apprenticeship Program is a national
program, recognised Australia wide for delivering consistent, high-quality on-the-job and off-the-job training. Certificate III
qualification outcomes are promoted in: Engineering - Mechanical Trade (diesel fitter); Automotive Electrical Technology;
Engineering - Fabrication Trade (boilermaking/welding); and Electrotechnology Electrician (high voltage systems).
CPB Contractors offers a Vacation Program for undergraduates that provides real, on-the-job experience, within a structured
environment. The program is available across a range of disciplines, including: engineering (civil, mechanical, electrical &
geotechnical); construction management; environment; surveying; health & safety; legal, finance & accounting; and human
resources.
Developing our frontline leaders in Mongolia
Thiess’ Learning & Development team showcased CIMIC’s ‘One Frontline Leadership’ training program in Mongolia in February
2019, sharing important skills, knowledge and insights with more than 30 current and emerging leaders. The interactive program
was delivered twice – once in English and once in Mongolian. Specifically designed for frontline leaders, it includes critical skills and
knowledge about effective communication, behavioural styles, delegation of tasks, how to give and receive feedback, decision-
making and guiding their teams through various stages of development.
66 EIS is a set of processes, business rules, tools and standardised reports for the management, control, and reporting of key project activities,
65 Full-time equivalent.
revenue, cost, margin and working capital.
93
§
§
CIMIC also engages with schools and universities on programs that aim to develop skills and equip our workforce for the future.
Some of the development programs that CIMIC promotes include:
§
regularly cooperating with schools and universities through the provision of scholarships, delivering student presentations and
technical lectures, and providing career support and mentoring;
participating in university career fairs during 2019 including at: 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 the University of Western Sydney in a mentoring
capacity offering advice, information and networking opportunities for students;
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
§
§
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.
Attracting top talent
To build relationships with schools, students, and teachers – staff from EIC Activities attended the Explore Careers Fair in
Melbourne and Sydney. Explore Careers is Australia’s #1 Careers and Employment program that is supported by 100 of Australia’s
leading organisation, including CIMIC Group. Staff from EIC Activities spoke with students and career advisors about career
pathways in CIMIC Group, encouraging students to explore Science Technology Engineering and Maths (STEM) subjects. On the
day, the team established virtual and augmented reality displays demonstrating engineering in an interactive way.
Some of the university programs for vacation students and interns that CIMIC and its Operating Companies supported during the
year included: the University of Queensland Mining and Metallurgy Association Student Society; the Australasian Institute of
Mining and Metallurgy (AusIMM) New Leaders Conference in Perth; the AusIMM Student Chapter of the University of Western
Australia; and the AusIMM Student Chapter Illawarra.
We also collaborate with universities where the following research services agreements are in place:
§ University of Sydney – ‘optimising solar panel foundation systems’;
§ University of Technology Sydney – ‘developing innovative design and performance procedures for stabilising landfills bearing
long term infrastructure loads: with special reference to Moorebank intermodal rail link’; and
§ University of Western Sydney – ‘alkaline-activated treatment of residual Bringelly shale’.
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. In 2019, 60 vacation students were provided with an 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 CIMIC’s Graduate Program.
Nurturing the next generation of young talent
Leighton Asia’s operation in Hong Kong has been recognised by the Hong Kong Government, receiving a Bronze Award for
‘Contractor Hiring the Most Number for Construction Industry Council (CIC) Graduates.’ Leighton Asia was also commended as a
‘Contractor Actively Participating in Cooperative Training Schemes.’
CIMIC engage with students through school-based traineeships in local communities; hosting urban and remote schools as part of
career programs. We partner with Explore Careers, Australia’s leading careers and employment program, which is designed to
bring school students and their future employers together. Partnering provides an opportunity for CIMIC to promote the Group to
secondary school students and provide employment pathways for them.
Happy campers
In 2019, the University of New South Wales held a Women in Engineering Camp for enthusiastic high school students interested in
exciting and rewarding careers in STEM. CIMIC Group sponsored the event’s networking night where 100 students mingled with
academics, peer students, and industry guests – including 15 engineers from CPB Contractors and UGL.
The students also tuned-in to hear from CPB Contractors’ Project Manager, Kirsten Evans, on her successful career journey in STEM.
Kirsten talked about her path to becoming a Project Manager and the responsibilities in her current role on the Sydney Metro
Northwest Project. She also talked about what it is like to be a woman in construction and the exciting opportunities that come
with working for the country’s largest construction company.
Earlier that day, 50 students visited the Sydney Metro Northwest project site where UGL Commissioning Coordination Manager,
Michelle Ho, showed the students the Operational Control Centre from which the new driverless metro trains, and various rail
systems can be controlled and monitored. The students also visited the new Tallawong station. Michelle shared with the students
that her father had encouraged her to be an engineer and that she had been supported by leaders in the field throughout her
career with opportunities to learn and grow.
95
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
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.
§
§
Attracting top talent
To build relationships with schools, students, and teachers – staff from EIC Activities attended the Explore Careers Fair in
Melbourne and Sydney. Explore Careers is Australia’s #1 Careers and Employment program that is supported by 100 of Australia’s
leading organisation, including CIMIC Group. Staff from EIC Activities spoke with students and career advisors about career
pathways in CIMIC Group, encouraging students to explore Science Technology Engineering and Maths (STEM) subjects. On the
day, the team established virtual and augmented reality displays demonstrating engineering in an interactive way.
Some of the university programs for vacation students and interns that CIMIC and its Operating Companies supported during the
year included: the University of Queensland Mining and Metallurgy Association Student Society; the Australasian Institute of
Mining and Metallurgy (AusIMM) New Leaders Conference in Perth; the AusIMM Student Chapter of the University of Western
Australia; and the AusIMM Student Chapter Illawarra.
We also collaborate with universities where the following research services agreements are in place:
§ University of Sydney – ‘optimising solar panel foundation systems’;
§ University of Technology Sydney – ‘developing innovative design and performance procedures for stabilising landfills bearing
long term infrastructure loads: with special reference to Moorebank intermodal rail link’; and
§ University of Western Sydney – ‘alkaline-activated treatment of residual Bringelly shale’.
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. In 2019, 60 vacation students were provided with an 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 CIMIC’s Graduate Program.
Nurturing the next generation of young talent
Leighton Asia’s operation in Hong Kong has been recognised by the Hong Kong Government, receiving a Bronze Award for
‘Contractor Hiring the Most Number for Construction Industry Council (CIC) Graduates.’ Leighton Asia was also commended as a
‘Contractor Actively Participating in Cooperative Training Schemes.’
CIMIC engage with students through school-based traineeships in local communities; hosting urban and remote schools as part of
career programs. We partner with Explore Careers, Australia’s leading careers and employment program, which is designed to
bring school students and their future employers together. Partnering provides an opportunity for CIMIC to promote the Group to
secondary school students and provide employment pathways for them.
Happy campers
In 2019, the University of New South Wales held a Women in Engineering Camp for enthusiastic high school students interested in
exciting and rewarding careers in STEM. CIMIC Group sponsored the event’s networking night where 100 students mingled with
academics, peer students, and industry guests – including 15 engineers from CPB Contractors and UGL.
The students also tuned-in to hear from CPB Contractors’ Project Manager, Kirsten Evans, on her successful career journey in STEM.
Kirsten talked about her path to becoming a Project Manager and the responsibilities in her current role on the Sydney Metro
Northwest Project. She also talked about what it is like to be a woman in construction and the exciting opportunities that come
with working for the country’s largest construction company.
Earlier that day, 50 students visited the Sydney Metro Northwest project site where UGL Commissioning Coordination Manager,
Michelle Ho, showed the students the Operational Control Centre from which the new driverless metro trains, and various rail
systems can be controlled and monitored. The students also visited the new Tallawong station. Michelle shared with the students
that her father had encouraged her to be an engineer and that she had been supported by leaders in the field throughout her
career with opportunities to learn and grow.
Victorian mentoring program launched
More than 100 employees from CPB Contractors’ team in Victoria are participating in a new mentoring program and discussion
groups over the next 12 months, with the aim of developing their skills and building professional networks. The new program aligns
with CPB Contractors’ ‘People First’ strategy and forms part of the broader CIMIC Group strategy to support employees, develop
their skills and build their careers.
Senior leaders from across CPB Contractors have been paired with mentees, who will continue to meet regularly to discuss goal
setting, relationship building, communication and problem solving. The program was launched in response to employee feedback
asking for more mentoring, career development and job opportunities. Mentoring is now a necessary business tool. It used to be
that employees would organically build their own networks, but now more formal processes are being established. In the coming
year, the new program will leverage existing groups within the business with participants drawn from a wide range of business
disciplines and locations.
Recruit internally
CIMIC’s Recruitment Policy preferences the recruitment of internal candidates prior to undertaking any external recruitment. We
will generally advertise internally first, on the basis that we believe we have an obligation to develop opportunities for our own
people before looking at external recruitment. By favouring internal recruitment, we hope to encourage loyalty and by reducing
turnover we can reduce recruitment, training and the other cost that apply when recruiting externally.
Of all of the jobs offered by the Group in 2019, 2,092 were filled by internal candidates (versus 1,476 in 2018), a 41.7% year-on-year
increase.
Promoting locally in Indonesia
Thiess is pleased to have made the first local appointment to the top role in its Indonesian business. Jeffrey Kounang’s openness to
new experiences and commitment to strategic growth have shored up his credentials as Thiess’ new President Director of
Indonesia. Born and raised in Jakarta, and with more than 20 years with Thiess, Jeffrey oversees all of the Indonesian mining
operations, with some 7,500 employees and production levels in excess of 250 million bank cubic metres per year.
Since joining Thiess in 1998, Jeffrey has aspired to bring practicality, quality, sustainability and innovation to Indonesian mining
operations. His appointment reflects Thiess’ commitment to developing local leaders and upskilling its workforce.
We encourage merit-based section criteria where selection is based on competency, experience and qualifications, and assessed
against bona fide and defined job requirements. All employment processes and decisions should be free from any bias and
discrimination, and in line with our Code and other policies and procedures.
CIMIC launched a Group-wide CIMIC ‘Jobs Board’ in 2017 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 Company’s intranet.
The Group recruited or onboarded 16,245 new hires in 2019 versus 19,685 in 2018.
The bespoke nature of many of the Group’s projects – particularly in construction – means that many workers are taken on for
relatively short-term periods. 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.
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. 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
Female
10.0
0.6
0.8
0.8
Male
77.4
0.2
2.6
7.7
The relatively short-term nature of projects can result in relatively high turnover rates for traditionally ‘blue-collar’ type work
where trades move from employer to employer and project to project. It makes comparisons of turnover rates across the Group’s
entire workforce somewhat irrelevant when compared to many other industries that are not project based. CIMIC believes that a
more appropriate turnover rate to use should reflect the departures of ‘white-collar’ employees (or staff) who are encouraged to
build long-term careers with the Group.
95
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Turnover rates (%) 67
Overall - voluntary and involuntary staff and wages
Voluntary - staff and wages
Voluntary - male staff
Voluntary - female staff
2019
48.9
12.3
11.9
3.8
2018
51.3
12.0
13.1
4.2
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 length of service of our employees is 3.9 years (an increase versus 3.4 years in 2017 and 2018) with men having an
annual tenure of 3.9 years and women of 4.0 years.
The Group has a large cohort of experienced and long serving employees, many with management experience, which includes key
operational roles such as project managers, foremen and site superintendents. This depth of experience is reflected in the table
below.
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
Female
3.6
3.9
1.4
2.0
0.8
0.4
Male
28.8
29.5
8.0
12.2
5.8
3.6
In 2019, we again undertook talent reviews and succession planning for critical roles across all Operating Companies. The outcomes
of these reviews will be used for development planning in 2020.
ENCOURAGE DIVERSITY
CIMIC understands that diversity of thought, experience and skills makes businesses stronger – and we are no
exception. Inclusive and respectful workplaces enable everyone to contribute their best and develop through a
rewarding career. 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.
Thiess launch LGBTIQA+ support network
Thiess is driving its diversity and inclusion vision of ‘everyone matters always’ with the launch of Allies, its first LGBTIQA+ Australian
support network. Allies aims to connect employees who identify as part of the LGBTIQA+ community and is open to anyone at
Thiess who wishes to support their colleagues and learn more about the community.
The Allies workplace network advocates and facilitates a culture of inclusion and respect, regardless of sex, sexuality, gender and
expression. As part of Thiess' commitment to an inclusive workplace, Allies aims to create awareness through these four objectives:
§
§
Ensure LGBTIQA+ employees feel safe and supported;
Foster an inclusive culture where everyone, including non-LGBTIQA+ employees, can be involved to show their support and
learn more;
Drive awareness through education, empowering employees with the knowledge and confidence to challenge bias, speak up
against stereotypes and reject intolerance; and
Demonstrate Thiess as an inclusive workplace by showing support for key initiatives within the LGBTIQA+ community.
§
§
Thiess celebrated the launch of Allies across its Australian projects, offices and workshops in September 2019, sharing an engaging
video that highlighted some of its employees’ personal journeys and encouraged supporters to become an ally.
CIMIC’s Diversity & Social Inclusion Policy 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.
§
§
§
§
67 Percentages are based on total departures for the year divided by the average headcounts.
97
97
Overall - voluntary and involuntary staff and wages
Turnover rates (%) 67
Voluntary - staff and wages
Voluntary - male staff
Voluntary - female staff
2019
48.9
12.3
11.9
3.8
2018
51.3
12.0
13.1
4.2
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 length of service of our employees is 3.9 years (an increase versus 3.4 years in 2017 and 2018) with men having an
annual tenure of 3.9 years and women of 4.0 years.
The Group has a large cohort of experienced and long serving employees, many with management experience, which includes key
operational roles such as project managers, foremen and site superintendents. This depth of experience is reflected in the table
below.
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
Female
3.6
3.9
1.4
2.0
0.8
0.4
Male
28.8
29.5
8.0
12.2
5.8
3.6
In 2019, we again undertook talent reviews and succession planning for critical roles across all Operating Companies. The outcomes
of these reviews will be used for development planning in 2020.
ENCOURAGE DIVERSITY
CIMIC understands that diversity of thought, experience and skills makes businesses stronger – and we are no
exception. Inclusive and respectful workplaces enable everyone to contribute their best and develop through a
rewarding career. 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.
Thiess launch LGBTIQA+ support network
Thiess is driving its diversity and inclusion vision of ‘everyone matters always’ with the launch of Allies, its first LGBTIQA+ Australian
support network. Allies aims to connect employees who identify as part of the LGBTIQA+ community and is open to anyone at
Thiess who wishes to support their colleagues and learn more about the community.
The Allies workplace network advocates and facilitates a culture of inclusion and respect, regardless of sex, sexuality, gender and
expression. As part of Thiess' commitment to an inclusive workplace, Allies aims to create awareness through these four objectives:
Ensure LGBTIQA+ employees feel safe and supported;
Foster an inclusive culture where everyone, including non-LGBTIQA+ employees, can be involved to show their support and
learn more;
Drive awareness through education, empowering employees with the knowledge and confidence to challenge bias, speak up
against stereotypes and reject intolerance; and
Demonstrate Thiess as an inclusive workplace by showing support for key initiatives within the LGBTIQA+ community.
Thiess celebrated the launch of Allies across its Australian projects, offices and workshops in September 2019, sharing an engaging
video that highlighted some of its employees’ personal journeys and encouraged supporters to become an ally.
CIMIC’s Diversity & Social Inclusion Policy 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
Inclusive workplace culture: Embed and progress a socially inclusive workplace through the elimination of discrimination, bias,
Accountable Leadership: Lead and advocate for a diverse and inclusive culture with a focus on leadership to set expectations,
is reflective of the country in which we operate;
harassment and violence in the workplace; and
drive and be accountable for progress.
67 Percentages are based on total departures for the year divided by the average headcounts.
§
§
§
§
§
§
§
§
§
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Female participation and gender equity
We are actively promoting and seeking to improve, female participation in the workplace and achieving gender equality, including
pay equity. A key objective of the CIMIC Group is to increase the number of females employed and women in leadership at all levels
of the business and we are gradually making inroads towards this goal.
Diversity indicators (%)68
Female share of total workforce
Females in senior management positions (as % of total management 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)69
Females in management positions in revenue-generating
functions (as a % of all such managers)
2019
12.2
13.9
15.1
15.5
13.8
8.3
2018
10.3
12.2
12.8
13.0
11.8
5.8
CIMIC’s Diversity & Inclusion Executive Council70 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.
§
§
Celebrating International Women’s Day
In March 2019, teams from across CPB Contractors marked International Women’s Day, which celebrates the social, economic,
cultural and political achievements of women. The day also prompts a call to action for men and women to accelerate the progress
of gender equality.
By creating a more diverse and inclusive workplace, CPB Contractors expects to tap into greater diversity of thought and experience
that will ultimately deliver better business outcomes. CPB Contractors is committed to delivering on its goal of significantly
increasing the number of women in our business and by 2020 want women to make up 30 per cent of its workforce. To assist in
achieving this goal, CPB Contractors has revised its hiring practices to encourage more females through the application and
selection process.
Other initiatives include conducting regular Gender Equity Reviews to achieve and maintain equality, implementing a training and
mentoring program to support and encourage women to advance to more senior roles, and conducting important training such as
Equal Employment Opportunity and Unconscious Bias to progress the company’s culture.
CIMIC understands that large parts of the industries in which we work have not been seen to be providing attractive career options
for women. While relatively small numbers of women have historically entered the engineering trades and profession, we are
pleased that this is changing. It is for this reason that CPB Contractors is a member of the National Association of Women in
Construction which is an advocate for positive change for women in the construction industry and strives for an equitable
construction industry where women fully participate
CIMIC is deliberately working to encourage greater female participation via recruitment into our Graduate Program. For the 2019
graduate cohort, the female participation rate was ~37%, which is well above the average participation rate of the construction
industry of ~12.1% and the mining industry at ~15.9%71.
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. This also involves preparing professional development plans so that we
can build a career for these women.
68 As per disclosure requirements of DJSI.
69 Executives and General Managers.
70 The Council is chaired by the CEO and its members include the CFO, the Chief HR Officer and all Operating Company Managing Directors.
71 Australian Bureau of Statistics; 4125.0 - Gender Indicators, Australia, Nov 2019.
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Indonesia’s Green Operator Training program sees more women join the ranks
Thiess’ team in Indonesia is embedding diversity and inclusion in the workplace by delivering training programs and initiatives to
help more women enter the mining industry. In August 2019, sixteen women from local communities in Indonesia’s Kutai Barat
region graduated from the Thiess Women’s Green Operator Training program. With no prior mining experience, the women spent
the previous four months completing intensive training including classroom and in-field sessions. The modules covered the safety
and technical aspects of the role as well as hands-on training completing onsite circuits using the equipment they will operate, with
their trainers.
The Women’s Green Operator Training program is one of several initiatives at Thiess promoting and increasing equal employment
opportunities across the business. This is the third group of new female haul truck operators to complete the program this year
bringing the total in 2019 to 44 graduates. The graduates are now Thiess employees and behind the steering wheels of CAT 777
haul trucks, applying their newly found trade skills. In addition to providing valuable skills and development opportunities, these
roles allow women to support their families and to give back to their local communities.
CIMIC and each of its Operating Companies have an annual reporting obligation to provide certain gender related information to
the Australian Government’s Workplace Gender Equality Agency (WGEA)72. These comprehensive submissions provide a substantial
amount of gender related data, segmented by occupational types, graduates and apprentices, full-time and part-time, and parental
leave accessed. 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 2018/19 WGEA submissions73 show that, for the larger contracting entities of CPB Contractors, Thiess, Sedgman and UGL,
which have substantial employee numbers, females accounted for between 11.4% and 20.7% of management positions and 10.7%
and 22.5% of non-management positions.
Female participation (as a % of each management WGEA category in the
Group larger Operating Company’s)
All managers
-
-
-
-
CEO and Key Management Personnel
General Mangers/other executives
Senior managers
Other managers
All non-managers
2018/19
2017/18
13.9
8.0
6.9
17.5
13.9
16.1
13.2
10.1
9.7
16.3
12.8
15.3
While relatively low by the standards of many other industries, these results do reflect the traditionally male dominated nature of
the construction and mining industries. The WGEA submissions are demonstrating gradual improvements in female participation
across the Group’s Operating Companies, including in leadership positions. 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.
CIMIC is committed to making sure our male and female employees receive equal pay, and we are working to close any pay gaps. In
2019, CIMIC’s Operating Companies used an in-house developed gender pay equity tool to again 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.
We continue to focus on gender pay equity as a part of everyday decision making, rather than as part of an ad hoc special review.
This focus is particularly targeted at hire, on promotion or job change, and as part of the annual remuneration review. We have
continued to reduce the gender pay gap across the Group, particularly in some specifically male dominated job families; for
example, in our Engineering job family.
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.
Parental leave taken in 2018/19 (as reported to WGEA)
Managers taking primary or secondary carer’s leave
Non-managers taking primary or secondary carer’s leave
Total taking primary or secondary carers leave
Female
14
125
139
Male
46
186
232
In other countries, paid parental leave is provided in accordance with current local legislation.
72 www.wgea.gov.au/report/public-reports.
73 Based on the aggregated Public Reports for 2018/19 by CIMIC’s Australian based Operating Companies to the WGEA. The reporting period is 12
months, from 1 April to 31 March.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Indonesia’s Green Operator Training program sees more women join the ranks
Thiess’ team in Indonesia is embedding diversity and inclusion in the workplace by delivering training programs and initiatives to
help more women enter the mining industry. In August 2019, sixteen women from local communities in Indonesia’s Kutai Barat
region graduated from the Thiess Women’s Green Operator Training program. With no prior mining experience, the women spent
the previous four months completing intensive training including classroom and in-field sessions. The modules covered the safety
and technical aspects of the role as well as hands-on training completing onsite circuits using the equipment they will operate, with
their trainers.
The Women’s Green Operator Training program is one of several initiatives at Thiess promoting and increasing equal employment
opportunities across the business. This is the third group of new female haul truck operators to complete the program this year
bringing the total in 2019 to 44 graduates. The graduates are now Thiess employees and behind the steering wheels of CAT 777
haul trucks, applying their newly found trade skills. In addition to providing valuable skills and development opportunities, these
roles allow women to support their families and to give back to their local communities.
CIMIC and each of its Operating Companies have an annual reporting obligation to provide certain gender related information to
the Australian Government’s Workplace Gender Equality Agency (WGEA)72. These comprehensive submissions provide a substantial
amount of gender related data, segmented by occupational types, graduates and apprentices, full-time and part-time, and parental
leave accessed. 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 2018/19 WGEA submissions73 show that, for the larger contracting entities of CPB Contractors, Thiess, Sedgman and UGL,
which have substantial employee numbers, females accounted for between 11.4% and 20.7% of management positions and 10.7%
and 22.5% of non-management positions.
Female participation (as a % of each management WGEA category in the
2018/19
2017/18
Group larger Operating Company’s)
All managers
CEO and Key Management Personnel
General Mangers/other executives
-
-
-
-
Senior managers
Other managers
All non-managers
13.9
8.0
6.9
17.5
13.9
16.1
13.2
10.1
9.7
16.3
12.8
15.3
While relatively low by the standards of many other industries, these results do reflect the traditionally male dominated nature of
the construction and mining industries. The WGEA submissions are demonstrating gradual improvements in female participation
across the Group’s Operating Companies, including in leadership positions. 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.
CIMIC is committed to making sure our male and female employees receive equal pay, and we are working to close any pay gaps. In
2019, CIMIC’s Operating Companies used an in-house developed gender pay equity tool to again 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.
We continue to focus on gender pay equity as a part of everyday decision making, rather than as part of an ad hoc special review.
This focus is particularly targeted at hire, on promotion or job change, and as part of the annual remuneration review. We have
continued to reduce the gender pay gap across the Group, particularly in some specifically male dominated job families; for
example, in our Engineering job family.
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.
Parental leave taken in 2018/19 (as reported to WGEA)
Managers taking primary or secondary carer’s leave
Non-managers taking primary or secondary carer’s leave
Total taking primary or secondary carers leave
Female
14
125
139
Male
46
186
232
In other countries, paid parental leave is provided in accordance with current local legislation.
73 Based on the aggregated Public Reports for 2018/19 by CIMIC’s Australian based Operating Companies to the WGEA. The reporting period is 12
72 www.wgea.gov.au/report/public-reports.
months, from 1 April to 31 March.
99
Indigenous employment
CIMIC values and recognises Indigenous nations, peoples and cultures and seeks to create equitable employment opportunities.
We offer a range of employment, training and enterprise opportunities for Australian Indigenous people including internship
opportunities for university students through our partnership with CareerTrackers.
CareerTrackers creating Indigenous professionals
CIMIC Group’s partnership with CareerTrackers is creating opportunities for Indigenous university students to work at the forefront
of our industries and to make a valuable contribution to our operations, projects and company culture. Created in 2009,
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.
Since 2009, hundreds of CareerTrackers participants have graduated from university and every member of their Alumni community
is employed in a professional role. By 2020, that Alumni community is expected to be made up of 1,073 highly educated Indigenous
professionals. The success of the program has been recognised by employers, governments and, most importantly, Indigenous
communities throughout Australia. 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.
CareerTrackers established its first 10-year corporate partnership with CPB Contractors in 2010 and, since then, the program has
been expanded to include Thiess, Sedgman, UGL, EIC Activities, Pacific Partnerships and CIMIC.
In 2019, the Group directly employed 429 Indigenous people in its Australian workforce. A range of initiatives are being pursued to
improve Indigenous employment and participation in the workforce.
Indigenous students gain valuable experience at Nepean Hospital project
At the Nepean Hospital Redevelopment project in Western Sydney, CPB Contractors is providing five Indigenous Australian high
school students valuable work experience as part of a two-year traineeship. The project involves the construction of a new 14-
storey clinical building of over 55,000m2 that will include a new emergency department, more than 200 overnight beds and more
than 12 new operating theatres.
CPB Contractors is partnering with Aboriginal learning organisation Diz Footprints, helping students work towards a Certificate II in
Construction Pathways. The students spend one day a week on site and one day with a TAFE college while completing their High
School Certificate course. The qualification provides a pathway to the primary trades in the construction industry.
To date, the students have learnt about multiple trades including landscaping, painting, cleaning and general labouring. In their
second year, the students will be working with experienced tradespeople in formwork, concreting and carpentry. The program was
established following extensive consultation with the NSW Department of Education, NSW Department of Industry, the local NSW
Aboriginal Education Consultative Group and the Nepean Aboriginal Health Service, and forms part of CPB Contractors’
Reconciliation Action Plan commitment to boost Indigenous training and employment.
Driving greater diversity
UGL and Aboriginal-owned ARRA Group are working together providing skilled people to join the team delivering the Chevron
contract in Western Australia. UGL is committed to establishing relationships with Aboriginal and Torres Strat Islander-owned
businesses and monitors those activities through its Reconciliation Action Plan.
The ARRA Group and UGL have been working together since 2018. The goal is to attract more Aboriginal and Torres Strait Islander
employees to the Chevron contract. As each employee joins the team, they are assigned a mentor, ensuring a smooth transition
smoothly into their new role and the project. The UGL team provides mechanical, electrical and instrumentation-based
maintenance, plant turnaround and brownfield execution services for Chevron’s Western Australian assets.
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.
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Celebration of NAIDOC week
Across the Group, teams came together to celebrate NAIDOC week. NAIDOC originally stood for ‘National Aborigines and Islanders
Day Observance Committee.’ This committee was once responsible for organising national activities during NAIDOC Week and its
acronym has since become the name of the week itself.
In Brisbane, teams from Thiess, Sedgman and CIMIC gathered together, focusing on the themes of Voice, Treaty and Truth, and
were encouraged to take a personal lead in Australia’s reconciliation journey. At the celebration, representatives from Leading with
Strength – a proudly Indigenous organisation that delivers professional learning programs across Australia – shared some of the
history and achievements of our Aboriginal and Torres Strait Islander community.
In Newcastle, UGL’s Operations team celebrated with Ashley Gordon, a former rugby league player for the Newcastle Knights and
Penrith Panthers, and a proud Indigenous Australian. The team were given an insight into Aboriginal history, why reconciliation is
important, and how we can all move forward as a nation.
In Sydney, teams from EIC Activities, Pacific Partnerships and CIMIC watched a didgeridoo (yidaki) performance and heard from
Bruce Shillingsworth Jnr, a proud descendant of the Muruwarri tribe, and heard from special guest speaker Margaret ‘Missy’
Nicholls. Missy, a descendant of the Wayilwan Ngyiambaa tribe and Brewarrina Central School’s Executive Assistant Principal, spoke
about her commitment to improving educational results for Aboriginal students within her school.
From little things big things grow
Thiess has proudly launched a national partnership with the Clontarf Foundation as part of its Australia-wide CARE Program for
social investment. The Clontarf Foundation is a not-for-profit organisation that seeks to improve the education, discipline, life skills,
self-esteem, and employment prospects of young Aboriginal and Torres Strait Islander men. The program is aimed at males in high
school from Years 7 to 12, with a mentoring program that continues one to two years post Year 12.
Thiess will work with the Clontarf Foundation providing work experience, traineeships, mentoring and coaching opportunities for
the young men. The partnership was launched at a special event at Thiess’ Component Rebuild Centre in Brisbane, where young
men from the Foundation enjoyed a tour, learned about career pathways available in mining and spent time with the Thiess team.
Clontarf academies are formed in partnership with selected schools and their success is based on the full-time nature of the
program and the strength of the relationships between its staff and each Clontarf student. The program currently supports more
than 8,000 young Aboriginal and Torres Strait Islander men who are actively involved in mostly secondary education at Clontarf
academies and their partnering schools in Western Australia, the Northern Territory, Victoria, New South Wales, Queensland and
soon to be South Australia.
The Clontarf Foundation consistently achieves positive results with a year-to-year apparent retention rate of 90 per cent and
above, school attendance rates averaging 80 per cent, and 80 per cent of Year 12 leavers remaining in employment or further
study/ training 12 months after finishing school.
Each of Thiess, UGL and CPB Contractors has Reconciliation Action Plans (RAP) in place that formalise their support for Aboriginal
and Torres Strait Islander people.
UGL releases new Reconciliation Action Plan
In September 2019, Mackay in Queensland played host to the launch of UGL’s next RAP. This is UGL’s second Innovate RAP and its
third overall RAP. UGL selected Mackay as the perfect launch location due to its proximity to UGL’s customers and suppliers across
the wide range of sectors UGL operates in, including energy, resources, mining, water, transport and technology.
An example of a UGL RAP initiative is the creation of an Aboriginal and Torres Strait Islander Traineeship & Apprenticeship program
on the Sydney Metro Northwest project. UGL is working with 10 Aboriginal and Torres Strait Islander youths as part of a
commitment to tackling long-term unemployment. UGL’s partner on the initiative, Infraworks, provides Certificate III Rail
Infrastructure traineeships, pastoral care, and work readiness training to encourage the candidates to gain sustainable employment
opportunities.
Thiess’ first RAP was introduced in 2013 while CPB Contractors launched their first RAP in June 2019. The RAPs, which are tailored
to the specifics needs of each Operating Company, includes a range of actions, some specific deliverables and targets, timelines for
implementation and identify the people responsible for delivery. Each of the RAPs has received an endorsement from
Reconciliation Australia, the national expert body on reconciliation.
Local employment
With a long history of working in a number of countries, CIMIC appreciates the value of investing in and developing a local
workforce. We understand the benefit of exporting skills and innovation to overseas markets, but equally we realise that we can
only be successful by building a local workforce which we have done in numerous locations. By doing so, we help the economic
development of those countries and to create well-paid job opportunities for the benefit of our local employees and their families.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Celebration of NAIDOC week
Across the Group, teams came together to celebrate NAIDOC week. NAIDOC originally stood for ‘National Aborigines and Islanders
Day Observance Committee.’ This committee was once responsible for organising national activities during NAIDOC Week and its
acronym has since become the name of the week itself.
Thiess changing the face of mining in Mongolia
In Mongolia, Thiess is behind the first wave of women legally allowed to work as underground operators. As part of their
commitment to gender equality, Thiess’ Mongolia team has been working with local women from South Gobi to upskill and
promote opportunities, and to encourage a better gender balance.
In Brisbane, teams from Thiess, Sedgman and CIMIC gathered together, focusing on the themes of Voice, Treaty and Truth, and
were encouraged to take a personal lead in Australia’s reconciliation journey. At the celebration, representatives from Leading with
Strength – a proudly Indigenous organisation that delivers professional learning programs across Australia – shared some of the
history and achievements of our Aboriginal and Torres Strait Islander community.
In 2019, Thiess employed three women after putting them through extensive role and safety training. All three women are now
qualified to operate equipment and undertake daily operator duties. Thiess continues to support the diversity and inclusion
strategy of the Oyu Tolgoi C2S (conveyor-to-surface) Project by aiming to recruit more female operators and training them to the
highest possible standards.
In Newcastle, UGL’s Operations team celebrated with Ashley Gordon, a former rugby league player for the Newcastle Knights and
Penrith Panthers, and a proud Indigenous Australian. The team were given an insight into Aboriginal history, why reconciliation is
important, and how we can all move forward as a nation.
In Sydney, teams from EIC Activities, Pacific Partnerships and CIMIC watched a didgeridoo (yidaki) performance and heard from
Bruce Shillingsworth Jnr, a proud descendant of the Muruwarri tribe, and heard from special guest speaker Margaret ‘Missy’
Nicholls. Missy, a descendant of the Wayilwan Ngyiambaa tribe and Brewarrina Central School’s Executive Assistant Principal, spoke
about her commitment to improving educational results for Aboriginal students within her school.
From little things big things grow
Thiess has proudly launched a national partnership with the Clontarf Foundation as part of its Australia-wide CARE Program for
social investment. The Clontarf Foundation is a not-for-profit organisation that seeks to improve the education, discipline, life skills,
self-esteem, and employment prospects of young Aboriginal and Torres Strait Islander men. The program is aimed at males in high
school from Years 7 to 12, with a mentoring program that continues one to two years post Year 12.
Thiess will work with the Clontarf Foundation providing work experience, traineeships, mentoring and coaching opportunities for
the young men. The partnership was launched at a special event at Thiess’ Component Rebuild Centre in Brisbane, where young
men from the Foundation enjoyed a tour, learned about career pathways available in mining and spent time with the Thiess team.
Clontarf academies are formed in partnership with selected schools and their success is based on the full-time nature of the
program and the strength of the relationships between its staff and each Clontarf student. The program currently supports more
than 8,000 young Aboriginal and Torres Strait Islander men who are actively involved in mostly secondary education at Clontarf
academies and their partnering schools in Western Australia, the Northern Territory, Victoria, New South Wales, Queensland and
soon to be South Australia.
The Clontarf Foundation consistently achieves positive results with a year-to-year apparent retention rate of 90 per cent and
above, school attendance rates averaging 80 per cent, and 80 per cent of Year 12 leavers remaining in employment or further
study/ training 12 months after finishing school.
Each of Thiess, UGL and CPB Contractors has Reconciliation Action Plans (RAP) in place that formalise their support for Aboriginal
and Torres Strait Islander people.
UGL releases new Reconciliation Action Plan
In September 2019, Mackay in Queensland played host to the launch of UGL’s next RAP. This is UGL’s second Innovate RAP and its
third overall RAP. UGL selected Mackay as the perfect launch location due to its proximity to UGL’s customers and suppliers across
the wide range of sectors UGL operates in, including energy, resources, mining, water, transport and technology.
An example of a UGL RAP initiative is the creation of an Aboriginal and Torres Strait Islander Traineeship & Apprenticeship program
on the Sydney Metro Northwest project. UGL is working with 10 Aboriginal and Torres Strait Islander youths as part of a
commitment to tackling long-term unemployment. UGL’s partner on the initiative, Infraworks, provides Certificate III Rail
Infrastructure traineeships, pastoral care, and work readiness training to encourage the candidates to gain sustainable employment
opportunities.
Thiess’ first RAP was introduced in 2013 while CPB Contractors launched their first RAP in June 2019. The RAPs, which are tailored
to the specifics needs of each Operating Company, includes a range of actions, some specific deliverables and targets, timelines for
implementation and identify the people responsible for delivery. Each of the RAPs has received an endorsement from
Reconciliation Australia, the national expert body on reconciliation.
Local employment
With a long history of working in a number of countries, CIMIC appreciates the value of investing in and developing a local
workforce. We understand the benefit of exporting skills and innovation to overseas markets, but equally we realise that we can
only be successful by building a local workforce which we have done in numerous locations. By doing so, we help the economic
development of those countries and to create well-paid job opportunities for the benefit of our local employees and their families.
101
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
2019
94
2018
94
The Group’s has a Diversity & Social Inclusion Policy which promotes – amongst other things – investment in local employment,
leadership development and succession planning to ensure the future of work is reflective of the country in which we operate, and
valuing and recognising Indigenous nations, peoples and cultures and to create equitable opportunity for participation in
employment and business supply chains.
Inclusive workplaces
It is our objective to cultivate inclusive workplaces, where fairness and equity are embedded, and which foster the unique skills and
talent of our people. We want to embed and progress socially inclusive workplaces through the elimination of discrimination, bias,
harassment and violence in the workplace. We respect - and will not discriminate on the basis of - individual differences such as
race, gender, sexual preference, marital status, age, religion, colour, national extraction, social origin, political opinion, disability,
family or carer responsibilities, or pregnancy.
Online learning now catering to those with disabilities
CIMIC has launched Group-wide online EEO and whistle-blower training modules which have been developed using the Web
Content Accessibility Guidelines (WCAG) to AA standard. These WCAG standards have been developed with a goal of providing a
single shared standard to make web content more accessible to a wider range of people with disabilities and more usable in
general. Any future online learning being deployed by the Group will be consistent with these WCAG standards.
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.
CPB Contractors an establishing partner of the ‘Out for Good’ program
This program helps young people who have been in prison to gain meaningful employment and get their lives back on track. CPB
Contractors believes that giving young people the opportunity to turn their lives around is an excellent way to make a lasting and
positive contribution to the community.
The program is a partnership between firms, including CPB Contractors, Jesuit Social Services, GOAL Indigenous Services and the
YMCA Bridge Project. Under the partnership, CPB Contractors provides entry level jobs for young people. It gives them the
opportunity to develop their workplace skills, gain valuable experience in the construction industry and get their lives back on track.
Retaining the experience of our mature age workers is an important element 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
Female
5.4
9.0
5.4
2.8
0.6
Male
11.2
26.0
22.0
13.5
4.0
102
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Helping people make clearer decisions
With operations spanning Hong Kong, Singapore, the Philippines, Indonesia, Malaysia, India and Dubai, Leighton Asia has delivered
various events to cultivate a more diverse and inclusive workplace. As part of CIMIC Group’s Diversity and Inclusion strategy,
Leighton Asia has conducted workshops dealing with unconscious bias with managers across projects and offices in Hong Kong,
Singapore, Indonesia and India.
These workshops assist managers to make clearer business and better people decisions, avoiding the potential to fall into the trap
of unconscious bias when judging a situation quickly. The workshop helps employees to realise the importance of pausing and
challenging our assumptions before rushing into a decision to achieve better outcomes. While diversity comes down to the mix of
differences among people, inclusion is about deliberate efforts to welcome and integrate those differences, embracing equality and
creating a sense of belonging. In India, inclusion is promoted through employee wellbeing activities. Key activities have included a
talk delivered by a physiotherapy and wellness expert on Women’s Health and Wellness, and anti-sexual harassment training for
potential members of Leighton Asia’s Internal Complaints Committee.
REWARD PERFORMANCE
CIMIC believes that people perform best when they have clearly defined roles and responsibilities, and encourage
individual accountability. We understand that the role of remuneration – including incentives – is to fairly compensate,
recognise and to motivate 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 of - 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, unlike the regimes that investors might find in
many other countries. In Australia, as per the prevailing Government legislated retirements benefits scheme, CIMIC contributes an
amount equal to 9.5% of an individual’s salary into their superannuation fund account. In other countries, we meet all of our
legislative and contractual obligations with respect to pension fund contributions.
Individual responsibility
Accountability is one of CIMIC’s 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. We believe that
accountability is about taking responsibility for achieving outcomes and focusing on finding solutions.
Measurable goals
At CIMIC, we undertake regular performance management to develop and evaluate the performance pf individual in line with the
Group’s strategic plans and objectives. We set clearly defined and measurable goals aligned with our Principles and objectives.
Each of our Operating Companies has a framework for managing the performance of its people. Skills are mapped against role
requirements and this information is then used to identify gaps in capability, and to consistently and equitably assess employee
performance. Regular performance reviews for all staff facilitates the transparent discussion of employee achievement against key
performance indicators and expectations. 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 recognise the reporting requirement of DJSI to disclose the median or mean annual compensation for all employees except the
CEO. For the 2019 year, the mean employee compensation ratio has risen marginally.
Compensation measures
Total CEO base salary (A$)
Average base salary – all employees (excluding the CEO (A$)74
Compensation ratio (CEO to all employees)
2019
1,320,000
129,872
10.2
2018
1,200,000
122,829
9.8
We also note that the management ownership of the CEO represents a multiple75 of 0.35 times their base salary. The management
ownership average multiple of the other Key Management Personnel member is 0.01 times.
74 Data reflects staff remuneration. Due to timing of publication of the Annual Report, 2019 data is as at 30 November 2019 while 2018 data is as at
31 December 2018. Bonuses are not included in the comparisons as the current year’s bonuses are not finalised before the publication of the
Annual Report.
75 Based on the value of shares (10,000) and options held at 31 December 2019 (closing price of $33.14 less issue price of options of $27.53
multiplied by 23,537 options) divided by Fixed Remuneration, as per the disclosure provided in the 2019 Remuneration Report.
103
103
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
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 2020, 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 222 employees in 2020;
continue to undertake Human Rights and Modern Slavery risk assessments;
continue to undertake Group-wide employee engagement surveys 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.
§
§
§
§
§
§
§
104
104
Helping people make clearer decisions
With operations spanning Hong Kong, Singapore, the Philippines, Indonesia, Malaysia, India and Dubai, Leighton Asia has delivered
various events to cultivate a more diverse and inclusive workplace. As part of CIMIC Group’s Diversity and Inclusion strategy,
Leighton Asia has conducted workshops dealing with unconscious bias with managers across projects and offices in Hong Kong,
Singapore, Indonesia and India.
These workshops assist managers to make clearer business and better people decisions, avoiding the potential to fall into the trap
of unconscious bias when judging a situation quickly. The workshop helps employees to realise the importance of pausing and
challenging our assumptions before rushing into a decision to achieve better outcomes. While diversity comes down to the mix of
differences among people, inclusion is about deliberate efforts to welcome and integrate those differences, embracing equality and
creating a sense of belonging. In India, inclusion is promoted through employee wellbeing activities. Key activities have included a
talk delivered by a physiotherapy and wellness expert on Women’s Health and Wellness, and anti-sexual harassment training for
potential members of Leighton Asia’s Internal Complaints Committee.
REWARD PERFORMANCE
CIMIC believes that people perform best when they have clearly defined roles and responsibilities, and encourage
individual accountability. We understand that the role of remuneration – including incentives – is to fairly compensate,
recognise and to motivate 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 of - 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, unlike the regimes that investors might find in
many other countries. In Australia, as per the prevailing Government legislated retirements benefits scheme, CIMIC contributes an
amount equal to 9.5% of an individual’s salary into their superannuation fund account. In other countries, we meet all of our
legislative and contractual obligations with respect to pension fund contributions.
Individual responsibility
Accountability is one of CIMIC’s 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. We believe that
accountability is about taking responsibility for achieving outcomes and focusing on finding solutions.
Measurable goals
At CIMIC, we undertake regular performance management to develop and evaluate the performance pf individual in line with the
Group’s strategic plans and objectives. We set clearly defined and measurable goals aligned with our Principles and objectives.
Each of our Operating Companies has a framework for managing the performance of its people. Skills are mapped against role
requirements and this information is then used to identify gaps in capability, and to consistently and equitably assess employee
performance. Regular performance reviews for all staff facilitates the transparent discussion of employee achievement against key
performance indicators and expectations. 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 recognise the reporting requirement of DJSI to disclose the median or mean annual compensation for all employees except the
CEO. For the 2019 year, the mean employee compensation ratio has risen marginally.
Compensation measures
Total CEO base salary (A$)
Average base salary – all employees (excluding the CEO (A$)74
Compensation ratio (CEO to all employees)
2019
1,320,000
129,872
10.2
2018
1,200,000
122,829
9.8
We also note that the management ownership of the CEO represents a multiple75 of 0.35 times their base salary. The management
ownership average multiple of the other Key Management Personnel member is 0.01 times.
74 Data reflects staff remuneration. Due to timing of publication of the Annual Report, 2019 data is as at 30 November 2019 while 2018 data is as at
31 December 2018. Bonuses are not included in the comparisons as the current year’s bonuses are not finalised before the publication of the
75 Based on the value of shares (10,000) and options held at 31 December 2019 (closing price of $33.14 less issue price of options of $27.53
multiplied by 23,537 options) divided by Fixed Remuneration, as per the disclosure provided in the 2019 Remuneration Report.
Annual Report.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
INNOVATION
OUR APPROACH
Innovation is one of the Group’s Principles and is key to a sustainable business. Innovations are new and better ways of doing
things that create value for the Group – from idea generation to implementation. Delivering innovative solutions is an essential
element of being competitive in industries like ours. It means we are continually seeking out better ways to solve problems and
improve, adapt and evolve. We seek to foster and encourage innovation, promoting a culture where employees are supported to
adapt, innovate and be self-critical, and to learn from experience, rather than one that punishes failures.
Foster innovation
Measures in place
Actions taken during 2019
Performance
Capture knowledge
Measures in place
Actions taken during 2019
Performance
Encourage collaboration
Measures in place
Actions taken during 2019
Performance
Manage risk
Measures in place
Actions taken during 2019
Performance
Focus on the future
Measures in place
Actions taken during 2019
Performance
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Dedicated engineering and technical services business - EIC Activities - leads Group’s
commitment to innovation
Innovation embedded in Group’s Principles, Sustainability Policy and mission of EIC Activities
EIC Activities employees commit to spending 10% of their time on innovation projects
Spigit software platform to capture innovations
Trained 2,165 employees in the use of BIM and GIS
A 40% increase in the application of BIM and GIS on projects
EIC Activities’ employees achieved innovation time of 7.8% and spent 12,583 hours on
innovation
2,449 hours spent on BIM/GIS training
Interactive Project Knowledge Library (iPKL)
EIC Activities provided training and webinars to over 6,383 participants during 2019
EIC Activities hosted 22 fortnightly best practice ‘Webinar Wednesdays’ watched by 3,472
people, up from 2,556 in 2018
EIC Activities hosted Webinars for 755 Graduates and provided on-demand training for 2,156
employees across the Group
iPKL expanded to capturing details of over 3,000 projects with over 43,000 documents
23 communities of practice established in iPKL to promote collaboration across the Group
11 green standard projects registered in 2019 and 10 certifications received
Building projects have received 95 Green Star76 certifications since 2006
81 employees accredited to ‘green project’ or ‘Cleantech’77 standards
CPB Contractors is Australia’s leading sustainability contractor having received 28 IS rating
certifications from ISCA
$3.0 billion of ‘Cleantech’ revenue generated from CPB Contractors’ sustainably rated or
‘green’ projects – the equivalent of 40% of construction revenue and 20% of total revenue
§
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.
§ More than 80 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
§
§
§
§
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
76 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.
77 Cleantech refers to products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy
consumption, waste, or environmental pollution. In CIMIC’s case, these related to construction or operations and maintenance of projects that
receive an externally validated sustainability rating.
105
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Creating value
The Company helps to deliver innovative solutions for clients and to generate sustainable cash-backed profits which
creates value for shareholders. For CIMIC though, value is more than purely dividends and share appreciation. CIMIC
creates value in other ways that brings significant benefits to communities and society.
At CIMIC, we believe the value we create is critical for a sustainable business and future. This value goes beyond what we create for
shareholders but includes societal value creation which acknowledges that what we do - on a daily basis - has impacts which
resonate throughout the communities and societies in which we operate. If we do this well, over time this creates a virtuous circle
which feeds back to the business and, therefore, our shareholders.
We, in turn, have embedded this broader concept of value creation which helps us understand the needs, concerns and
expectations of our key stakeholders, and how we impact and influence them. Here we provide examples of the needs we meet
and the value we create for CIMIC’s key stakeholders, together with quantifiable examples from 2019.
Stakeholder
Clients
How CIMIC creates value
§ Providing high quality, safe,
value-adding solutions
Invest capital on behalf of clients
to efficiently and effectively
deliver projects
§
Actions taken during 2019
EIC Activities provided training and webinars to over 6,383 participants during 2019
EIC Activities hosted 22 fortnightly best practice ‘Webinar Wednesdays’ watched by 3,472
Employees
§ Provides safe, well-paid,
stimulating career opportunities
Suppliers /
subcontractors
§ Stimulated economic activity by
procuring materials and services
from subcontractor and other
business inputs
Governments
Actions taken during 2019
Relevant aspects of the Risk Policy and procedures included in the Tender Policy to ensure a
Communities
Shareholders
Debt and
facility
providers
§ Generated and paid taxes which
provide revenue for various
National and State governments
§ Mined minerals on which clients
paid royalties
§ Contributed to trade through
§
the export of services
Invest capital to boost
productivity and support
economic growth
§ Design, financing, construction,
and operation and maintenance
of infrastructure and property
which improve the productivity
of economies and the quality of
people’s lives
§ Delivered sustainable
infrastructure
§ Provide local employment
opportunities for people
§ Support local communities
through charitable giving and
participation programs
§ Delivering dividends
§ Compensating shareholders via
buyback program
§ Generating secure and reliable
returns for providers of debt and
other financial facilities
Examples of the value created in 201978
§ Delivered $7.5 billion worth of construction activity and provided
$2.6 billion worth of O&M services for infrastructure, building and
resources projects
§ Delivered almost $4.5 billion worth of outsourced mining services
§
and minerals processing billion work
Invested $774.4 million worth of capital in property, plant and
equipment
§ $3.7 billion of wages, salaries and benefits paid to employees79, a
significant portion of which was paid to employees based in rural
and regional areas
§
Invested in 825,220 hours of staff training and development
§ Procured $2.7 billion worth of materials and spent $4.2 billion
employing subcontractors, many of them local79
§ $351.2 million of corporate tax expenses paid
§ $138 million of State payroll taxes paid in Australia (in 2018/19)
§ CIMIC employees paid substantial personal income taxes to the
Australian and other international governments
§ Facilitated the generation of significant mining royalties for
Australian governments through Thiess’ mining activities
§ Contributed $3.5 billion to the Australian economy through the
export of construction, mining and minerals processing, and O&M
services
Invested $774.4 million in property, plant and equipment which
fosters productivity
§
§ Delivered $7.5 billion worth of construction work and provided $2.6
billion worth of operations and maintenance services
§ CPB Contractors’ delivered $3.0 billion worth of sustainably rated or
‘green’ projects
§ Many of CIMIC’s 35,373 direct employees are from local
communities and regional and remote communities
§ Directly invested $1,045k into community investments, charitable
donations and other commercial initiatives
§ Returned $530 million to shareholders in the form of dividends and
share buybacks
§ Paid $139.3 million in interest and other finance costs to providers
of interest-bearing liabilities and other financial instruments
78 The figures quoted are estimates based on CIMIC’s internal calculations.
79 Based on personnel costs as per Note 3. Expenses in the Financial Report.
106
106
INNOVATION
OUR APPROACH
Foster innovation
Measures in place
Innovation is one of the Group’s Principles and is key to a sustainable business. Innovations are new and better ways of doing
things that create value for the Group – from idea generation to implementation. Delivering innovative solutions is an essential
element of being competitive in industries like ours. It means we are continually seeking out better ways to solve problems and
improve, adapt and evolve. We seek to foster and encourage innovation, promoting a culture where employees are supported to
adapt, innovate and be self-critical, and to learn from experience, rather than one that punishes failures.
Dedicated engineering and technical services business - EIC Activities - leads Group’s
commitment to innovation
Innovation embedded in Group’s Principles, Sustainability Policy and mission of EIC Activities
EIC Activities employees commit to spending 10% of their time on innovation projects
Spigit software platform to capture innovations
Actions taken during 2019
Trained 2,165 employees in the use of BIM and GIS
Performance
A 40% increase in the application of BIM and GIS on projects
EIC Activities’ employees achieved innovation time of 7.8% and spent 12,583 hours on
Capture knowledge
Measures in place
innovation
2,449 hours spent on BIM/GIS training
Interactive Project Knowledge Library (iPKL)
Performance
Encourage collaboration
Measures in place
Actions taken during 2019
Manage risk
Measures in place
EIC Activities hosted Webinars for 755 Graduates and provided on-demand training for 2,156
people, up from 2,556 in 2018
employees across the Group
iPKL expanded to capturing details of over 3,000 projects with over 43,000 documents
23 communities of practice established in iPKL to promote collaboration across the Group
11 green standard projects registered in 2019 and 10 certifications received
Building projects have received 95 Green Star76 certifications since 2006
81 employees accredited to ‘green project’ or ‘Cleantech’77 standards
certifications from ISCA
$3.0 billion of ‘Cleantech’ revenue generated from CPB Contractors’ sustainably rated or
‘green’ projects – the equivalent of 40% of construction revenue and 20% of total revenue
Risk Policy; Risk Management Policy; Business Resilience Policy; and Quality Management
Performance
CPB Contractors is Australia’s leading sustainability contractor having received 28 IS rating
Policy
Risk management framework based on ISO 31000
§ Quality management systems based on ISO 9001
more rigorous approach to risk management at tender stage.
§ More than 80 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
Performance
Risk management framework embedded within existing processes and aligned to the Group’s
against the work being tendered.
objectives, both short and longer term
Focus on the future
Measures in place
Actions taken during 2019
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
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
76 Launched by the Green Building Council of Australia in 2003, Green Star is Australia's only national and voluntary rating system for buildings and
77 Cleantech refers to products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy
consumption, waste, or environmental pollution. In CIMIC’s case, these related to construction or operations and maintenance of projects that
receive an externally validated sustainability rating.
communities.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Industry
§ Encouraging industry innovation
which leads to safer, more
efficient solutions
§ $2.3 million specifically invested on new innovation projects
Many of these factors are interlinked but the examples illustrate how CIMIC’s operations provide benefits that multiply through the
economy and society.
Completion of expressway reduces congestion and improves deliveries
Leighton Asia is proud to be a key and active partner in supporting infrastructure plans to boost economic activities and relieve
traffic congestion in Metro Manila. With the hard work of Leighton Asia’s North Luzon Expressway Harbour Link Segment 10 (NLEX)
team, and their close working relationship with the client, the 5.6km 6-lane divided expressway project was completed six months
ahead of the agreed schedule. The team remained Lost Time Injury free from the project’s commencement in October 2014 until its
completion in February 2019.
This phase of the NLEX project is expected to ease traffic bottlenecks as it diverts 30,000 vehicles daily away from the busy streets
of Metro Manila and will facilitate the efficient delivery of goods as cargo trucks will have alternative access from the port area to
the provinces in northern Luzon and vice versa.
The direct economic value, as defined by the GRI, generated and distributed by CIMIC over the past 3 years is set out in the table
below.
Economic value created (A$m)80
Economic value generated: Revenue
2019
14,701
2018
14,670
2017
13,429
Economic value distributed
Of which: Operating costs
Employee wages and benefits
Payments to providers of capital
Payments to governments
Community investments
Economic value retained
(13,588)
(13,736)
(12,650)
(8,922)
(3,710)
(658)
(297)
(1.0)
(9,208)
(3,634)
(593)
(300)
(0.7)
(8,341)
(3,530)
(510)
(269)
(0.5)
1,113
934
779
Other shareholder return metrics can be found in the Operating and Financial Review and Remuneration Report sections of this
Annual Report.
FOSTER INNOVATION
At CIMIC, 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.
While innovation occurs in every part of the business, it is most obvious in EIC Activities – the Group's engineering and technical
services business. EIC Activities’ name stands for Engineering, Innovation and Capability – reflecting its purpose.
EIC Activities partners with all of the Group’s Operating Companies to ensure that the collective experience, technical capabilities,
innovations and leading-edge technology applications are leveraged to deliver our client’s objectives.
The CIMIC Innovation Program now in its 3rd year, has continued to build momentum within our Operating Companies. In 2019,
more than 1,000 ideas were submitted across all our campaigns, with strong participation above industry benchmarks. These
campaigns are an important tool in populating the improvement pipeline at each Operating Company. EIC Activities has been very
active in taking these ideas through the proof-of-value testing phase, to pilot and then on to wider adoption.
International accolades received for excellence in innovation
Leighton Asia was selected as one of the Top 100 Companies in the New Civil Engineer’s (NCE) Power List which recognises the
most forward-thinking and innovative firms operating in civil engineering. Leighton Asia also won the ‘Construction Innovation
Award’ at the NCE 100 Awards Dinner for its innovative approach in the construction of the Hong Kong-Zhuhai-Macao Bridge
Passenger Clearance Building project, with site constraints overcome through the extensive use of offsite manufacturing.
EIC Activities collaborates with project teams from the earliest pre-bid, tender and project establishment phases where
opportunities to innovate, mitigate risk and add value are strongest. Subject matter experts from EIC Activities are some of the
industry's most respected engineers, academics and practitioners. They have extensive project experience across different
geographies, markets, clients and contract types.
80 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.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Industry
§ Encouraging industry innovation
§ $2.3 million specifically invested on new innovation projects
which leads to safer, more
efficient solutions
Many of these factors are interlinked but the examples illustrate how CIMIC’s operations provide benefits that multiply through the
economy and society.
Completion of expressway reduces congestion and improves deliveries
Leighton Asia is proud to be a key and active partner in supporting infrastructure plans to boost economic activities and relieve
traffic congestion in Metro Manila. With the hard work of Leighton Asia’s North Luzon Expressway Harbour Link Segment 10 (NLEX)
team, and their close working relationship with the client, the 5.6km 6-lane divided expressway project was completed six months
ahead of the agreed schedule. The team remained Lost Time Injury free from the project’s commencement in October 2014 until its
completion in February 2019.
This phase of the NLEX project is expected to ease traffic bottlenecks as it diverts 30,000 vehicles daily away from the busy streets
of Metro Manila and will facilitate the efficient delivery of goods as cargo trucks will have alternative access from the port area to
the provinces in northern Luzon and vice versa.
The direct economic value, as defined by the GRI, generated and distributed by CIMIC over the past 3 years is set out in the table
below.
Economic value created (A$m)80
Economic value generated: Revenue
2019
14,701
2018
14,670
2017
13,429
Economic value distributed
Of which: Operating costs
Employee wages and benefits
Payments to providers of capital
Payments to governments
Community investments
Economic value retained
(13,588)
(13,736)
(12,650)
(8,922)
(3,710)
(658)
(297)
(1.0)
(9,208)
(3,634)
(593)
(300)
(0.7)
(8,341)
(3,530)
(510)
(269)
(0.5)
1,113
934
779
Other shareholder return metrics can be found in the Operating and Financial Review and Remuneration Report sections of this
Annual Report.
FOSTER INNOVATION
At CIMIC, 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.
While innovation occurs in every part of the business, it is most obvious in EIC Activities – the Group's engineering and technical
services business. EIC Activities’ name stands for Engineering, Innovation and Capability – reflecting its purpose.
EIC Activities partners with all of the Group’s Operating Companies to ensure that the collective experience, technical capabilities,
innovations and leading-edge technology applications are leveraged to deliver our client’s objectives.
The CIMIC Innovation Program now in its 3rd year, has continued to build momentum within our Operating Companies. In 2019,
more than 1,000 ideas were submitted across all our campaigns, with strong participation above industry benchmarks. These
campaigns are an important tool in populating the improvement pipeline at each Operating Company. EIC Activities has been very
active in taking these ideas through the proof-of-value testing phase, to pilot and then on to wider adoption.
International accolades received for excellence in innovation
Leighton Asia was selected as one of the Top 100 Companies in the New Civil Engineer’s (NCE) Power List which recognises the
most forward-thinking and innovative firms operating in civil engineering. Leighton Asia also won the ‘Construction Innovation
Award’ at the NCE 100 Awards Dinner for its innovative approach in the construction of the Hong Kong-Zhuhai-Macao Bridge
Passenger Clearance Building project, with site constraints overcome through the extensive use of offsite manufacturing.
EIC Activities collaborates with project teams from the earliest pre-bid, tender and project establishment phases where
opportunities to innovate, mitigate risk and add value are strongest. Subject matter experts from EIC Activities are some of the
industry's most respected engineers, academics and practitioners. They have extensive project experience across different
geographies, markets, clients and contract types.
80 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.
107
Earthworks trial delivers early efficiency gains
Two CPB Contractors projects, Western Sydney Airport Early Earthworks (EE) and Brisbane Airport New Parallel Runway, are
trialling an innovation that has the potential to deliver substantial productivity savings. Delivery of a profitable earthworks project
requires an efficient load/haul/dump cycle. While productivity is measured in many ways, tracking of this activity has often relied
on paper-based methods.
The EE team introduced an innovation, applying tracking devices to CPB Contractors’ earthmoving equipment to create a
connected fleet. The use of technology in this way has improved monitoring of daily production and ensured the information is
easily accessible online, any time of day. The tracking and monitoring systems are giving project engineers, supervisors and
surveyors an informed view of production progress, allowing the team to adjust as needed. Applying the data collated in other
ways, the team has also found that they can accurately quantify work and improve the construction verification method with high
definition surveying.
On the New Parallel Runway project in Brisbane, CPB Contractors has teamed up with EIC Activities to take a similar approach.
Trialling the use of low-cost sensors fitted onto an articulated dump truck to digitally track production, the team is experiencing
gains in line with those on the EE project
The technology has the potential to improve cost and safety performance. The solution could be scaled across the business to
deliver productivity benefits for similar sites, while also significantly removing the interaction of people and plant – a critical hazard
for CPB Contractors and one that we aim to eliminate. Through these trials we have an opportunity to prove that automated load
counting is useful to our people and that quality outcomes – including improved accuracy, productivity, scheduling and forecasting
– can be delivered at low-cost to our projects.
The experts from EIC Activities are often called on to challenge and improve concept designs, construction methods and operations
and maintenance practices, to find ways to increase the level of self-performance on projects and to deliver competitive solutions.
Involving EIC Activities in tenders and projects consistently results in significant cost and program savings and delivering better
outcomes for clients.
In 2019, EIC Activities invested more than A$2.3m in undertaking 24 new innovation projects, with a total of 43 active projects still
underway at the close of 2019. EIC Activities helps CIMIC to source, evaluate and if required create new and better ways of
executing work for our businesses.
Long term research programs included the continued research into new treatments for landfill characterisation and design in
partnership with the University of Technology Sydney (UTS) which will enable more precise prediction of landfill performance and
cost-effective treatments for new roads being built over landfill sites. EIC has also continued throughout 2019 the partnership with
the University of Western Sydney with the SPARC research hub, a $3m industry partnership into alternative subgrades, pavements
and various road and civil innovations.
New projects begun in 2019 include many new software and mobile solutions for the application of digital and lean workflows on
construction projects, review and pilot of various digital automation technologies across the group for process optimisation, as well
as new construction and mining projects for field robotics and automaton of earthworks. The business is also investing in the
creation on national geotechnical and reactive soil databases bringing together the knowledge of our projects, with the GIS and
digital capability of EIC Activities.
Fashion forward – Sedgman’s intelligent wearable technology
Sedgman is currently testing intelligent, wearable technology which can be used to transmit visuals from site to office-based
experts who can diagnose maintenance issues and provide immediate support. The technology consists of a camera, noise-
cancelling microphone and earplugs. It enables the wearer to share real-time footage, still images and audio between two locations
via 3G/4G mobile or site Wi-Fi networks. Video footage from the site can be annotated in real-time and viewed in the headset
screen of the user.
The use of intelligent wearables is just one of the elements supporting Sedgman’s SMART Plant strategy, which aims to digitally
transform plants so that they can be remotely supported. The advanced plant monitoring that is delivered through these digital
initiatives has a wide range of benefits including maximised plant performance and runtime through process optimisation and
predictive maintenance activities. Other benefits include improved client engagement through transparent and real-time data,
reduced site travel requirements for regional experts and enhanced effectiveness of the teams on the ground.
All of our businesses now have dedicated innovation teams, who meet regularly with the assistance of EIC to ensure that the
knowledge is captured and transferred between projects and operating companies to improve our capability across the board.
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UGL shares ‘Engineering Team of the Year’ award with its partners
One of the Group’s major clients, the Royal Australian Navy has presented UGL, and its partners on the Landing Helicopter Dock
(LHD) Landing Craft Engineering team, with its ‘Engineering Team of the Year’ Gold Commendation. The Navy’s Capability
Acquisition and Sustainment Group (CASG) holds these awards each year to recognise the outstanding contributions and
achievements made by their civilian and military organisation partners. UGL, with its engineering team partners CASG, Navy
Technical Bureau, Defence Science and Technology, Navantia and KBR received the recognition for their engineering solution that
has increased the capacity and capability of the Navy’s LHD Landing Craft.
In 2018, the LHD Landing Craft Engineering team set themselves the ambitious task of enhancing the carrying capacity of the LHD
Landing Craft. These are critical Defence Force assets that provide essential ship-to-shore transport for disaster relief and
humanitarian missions. The team collaborated to find and successfully implement the solution which needed to provide immediate
and long-term improvements to the fleet whilst avoiding additional costs or resources during the implementation. The team
engineered solutions that included designing a dunnage system, which secures cargo, and successfully deployed this system in
eight weeks. The improved capability now enables loading and transport of all existing and future land vehicles for Defence’s
Amphibious Forces. The team also conducted a stability analysis and redesigned the engine room to include an additional
watertight bulkhead and relocated various systems on the vessel. It was this solution that increased the capability of the LHD
Landing Craft to safely carry 60 tonnes of cargo within normal operational limits, an increase of 40 tonnes or a 300% improvement
in performance, while delivering it for minimal cost.
UGL has been delivering maintenance support services, including preventative and corrective maintenance, to the Navy’s fleet of
12 amphibious LHD Landing Craft since 2014. The team’s contribution to future proofing LHD Landing Craft capability greatly
enhances the overall program for CASG.
EIC Activities also has access to, and extends its capability, through other technical groups within the ACS Group, including
HOCHTIEF AG, Dragados and Turner.
CAPTURE KNOWLEDGE
We seek to provide a dynamic work environment, one where our people and projects share access to world class
technologies, engineering solutions, knowledge resources, communities of practice, and outstanding technical training
and development. A key tool in this capture of knowledge has been the creation of our own, custom-built, intellectual property
database in the form of our interactive Project Knowledge Library (iPKL) which was launched in 2016. Built and continually
developed by EIC Activities, iPKL holds key data from over 3,000 diverse projects.
The iPKL platform also includes more than 20 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
Community and Stakeholder Relations
Concrete and Quarry Materials
§
§
§
§
§
§ Digital Engineering
§
Environment
§ Geotechnical
Innovation and Lean
Knowledge Management
§ Heavy Lift
§
§
§ Mechanical and Electrical Engineering
§
Procurement
§
Project Planning
§ Quality and Compliance
§
Rail
Roads and Civil Works
Structural Engineering
Survey
Sustainability
Temporary Works
§
§
§
§
§
§ Utility Management
§ Water and Waste Water
Global environment community of practice
In 2019, 22 environmental representatives from Thiess and Sedgman across Australia, Indonesia, Chile and Mongolia gathered in
Brisbane for an environmental community of practice. The three-day session saw presentations on key topics including
rehabilitation, water management, dam governance and the systems and processes being used to manage environmental
obligations.
The interactive sessions provided opportunities for discussion and questions. The event also encouraged the sharing of key
learnings, discussion about potential improvements and an opportunity to celebrate progress and achievements.
Project related resources held in iPKL includes: pre-contract documents; work pack/execution resources; project data sheets;
images; case studies; lessons learned; final project reports; innovations; technical papers; award submissions and awards received;
and capability statements. iPKL 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.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
UGL shares ‘Engineering Team of the Year’ award with its partners
One of the Group’s major clients, the Royal Australian Navy has presented UGL, and its partners on the Landing Helicopter Dock
(LHD) Landing Craft Engineering team, with its ‘Engineering Team of the Year’ Gold Commendation. The Navy’s Capability
Acquisition and Sustainment Group (CASG) holds these awards each year to recognise the outstanding contributions and
achievements made by their civilian and military organisation partners. UGL, with its engineering team partners CASG, Navy
Technical Bureau, Defence Science and Technology, Navantia and KBR received the recognition for their engineering solution that
has increased the capacity and capability of the Navy’s LHD Landing Craft.
In 2018, the LHD Landing Craft Engineering team set themselves the ambitious task of enhancing the carrying capacity of the LHD
Landing Craft. These are critical Defence Force assets that provide essential ship-to-shore transport for disaster relief and
humanitarian missions. The team collaborated to find and successfully implement the solution which needed to provide immediate
and long-term improvements to the fleet whilst avoiding additional costs or resources during the implementation. The team
engineered solutions that included designing a dunnage system, which secures cargo, and successfully deployed this system in
eight weeks. The improved capability now enables loading and transport of all existing and future land vehicles for Defence’s
Amphibious Forces. The team also conducted a stability analysis and redesigned the engine room to include an additional
watertight bulkhead and relocated various systems on the vessel. It was this solution that increased the capability of the LHD
Landing Craft to safely carry 60 tonnes of cargo within normal operational limits, an increase of 40 tonnes or a 300% improvement
in performance, while delivering it for minimal cost.
UGL has been delivering maintenance support services, including preventative and corrective maintenance, to the Navy’s fleet of
12 amphibious LHD Landing Craft since 2014. The team’s contribution to future proofing LHD Landing Craft capability greatly
enhances the overall program for CASG.
EIC Activities also has access to, and extends its capability, through other technical groups within the ACS Group, including
HOCHTIEF AG, Dragados and Turner.
CAPTURE KNOWLEDGE
We seek to provide a dynamic work environment, one where our people and projects share access to world class
technologies, engineering solutions, knowledge resources, communities of practice, and outstanding technical training
and development. A key tool in this capture of knowledge has been the creation of our own, custom-built, intellectual property
database in the form of our interactive Project Knowledge Library (iPKL) which was launched in 2016. Built and continually
developed by EIC Activities, iPKL holds key data from over 3,000 diverse projects.
The iPKL platform also includes more than 20 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
§ Heavy Lift
Innovation and Lean
Knowledge Management
Community and Stakeholder Relations
§ Mechanical and Electrical Engineering
Concrete and Quarry Materials
§ Digital Engineering
Environment
§ Geotechnical
Procurement
Project Planning
§ Quality and Compliance
Rail
§
§
§
§
§
§
§
§
§
§
Roads and Civil Works
Structural Engineering
Survey
Sustainability
Temporary Works
§ Utility Management
§ Water and Waste Water
Global environment community of practice
In 2019, 22 environmental representatives from Thiess and Sedgman across Australia, Indonesia, Chile and Mongolia gathered in
Brisbane for an environmental community of practice. The three-day session saw presentations on key topics including
rehabilitation, water management, dam governance and the systems and processes being used to manage environmental
obligations.
The interactive sessions provided opportunities for discussion and questions. The event also encouraged the sharing of key
learnings, discussion about potential improvements and an opportunity to celebrate progress and achievements.
Project related resources held in iPKL includes: pre-contract documents; work pack/execution resources; project data sheets;
images; case studies; lessons learned; final project reports; innovations; technical papers; award submissions and awards received;
and capability statements. iPKL 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.
109
Digital engineering
Building Information Modelling (BIM) and Geographic Information Systems (GIS) are digital engineering technologies that enable
project teams to collaborate in virtual environments. The Group's digital engineering approach integrates Information
Management, BIM, Quality Assurance and Asset Management, which our project teams leverage to generate innovative end-to-
end solutions, and to manage complex interfaces and control project delivery. This is a core capability that equips us to reliably and
cost effectively deliver quality assets, optimise performance and improve social, economic and environmental outcomes.
Remote location construction challenges overcome by digital engineering know-how
CPB Contractors has utilised BIM and off-site prefabrication to overcome the challenges of designing and building, in a remote
semi-rural location, the Waikeria Prison Development Public Private Partnership (PPP) project. It provides a good example of how
digital technologies can add value by supporting engineers on site, simplifying how they work, and optimising the Group’s
capability.
The new facility is being built on the site of the existing Waikeria Prison in the Waikato region (upper North Island) of New Zealand,
and features accommodation for 500 prisoners, along with a secure mental health unit providing care for additional prisoners. It
features 29 buildings on a 21-hectare project site.
Supported by EIC Activities, the team used BIM modelling to prepare for early engagement with the structural steel and pre-cast
fabricators. Building digitally first enabled the team to accurately brief fabricators on scope, design and delivery. The project is
utilising 2,500 precast flat panels in the construction and 1,600 panels for the containment fence. Using BIM sped up the process
and allowed the team enhanced coordination and to detect potential clashes.
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 BSI (British Standards Institution). In 2019, CIMIC has received acknowledgement of the BSI Kitemark for
Design and Construction - BS EN ISO 19650-1 and BS EN ISO 19650-2.
CIMIC Group first in Australasia to be certified to new International BIM standard ISO 19650
In 2019, CIMIC Group companies, CPB Contractors, Leighton Asia, UGL, Sedgman, Pacific Partnerships and EIC Activities were the
first in Australasia to achieve Kitemark certification for excellence in BIM to the new international ISO 19650 standards series. The
BSI certification recognises CIMIC Group’s leading expertise in using BIM for design and construction over the whole life cycle of a
built asset, from strategic planning, design and delivery, through to operations, maintenance and decommissioning.
BSI certification is the international benchmark for excellence in digital engineering and project delivery. As part of the certification
process, BSI completed onsite audits with CIMIC Group projects, assessing areas including delivery to contract requirements, client
satisfaction and supply chain management against the ISO requirements.
BSI’s independent assessment and certification recognises and endorses all nominated CIMIC Group companies for digital
engineering compliance, to the specific standards BS EN ISO 19650-1 and BS EN ISO 19650-2 with BSI Kitemark certification, being
the highest certification of excellence to those standards. This builds on the Group’s 2017 achievement of being the first
Australasian companies to achieve BSI Kitemark certification to the previous BS and PAS 1192 standards.
Kitemark certification to ISO 19650 parts one and two reflects that CIMIC Group's digital engineering capability is embedded in our
operations and enhances value for clients.
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.
Innovative falsework improves efficiency and safety
In Hong Kong, Leighton Asia’s team on the 2.2km, dual-lane Tseung Kwan O-Lam Tin Tunnel (TKO-LTT) highway project developed
an innovative approach to erect, use and dismantle a temporary falsework system on a steep slope, while allowing other parts of
the project to progress under and around the footprint of the structure. Falsework consists of temporary structures used in
construction to support a permanent structure until its construction is sufficiently advanced to support itself. On the TKO-LTT
project, the falsework is being used to construct a new bridge which consists of multiple lightweight parts assembled to form
heavy-duty props and large-span trusses to cope with the difficult terrain.
To assist the workers in overcoming their unfamiliarity with this relatively new and complex falsework structure, practical training
sessions were held in the supplier’s workshop prior to the start of works on site. Prefabrication of props and trusses occurred on
ground, largely reducing the need and risk of working at height.
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The challenging dismantling sequence, where access to the falsework for the crane was blocked by the completed bridge, was
planned using BIM technology for better communication with the work crew. Feedback from daily work team briefings and results
from continuous monitoring of the works were used to constantly review, and if necessary, adjust the disassembly sequence.
Because of this process, the team developed the idea to extend the vertical supports underneath the bridge and separate the
falsework trusses into two parallel longitudinal segments. This allowed the trusses to be slid out from the cover of the bridge until
they could be lifted safely by the tower crane for dismantling on the ground. Control measures to ensure the steel trusses’ stability
during the sliding process were put in place. Separating the steel beams into two segments reduced the load and increased ease of
manoeuvrability. This method was not only safer but also streamlined the dismantling process by allowing two teams to effectively
work on either side of the falsework system with minimal disruption to other works.
BIM is used for generating and managing digital information with virtual models representing the project scope and existing
interfaces.
Upgrading a fifty-year-old plant using 3D scanning
At the Elkview site in British Colombia, Canada, Sedgman engineers are providing their expertise to upgrade a coal preparation
plant. Originally built in the late 1960s, and then expanded and upgraded in 2012, Sedgman has been engaged to increase the
production of clean coal from the plant from 7.2 million tonnes per annum (Mtpa) to 8.2 Mtpa by 2020 and then to 9.0 Mtpa by
2021.
The majority of Sedgman's work is to be completed in the original, 50-year-old, plant structure. Given the age, information and
drawings are often missing or are no longer reliable. To achieve a base model for the existing structure and equipment, Sedgman
arranged for the entire plant to be 3D scanned. The 3D scan was then converted into a 3D model with the assistance of HOCHTIEF
India. The 3D model is being used for structural calculations, new design activities and drawing generation. Using this approach,
Sedgman has lowered the overall project design budget and is providing the client with a full 3D model of the Elkview plant. This
innovative approach uses the best of available technology to complement the engineering expertise at Sedgman ensuring optimal
outcomes for the client.
CIMIC has also developed a leading position in the use of GIS which 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 heights in surveying
The team on the TKO-LTT project in Hong Kong has been innovating to apply drone or unmanned aerial vehicle technology for
surveying to enhance operational efficiency and mitigate safety risks. The terrain of the TKO-LTT project is very steep and has
proven challenging to surveys. Traditional survey, which take place every 3 months, generally take 10 days with a team of six to
eight surveyors. A further few days are then required for processing the data and preparing the computer-aided design or CAD
drawings.
With drone technology, challenging surveying becomes more time-efficient and safer to conduct. On the project, the team is able
to quickly capture more meaningful data to better track progress, manage resources, and keep to budget, which benefits the entire
project. A 16-hectare site can be surveyed in less than an hour via our automated ‘Map Pilot’ flight application.
Use of drone technology is advancing rapidly and can be used in various stages of the construction lifecycle to perform numerous
key functions, including:
§
§
§
§
§
§
Assessing greenfield site conditions;
Aiding with site planning and layout;
Capturing construction progress photos;
Performing 3D scans of existing structures;
Creating virtual building models; and
Assisting with ongoing maintenance and damage assessment.
Leighton Asia collaborated with EIC Activities and received some advice and direction on what software and hardware to use.
Contagious enthusiasm for digitisation
BIM is playing an important role in Leighton Asia’s successful delivery of the Hong Kong International Airport Terminal 2 Foundation
and Substructure Works (T2) project. On the T2 project, a joint venture including Leighton Asia is responsible for the construction of
the new Terminal 2 basement structure, a South Annex Building, future viaduct foundations and demolition works required for the
expansion of the existing Terminal 2 building.
The challenge to maintain up-to-date data for geotechnical design is often regarded by engineers as one of the most time-
consuming and repetitive tasks. The solution offered by the BIM team automates the workflow, reducing the effort spent on daily
data input, interpretation and amendment. A smart script has been developed to read and interpret site logs, update drawings and
evaluate the site conditions. A similar approach is also used to record the as-built status of different elements for internal checking
and coordination with the client. The result is a more effective use of resources which significantly increases efficiency and quality.
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The T2 team has also embraced Sketchup as a 3D tool for temporary work design, producing fine and highly coordinated 2D
drawings directly from the models. This has enabled the BIM model to be brought on site, enabling all site staff to better
understand and coordinate work to be carried out. To keep track of site progress, another smart script allows the team to extract
information from project diaries making it visually available to members of different teams. This enables the team to read the
status of hundreds of foundation and structural elements. By inputting the collected values into the models, data can be recalled
and displayed in meaningful ways for different teams to analyse. The collected data can then be converted to generate a set of
animated method statements for each stage in virtual reality. These animations allow the operation team and engineers to work
together, refine their planning of works and significantly mitigating safety risks on site.
Projects have reported a 40% increase in the use of BIM and GIS across their teams. Increases have been measured not only in the
numbers of projects implementing Digital Engineering but also broader usage and application across the project teams. CPB
contractors have implemented standardised Digital Engineering practises on fourteen major infrastructure projects in 2019.
In 2016, our people were accessing 250,000 maps per week on GIS platform. By 2019, this had grown to more than 2 million maps
per week.
Since the attainment of Kitemark certification in 2017, we have been progressively implementing Digital Engineering best practices
on all of the Group’s infrastructure project and, in 2019, we trained more than 2,165 people for 2,449 hours in the use of BIM and
GIS (versus 659 people 2018).
Tried and tested
EIC Activities’ Digital Engineering team, in collaboration with Nexplore, is testing augmented reality (AR) on several sites across the
Group to review, analyse and demonstrate the value of its use in practical applications. AR is an experience where computer
generated information and imagery is overlaid on the real-world environment to appear as though it exists in the same space.
An AR mobile application is being developed which will keep images anchored in the real-world position as users move around the
site. This allows project teams to view 3D Building Information Model (BIM) designs on their sites through a smartphone or tablet
at any time during construction. At CPB Contractors’ Gunyama Park Aquatic and Recreation Centre project in Sydney, EIC Activities
is working with the project team to use AR to visualise the federated BIM model on the construction site. A federated BIM model
encompasses all elements of the design, such as fire systems and electrical. This is allowing team members to view on a tablet the
digital model overlayed on the construction site and to gain a clear understanding of the spatial aspects of the design.
EIC Activities is also expanding the use of 4D planning on building and infrastructure projects to combine digital BIM designs with
project planning. Special 4D planning software allows construction planners to directly manipulate the 3D design models to reflect
the desired construction sequence over time, shown through 4D simulations and traditional Gantt charts. This approach makes
planning easier, more accurate and provides assurance that the design and proposed construction methodology are fully
compatible.
Technical training
EIC Activities has continued to deliver its ‘Webinar Wednesday’ series to promote discussion and socialisation of technical
knowledge throughout the CIMIC Group, and to connect colleagues interested in a variety of engineering topics with a focus on
risks and opportunities, best practice and emerging technologies. Held every second Wednesday, the 22 roughly 40-minute
interactive webinars - with a question and answer session at the end of each presentation - were watched by more than 3,472
employees. The webinars are also available for viewing later on the intranet and the subjects covered in 2019 included:
The challenging dismantling sequence, where access to the falsework for the crane was blocked by the completed bridge, was
planned using BIM technology for better communication with the work crew. Feedback from daily work team briefings and results
from continuous monitoring of the works were used to constantly review, and if necessary, adjust the disassembly sequence.
Because of this process, the team developed the idea to extend the vertical supports underneath the bridge and separate the
falsework trusses into two parallel longitudinal segments. This allowed the trusses to be slid out from the cover of the bridge until
they could be lifted safely by the tower crane for dismantling on the ground. Control measures to ensure the steel trusses’ stability
during the sliding process were put in place. Separating the steel beams into two segments reduced the load and increased ease of
manoeuvrability. This method was not only safer but also streamlined the dismantling process by allowing two teams to effectively
work on either side of the falsework system with minimal disruption to other works.
BIM is used for generating and managing digital information with virtual models representing the project scope and existing
interfaces.
2021.
Upgrading a fifty-year-old plant using 3D scanning
At the Elkview site in British Colombia, Canada, Sedgman engineers are providing their expertise to upgrade a coal preparation
plant. Originally built in the late 1960s, and then expanded and upgraded in 2012, Sedgman has been engaged to increase the
production of clean coal from the plant from 7.2 million tonnes per annum (Mtpa) to 8.2 Mtpa by 2020 and then to 9.0 Mtpa by
The majority of Sedgman's work is to be completed in the original, 50-year-old, plant structure. Given the age, information and
drawings are often missing or are no longer reliable. To achieve a base model for the existing structure and equipment, Sedgman
arranged for the entire plant to be 3D scanned. The 3D scan was then converted into a 3D model with the assistance of HOCHTIEF
India. The 3D model is being used for structural calculations, new design activities and drawing generation. Using this approach,
Sedgman has lowered the overall project design budget and is providing the client with a full 3D model of the Elkview plant. This
innovative approach uses the best of available technology to complement the engineering expertise at Sedgman ensuring optimal
outcomes for the client.
CIMIC has also developed a leading position in the use of GIS which 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 heights in surveying
The team on the TKO-LTT project in Hong Kong has been innovating to apply drone or unmanned aerial vehicle technology for
surveying to enhance operational efficiency and mitigate safety risks. The terrain of the TKO-LTT project is very steep and has
proven challenging to surveys. Traditional survey, which take place every 3 months, generally take 10 days with a team of six to
eight surveyors. A further few days are then required for processing the data and preparing the computer-aided design or CAD
drawings.
With drone technology, challenging surveying becomes more time-efficient and safer to conduct. On the project, the team is able
to quickly capture more meaningful data to better track progress, manage resources, and keep to budget, which benefits the entire
project. A 16-hectare site can be surveyed in less than an hour via our automated ‘Map Pilot’ flight application.
Use of drone technology is advancing rapidly and can be used in various stages of the construction lifecycle to perform numerous
key functions, including:
Assessing greenfield site conditions;
Aiding with site planning and layout;
Capturing construction progress photos;
Performing 3D scans of existing structures;
Creating virtual building models; and
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Assisting with ongoing maintenance and damage assessment.
Leighton Asia collaborated with EIC Activities and received some advice and direction on what software and hardware to use.
Contagious enthusiasm for digitisation
BIM is playing an important role in Leighton Asia’s successful delivery of the Hong Kong International Airport Terminal 2 Foundation
and Substructure Works (T2) project. On the T2 project, a joint venture including Leighton Asia is responsible for the construction of
the new Terminal 2 basement structure, a South Annex Building, future viaduct foundations and demolition works required for the
expansion of the existing Terminal 2 building.
The challenge to maintain up-to-date data for geotechnical design is often regarded by engineers as one of the most time-
consuming and repetitive tasks. The solution offered by the BIM team automates the workflow, reducing the effort spent on daily
data input, interpretation and amendment. A smart script has been developed to read and interpret site logs, update drawings and
evaluate the site conditions. A similar approach is also used to record the as-built status of different elements for internal checking
and coordination with the client. The result is a more effective use of resources which significantly increases efficiency and quality.
111
Applied Technical Training 2019 Launch
Digital Engineering 2019: The Year Ahead
Introducing HOCHTIEF India
Infrastructure Conceptual Design
Augmented & Virtual Reality
ISCAv2: The Essentials
Rail Track Construction
Alternative Remote Power Solutions
Earthing & Bonding in Rail Systems
Implementation of UAV Drone Technology in Hong Kong
Future Rail System Technology: AI, Big Data, IoT & Blockchain
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§ MEP Construction Engineering Service
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§ Microsoft OneNote: your digital notebook
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§ MEP Modular Construction Benefits
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Challenging the Norm in Flexible Pavement Design &
Construction
The Importance of Commissioning Strategies during
the Tender Phase
CIMIC Knowledge Tank and the Fuel that Feeds It
Asbestos Awareness
§ Managing Excavation Permits using GIS and digital
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technologies
CIMIC Knowledge Tank and the Fuel That Feeds It
Asphalt Innovations
Glass Fibre Reinforced Polymer: The other
reinforcement
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
ENCOURAGE COLLABORATION
At CIMIC, we encourage collaboration 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.
Australian first propels team to success
In a first for the Australian Navy and its ANZAC Class Frigates, a team at Naval Ship Management (NSM) has executed an
underwater bearing replacement on a warship propeller shaft that has significantly improved the operational condition of the ship
and reduced maintenance time and cost. NSM is UGL’s joint venture providing long-term asset management of multiple Royal
Australian Navy ships.
The bearings that were replaced, support the ship’s propeller shafts and are critical to the safety and performance of the vessel
while at sea. Identifying worn bearings usually means a full docking, where the ship needs to be pulled up out of the water to
replace them at significant cost. By collaborating with experts in their network, the NSM team developed an underwater
engineering solution to replace the worn bearing underwater, without impacting the ship’s operational schedule.
The client was concerned about the level of risk that would be involved in carrying out the work underwater and the quality of the
final outcome. The NSM team’s engineering-led approach guided investigation into the full detailed feasibility of changing the
bearings underwater. The team worked with all stakeholders to assess the risks and establish targeted mitigations before
commencing the task. Following significant testing, an integrated team of commercial divers and Navy clearance divers, with the
NSM team monitoring and supervising the work via a video link between the divers and the surface, successfully replaced the worn
bearings within a week. Following integrity testing, the frigate was announced ready-for-sea and was able to head out for an 18-
month tour of duty.
The team’s efforts were recognised by the frigate’s Commanding Officer who said: “The level of collaboration throughout the
project was outstanding. From the Integrated Project Team down, all stakeholders epitomised the NSM Values and the resulting
excellent cooperation ensured a smooth project.”
Green rated projects
Increasingly, governments are undertaking sustainable procurement which requires their various agencies to integrate
sustainability principles, planning and implementation into their procurement practices. By pursuing sustainable procurement,
governments seek to spend public money efficiently, economically and ethically by considering and integrating issues such as
environmental management, ethical procurement and socio/economic benefits.81 In many cases, this is manifest in the
requirement to deliver against well established, third-party sustainability ratings systems such as IS and GreenStar ratings.
Government
area
NSW
Agency
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
Environment, Planning and Sustainable
Development Directorate
City Rail Link Ltd
QLD
WA
VIC
ACT
New Zealand
IS Rating mandate82
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§
§
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§
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
Capital works projects >$10m83
All projects in program
CIMIC is supportive of this approach by governments as the ratings provide a mechanism for project solutions that deliver
environmental and social benefits while reducing life cycle costs.
CPB Contractors has established a position as an industry leader in the delivery of 'green' rated infrastructure projects in Australia
and New Zealand and encourages clients to mandate the use of this rating system. CPB Contractors is currently working on or has
delivered 33 IS registered or certified projects worth more than A$34 billion in total.
81 NSW Government, ProcurePoint - Sustainable procurement.
82 Detail reviewed by ISCA, 26 Nov 2019.
83 Either an IS rating or a Greenstar rating as per the ACT Climate Change Strategy 2019–25.
113
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
ENCOURAGE COLLABORATION
At CIMIC, we encourage collaboration 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.
Australian first propels team to success
In a first for the Australian Navy and its ANZAC Class Frigates, a team at Naval Ship Management (NSM) has executed an
underwater bearing replacement on a warship propeller shaft that has significantly improved the operational condition of the ship
and reduced maintenance time and cost. NSM is UGL’s joint venture providing long-term asset management of multiple Royal
Australian Navy ships.
The bearings that were replaced, support the ship’s propeller shafts and are critical to the safety and performance of the vessel
while at sea. Identifying worn bearings usually means a full docking, where the ship needs to be pulled up out of the water to
replace them at significant cost. By collaborating with experts in their network, the NSM team developed an underwater
engineering solution to replace the worn bearing underwater, without impacting the ship’s operational schedule.
The client was concerned about the level of risk that would be involved in carrying out the work underwater and the quality of the
final outcome. The NSM team’s engineering-led approach guided investigation into the full detailed feasibility of changing the
bearings underwater. The team worked with all stakeholders to assess the risks and establish targeted mitigations before
commencing the task. Following significant testing, an integrated team of commercial divers and Navy clearance divers, with the
NSM team monitoring and supervising the work via a video link between the divers and the surface, successfully replaced the worn
bearings within a week. Following integrity testing, the frigate was announced ready-for-sea and was able to head out for an 18-
month tour of duty.
The team’s efforts were recognised by the frigate’s Commanding Officer who said: “The level of collaboration throughout the
project was outstanding. From the Integrated Project Team down, all stakeholders epitomised the NSM Values and the resulting
excellent cooperation ensured a smooth project.”
Green rated projects
Increasingly, governments are undertaking sustainable procurement which requires their various agencies to integrate
sustainability principles, planning and implementation into their procurement practices. By pursuing sustainable procurement,
governments seek to spend public money efficiently, economically and ethically by considering and integrating issues such as
environmental management, ethical procurement and socio/economic benefits.81 In many cases, this is manifest in the
requirement to deliver against well established, third-party sustainability ratings systems such as IS and GreenStar ratings.
Government
Agency
IS Rating mandate82
area
NSW
QLD
WA
VIC
Department of Planning
Transport for NSW
Sydney Metro
Queanbeyan Council
Department of Transport and Main Roads
Main Roads WA
Vic Roads
Melbourne Metro
City of Casey
Level Crossings Removal Authority
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
ACT
Environment, Planning and Sustainable
Capital works projects >$10m83
Development Directorate
New Zealand
City Rail Link Ltd
CIMIC is supportive of this approach by governments as the ratings provide a mechanism for project solutions that deliver
environmental and social benefits while reducing life cycle costs.
CPB Contractors has established a position as an industry leader in the delivery of 'green' rated infrastructure projects in Australia
and New Zealand and encourages clients to mandate the use of this rating system. CPB Contractors is currently working on or has
delivered 33 IS registered or certified projects worth more than A$34 billion in total.
81 NSW Government, ProcurePoint - Sustainable procurement.
82 Detail reviewed by ISCA, 26 Nov 2019.
83 Either an IS rating or a Greenstar rating as per the ACT Climate Change Strategy 2019–25.
113
Green standard construction projects (#)
IS
Green Star
BEAM Plus
LEED84
Green Roads85
New registrations
during 2019
11
0
1
0
0
Cumulative
certifications since
2006
28
95
8
10
2
In 2019, CPB Contractors generated ‘Cleantech’ revenue of $3.0 billion from sustainably rated or ‘green’ projects. This figure - while
down on 2018 due to the completion of several large IS rated infrastructure projects - represents approximately 20% of the Group’s
2019 revenue.
CPB Contractors' green project revenue ($m)
Total
2019
3,020
2018
4,932
2017
2,703
In 2019, CPB Contractors’ performance, leadership and contribution to advancing infrastructure sustainability in Australasia was
recognised when ISCA named the Company the recipient of their ‘Organisational Leadership in Infrastructure Sustainability
Award (Private Sector)’.
UGL helps deliver highest ever IS rating for water infrastructure project
A joint venture, including UGL, is delivering a A$450 million upgrade of water infrastructure at St Marys and Quakers Hill in New
South Wales for Sydney Water. The Lower South Creek Treatment Program is adopting new technologies that are making water
treatment more sustainable, cost efficient and effective.
This is the first Sydney Water project to trial the IS Rating tool and certification process and features a number of sustainability
initiatives. Energy and carbon forecast modelling for the project estimates that the Program will achieve a reduction of 870,000
tonnes - or a 42% reduction - in total greenhouse gas emissions during construction and across its 50 years operational life. This
reduction includes embodied CO2 emissions from construction materials and treatment chemicals.
Onsite renewable energy use is a core objective of the Program and the implementation of consolidated solids processing at St
Marys allows for anaerobic digestion and energy recovery through a co-generation plant. With on-site thermal energy recovery and
electricity generation the project is able to self-supply 69% of its electricity demand.
The project has received the highest IS rating ever achieved for an Australian water infrastructure project, an Excellent ‘Design’
rating. This is the first IS rating achieved on a project where UGL has been a delivery partner/lead constructor and provides UGL
with an opportunity to promote the IS rating when tendering for future work.
Setting an example, CIMIC and its Operating Companies are headquartered in a number of green rated offices which were
described in the 2018 Sustainability Report.
Collaboration with industry associations and NGOs
CIMIC supports, and will seek to leverage, opportunities for external industry collaboration that create benefits for the Group
and/or the industries in which we operate. Any collaboration, including membership of industry bodies, is undertaken within the
boundaries of the Code of Conduct and our commitment to acting with integrity. All corporate memberships require the approval
of CIMIC’s CEO and are coordinated by CIMIC.
We encourage our Operating Companies 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. The Group is a member of a number of trade and industry associations and other groups which are listed on our
website.
CIMIC believes 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 also 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.
84 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.
85 Greenroads is an independent non-profit that advances sustainability performance management and education for transportation capital
projects.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Research and development
CIMIC promotes and invests in research and development to optimise whole-of-life solutions and innovate to drive efficiency and
productivity, mitigate risk, increase self-performance and improve outcomes across the project and asset lifecycle. Our EIC
Activities business provides projects with technical analysis, advice and reviews, right through to comprehensive services where
they challenge designs and methods, develop solutions and deliver innovations.
EIC Activities formal innovation platform saw 608 employees involved in innovation management during 2019 with 1,199 ideas
submitted for consideration. These innovations attracted more than 2,000 comments, reflecting a high level of engagement in the
process.
MANAGING RISK
We define risk management as the identification, assessment and treatment of risks that have the
potential to materially impact our operations, people, and reputation, the environment and
communities in which we work, and the financial prospects of the Group. Our risk management framework is continually
monitored, is tailored to our business, embedded largely within existing processes and aligned to our objectives, both short and
longer term.
The CIMIC Risk Management Framework is based on International Standard ISO 31000 ‘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 Group’s diversity of operations, 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 approach to Risk Management has been described in
detail in previous Sustainability Reports.
Quality
CIMIC seeks to deliver quality projects that meet the requirements of our clients and other stakeholders. A quality outcome is the
result of good planning and skilful execution and is a function of how we manage risk. Everyone has accountabilities in this regard
for the delivery of quality outcomes.
Team makes waves in water quality
In late 2016, UGL and CPB Contractors were awarded the contract to design, construct and commission a new Sewage Treatment
Plant (STP) at Melbourne Water’s Western Treatment Plant (WTP), 34km from the Melbourne CBD. To further improve the
tendered design, the team collaborated and challenged themselves to look for further improvements. They engineered a redesign
on the 140 ML/day plant, which delivers a more robust treatment process, enables the plant to be operated more cost effectively
and supports the safety of the construction team, operators and maintenance staff and site visitors.
The redesign resulted in a simpler and easier to control raw influent system that significantly improved the distribution of the
influent around the large site and reduced the cost of the inlet works. Knowing that the largest operating cost of a wastewater
treatment plant is the aeration system, the team also thoroughly reviewed the proposed system. They used their review findings to
deliver high performance aeration equipment in each biological reactor through state-of-the-art blowers fitted with magnetically
levitating bearings.
The plant successfully achieved practical completion on 26 April 2019. The plant is performing well with all four of its reactors
operating at design capacity and producing water quality better than the specified requirements. Melbourne Water has recognised
the project as an outstanding example of what a good safety culture looks like and last year presented the Site Superintendent with
an award for safety leadership at its Melbourne Water inaugural safety awards.
Dedicated quality managers are in roles with direct accountability for ensuring compliance with ISO 9001 Quality Management
Systems. 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 - ISO 9001 (Bureau Veritas Quality System Verification); and
Sedgman - ISO 9001 (SAI Global)86.
§
§
86 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.
115
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Research and development
CIMIC promotes and invests in research and development to optimise whole-of-life solutions and innovate to drive efficiency and
productivity, mitigate risk, increase self-performance and improve outcomes across the project and asset lifecycle. Our EIC
Activities business provides projects with technical analysis, advice and reviews, right through to comprehensive services where
they challenge designs and methods, develop solutions and deliver innovations.
EIC Activities formal innovation platform saw 608 employees involved in innovation management during 2019 with 1,199 ideas
submitted for consideration. These innovations attracted more than 2,000 comments, reflecting a high level of engagement in the
process.
MANAGING RISK
longer term.
We define risk management as the identification, assessment and treatment of risks that have the
potential to materially impact our operations, people, and reputation, the environment and
communities in which we work, and the financial prospects of the Group. Our risk management framework is continually
monitored, is tailored to our business, embedded largely within existing processes and aligned to our objectives, both short and
The CIMIC Risk Management Framework is based on International Standard ISO 31000 ‘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 Group’s diversity of operations, 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 approach to Risk Management has been described in
CIMIC seeks to deliver quality projects that meet the requirements of our clients and other stakeholders. A quality outcome is the
result of good planning and skilful execution and is a function of how we manage risk. Everyone has accountabilities in this regard
detail in previous Sustainability Reports.
Quality
for the delivery of quality outcomes.
Team makes waves in water quality
In late 2016, UGL and CPB Contractors were awarded the contract to design, construct and commission a new Sewage Treatment
Plant (STP) at Melbourne Water’s Western Treatment Plant (WTP), 34km from the Melbourne CBD. To further improve the
tendered design, the team collaborated and challenged themselves to look for further improvements. They engineered a redesign
on the 140 ML/day plant, which delivers a more robust treatment process, enables the plant to be operated more cost effectively
and supports the safety of the construction team, operators and maintenance staff and site visitors.
The redesign resulted in a simpler and easier to control raw influent system that significantly improved the distribution of the
influent around the large site and reduced the cost of the inlet works. Knowing that the largest operating cost of a wastewater
treatment plant is the aeration system, the team also thoroughly reviewed the proposed system. They used their review findings to
deliver high performance aeration equipment in each biological reactor through state-of-the-art blowers fitted with magnetically
levitating bearings.
The plant successfully achieved practical completion on 26 April 2019. The plant is performing well with all four of its reactors
operating at design capacity and producing water quality better than the specified requirements. Melbourne Water has recognised
the project as an outstanding example of what a good safety culture looks like and last year presented the Site Superintendent with
an award for safety leadership at its Melbourne Water inaugural safety awards.
Dedicated quality managers are in roles with direct accountability for ensuring compliance with ISO 9001 Quality Management
Systems. 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 - ISO 9001 (Bureau Veritas Quality System Verification); and
Sedgman - ISO 9001 (SAI Global)86.
86 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.
§
§
§
§
§
115
One way of measuring quality is through repeat client rates which CIMIC regards as providing a better indicator of client
satisfaction than client surveys. CIMIC calculates a repeat client rate by summing the total value of all contracts awarded by
existing clients during the year (including new contracts, extensions and variations) and dividing by the total of value
of all contracts awarded during the year (as per page the ‘New Work and Work in Hand’ sub-chapter in the Operating and Financial
Review). On an aggregated basis, using the dollar value of contracts awarded, the repeat client rate for the Group has consistently
been over 80% for the last 5 years.
Repeat Client rate (%)
2019
94
2018
88
2017
86
2016
83
2015
93
FOCUS ON THE FUTURE
We actively monitor our markets and the broader business environment for disruptions, trends
or changes that may present risks or opportunities. We seek to mitigate the risks and to and
capitalise on any 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. These were addressed in detail in the 2017 and 2018 Sustainability
Reports.
UGL invited to share renewables expertise
As the renewables sector evolves, the key question now being raised is ‘What’s next’? Representatives from UGL were invited to
address this question in June 2019 at the Australia-Korea Business Council (AKBC) Conference as part of a larger Australian Energy
Storage conference held in Sydney, New South Wales.
It was made clear at the conference that Korean investors are interested in local Australian installers who know the landscape and
have a strong reputation in the field. Recognising their leadership in the Australian renewables market, UGL was asked to provide a
presentation focusing on trends and upcoming projects in Australia. They also highlighted UGL’s capabilities in solar and battery
installation, and strong history of performance in high voltage power management. The conference was an excellent opportunity to
develop deeper and broader relationships with Korean organisations interested in creating partnerships in Australia.
While UGL is well positioned, they are also taking a longer-term look at other technologies, such as pumped hydro and waste-to-
energy, which are expected to play a large part in Australia’s renewable energy future. UGL’s experience in renewables and solar
includes the construction and commissioning of 12 solar farms, and six other renewable projects with a current output of 380
megawatts across Australia.
Other potential disruptions or trends include the increasing demand for sustainable infrastructure.
Sustainable infrastructure
In August 2019, Infrastructure Australia launched its 2019 Audit, sparking a new national conversation and calling for long-term
changes to the way governments plan, fund and deliver infrastructure. According to the Audit, more than $200 billion in
infrastructure investment is in the project pipeline, while $123 billion is underway. Infrastructure Australia’s Audit identified 180
challenges and opportunities; 22 of these are directly addressed by ISCA and the Infrastructure Sustainability (IS) Rating Scheme
In response to the Audit, ISCA released a submission which outlines innovative industry-led solutions to support the design, delivery
and operation of sustainable, resilient infrastructure. That submission referenced IS’s project database of 63 projects worth $165
billion that demonstrate how well-planned, well-designed infrastructure can be economically and environmentally sustainable and
support growing communities over the long-term.
The IS Rating Scheme links infrastructure development directly to the UN’s Sustainable Development Goals, aligning industry best
practice with global sustainability targets. IS-rated projects have collectively avoided 20 million tonnes of emissions, 150 million
waste to landfill and 170 million megalitres of water consumption. The Audit notes that sustainability and resilience are not ‘fringe
concepts’, but good economic practice – and CIMIC agrees. While it’s possible to start creating change at any point in an asset’s
lifecycle, the greatest opportunities lie at the earliest stages, starting with strategic planning.
Australia has industry-accepted best practice benchmarks for sustainable, resilient infrastructure – the IS Rating Scheme. We now
need wider mandates from all three tiers of government to ensure all infrastructure delivers cultural, social, environmental and
economic benefits. Many of the issues raised in the Audit demand revolutionary thinking and radical changes to industry practice.
CIMIC welcomes the opportunity to work with ISCA and other stakeholders across the infrastructure sector to accelerate
innovation because we know this will make the most of this unmissable opportunity. ISCA’s submission summary in response to
Infrastructure Australia’s 2019 Audit can be downloaded from their website.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
OUTLOOK AND FUTURE PLANS
We are committed to bringing an innovative approach to the successful delivery of projects. In 2020, 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 estimator 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 publish our response to the TCFD87 recommendations.
§
§
§
§
§
§
§
87 Task Force on Climate related Financial Disclosures
117
117
OUTLOOK AND FUTURE PLANS
We are committed to bringing an innovative approach to the successful delivery of projects. In 2020, 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 estimator 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 publish our response to the TCFD87 recommendations.
§
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§
§
§
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§
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
ENVIRONMENT
OUR APPROACH
CIMIC is committed to undertaking business activities in a manner that respects the environment and contributes to the
sustainability of our business. Our environmental sustainability commitments are to:
§
§
prevent the incidence, and mitigate the impact, of any pollution to air, water or land;
use energy efficiently, reduce energy intensity, utilise renewables when efficient to do so and minimise greenhouse gas
emissions;
use resources efficiently, encourage recycling and take a lifecycle approach to reducing waste;
minimise water usage and implement opportunities for water efficiency and recycling;
continually innovate to improve the efficiency of resources used and reduce their impact on the environment and society;
minimise disturbances and avoid impacts on habitats and ecology, and promote biodiversity; and
increase resilience to climate risks by undertaking risk assessments, and by designing and adapting activities to respond to
potential and actual impacts.
§
§
§
§
§
The Group manages its environmental footprint using consistent processes and methods that reflect best practice to mitigate
environmental risk. We seek to continually innovate to improve the efficiency of the resources we use and reduce waste, thereby
lowering our costs, improving our value proposition and benefitting the environment.
CIMIC is committed to abiding by Principles 7-10 of the United Nations Global Compact which state that businesses should:
§
§
§
support a precautionary approach to environmental challenges - Principle 7;
undertake initiatives to promote greater environmental responsibility - Principle 8; and
encourage the development and diffusion of environmentally friendly technologies - Principle 9.
Prevent pollution
Measures in place
Actions taken during 2019
Performance
§
Code of Conduct; Environmental Policy supplemented by Operating Company Policies and
systems
100% of Operating Company management systems certified to ISO 14001
289 environmental experts employed across the Group
§ 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 1 Level 1 incidents and 29 Level 2 incidents recorded
32 breaches resulted in 18 fines totalling $307,538
Use energy efficiently and reduce emissions
Measures in place
§
Actions taken during 2019
§
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies and
systems
Reported Australian energy use and Scope 1 and Scope 2 emissions to the Clean Energy
Regulator as per the Group’s NGER obligations
Submitted a comprehensive response to CDP’s 2019 Climate Change survey
§
§ Numerous, project-by-project initiatives tailored to energy efficiency and reducing emissions
§
§
§
§
as appropriate
Reduced energy intensity from 0.74 GWH/$m of revenue to 0.72 GWH/$m
EY undertook a Limited Assurance audit of the Group’s NGER submission and signed off on the
Energy and Emissions Report
Received a ‘C’ rating from CDP
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies and
systems
§ Numerous, project-by-project initiatives tailored to reduce waste as appropriate
§
Each Operating Company has a range of programs in place to actively reduce waste and
encourage recycling
Achieved a recycling/reuse rate of 78.6% with only 4.2% of waste disposed to landfill
Recycled 28,301 tonnes of concrete
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies and
systems
Submitted a comprehensive response to CDP’s 2019 Water survey
§
§ Numerous, project-by-project initiatives tailored to conserve water as appropriate
§
Aggregate water usage reduced with a water intensity of 0.38 ML/$m of revenue
§
Achieved water recycling/reuse rate of 20.1%
Performance
Reduce waste
Measures in place
Actions taken during 2019
Performance
Conserve water
Measures in place
Actions taken during 2019
Performance
§
§
§
87 Task Force on Climate related Financial Disclosures
117
118
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Use materials efficiently and reduce impact
Measures in place
§
Actions taken during 2019
Performance
Protect biodiversity
Measures in place
§
§
§
Actions taken during 2019
Performance
Build resilience to climate risks
Measures in place
§
§
§
§
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies and
systems
Numerous, project-by-project initiatives tailored to use materials efficiently as appropriate
Sydney Metro Northwest project the first project of its kind to earn a responsible timber
project certification
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies and
systems
Numerous, project-by-project initiatives tailored to protect diversity as appropriate
Reshaped 524 ha, top-soiled 320 ha and seeded 63 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
Actions taken during 2019
Performance
§ Numerous, project-by-project initiatives tailored to build resilience as appropriate
§
Climate change resilience initiatives integrated into project plans and lifecycle 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 good environmental performance helps to gain the confidence of our clients, communities, regulators and the
various stakeholders that our projects interact with. We also recognise that, by preventing pollution, we avoid potential operational
delays, remediation costs, fines and legal fees, and the potential of litigation and the resultant increase in insurance premiums.
CIMIC 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.
A sustainable solution for the community
Travellers on the northern side of Hong Kong Island are benefitting from the completion in 2019 of the 4.5km Central - Wan Chai
Bypass and Island Eastern Corridor Link (CWB), with key components delivered by Leighton Asia. Work on the two contracts
included two bridges, 3.7km of cut-and-cover tunnels, tunnel buildings, realigning and reconstructing existing roads, fit out of the
tunnels, plus the design, installation and commissioning of all tunnel services. The link is expected to cut travelling time between
the eastern and western ends of Hong Kong Island from about half an hour to five minutes.
The link also brings benefits in terms of sustainability and environmental quality. The CWB scheme features the world’s largest air
purification system (APS) that can handle 5.4 million m3 of vehicle exhaust per hour, removing at least 80% of key pollutants from
roadside emissions and improving air quality. Large fans draw tunnel exhaust fumes into air purification plants in three ventilation
buildings along CWB’s tunnel. The air first travels through an Electrostatic Precipitator which separates harmful particulates and
then passes through a De-nitrification Filter to remove nitrogen dioxide. Purified air is then discharged from the system.
CWB is not just a major highway connection, but a sustainable and strategic scheme to transform the existing crowded and
polluted streets of Hong Kong’s central business district. The project optimises the limited road surfaces available whilst bringing
benefits to enhance the community’s living quality. 80% of the CWB runs underground, which reduces obstruction of the view of
Hong Kong Harbour. Extensive greening elements have also been added to the tunnel portal and the areas surrounding the CWB,
improving the amenity of the area.
119
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
Use materials efficiently and reduce impact
Measures in place
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies and
Actions taken during 2019
Numerous, project-by-project initiatives tailored to use materials efficiently as appropriate
Performance
Sydney Metro Northwest project the first project of its kind to earn a responsible timber
Protect biodiversity
Measures in place
project certification
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies and
Actions taken during 2019
Numerous, project-by-project initiatives tailored to protect diversity as appropriate
Performance
Reshaped 524 ha, top-soiled 320 ha and seeded 63 ha of mining projects
Build resilience to climate risks
Measures in place
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies and
Comprehensive ‘Assessing Climate Risk’ guidance in place to support the development of
Climate Resilience Plans on CPB Contractors’ construction projects
Actions taken during 2019
§ Numerous, project-by-project initiatives tailored to build resilience as appropriate
Performance
Climate change resilience initiatives integrated into project plans and lifecycle assessments
systems
systems
systems
§
§
§
§
§
§
§
§
§
CIMIC is committed to preventing the incidence, and mitigating the impact, of any pollution to air, water
PREVENT POLLUTION
or land.
We understand that good environmental performance helps to gain the confidence of our clients, communities, regulators and the
various stakeholders that our projects interact with. We also recognise that, by preventing pollution, we avoid potential operational
delays, remediation costs, fines and legal fees, and the potential of litigation and the resultant increase in insurance premiums.
CIMIC 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.
A sustainable solution for the community
Travellers on the northern side of Hong Kong Island are benefitting from the completion in 2019 of the 4.5km Central - Wan Chai
Bypass and Island Eastern Corridor Link (CWB), with key components delivered by Leighton Asia. Work on the two contracts
included two bridges, 3.7km of cut-and-cover tunnels, tunnel buildings, realigning and reconstructing existing roads, fit out of the
tunnels, plus the design, installation and commissioning of all tunnel services. The link is expected to cut travelling time between
the eastern and western ends of Hong Kong Island from about half an hour to five minutes.
The link also brings benefits in terms of sustainability and environmental quality. The CWB scheme features the world’s largest air
purification system (APS) that can handle 5.4 million m3 of vehicle exhaust per hour, removing at least 80% of key pollutants from
roadside emissions and improving air quality. Large fans draw tunnel exhaust fumes into air purification plants in three ventilation
buildings along CWB’s tunnel. The air first travels through an Electrostatic Precipitator which separates harmful particulates and
then passes through a De-nitrification Filter to remove nitrogen dioxide. Purified air is then discharged from the system.
CWB is not just a major highway connection, but a sustainable and strategic scheme to transform the existing crowded and
polluted streets of Hong Kong’s central business district. The project optimises the limited road surfaces available whilst bringing
benefits to enhance the community’s living quality. 80% of the CWB runs underground, which reduces obstruction of the view of
Hong Kong Harbour. Extensive greening elements have also been added to the tunnel portal and the areas surrounding the CWB,
improving the amenity of the area.
119
In 2019, 1 Level 1 incident was recorded (zero recorded in 2018) and 29 Level 2 incidents recorded (versus 14 in 2018).
Environmental incidents88
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 ($)
2019
1
29
447
0.20
32
18
2018
0
14
693
0.09
21
5
2017
0
10
497
0.06
15
4
307,538
21,379
38,200
Real-time noise monitoring at Mt Pleasant Operation
The Mount Pleasant Operation is a greenfield mine situated close to Muswellbrook in New South Wales, Australia. The site has
strict operating conditions for noise management due to the mine’s proximity to the local community.
To manage these challenges, Thiess utilises onboard fleet management technology and noise monitoring devices to identify in real-
time key noise sources. Weather forecasting is also used to predict adverse weather conditions that may impact noise levels. This
type of noise monitoring allows Thiess to quickly respond to elevated noise levels, minimising community impacts while
maintaining productivity and regulatory compliance
CPB Contractors recorded 1 Level 1 incident which related to a prosecution for the WestConnex New M5 Project. After pleading
guilty in October 2018, CPB Contractors was convicted in September 2019, in the NSW Land & Environment Court, for causing
offensive odours to be emitted at the WestConnex M5 St Peters Interchange. The offences were committed on four occasions in
April, May and June 2017 in the course of construction activities. Steps have now been taken to prevent those incidents
reoccurring.
CPB Contractors has expressed its genuine and sincere apology to the community and residents for the odour. On 25 September
2019, CPB Contractors was ordered to: pay a total of $295,000 to the Environment Trust in lieu of a fine; pay the Environmental
Protection Authority’s investigation and legal costs; publish a notice of apology in various media outlets; and provide a notice to
nearby residents.
CPB Contractors recorded 24 Level 2 incidents, mainly related to site discharges, clearing activities, extent of works and hours of
works. CPB Contractors recorded 22 legal breaches for environmental incidents; 16 of these incidents - all on the Transmission
Gully Project in New Zealand - incurred individual fines of NZ$750 per incident, all of which related to actual or potential site
discharges. All incidents were investigated in accordance with environmental management processes and corrective actions were
implemented.
In Leighton Asia, 2 legal breaches (recorded Level 2 incidents) were incurred for mosquito larvae breeding incidents in Singapore
and Hong Kong. The incidents were investigated in accordance with Leighton Asia’s environmental management processes and
corrective actions were implemented to prevent a reoccurrence
UGL recorded 3 separate Level 2 incidents relating to uncontrolled offsite discharges at the Woodleigh Waterworks in Singapore.
One of these incidents incurred a fine of A$1,000.
Zero Level 1 or Level 2 incidents were recorded at Thiess however there were 5 breaches which related to licence limit
exceedances; 3 in Indonesia and 2 in Australia.
No Level 1 or Level 2 environmental incidents were reported at Sedgman.
The number of Level 3 incidents across the Group decreased from 693 in 2018 to 447 in 2019.
USE ENERGY EFFICIENTLY AND REDUCE EMISSIONS
CIMIC is committed to using energy efficiently, reducing our energy intensity, utilising renewables when efficient
to do so and to minimising the emission of greenhouse gases. More effectively managing the earth’s scarce
resources is not only the right thing to do, but it also creates value by reducing operating costs.
In terms of total energy usage, Thiess’ mining activities are the largest single driver, utilising substantial quantities of diesel fuel in
the operation of haul trucks, excavators and ancillary equipment. Thiess continually seeks to innovate to find more efficient ways to
88 Environmental discharges, environmental pollution or degradation which have: Level 1 - high severity impacts on the community and/or
environment or may have irreversible detrimental long-term impacts; Level 2 - moderate severity impacts on the community and/or environment (1
to 3 months) but is fully reversible in the long term; Level 3 - low severity impacts on the community and environment in the short term (<1 month)
and is fully reversible with no residual impacts. Includes nuisance level impacts.
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
deliver its services through optimising mine planning and operations, as well as equipment utilisation. Diesel, for use in
construction, is a less substantial contributor to energy use, with petrol and other fuel sources making only relative minor
contributions.
CIMIC’s electricity consumption is primarily used to:
§
§
§
power 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.
A smart approach to meter data collection
Energy utilities and meter-reader service providers are striving to get smarter about the collection and presentation of metering
data. It’s driven by both gaining efficiencies and providing consumers with better information.
Endeavour Energy is the operator of the electrical distribution network for Greater Western Sydney, the Blue Mountains, the
Southern Highlands and the Illawarra region of New South Wales and has outsourced its field work to UGL. Endeavour and UGL
staff have teamed up to form an alliance around energy meter reading utilising SevenX – an Android app – which delivers improved
efficiency and quality outcomes for managing meter data collection.
With the old system, meter readers had to go back into the office to dock their reader and that would be the only opportunity to
download the data. Data is now generated in real time from the handheld devices back to the servers, so it can be monitored and
analysed more efficiently. There’s no need for meter readers to come into the office, they can take their handheld device home
with them, then head straight out into the field again the next day, thereby increasing their productivity. With the app, the alliance
has realised a significant gain in efficiencies, saving both time and cost which is benefitting the customers of Endeavour Energy.
The Group’s energy consumption and spend over the last three years was as follows:
Energy consumption
Total Gigawatt hours (GWH)
Of which: Liquid, gas and solid fuel (%)
Non-renewable electricity (%)
Renewable electricity89
Energy spend ($m)
2019
10,647
98.7
1.2
0.2
262
2018
10,846
98.6
1.3
0.1
266
2017
8,790
98.4
1.6
--
225
The Group is actively pursuing a range of energy efficiency initiatives that promote the delivery of energy efficient, environmentally
and socially responsible projects.
An Australian first for West Gate
In Victoria, CPB Contractors is leading the industry, delivering a safe and sustainable tunnel lighting solution for Melbourne’s West
Gate Tunnel project. One of Victoria’s largest ever urban road projects, it features three inter-related projects and includes a 2.8km
eastbound tunnel and 4km westbound tunnel in Melbourne’s inner west.
In consultation with EIC Activities, the project identified an alternative approach to the underground lighting design. Rather than
installing the conventional high-pressure sodium (HPS) lights, two light-emitting diode (LED) light rows, or fluorescent bulbs, the
project will instead install a single row of LED lamps. This shift in lighting design and materials will result in operational
improvements long-term, including reduced energy consumption and improved longevity for ceiling lamps, while also maintaining
the desired uniform light distribution.
Further environmental risks were minimised through refinements to tunnel ventilation systems. EIC Activities has worked
collaboratively with CPB Contractors to come up with new design solutions that benefit both the client and the productivity of the
project. The team recognised that installing wide, low-speed fans directly above the tunnel alignment would reduce noise and
power usage which will benefit operations and the local community in the longer-term.
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, CIMIC Operating Companies work together with their
clients and business partners to develop tailored solutions to reduce the emission from each of their bespoke projects.
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.
89 CIMIC has only been reliably able to track renewable electricity purchases from 2018 onwards.
121
121
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
deliver its services through optimising mine planning and operations, as well as equipment utilisation. Diesel, for use in
construction, is a less substantial contributor to energy use, with petrol and other fuel sources making only relative minor
contributions.
The majority (~92%) of the Group’s Scope 1 emissions were generated by the consumption of diesel in the contract mining
activities of Thiess. In 2019, total emission fell by 2%, this was less than the growth in revenue from mineral and mineral
processing, which grew by more than 13%.
CIMIC’s electricity consumption is primarily used to:
§
§
§
power 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.
A smart approach to meter data collection
Scope 1 greenhouse gas emissions
Total (kt.CO2-e)
2019
2,634
2018
2,689
2017
2,202
CIMIC’s Scope 2 GHG emissions are almost entirely derived from the consumption of purchased electricity. The main areas where
electricity is consumed were outlined on the previous page.
Energy utilities and meter-reader service providers are striving to get smarter about the collection and presentation of metering
data. It’s driven by both gaining efficiencies and providing consumers with better information.
Scope 2 greenhouse gas emissions
Total (kt.CO2-e)
2019
122
2018
125
2017
128
Endeavour Energy is the operator of the electrical distribution network for Greater Western Sydney, the Blue Mountains, the
Southern Highlands and the Illawarra region of New South Wales and has outsourced its field work to UGL. Endeavour and UGL
staff have teamed up to form an alliance around energy meter reading utilising SevenX – an Android app – which delivers improved
efficiency and quality outcomes for managing meter data collection.
Scope 1 and Scope 2 emissions are broadly a function of the Group’s mining and construction activity levels. The efficiency of the
energy used, either liquid fuel or electricity, is managed carefully by CIMIC. Not only because of the impact on the climate, but
because it can assist in lowering costs and improving profitability. This efficiency focus is good for the environment and good for
business.
With the old system, meter readers had to go back into the office to dock their reader and that would be the only opportunity to
download the data. Data is now generated in real time from the handheld devices back to the servers, so it can be monitored and
analysed more efficiently. There’s no need for meter readers to come into the office, they can take their handheld device home
with them, then head straight out into the field again the next day, thereby increasing their productivity. With the app, the alliance
has realised a significant gain in efficiencies, saving both time and cost which is benefitting the customers of Endeavour Energy.
The Group’s energy consumption and spend over the last three years was as follows:
2019
10,647
98.7
1.2
0.2
262
2018
10,846
98.6
1.3
0.1
266
2017
8,790
98.4
1.6
--
225
Energy consumption
Total Gigawatt hours (GWH)
Of which: Liquid, gas and solid fuel (%)
Non-renewable electricity (%)
Renewable electricity89
Energy spend ($m)
and socially responsible projects.
An Australian first for West Gate
The Group is actively pursuing a range of energy efficiency initiatives that promote the delivery of energy efficient, environmentally
In Victoria, CPB Contractors is leading the industry, delivering a safe and sustainable tunnel lighting solution for Melbourne’s West
Gate Tunnel project. One of Victoria’s largest ever urban road projects, it features three inter-related projects and includes a 2.8km
eastbound tunnel and 4km westbound tunnel in Melbourne’s inner west.
In consultation with EIC Activities, the project identified an alternative approach to the underground lighting design. Rather than
installing the conventional high-pressure sodium (HPS) lights, two light-emitting diode (LED) light rows, or fluorescent bulbs, the
project will instead install a single row of LED lamps. This shift in lighting design and materials will result in operational
improvements long-term, including reduced energy consumption and improved longevity for ceiling lamps, while also maintaining
the desired uniform light distribution.
Further environmental risks were minimised through refinements to tunnel ventilation systems. EIC Activities has worked
collaboratively with CPB Contractors to come up with new design solutions that benefit both the client and the productivity of the
project. The team recognised that installing wide, low-speed fans directly above the tunnel alignment would reduce noise and
power usage which will benefit operations and the local community in the longer-term.
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, CIMIC Operating Companies work together with their
clients and business partners to develop tailored solutions to reduce the emission from each of their bespoke projects.
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.
89 CIMIC has only been reliably able to track renewable electricity purchases from 2018 onwards.
121
Given the impact of activity levels, CIMIC’s preferred performance measure is emissions intensity, which is based on the total of
both Scope 1 and Scope 2 emissions (in kt. Co2-e) divided by revenue (in $m). Given the diversified nature of the Group’s activities,
and their very different energy usage profiles, CIMIC believes that measuring emissions intensity by activity provides an appropriate
– and comparable - metric.
CIMIC is committed to a target of achieving annual reductions in the emissions intensity of all three of the Group’s primary business
activities - Mining and Minerals Processing, Construction, and Services.
Scope 1 and Scope 2 greenhouse gas emissions
intensity (kt. CO2-e/$m)
Mining and minerals processing
Construction
Services
2019
0.56
0.04
0.01
2018
0.62
0.04
0.01
2017
0.64
0.04
0.01
The gradual reduction in emission intensity in the Mining and Minerals Processing business over the last three years reflects an
ongoing focus on improving the efficiency of energy usage, particularly diesel. The Construction business is much less emissions
intense than the Mining business, but its energy usage depends on what types of projects it is delivering (i.e. excavating a tunnel
versus building a hospital). The Services business has an even lower emission intensity and is largely focused on improving the
efficiency of electricity usage which is its largest contributor to emissions.
CIMIC will also work, with clients, to develop energy and emissions targets that are relevant to those individual projects.
Certified: Adelaide's Torrens Road to River Torrens Project
The Torrens Road to River Torrens Project (T2T) in northern Adelaide has achieved a ‘Leading’ As Built IS Rating, the highest
possible. The project featured a number of sustainability initiatives which contributed to the achievement of the 'Leading' rating.
These included a 49% reduction in the amount of carbon emissions produced when compared to a business-as-usual base case.
This equates to saving more than 43,000 tonnes of carbon from entering the atmosphere. This was achieved through:
§
§
§
the use of reclaimed asphalt - more than 50% of the 50,000 tonnes of asphalt pavement was reclaimed;
innovative design of the retaining wall using soil nails, which reduced the amount of concrete and steel; and
reductions in bridge deck area due to a symmetrical design.
The project also scored highly for its treatment of waste with spoil, construction and demolition waste, and office waste all recycled
to the highest industry benchmarks. In addition, the project featured some ecology initiatives including the:
§ Use of five basins for water treatment, including swales, which encouraged natural regrowth, and
§
Installation of possum boxes which improved local biodiversity.
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 emissions are largely a function of the materials used by the Group in construction. While CIMIC will try to reduce Scope 3
emissions where possible, the choice of materials is very often driven by the demands of clients (both in terms of the type of
projects awarded and the contractual terms), compliance with industry standards, and the requirements of consulting engineers
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
and designers. For these reasons, while CIMIC will - for example - try to select lower emission materials (such as geopolymer
concrete) this is not always possible and our attempts to reduce the emissions embedded in construction materials remain
dependant on satisfying the demands of our clients.
Scope 3 greenhouse gas emissions (kt.CO2-e)
Total (kt.CO2-e)
2019
1,143
2018
1,000
2017
1,653
In 2019, CIMIC’s Scope 3 emission increased by 14%, primarily reflecting an increase in the amount of materials used and a
substantial reduction in the amount of waste generated. 90
As a substantial energy user and greenhouse gas emitter, CIMIC is registered to report under the NGER91 scheme. Energy use and
emissions data is collected for all 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 for reporting in Australia 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
2018/19
2017/18
2016/17
2015/16
2014/15
Total Scope 1
emissions (t CO2-e)
134,974
128,057
68,295
50,639
77,412
Total Scope 2
emissions (t CO2-e
82,089
113,591
53,534
32,910
72,142
Total Net energy
consumed (GJ)
2,297,710
2,336,472
1,233,835
884,558
1,434,467
EY signed off on the preparation of CIMIC’s Energy and Emissions Report, again providing a limited assurance audit for the
2018/2019 NGER data as requested.
REDUCE WASTE
CIMIC is committed to 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.
Reusing and recycling materials on the West Gate Tunnel Project
The CPB Contractors’ team delivering construction works on the West Gate Tunnel project in Melbourne is committed to reusing
and recycling materials whenever possible. They were recently able to further minimise their environmental footprint by donating
materials to support Wildlife Victoria.
They were able to put to good use off-cuts from the Flowering Gum and Sheoak growing on the site that would otherwise been
disposed of as a result of construction activities. These off-cuts have proven to be valuable fresh food sources for injured native
animals and the team were able to help share them with various local wildlife organisations.
In recent years, the Group has generated a significantly increased amount of spoil - or waste earth and rock - that needs to be
disposed of due to an increase in tunnelling activity. 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 2019, generated a total of 8,438,989 tonnes of waste, of which more than 78.6% was diverted - mainly for reuse - and only ~4.2%
(v 1.4% in FY18) was disposed of in a landfill.
Waste generation (tonnes)
Disposed - landfill
Disposed - other
Diverted - reuse
Diverted - recycling
Diverted - other
Total
2019
353,976
1,450,400
5,464,433
1,169,803
377
8,438,989
2018
188,121
440,653
10,677,213
1,820,119
862
13,126,968
90 The substantial reduction in emissions from 2017 to 2018 reflects a change in the materials emission factors used at CPB Contractors and an
overstatement of emission generated by landfill, waste and steel in 2017 by UGL. These changes were reported in the 2018 Sustainability Report.
91 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.
123
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
and designers. For these reasons, while CIMIC will - for example - try to select lower emission materials (such as geopolymer
concrete) this is not always possible and our attempts to reduce the emissions embedded in construction materials remain
dependant on satisfying the demands of our clients.
Scope 3 greenhouse gas emissions (kt.CO2-e)
Total (kt.CO2-e)
2019
1,143
2018
1,000
2017
1,653
In 2019, CIMIC’s Scope 3 emission increased by 14%, primarily reflecting an increase in the amount of materials used and a
substantial reduction in the amount of waste generated. 90
As a substantial energy user and greenhouse gas emitter, CIMIC is registered to report under the NGER91 scheme. Energy use and
emissions data is collected for all 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 for reporting in Australia 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
134,974
128,057
68,295
50,639
77,412
Total Net energy
consumed (GJ)
2,297,710
2,336,472
1,233,835
884,558
1,434,467
82,089
113,591
53,534
32,910
72,142
EY signed off on the preparation of CIMIC’s Energy and Emissions Report, again providing a limited assurance audit for the
2018/19
2017/18
2016/17
2015/16
2014/15
2018/2019 NGER data as requested.
REDUCE WASTE
opportunities for recycling or reuse.
CIMIC is committed to 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
Reusing and recycling materials on the West Gate Tunnel Project
The CPB Contractors’ team delivering construction works on the West Gate Tunnel project in Melbourne is committed to reusing
and recycling materials whenever possible. They were recently able to further minimise their environmental footprint by donating
materials to support Wildlife Victoria.
They were able to put to good use off-cuts from the Flowering Gum and Sheoak growing on the site that would otherwise been
disposed of as a result of construction activities. These off-cuts have proven to be valuable fresh food sources for injured native
animals and the team were able to help share them with various local wildlife organisations.
In recent years, the Group has generated a significantly increased amount of spoil - or waste earth and rock - that needs to be
disposed of due to an increase in tunnelling activity. 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 2019, generated a total of 8,438,989 tonnes of waste, of which more than 78.6% was diverted - mainly for reuse - and only ~4.2%
(v 1.4% in FY18) was disposed of in a landfill.
Waste generation (tonnes)
Disposed - landfill
Disposed - other
Diverted - reuse
Diverted - recycling
Diverted - other
Total
2019
353,976
1,450,400
5,464,433
1,169,803
377
8,438,989
2018
188,121
440,653
10,677,213
1,820,119
862
13,126,968
90 The substantial reduction in emissions from 2017 to 2018 reflects a change in the materials emission factors used at CPB Contractors and an
overstatement of emission generated by landfill, waste and steel in 2017 by UGL. These changes were reported in the 2018 Sustainability Report.
91 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.
123
During 2019, the Group recycled 28,301 tonnes of concrete which avoided this material being sent to landfill.
Recycling concrete on the Pacific Motorway Upgrade
CPB Contractors has been upgrading a 12km section of the M1 Pacific Motorway, located about two hours north of Sydney's CBD.
The upgrade, which commenced in 2017, was designed to widen the M1 to three lanes in each direction, replace cracked concrete
pavements with smoother, quieter, asphalt and to improve safety.
Concrete recycling is a feature of the project with the existing concrete pavement being removed and then crushed within the work
area. Processing on site reduces the number of truck movements required around the project. The crushed concrete is then
recycled for use in the new road foundation. More than 200,000 tonnes of concrete have been recycled and reused in the delivery
of this important infrastructure project.
During the year, the Group generated 73,211 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
2019
73,211
2018
91,505
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
Minimising water usage and implementing opportunities for water efficiency and recycling is an important
commitment for CIMIC. The Group’s projects - be they construction, mining or services - can often be substantial
users of water. Water is often used 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.
Thiess continues to support the International River Foundation
Thiess is a founding member of the International River Foundation (IRF) that promotes the restoration, protection, sustainable
management and resilience of the world’s rivers. In 2019, the Foundation marked its 20th anniversary of the awarding of the
International Riverprize. This prize recognises and rewards organisations who ensure the sustainable management of the world’s
rivers, whether at the grassroots or transboundary level. Thiess is proud to maintain a long-standing relationship with the IRF who
champion integrated river basin management for the restoration, protection and sustainable management of the world’s rivers
.
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.
Thiess’ global approach to dam governance
Thiess has developed a bespoke dam governance framework to manage dams globally. The framework provides an overview of
how to record, assess and manage dams with the key objective of keeping Thiess’ people, assets and the environment safe. The
framework is used to develop a risk profile for each dam to ensure appropriate controls are in place to manage any identified risks.
Assessments have been completed on all Thiess’ dams globally, with further investigations - in line with framework requirements -
planned for 2020. Thiess is also an active member on advisory committees relating to dam management ensuring the dam
governance framework remains in line with leading industry practice.
During 2019, the Group withdrew 17.2 million kilolitres of water and discharged more than 11.6 million kilolitres which led to a
substantial variation compared to the prior year. The significant amount of water discharged in 2018 relates to pit dewatering
124
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
activities at the Senakin coal mine in Indonesia where mining recommenced that year. 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 consumption92
Withdrawals (ML)
Discharge (ML)
Consumption (ML)
Recycled-reused (ML)
Recycled-reused (%)
2019
17,188
(11,567)
5,621
4,313
20.1
2018
8,121
(9,022)
(901)
9,200
53.1
Drought conditions in Australia led to an increase in water use for dust suppression in the Australia Mining business.
The Group will seek opportunities where possible to recycle or reuse water and, in 2019, 4.3 million kilolitres was sourced in this
way. This generated a recycling-reuse percentage of 20.1%.
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
2019
69
0
15
1
15
2018
44
3
17
9
27
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
2019
>99
0
0
<1
2018
86
6
7
1
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 2019, the Group’s Operating Companies procured nearly 6.7 million tonnes of construction materials.
Material use (kilotonnes)
Quantity
2019
6,751
2018
4,295
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
Glass
2019
83
2
15
<1
<1
2018
88
3
8
<1
<1
92 These water disclosures for withdrawals, discharges and consumption align with the ‘CDP Technical Note on Water Accounting’, CDP Water
Security 2018.
125
125
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
activities at the Senakin coal mine in Indonesia where mining recommenced that year. 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.
Drought conditions in Australia led to an increase in water use for dust suppression in the Australia Mining business.
The Group will seek opportunities where possible to recycle or reuse water and, in 2019, 4.3 million kilolitres was sourced in this
way. This generated a recycling-reuse percentage of 20.1%.
The Group’s withdrawals were primarily sourced from rainwater and rivers, wastewater from other organisations, renewable
Fresh surface water, including rainwater, water from wetlands, rivers and
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 2019, the Group’s Operating Companies procured nearly 6.7 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
Water usage and consumption92
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
Material use (kilotonnes)
Quantity
split as follows:
Quantities (%)
Concrete
Steel
Asphalt
Timber
Glass
2019
17,188
(11,567)
5,621
4,313
20.1
2018
8,121
(9,022)
(901)
9,200
53.1
2019
69
0
15
1
15
2019
>99
0
0
<1
2019
6,751
2019
83
2
15
<1
<1
2018
44
3
17
9
27
2018
86
6
7
1
2018
4,295
2018
88
3
8
<1
<1
92 These water disclosures for withdrawals, discharges and consumption align with the ‘CDP Technical Note on Water Accounting’, CDP Water
Security 2018.
125
New stations built using 100% responsibly sourced timber
The station canopies and multi-story parking façades on the Sydney Metro Northwest project have been constructed with 100%
responsibly sourced timber. The wood used at seven stations has been certified under the Programme for the Endorsement of
Forest Certification (PEFC) and Responsible Wood (RW) Chain of Custody Project Standards, and one additional station has been
certified with a Forest Stewardship Council® (FSC®) Partial Project Certificate. Additionally, the timber used on four multi-story
parking structures, with space for more than 4,000 vehicles, has also been certified as responsibly sourced under the PEFC and RW
Project Standards. The Sydney Metro Northwest project - which opened to customers in May 2019 - is the first project of its kind to
earn a responsible timber project certification.
CPB Contractors, part of the joint venture that constructed the Metro, sourced timber from FSC and RW certified forests in New
South Wales. They also tracked the material through the primary saw mills and timber wholesalers to the fabricators and installers
of the timber batten ceilings and façades. Independent, third-party certification was conducted to ensure that the timber was
sourced from responsibly managed forests, and that transparency has been maintained throughout the supply chain.
Materials made up approximately 20% of the Group’s total expenses in 2019 (versus 21% in 2018). Detail on the Group’s other
expense items can be found in ‘Note 3. Expenses’ in the Financial Report section of the Annual Report.
An Australian first for CPB Contractors
In Brisbane, Queensland, CPB Contractors in partnership with Transurban Queensland and the Queensland State Government has
delivered the Logan Enhancement Project which includes widening sections of the Logan and Gateway motorways, improving key
congestion hot spots and constructing on and off-ramps on the Gateway Motorway. CPB Contractors has marked an Australian first
on this project, using an innovative EME2 (Enrobé a Module Élevé Class 2) asphalt product that increases paving durability, despite
requiring a lower volume of the product in comparison to regular asphalt. Selected for its high strength and resistance attributes,
more than 206,000 tonnes of the combined base and binder asphalt was applied to the Queensland roads project. The
Infrastructure Sustainability Council of Australia (ISCA) has since verified that this is the single largest commercial use of EME2 in
Australia.
The use of this new material is another example of CPB Contractors’ commitment to sourcing innovative and environmentally
sustainable solutions for projects. EME2 can potentially reduce the layer thickness of the base course for a heavily trafficked
pavement by up to 30% depending on traffic conditions and local climate, delivering construction program savings. Longer-lasting
pavement solutions and more durable design will pay dividends by reducing the frequency of road resurfacing in years to come.
Innovations like this are contributing to the broader market transformation of sustainable road construction by minimising future
road maintenance and disruption for vehicles.
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.
The rehabilitation of disturbed areas remains an integral element of dealing with biodiversity on our construction, mining and
services projects. Rehabilitation 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
183.9
340.2
524.1
Top-soiled
96.0
223.6
319.6
Seeded
62.5
0
62.5
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
Industry-leading rehabilitation in the Hunter Valley
Thiess is committed to utilising the latest technology to create natural rehabilitated landforms and ensure the delivery of industry-
leading results for the environment and community. At its Hunter Valley operations, Thiess is utilising Geofluv, a new approach to
rehabilitation designs that aims to rehabilitate the land to a more natural function and appearance.
Due to these operations’ proximity to local communities, the environment team is committed to developing landform approaches
that are effective visual and noise barriers. Rehabilitation includes establishing grassy woodland, with native grass, trees, shrubs,
and incorporates rock piles and stands of tree hollows to encourage fauna return. Stabilising soil, minimising dust and noise
impacts, and providing a visually appealing landscape is an absolute priority.
BUILD RESILIENCE TO CLIMATE RISKS
Operating sustainably provides CIMIC with opportunities – to be part of the solution to help address the climate change
challenge and to expand our operations as a trusted partner to clients and other stakeholders seeking to transition to a
low-carbon future.
We have clear approaches in place in relation to climate change. This encompasses dedicated businesses focused on driving the
opportunities in our sectors for the benefit of our clients, partners, suppliers, communities and shareholders, and robust
governance and management of climate-related risks.
The former includes a range of construction, services and technology opportunities from remediation work and increased
investments by clients as they seek greater resilience to the potential effects of climate change. We have a strong competitive
position delivering sustainably rated buildings and infrastructure projects, which now account for more than 20% of our revenue,
and demand for these types of projects is expected to continue to grow.
In addition, our mining services and minerals processing expertise will increasingly be applied to supporting the extraction of
emerging resources such as lithium, cobalt, manganese, nickel, graphite and rare earths for use in alternative energy technologies.
While global demand for thermal coal is forecast to remain relatively stable for the foreseeable future (to 2040), a significant
portion of our secured work in mining and minerals processing is diversified across other commodities such as metallurgic coal
(for steel making), iron ore, copper and gold. In 2019, thermal coal generated approximately 13% of the Group’s revenue.
In terms of emissions reduction, our aim is to work together with our clients and partners to find ways to operate more effectively
and efficiently in delivering services, while boosting energy productivity, reducing waste, rehabilitating degraded land, increasing
the use of renewable energy and driving innovation. Our target is to achieve annual reductions in the emissions intensity of each of
our three primary business activities – Mining and Minerals Processing, Construction, and Services.
We welcome the work of the Task Force on Climate-related Financial Disclosures (TCFD), to increase transparency around the
response of businesses to climate change. This year, we have drafted our first standalone CIMIC Climate Change Report, based on
the TCFD framework, which we expect to make available on our website in 2020. We will continue to regularly review our
operations and provide a regular update on how CIMIC Group is tackling climate change in our annual Sustainability Report.
OUTLOOK AND FUTURE PLANS
We are committed to, wherever possible, preventing or otherwise mitigating and remediating any harmful effects from our
operations. In 2020, we plan to:
§
seek opportunities - tailored to each of the Group’s Operating Companies and projects - to increase the use of renewables,
and to reduce energy usage and intensity;
continue to focus on initiatives to report on and reduce GHG emissions;
continue to recycle concrete where possible and to reduce the amount of waste going to landfill;
seek opportunities - tailored to each of the Group’s Operating Company and projects - to reduce water usage and water
intensity;
publish the recommended disclosures of the TCFD which will be made 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; and
further develop and improve support tools and processes to integrate sustainability on infrastructure projects.
§
§
§
§
§
§
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CIMIC Group Limited Annual Report 2019 | 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 again acknowledged CIMIC with a ‘C’ rating for its ‘Climate Change’ submission which indicates that CIMIC has
“Knowledge of impacts on, and of, climate change issues”93.
SAFETY
CPB Contractors
§
Recognised – along with Pacific Partnerships - with the ‘3M best use of New Zealand design/technology’ award in the New
Zealand Workplace Health and Safety Awards for an in-crane GPS warning system on the Transmission Gully project.
Leighton Asia
§
§
§
Received ‘Proactive Safety Contractor Award 2019’ from the Hong Kong Construction Association (HKCA).
Received ‘Silver Safety Award’ at the MTR QSE Award Scheme for Shatin to Central Link 1112 in Hong Kong.
Received ‘Safe Project Team 2019 Highly Commended Award’ at the Lighthouse Club (LHC) Contractors’ Safety Awards for the
Shatin to Central Link 1123 Exhibition Station and Western Approach Tunnel in Hong Kong.
Received ‘Safe Project Team 2019 Commended Award’ at the LHC Contractors’ Safety Awards for the Black Point Power
Station Combined Cycle Gas Turbine project in Hong Kong.
Received CLP’s ‘Zero Recordable Injury Incident’ for the Black Point Power Station Combined Cycle Gas Turbine project in Hong
Kong.
Recognised with a Gold Award at the 2019 Royal Society for Prevention of Accidents Awards for the Deep Tunnel Sewerage
System Phase 2- Contract T-09 in Singapore.
Received Singapore’s inaugural ‘Public Utilities Board Safety Recognition Award’ for the Deep Tunnel Sewerage System Phase
2- Contract T-09.
Lai Kwai Ping, Supervisor, and Andy Fong, Safety Supervisor in Hong Kong, were recognised by the Airport Authority’s Safety
Recognition Scheme 2018/ 2019 with the ‘Role Model Safety Behaviour Award’ and ‘Best Safety Supervisor Award’
respectively.
Stephen Bennet, Project Director, and Billy Siu, Supervisor in Hong Kong, were recognised by the HKCA with the ‘Safe Person-
in-charge Award’ and ‘Safe Supervisors Award’ respectively.
Josh Liu, Construction Manager in Hong Kong, was recognised by the Airport Authority’s Safety Recognition Scheme
2018/2019 with the ‘V Commit Contractors Manager Diamond Award’.
Gurung Prakash, Scaffold Ganger in Hong Kong, was recognised by the Occupational Health and Safety Council’s Construction
Safety Promotional Campaign with the ‘Outstanding Work at Height Worker’.
§
§
§
§
§
§
§
§
§
§
INTEGRITY
CPB Contractors
§
Awarded the ‘Social Procurement Partnership of the Year’ at the 2019 Social Traders Awards for an innovative partnership
between Metro Tunnel Project's Rail Systems Alliance (RSA) in Victoria and Kinfolk Enterprise.
Leighton Asia
§
Commended for giving back to the community in Hong Kong through The Community Chest’s Corporate Volunteer Matching
Scheme at its Corporate and Employee Contribution Program 2018/19 awards.
Thiess
§
§
Finalist in the ‘Best Company Indigenous Procurement Initiative’ at the Queensland Resources Council (QRC) Indigenous
Awards for their Indigenous Networking Breakfast.
Finalist in the 2019 Australian Mining Prospects Awards in the category of ‘Community Interaction’ for its commitment to
building skills and opportunities for inmates in New South Wales’ Hunter Valley.
93 CDP’s 2019’ Climate Change Basic Performance Review Report’, 22 Jan 2020.
128
128
Industry-leading rehabilitation in the Hunter Valley
Thiess is committed to utilising the latest technology to create natural rehabilitated landforms and ensure the delivery of industry-
leading results for the environment and community. At its Hunter Valley operations, Thiess is utilising Geofluv, a new approach to
rehabilitation designs that aims to rehabilitate the land to a more natural function and appearance.
Due to these operations’ proximity to local communities, the environment team is committed to developing landform approaches
that are effective visual and noise barriers. Rehabilitation includes establishing grassy woodland, with native grass, trees, shrubs,
and incorporates rock piles and stands of tree hollows to encourage fauna return. Stabilising soil, minimising dust and noise
impacts, and providing a visually appealing landscape is an absolute priority.
BUILD RESILIENCE TO CLIMATE RISKS
Operating sustainably provides CIMIC with opportunities – to be part of the solution to help address the climate change
challenge and to expand our operations as a trusted partner to clients and other stakeholders seeking to transition to a
low-carbon future.
We have clear approaches in place in relation to climate change. This encompasses dedicated businesses focused on driving the
opportunities in our sectors for the benefit of our clients, partners, suppliers, communities and shareholders, and robust
governance and management of climate-related risks.
The former includes a range of construction, services and technology opportunities from remediation work and increased
investments by clients as they seek greater resilience to the potential effects of climate change. We have a strong competitive
position delivering sustainably rated buildings and infrastructure projects, which now account for more than 20% of our revenue,
and demand for these types of projects is expected to continue to grow.
In addition, our mining services and minerals processing expertise will increasingly be applied to supporting the extraction of
emerging resources such as lithium, cobalt, manganese, nickel, graphite and rare earths for use in alternative energy technologies.
While global demand for thermal coal is forecast to remain relatively stable for the foreseeable future (to 2040), a significant
portion of our secured work in mining and minerals processing is diversified across other commodities such as metallurgic coal
(for steel making), iron ore, copper and gold. In 2019, thermal coal generated approximately 13% of the Group’s revenue.
In terms of emissions reduction, our aim is to work together with our clients and partners to find ways to operate more effectively
and efficiently in delivering services, while boosting energy productivity, reducing waste, rehabilitating degraded land, increasing
the use of renewable energy and driving innovation. Our target is to achieve annual reductions in the emissions intensity of each of
our three primary business activities – Mining and Minerals Processing, Construction, and Services.
We welcome the work of the Task Force on Climate-related Financial Disclosures (TCFD), to increase transparency around the
response of businesses to climate change. This year, we have drafted our first standalone CIMIC Climate Change Report, based on
the TCFD framework, which we expect to make available on our website in 2020. We will continue to regularly review our
operations and provide a regular update on how CIMIC Group is tackling climate change in our annual Sustainability Report.
We are committed to, wherever possible, preventing or otherwise mitigating and remediating any harmful effects from our
OUTLOOK AND FUTURE PLANS
operations. In 2020, we plan to:
seek opportunities - tailored to each of the Group’s Operating Companies and projects - to increase the use of renewables,
and to reduce energy usage and intensity;
continue to focus on initiatives to report on and reduce GHG emissions;
continue to recycle concrete where possible and to reduce the amount of waste going to landfill;
seek opportunities - tailored to each of the Group’s Operating Company and projects - to reduce water usage and water
intensity;
publish the recommended disclosures of the TCFD which will be made 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; and
further develop and improve support tools and processes to integrate sustainability on infrastructure projects.
§
§
§
§
§
§
§
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
CULTURE
CIMIC
§
§
§
LinkedIn ranked CIMIC Group as number seven on its ‘Top Companies 2019: Where Australia wants to work now’ list.
Ranked 32nd in the Financial Review’s Top 100 Graduate Employers survey which lists the most popular firms for graduates.
CIMIC’s CEO and all Australian-based Operating Company Managing Directors recognised as WGEA Pay Equity Ambassadors.
CPB Contractors
§
Awarded the ‘Pride in Diversity and Social Inclusion Award’ in recognition of commitment, investment and achievement in
diversity and social inclusion at South Australia’s Civil Contractors Federation (SACCF) Excellence Awards.
§ Nichole Fynnaart, Senior Document Controller, was recognised with a ‘Quiet Achiever Award’ for her dedication and proactive
approach to document control at the SACCF Excellence Awards.
Papua Taumate, Graduate Engineer, was recognised as the ‘Young Engineer of the Year’ at the 2019 Civil Contractors New
Zealand Awards.
Katherine Brewis, Project Manager, was appointed to Roads Australia’s 2020 National Fellowship Program.
§
§
Thiess
§
Pedro Sanhueza Soto, Thiess Graduate Mining Engineer, won the University of Chile’s Juan Bruggen Award.
Leighton Asia
§
Received a Bronze Award from the Hong Kong Government for ‘Contractor Hiring the Most Number for Construction Industry
Council (CIC) Graduates.’
Commended by the Construction Industry Council (of Hong Kong) as a ‘Contractor Actively Participating in Cooperative
Training Schemes.’
Tam Kit Choi, Building Engineer in Hong Kong, was recognised by the Sir Edward Youde Memorial Fund 2018/19 with the
‘Award for Self-Improvement for Working Adults.’
§
§
INNOVATION
CPB Contractors
§ Winner of the Infrastructure Partnerships Australia (IPA) ‘Industry Choice Award’ for the Caulfield to Dandenong Level Crossing
Removal Project.
§ Winner of the IPA ‘Government Partnerships Excellence Award’ for the Caulfield to Dandenong Level Crossing Removal
Project.
§
Finalist in the IPA ‘Project for the Year Award’ for the Caulfield to Dandenong Level Crossing Removal Project.
§
Finalist in the IPA ‘Contractor Excellence Award’ for the Caulfield to Dandenong Level Crossing Removal Project.
§
Finalist in the IPA ‘Government Partnerships Excellence Award’ for the Canberra Light Rail project.
§ Winner of ISCA’s ‘Organisational Leadership in Infrastructure Sustainability Award’ (Private Sector)
§ Winner of ISCA’s ‘IS Innovation and Impact Award’ for the Caulfield to Dandenong Level Crossing Removal Project.
§
Finalist in ISCA’s ‘IS Innovation and Impact Award’ for the Sydney Metro Northwest – Operations, Trains and Stations.
§ Winner of ISCA’s ‘Outstanding Achievement in Infrastructure Sustainability Award (Design)’ for the Sydney Metro City &
Southwest Tunnel and Station Excavation Works.
§ Nominated as a Finalist in the 2020 Australian Construction Achievement Award for the Caulfield to Dandenong Level Crossing
Removal Project and for the Sydney Metro Northwest (the Operations, Trains and Systems (OTS) contract).
§ Winner of a Master Builders Australia National Excellence Award (MBANEA) in the category of ‘National Civil / Infrastructure
Award - Over $25m’ for the Caulfield to Dandenong Level Crossing Removal Project.
§ Winner of the MBANEA in the category of ‘National Health Facility Award’ for the new Northern Beaches Hospital.
§
Bjorn Eilande acknowledged with a ‘High Commendation’ in the category of ‘Commercial Construction: $50 million plus’ for
the APEC Haus development in Papua New Guinea in the AIB Building Professional Excellence Awards of Queensland.
Broad Construction
§
Chris Owen recognised as the ‘2019 Western Australia Building Professional of the Year’ and in the category of ‘Residential
Construction: $50 million plus’ for the Campus Perth development in the Australian Institute of Building (AIB) Professional
Excellence Awards for Western Australia.
§ Nigel Smith acknowledged with a ‘High Commendation’ in the category of ‘Residential Construction: $50 million plus’ for the
Claremont on the Park development in the AIB Professional Excellence Awards of Western Australia.
Leighton Asia
§
Selected as one of the Top 100 Companies in the New Civil Engineer’s (NCE) Power List which recognises the most forward-
thinking and innovative firms operating in civil engineering.
§ Winner of the NCE ‘Construction Innovation award’ for its innovative approach in the construction of the Hong Kong-Zhuhai-
Macao Bridge Passenger Clearance Building project.
129
129
§
Pacific Partnerships
§
Recognised with an Excellence Award, along with CPB Contractors and other ShapED consortium partners, by the Property
Council New Zealand at the Property Industry Awards 2019 for the Te Ao Marama School in Hamilton. The Matua Ngaru
School and the Te Uho o te Nikau Primary School in Auckland received Merit Awards.
Finalist in the IPA ‘Project for the Year Award’ for the Canberra Light Rail project (included CPB Contractors and UGL).
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
UGL
§ Winner of the IPA ‘Innovation Excellence Award’ for the Uninterruptible Power Supply for Melbourne’s Railway Signalling
§
Network.
Awarded, along with its partners, the ‘Engineering Team of the Year’ Gold Commendation by the Royal Australian Navy’s
Capability Acquisition and Sustainment Group for work on the Navy’s Landing Helicopter Dock Landing Craft.
§ Nominated as a Finalist in the 2020 Australian Construction Achievement Award for the Caulfield to Dandenong Level Crossing
Removal Project and for the Sydney Metro Northwest (the Operations, Trains and Systems (OTS) contract).
CULTURE
CIMIC
CPB Contractors
Zealand Awards.
Thiess
Leighton Asia
Council (CIC) Graduates.’
Training Schemes.’
INNOVATION
CPB Contractors
Removal Project.
Project.
LinkedIn ranked CIMIC Group as number seven on its ‘Top Companies 2019: Where Australia wants to work now’ list.
Ranked 32nd in the Financial Review’s Top 100 Graduate Employers survey which lists the most popular firms for graduates.
CIMIC’s CEO and all Australian-based Operating Company Managing Directors recognised as WGEA Pay Equity Ambassadors.
Awarded the ‘Pride in Diversity and Social Inclusion Award’ in recognition of commitment, investment and achievement in
diversity and social inclusion at South Australia’s Civil Contractors Federation (SACCF) Excellence Awards.
§ Nichole Fynnaart, Senior Document Controller, was recognised with a ‘Quiet Achiever Award’ for her dedication and proactive
approach to document control at the SACCF Excellence Awards.
Papua Taumate, Graduate Engineer, was recognised as the ‘Young Engineer of the Year’ at the 2019 Civil Contractors New
Katherine Brewis, Project Manager, was appointed to Roads Australia’s 2020 National Fellowship Program.
Received a Bronze Award from the Hong Kong Government for ‘Contractor Hiring the Most Number for Construction Industry
Commended by the Construction Industry Council (of Hong Kong) as a ‘Contractor Actively Participating in Cooperative
Tam Kit Choi, Building Engineer in Hong Kong, was recognised by the Sir Edward Youde Memorial Fund 2018/19 with the
‘Award for Self-Improvement for Working Adults.’
§ Winner of the Infrastructure Partnerships Australia (IPA) ‘Industry Choice Award’ for the Caulfield to Dandenong Level Crossing
§ Winner of the IPA ‘Government Partnerships Excellence Award’ for the Caulfield to Dandenong Level Crossing Removal
Finalist in the IPA ‘Project for the Year Award’ for the Caulfield to Dandenong Level Crossing Removal Project.
Finalist in the IPA ‘Contractor Excellence Award’ for the Caulfield to Dandenong Level Crossing Removal Project.
Finalist in the IPA ‘Government Partnerships Excellence Award’ for the Canberra Light Rail project.
§ Winner of ISCA’s ‘Organisational Leadership in Infrastructure Sustainability Award’ (Private Sector)
§ Winner of ISCA’s ‘IS Innovation and Impact Award’ for the Caulfield to Dandenong Level Crossing Removal Project.
Finalist in ISCA’s ‘IS Innovation and Impact Award’ for the Sydney Metro Northwest – Operations, Trains and Stations.
§ Winner of ISCA’s ‘Outstanding Achievement in Infrastructure Sustainability Award (Design)’ for the Sydney Metro City &
Southwest Tunnel and Station Excavation Works.
§ Nominated as a Finalist in the 2020 Australian Construction Achievement Award for the Caulfield to Dandenong Level Crossing
Removal Project and for the Sydney Metro Northwest (the Operations, Trains and Systems (OTS) contract).
§ Winner of a Master Builders Australia National Excellence Award (MBANEA) in the category of ‘National Civil / Infrastructure
Award - Over $25m’ for the Caulfield to Dandenong Level Crossing Removal Project.
§ Winner of the MBANEA in the category of ‘National Health Facility Award’ for the new Northern Beaches Hospital.
Bjorn Eilande acknowledged with a ‘High Commendation’ in the category of ‘Commercial Construction: $50 million plus’ for
the APEC Haus development in Papua New Guinea in the AIB Building Professional Excellence Awards of Queensland.
Broad Construction
Chris Owen recognised as the ‘2019 Western Australia Building Professional of the Year’ and in the category of ‘Residential
Construction: $50 million plus’ for the Campus Perth development in the Australian Institute of Building (AIB) Professional
Excellence Awards for Western Australia.
§ Nigel Smith acknowledged with a ‘High Commendation’ in the category of ‘Residential Construction: $50 million plus’ for the
Claremont on the Park development in the AIB Professional Excellence Awards of Western Australia.
Leighton Asia
Selected as one of the Top 100 Companies in the New Civil Engineer’s (NCE) Power List which recognises the most forward-
thinking and innovative firms operating in civil engineering.
§ Winner of the NCE ‘Construction Innovation award’ for its innovative approach in the construction of the Hong Kong-Zhuhai-
Macao Bridge Passenger Clearance Building project.
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
129
Pedro Sanhueza Soto, Thiess Graduate Mining Engineer, won the University of Chile’s Juan Bruggen Award.
Thesis Award’ for 2019.
EIC Activities
§ Micah Fountain, Graduate Engineer, was awarded the Railway Technical Society of Australasia’s ‘Railway Engineering Student
ENVIRONMENT
Leighton Asia
§
Received ‘Hong Kong Green Organisation Certification’ for the Hong Kong-Zhuhai-Macao Bridge Passenger Clearance Building
project.
130
130
CIMIC Group Limited Annual Report 2019 | Sustainability Report
GRI INDEX
Legend
●
◕
Covered in full
Code = Covered in the Code of Conduct
Covered for the most part
◑
Covered in part ◎
Not covered
GRI Standard
Universal standards
General Disclosures
Name of the organisation
102-1
102-2
Activities, brands, products, and services
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
102-29
Collective knowledge of highest governance body
Evaluating the highest governance body’s performance
Identifying and managing economic, environmental, and social impacts
Annual Report section, Page
number/s and/or URL
Application
level /
omission
Shareholder information (SI),
www.cimic.com.au
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, 66 - 67, 89
66, 89 - 103
82 - 84
OFR, 82 - 84
Code, Sustainability Policy,
Environmental Policy, 118
63, 90, Group Policies
114
Executive Chairman’s review,
CEO’s review
OFR, 63 - 65
62, Group Policies, Code
79 - 80, Code, Ethics Line94
2019 Governance Statement,
Corporate Governance95
Corporate Governance
2015 Sustainability Report,
www.cimic.com.au
63 - 65
Directors’ Report, 2019
Governance Statement
Directors’ Report, 2019
Governance Statement,
www.cimic.com.au
2019 Governance Statement
Directors’ Report, 2019
Governance Statement,
www.cimic.com.au
2019 Governance Statement,
Board & committee charters96
2019 Governance Statement
2019 Governance Statement
2019 Governance Statement,
Board & committee charters
●
●
●
●
●
●
●
●
◑
◑
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
94 The CIMIC Group Ethics Line can be accessed at: http://www.cimic.com.au/ethics-line.
95 The Group’s approach to Corporate Governance can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
96 The Board and Committee Charters can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
131
131
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
GRI Standard
Covered in full
◕
Covered for the most part
◑
Covered in part ◎
Not covered
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
Contact point for questions regarding the report
102-54
102-55
102-56
103-1
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
Annual Report section, Page
number/s and/or URL
2019 Governance Statement,
Board & committee charters
68 - 127, 2019 Governance
Statement, Board & committee
charters
62, Director’s Report, 2019
Governance Statement, Board &
committee charters
79 - 80, 2019 Governance
Statement, Board & committee
charters
80, 2019 Governance Statement,
Board & committee charters
Remuneration Report
Remuneration Report
Remuneration Report, 2019
AGM Results97
Remuneration Report, 103
Remuneration Report, 103
63 - 65, 106 - 107
92
63 - 65, 106 - 107
63 - 65, 79, 85, 88
63 - 65, 80, 106 - 107
62, Financial Report
62
63 - 65
65, 66 - 67, Operating and
Financial Review, Financial
Report
62, Operating and Financial
Review, Financial Report
62, Operating and Financial
Review, Financial Report
Operating and Financial Review,
Financial Report
62, Operating and Financial
Review, Financial Report
Justin Grogan, EGM Investor
Relations & Sustainability
62
131 - 135
Not externally assured
63 - 65 (see references to
sections of Annual Report)
63 - 65 (see references to
sections of Annual Report)
62 - 65 (see references to
sections of Annual Report)
Economic Topic-specific Disclosures
Economic performance
Direct economic value generated and distributed
201-1
106 - 107
Application
level /
omission
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
◎
●
●
●
●
97 The results of the 2019 AGM (held 11 April 2019) can be accessed at: https://www.cimic.com.au/en/investors/asx-announcements.
132
132
GRI INDEX
Legend
●
Code = Covered in the Code of Conduct
GRI Standard
Universal standards
General Disclosures
102-1
Name of the organisation
102-3
Location of headquarters
102-4
Location of operations
102-5
Ownership and legal form
102-2
Activities, brands, products, and services
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
63 - 65
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
2019 Governance Statement
102-26
Role of highest governance body in setting purpose, values, and strategy
102-27
102-28
102-29
Collective knowledge of highest governance body
Evaluating the highest governance body’s performance
Identifying and managing economic, environmental, and social impacts
94 The CIMIC Group Ethics Line can be accessed at: http://www.cimic.com.au/ethics-line.
95 The Group’s approach to Corporate Governance can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
96 The Board and Committee Charters can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
131
Annual Report section, Page
Application
number/s and/or URL
level /
omission
Shareholder information (SI),
www.cimic.com.au
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, 66 - 67, 89
66, 89 - 103
82 - 84
OFR, 82 - 84
Code, Sustainability Policy,
Environmental Policy, 118
63, 90, Group Policies
114
CEO’s review
OFR, 63 - 65
62, Group Policies, Code
79 - 80, Code, Ethics Line94
2019 Governance Statement,
Corporate Governance95
Corporate Governance
www.cimic.com.au
Directors’ Report, 2019
Governance Statement
Directors’ Report, 2019
Governance Statement,
www.cimic.com.au
Directors’ Report, 2019
Governance Statement,
www.cimic.com.au
2019 Governance Statement,
Board & committee charters96
2019 Governance Statement
2019 Governance Statement
2019 Governance Statement,
Board & committee charters
●
●
●
●
●
●
●
●
◑
◑
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
CIMIC Group Limited Annual Report 2019 | Sustainability Report
GRI Standard
201-2
Financial implications and other risks and opportunities due to
climate change
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
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)
Annual Report section, Page
number/s and/or URL
2015 Sustainability Report, 2016
Sustainability Report, 2017
Sustainability Report, 110 – 111
and 120 – 121 of 2018
Sustainability Report
103
81 - 82
Not disclosed
101 - 102
63, 106 - 107
106 - 107
Not disclosed
78 - 79
66, 80 - 81
80
82
125 - 126
123 – 125
123 - 125
67, 121
67, 121
67, 121
67, 121
67, 121
124 - 125
124 - 125
67, 124 - 125
67, 124 - 125
67, 124 - 125
126 - 127
126 - 127
126 - 127
Not disclosed
67, 122 - 123
67, 122 - 123
67, 122 - 123
67, 122 - 123
67, 122 - 123
67, 122 - 123
Application
level /
omission
◕
●
●
◎
◕
●
●
◎
●
●
●
●
●
◕
◑
●
●
●
●
●
●
●
●
●
●
◑
◕
●
◎
●
●
●
●
●
◑
133
133
CIMIC Group Limited Annual Report 2019 | Sustainability Report
CIMIC Group Limited Annual Report 2019 | Sustainability Report
GRI Standard
Annual Report section, Page
number/s and/or URL
Application
level /
omission
305-7
306-1
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
403-9
403-10
404-1
404-2
404-3
405-1
405-2
406-1
407-1
408-1
409-1
410-1
Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant
air emissions
Effluents and Waste
Water discharge by quality and destination
Waste by type and disposal method
Significant spills
Transport of hazardous waste
Water bodies affected by water discharges and/or runoff
Environmental Compliance
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
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
Not disclosed
124 - 125
123 - 124
67, 119 - 120, Directors’ Report
124
119 - 120
67, 119 - 120, Directors’ Report
82 - 84
119 - 120
66, 97
Not disclosed
99
As per statutory obligations
68 - 75
68 - 75
72
As per statutory obligations
68 - 75
68 - 75
68 - 75
68 - 75
61, 66, 69 - 70
72 - 72
92 - 96
92 - 96
103
66, 97 - 103, Directors’ Report,
2019 Governance Statement
99
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
90 - 92
90 – 91
90 -91
◎
◑
●
●
●
●
●
◑
◑
●
◎
●
◎
●
●
●
◎
●
●
●
●
●
●
●
●
●
●
◑
◎
●
●
●
◎
134
134
201-2
Financial implications and other risks and opportunities due to
2015 Sustainability Report, 2016
Annual Report section, Page
Application
number/s and/or URL
level /
omission
◕
Sustainability Report, 2017
Sustainability Report, 110 – 111
and 120 – 121 of 2018
Sustainability Report
GRI Standard
climate change
Market Presence
minimum wage
201-3
201-4
Defined benefit plan obligations and other retirement plans
Financial assistance received from government
103
81 - 82
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
101 - 102
community
Indirect Economic Impacts
Infrastructure investments and services supported
Significant indirect economic impacts
Procurement Practices
204-1
Proportion of spending on local suppliers
63, 106 - 107
106 - 107
Not disclosed
Anti-corruption
procedures
Operations assessed for risks related to corruption
78 - 79
Communication and training about anti-corruption policies and
66, 80 - 81
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
80
82
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
protected areas
304-1
Operational sites owned, leased, managed in, or adjacent to,
126 - 127
protected areas and areas of high biodiversity value outside
304-2
Significant impacts of activities, products, and services on
126 - 127
IUCN Red List species and national conservation list species with
Not disclosed
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)
125 - 126
123 – 125
123 - 125
67, 121
67, 121
67, 121
67, 121
67, 121
124 - 125
124 - 125
67, 124 - 125
67, 124 - 125
67, 124 - 125
126 - 127
67, 122 - 123
67, 122 - 123
67, 122 - 123
67, 122 - 123
67, 122 - 123
67, 122 - 123
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
133
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◕
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●
◎
●
●
●
●
●
◕
◑
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●
●
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CIMIC Group Limited Annual Report 2019 | Sustainability Report
GRI Standard
Annual Report section, Page
number/s and/or URL
Application
level /
omission
411-1
412-1
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
Rights of Indigenous Peoples
Incidents of violations involving rights of indigenous peoples
Human Rights Assessment
Operations that have been subject to human rights reviews or
impact assessments
Employee training on human rights policies or procedures
Significant investment agreements and contracts that include
human rights clauses or that underwent human rights screening
Local Communities
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
97, 80
90 - 91
90 - 91
90 - 91
84 - 85
84 - 85
82 - 84
82 - 84
79
75 - 76
75 - 76
75 - 76
75 - 76, 82 - 83
82 - 83
81
81, 82
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●
●
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●
●
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◑
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●
●
●
●
135
135
Annual Report section, Page
Application
number/s and/or URL
level /
omission
CIMIC Group Limited Annual Report 2019 | Sustainability Report
GRI Standard
Rights of Indigenous Peoples
Human Rights Assessment
impact assessments
411-1
Incidents of violations involving rights of indigenous peoples
97, 80
412-1
Operations that have been subject to human rights reviews or
90 - 91
412-2
412-3
Employee training on human rights policies or procedures
Significant investment agreements and contracts that include
human rights clauses or that underwent human rights screening
90 - 91
90 - 91
Local Communities
413-1
Operations with local community engagement, impact
84 - 85
assessments, and development programs
413-2
Operations with significant actual and potential negative impacts
84 - 85
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
75 - 76
416-2
Incidents of non-compliance concerning the health and safety
75 - 76
82 - 84
82 - 84
79
service categories
impacts of products and services
Marketing and Labelling
information and labelling
communications
Customer Privacy
privacy and losses of customer data
Socioeconomic Compliance
economic area
417-1
417-2
Requirements for product and service information and labelling
75 - 76
Incidents of non-compliance concerning product and service
75 - 76, 82 - 83
417-3
Incidents of non-compliance concerning marketing
82 - 83
418-1
Substantiated complaints concerning breaches of customer
81
419-1
Non-compliance with laws and regulations in the social and
81, 82
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135
CIMIC Group I Annual Report 2019
136
Direct
137
CIMIC Group I Annual Report 2019
Sydney Metro Northwest
Pacific Partnerships (equity funding), CPB Contractors (design
and construction) and UGL (operations and maintenance)
supported by EIC Activities, New South Wales, Australia
Australia’s first metro railway, Sydney’s Metro North West Line,
opened in May 2019 on time and $1 billion under budget.
CPB Contractors, UGL, Pacific Partnerships and EIC Activities
contributed integrated rail solutions, delivering two of three major
contracts for the 36 kilometre, $8.3 billion project.
CPB Contractors, with joint venture partners, delivered the
$1.15 billion contract to build the 15km twin tunnels between Bella
Vista and Epping, as well as the civil works for the new stations and
services facilities.
Pacific Partnerships (equity funding), CPB Contractors (design and
construction) and UGL (operations and maintenance), as part of
the Northwest Rapid Transit (NRT) consortium, delivered the
$3.7 billion operations, trains and systems contract – the largest
Public Private Partnership (PPP) ever awarded in NSW.
The NRT PPP contract has been extended to Stage 2 (City &
Southwest) to deliver a seamless customer experience from Rouse
Hill to Bankstown – in total 66 kilometres of rail and 31 metro
stations.
i
F
n
a
n
c
a
i
l
R
e
p
o
r
t
CIMIC Group I Annual Report 2019
138
CIMIC Group Limited Annual Report 2019 | 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.
Summary of significant accounting policies
2. Revenue
3.
4.
Expenses
Significant item
5. Net finance income / (costs)
6. Auditors’ remuneration
7.
Income tax expense
8. Cash and cash equivalents
9.
Short term financial assets and investments
10. Trade and other receivables
11. Current tax assets
12. Inventories
13. Investments accounted for using the equity method
14. Other investments
15. Deferred taxes
16. Property, plant and equipment
17. Intangibles
18. Trade and other payables
19. Current tax liabilities
20. Provisions
21. Interest bearing liabilities
22. Lease liabilities
23. Share capital
24. Reserves
25. Retained earnings
26. Dividends
27. Earnings per share
28. Associates
29. Joint venture entities
30. Joint operations
31. Notes to the Statement of Cash flows
32. Acquisitions and disposals of controlled entities and businesses
33. Segment information
34. Commitments
35. Contingent liabilities
36. Capital risk management
37. Financial instruments
38. Employee benefits
39. Related party disclosures
40. CIMIC Group Limited and controlled entities
41. New accounting standards
42. Events subsequent to reporting date
Directors’ Declaration
Independent Auditor’s Report to the Members of CIMIC Group Limited
139
Page
140
141
142
143
144
145
145
162
162
163
165
166
167
168
168
169
171
171
171
172
172
173
174
176
176
176
177
177
178
179
180
181
182
183
185
188
190
191
192
195
196
197
198
213
216
219
232
232
233
234
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | 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.
Summary of significant accounting policies
9.
Short term financial assets and investments
13. Investments accounted for using the equity method
2. Revenue
Expenses
3.
4.
Significant item
5. Net finance income / (costs)
6. Auditors’ remuneration
7.
Income tax expense
8. Cash and cash equivalents
10. Trade and other receivables
11. Current tax assets
12. Inventories
14. Other investments
15. Deferred taxes
16. Property, plant and equipment
17. Intangibles
18. Trade and other payables
19. Current tax liabilities
20. Provisions
21. Interest bearing liabilities
22. Lease liabilities
23. Share capital
24. Reserves
25. Retained earnings
26. Dividends
27. Earnings per share
28. Associates
29. Joint venture entities
30. Joint operations
33. Segment information
34. Commitments
35. Contingent liabilities
36. Capital risk management
37. Financial instruments
38. Employee benefits
39. Related party disclosures
40. CIMIC Group Limited and controlled entities
41. New accounting standards
42. Events subsequent to reporting date
Directors’ Declaration
Independent Auditor’s Report to the Members of CIMIC Group Limited
Page
140
141
142
143
144
145
145
162
162
163
165
166
167
168
168
169
171
171
171
172
172
173
174
176
176
176
177
177
178
179
180
181
182
183
185
188
190
191
192
195
196
197
198
213
216
219
232
232
233
234
Consolidated Statement of Profit or Loss
for the 12 months to 31 December 2019
Revenue
Expenses
Share of profit / (loss) of associates and joint venture entities
Operating Profit
Provisions and asset impairment in relation to the Middle East exit
Earnings before interest and tax (“EBIT”)
Finance income
Finance costs
Net finance income / (costs)
(Loss) / profit before tax
Income tax benefit / (expense)
(Loss) / profit for the year
Note
2
3
28, 29
4
5
5
7
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
14,701.1
14,670.2
(13,538.7)
(13,555.0)
66.7
1,229.1
(2,724.7)
(1,495.6)
56.7
(185.9)
(129.2)
(1,624.8)
587.5
(1,037.3)
58.5
1,173.7
-
1,173.7
55.3
(157.4)
(102.1)
1,071.6
(299.9)
771.7
Loss / (profit) for the year attributable to non-controlling interests
(2.6)
6.8
(Loss) / profit for the year attributable to shareholders of the parent entity
(1,039.9)
778.5
Dividends per share - Final
Dividends per share - Interim
Basic earnings per share
Diluted earnings per share
26
26
27
27
-
71.0¢
(320.9¢)
(320.9¢)
86.0¢
70.0¢
240.1¢
240.1¢
31. Notes to the Statement of Cash flows
32. Acquisitions and disposals of controlled entities and businesses
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
140
CIMIC Group Limited Annual Report 2019 | Financial Report
Consolidated Statement of Other Comprehensive Income
for the 12 months to 31 December 2019
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
Note
(Loss) / profit for the year attributable to shareholders of the parent entity
(1,039.9)
778.5
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)
24
24
0.7
(8.6)
124.6
0.5
Other comprehensive income / (expense) for the year
(7.9)
125.1
Total comprehensive income / (expense) for the year attributable to shareholders
of the parent entity
(1,047.8)
903.6
Total comprehensive income / (expense) for the year attributable to shareholders
of the parent entity:
Total comprehensive income / (expense) for the year
Total comprehensive (income) / expense for the year attributable to non-controlling
interests
Total comprehensive income / (expense) for the year attributable to shareholders
of the parent entity
(1,045.2)
(2.6)
896.8
6.8
(1,047.8)
903.6
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
The consolidated statement of other comprehensive income is to be read in conjunction with the notes to the consolidated financial report.
141
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Consolidated Statement of Other Comprehensive Income
for the 12 months to 31 December 2019
Consolidated Statement of Financial Position
as at 31 December 2019
12 months to
12 months to
December 2019
December 2018
$m
$m
Restated^
Note
31 December
2019
$m
31 December
2018
$m
Restated^
31 December
2017
$m
Restated^
Note
(Loss) / profit for the year attributable to shareholders of the parent entity
(1,039.9)
778.5
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)
24
24
0.7
(8.6)
124.6
0.5
Other comprehensive income / (expense) for the year
(7.9)
125.1
Total comprehensive income / (expense) for the year attributable to shareholders
(1,047.8)
903.6
Total comprehensive income / (expense) for the year attributable to shareholders
Total comprehensive income / (expense) for the year
Total comprehensive (income) / expense for the year attributable to non-controlling
(1,045.2)
(2.6)
896.8
6.8
Total comprehensive income / (expense) for the year attributable to shareholders
(1,047.8)
903.6
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
of the parent entity
of the parent entity:
interests
of the parent entity
Assets
Cash and cash equivalents
Short term financial assets and investments
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
Financial liability
Interest bearing liabilities
Lease liabilities
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
8
9
10
11
12
10
12
13
14
15
16
17
18
19
20
4
21
22
18
20
21
22
15
1,750.0
4.5
3,554.4
-
400.1
-
5,709.0
130.4
114.9
250.5
112.2
1,025.2
2,279.1
1,104.4
5,016.7
10,725.7
6,024.6
60.3
327.2
1,483.4
164.3
277.8
8,337.6
200.8
60.5
758.6
624.3
20.9
1,665.1
10,002.7
2,141.7
3.5
3,122.1
-
315.1
1.5
5,583.9
777.6
111.1
136.6
105.4
69.6
2,068.1
1,093.5
4,361.9
9,945.8
5,669.7
68.4
326.0
-
50.7
279.2
6,394.0
82.0
62.4
472.1
629.7
19.4
1,265.6
7,659.6
1,813.8
0.8
3,215.7
29.0
210.8
32.2
5,302.3
1,091.0
167.6
382.7
169.2
164.2
1,746.1
1,089.7
4,810.5
10,112.8
4,722.8
40.4
311.8
-
265.6
134.8
5,475.4
112.1
69.3
637.8
509.5
-
1,328.7
6,804.1
723.0
2,286.2
3,308.7
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1,738.4
(527.0)
(454.4)
757.0
(34.0)
723.0
1,750.3
(514.3)
1,094.6
2,330.6
(44.4)
2,286.2
23
24
25
1,750.3
(554.3)
2,134.5
3,330.5
(21.8)
3,308.7
The consolidated statement of other comprehensive income is to be read in conjunction with the notes to the consolidated financial report.
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial report.
142
CIMIC Group Limited Annual Report 2019 | Financial Report
Consolidated Statement of Changes in Equity
for the 12 months to 31 December 2019
Restated^
Total equity at 31 December 2017
Opening balance adjustments:
AASB 15
AASB 9
Share
capital
Reserves
Retained
earnings
Attributable
to equity
holders
Non-
controlling
interests
Total
equity
$m
1,750.3
$m
(554.3)
$m
2,134.5
$m
3,330.5
$m
(21.8)
$m
3,308.7
-
-
(7.2)
(72.9)
(932.2)
(416.0)
(939.4)
(488.9)
(13.9)
-
(953.3)
(488.9)
Adjusted total equity at 1 January 2018
1,750.3
(634.4)
786.3
1,902.2
(35.7)
1,866.5
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
- Dividends
-
- Other
Total transactions with shareholders
Share based payments
26
24
-
-
-
-
-
-
-
125.1
778.5
-
778.5
125.1
(6.8)
-
771.7
125.1
-
(5.0)
-
(5.0)
(470.2)
-
-
(470.2)
(470.2)
(5.0)
-
(475.2)
-
-
(1.9)
(1.9)
(470.2)
(5.0)
(1.9)
(477.1)
Total equity at 31 December 2018
1,750.3
(514.3)
1,094.6
2,330.6
(44.4)
2,286.2
Total equity at 1 January 2019
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
- Dividends
-
- Acquisition
- Other
Total transactions with shareholders
Share buy backs
Share
capital
Reserves
Retained
earnings
Attributable
to equity
holders
Non-
controlling
interests
Total
equity
$m
1,750.3
$m
(514.3)
$m
1,094.6
$m
2,330.6
$m
(44.4)
$m
2,286.2
-
-
-
(7.9)
(1,039.9)
-
(1,039.9)
(7.9)
2.6
-
(1,037.3)
(7.9)
26
-
(11.9)
-
-
(11.9)
-
(4.8)
-
-
(4.8)
(509.1)
-
-
-
(509.1)
(509.1)
(16.7)
-
-
(525.8)
(4.2)
-
11.9
0.1
7.8
(513.3)
(16.7)
11.9
0.1
(518.0)
Total equity at 31 December 2019
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1,738.4
(454.4)
(527.0)
(34.0)
757.0
723.0
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial report.
143
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Consolidated Statement of Changes in Equity
for the 12 months to 31 December 2019
Consolidated Statement of Cash Flows
for the 12 months to 31 December 2019
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
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
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments
Cash acquired from acquisition 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 for share buy backs
Proceeds from borrowings
Repayment of borrowings
Repayment of leases
Dividends paid to shareholders of the Company
Dividends paid to 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
Restated^
Share
Reserves
Retained
Attributable
Non-
capital
earnings
to equity
controlling
Total
equity
holders
interests
Total equity at 31 December 2017
1,750.3
(554.3)
2,134.5
3,330.5
(21.8)
3,308.7
$m
$m
$m
$m
$m
$m
Opening balance adjustments:
AASB 15
AASB 9
(7.2)
(72.9)
(932.2)
(416.0)
(939.4)
(488.9)
(13.9)
-
(953.3)
(488.9)
Adjusted total equity at 1 January 2018
1,750.3
(634.4)
786.3
1,902.2
(35.7)
1,866.5
Profit for the year
Other comprehensive income
-
125.1
778.5
-
778.5
125.1
(6.8)
-
771.7
125.1
Transactions with shareholders in their
capacity as shareholders:
- Dividends
-
Share based payments
- Other
Total transactions with shareholders
26
24
(5.0)
-
-
(470.2)
-
-
(470.2)
(5.0)
-
(5.0)
(470.2)
(475.2)
-
-
(1.9)
(1.9)
(470.2)
(5.0)
(1.9)
(477.1)
Total equity at 31 December 2018
1,750.3
(514.3)
1,094.6
2,330.6
(44.4)
2,286.2
Share
Reserves
Retained
Attributable
Non-
capital
earnings
to equity
controlling
Total
equity
holders
interests
$m
$m
$m
1,750.3
(514.3)
1,094.6
$m
2,330.6
$m
$m
(44.4)
2,286.2
-
(1,039.9)
(1,039.9)
(7.9)
(7.9)
2.6
-
(1,037.3)
(7.9)
Total equity at 1 January 2019
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
- Dividends
-
Share buy backs
- Acquisition
- Other
Total transactions with shareholders
(11.9)
(4.8)
(509.1)
(525.8)
26
(509.1)
(11.9)
(4.8)
-
-
-
(509.1)
(16.7)
-
-
(4.2)
-
11.9
0.1
7.8
(513.3)
(16.7)
11.9
0.1
(518.0)
Total equity at 31 December 2019
1,738.4
(527.0)
(454.4)
757.0
(34.0)
723.0
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cash and cash equivalents at reporting date
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1,750.0
8
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
Note
16,684.3
(14,971.0)
16,040.8
(13,990.1)
1,713.3
2,050.7
28.0
(119.5)
(58.9)
1,900.3
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
(53.1)
(1.1)
(545.2)
-
407.7
(835.6)
(191.8)
(470.2)
-
(1,089.9)
31 (a)
32
23
31 (b)
31 (b)
31 (b)
26
26.7
(139.3)
(351.2)
1,249.5
(15.4)
(774.4)
(14.0)
22.5
-
18.0
(29.1)
(398.6)
(1,191.0)
(16.7)
1,191.8
(801.8)
(320.0)
(509.1)
(4.2)
(460.0)
(401.5)
2,141.7
9.8
265.2
1,813.8
62.7
2,141.7
144
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial report.
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial report.
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
CIMIC Group Limited (the Company) is a company domiciled in Australia. The consolidated financial statements of the Company
comprise the Company and its controlled entities (the Consolidated Entity or Group) and the Consolidated Entity’s interest in
associates and joint arrangements.
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and in accordance with the Corporations Act
2001. The financial report of the Consolidated Entity also complies with International Financial Reporting Standards (IFRS) as
adopted by the International Accounting Standards Board (IASB).
The standards, amendments to standards and interpretations available for early adoption at reporting date that have not been
applied in preparing this financial report are detailed in Note 41: New accounting standards.
Basis of preparation
Presentation
The financial report is presented in Australian dollars which is the Company’s functional currency. All amounts disclosed in the
financial report relate to the Group unless otherwise stated. The financial report has been prepared on the historical cost basis,
except for financial instruments that have been measured at fair value. These financial statements have been prepared on a going
concern basis, after taking into consideration all drawn and undrawn facilities.
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 in the current year and their impact is disclosed below. In accordance with
elections available under the relevant accounting standards, new accounting policies have been applied retrospectively and
therefore, the comparative periods have been adjusted and restated to be consistent with the current period.
In the current period the Group has disclosed Operating Profit following the recognition of a significant item recorded in the period
in relation to the provisions and asset impairment of the Middle East exit. Refer to Note 4: Significant item. Operating profit
represents the Group’s Earnings before Interest and Tax (EBIT) before the provisions and asset impairment in relation to the Middle
East exit, as this presentation provides more relevant and useful information in that it enhances the comparability and predictability
of the financial information presented in respect of the financial performance of the main operating activities of the Group.
The prior period amounts have been re-presented on a consistent basis to ensure comparability of the financial statements from
one period to the next and to provide more reliable and relevant information to the users of the financial statements.
New and amended standards adopted by the Company:
AASB 16: Leases
In the current year, the Group has applied AASB 16 Leases which was effective for the Group on 1 January 2019. Details of the new
requirements of AASB 16 as well as its impact on the Group’s consolidated financial statements are below.
AASB 16 replaces AASB 117: 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’. It has the objective to provide
users of the financial statements with a basis to assess the effect that leases have on the financial position, financial performance
and cash flows of an entity.
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to
account for leases, excluding those that are classified as short-term leases or leases for low value assets, 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 previous 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.
145
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
CIMIC Group Limited (the Company) is a company domiciled in Australia. The consolidated financial statements of the Company
comprise the Company and its controlled entities (the Consolidated Entity or Group) and the Consolidated Entity’s interest in
associates and joint arrangements.
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and in accordance with the Corporations Act
2001. The financial report of the Consolidated Entity also complies with International Financial Reporting Standards (IFRS) as
adopted by the International Accounting Standards Board (IASB).
The standards, amendments to standards and interpretations available for early adoption at reporting date that have not been
applied in preparing this financial report are detailed in Note 41: New accounting standards.
Basis of preparation
Presentation
The financial report is presented in Australian dollars which is the Company’s functional currency. All amounts disclosed in the
financial report relate to the Group unless otherwise stated. The financial report has been prepared on the historical cost basis,
except for financial instruments that have been measured at fair value. These financial statements have been prepared on a going
concern basis, after taking into consideration all drawn and undrawn facilities.
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 in the current year and their impact is disclosed below. In accordance with
elections available under the relevant accounting standards, new accounting policies have been applied retrospectively and
therefore, the comparative periods have been adjusted and restated to be consistent with the current period.
In the current period the Group has disclosed Operating Profit following the recognition of a significant item recorded in the period
in relation to the provisions and asset impairment of the Middle East exit. Refer to Note 4: Significant item. Operating profit
represents the Group’s Earnings before Interest and Tax (EBIT) before the provisions and asset impairment in relation to the Middle
East exit, as this presentation provides more relevant and useful information in that it enhances the comparability and predictability
of the financial information presented in respect of the financial performance of the main operating activities of the Group.
The prior period amounts have been re-presented on a consistent basis to ensure comparability of the financial statements from
one period to the next and to provide more reliable and relevant information to the users of the financial statements.
New and amended standards adopted by the Company:
AASB 16: Leases
In the current year, the Group has applied AASB 16 Leases which was effective for the Group on 1 January 2019. Details of the new
requirements of AASB 16 as well as its impact on the Group’s consolidated financial statements are below.
AASB 16 replaces AASB 117: 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’. It has the objective to provide
users of the financial statements with a basis to assess the effect that leases have on the financial position, financial performance
and cash flows of an entity.
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to
account for leases, excluding those that are classified as short-term leases or leases for low value assets, 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 previous 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.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
The CIMIC Group operates in a diverse range of industries, namely construction, mining, services and PPPs giving rise to numerous
leasing arrangements. Judgement and estimates are applied when assessing the full impact of AASB 16 on the Group. Management
review each lease, on an individual basis, and determine whether the standard’s criteria for a right-of-use asset or lease liability are
met. Additional factors, such as the lease costs and lease terms, are taken into consideration when identifying the cost base of the
right-of-use assets and lease liabilities, as well as the Group’s present obligations.
In making these judgements, the Group applied the practical expedient in AASB 16 Appendix paragraph C3 that enables the Group
to grandfather assessments made under previous assessments, such that only leases that are leases on date of transition on 1
January 2019 are required to be assessed as a lease under AASB 16. The Group’s accounting policies regarding AASB 16 are
disclosed in detail in Note 1: Summary of significant accounting policies – (j) Leases.
Impact on application
The Group has applied AASB 16 retrospectively and therefore, the comparative figures have been restated as if the new accounting
policy had always been applied. The disclosure notes have also been restated where required for comparatives under new
disclosure requirements. The adjustments due to the application of the new standards are analysed by financial statement line item
below.
Impact on Consolidated Statement of Financial Position at 31 December 2018
As reported
31 December 2018
$m
AASB 16 Transition
Adjustments
$m
Restated
31 December 2018
$m
Current trade and other receivables
Non-current trade and other receivables
Deferred tax assets
Property, plant & equipment
Total assets impact
Current trade and other payables
Current lease liabilities
Non-current trade and other payables
Non-current lease liabilities
Total liabilities impact
Net asset impact
Retained earnings
3,121.91
777.4
49.8
1,292.7
5,701.0
-
113.4
-
(2)
(1)
(3)
(1)
(3)
(1)
3,122.1
777.6
69.6
2,068.1
5,669.7
279.2
82.0
629.7
0.2
0.2
19.8
775.4
795.6
(31.3)
279.2
(31.4)
629.7
846.2
(50.6)
(4)
1,145.2
(50.6)
1,094.6
Total equity impact
1Total reported at 31 December 2018 was $3,125.4 million. Of this amount, $3.5 million has been reclassed to Short term financial
assets and investments.
(50.6)
146
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
Impact on Consolidated Statement of Financial Position at 31 December 2017
Current trade and other receivables
Non-current trade and other receivables
Deferred tax assets
Property, plant & equipment
Total assets impact
Current trade and other payables
Current lease liabilities
Non-current trade and other payables
Non-current lease liabilities
Total liabilities impact
Net asset impact
Retained earnings
As reported
31 December 2017
$m
AASB 16 Transition
Adjustments
$m
Restated
31 December 2017
$m
3,215.51
1,090.8
145.4
1,224.0
4,737.4
-
152.0
-
(2)
(1)
(3)
(1)
(3)
(1)
3,215.7
1,091.0
164.2
1,746.1
4,722.8
134.8
112.1
509.5
0.2
0.2
18.8
522.1
541.3
(14.6)
134.8
(39.9)
509.5
589.8
(48.5)
(4)
2,183.0
(48.5)
2,134.5
Total equity impact
1Total reported at 31 December 2017 was $3,216.3 million. Of this amount, $0.8 million has been reclassed to Short term financial
assets and investments.
(48.5)
(1) Property, plant and equipment & current and non-current lease liabilities
AASB 16 has led to recognised amounts for right-of-use assets within property, plant and equipment and lease liabilities on
the face of the balance sheet representing the Group’s portfolio of leased assets made up by property, plant, mining
equipment and vehicles utilised by the Group.
(2) Deferred tax assets
Adjustments under AASB 16 are subject to tax effect accounting and therefore the net deferred tax position has been impacted.
(3) Current and non-current trade and other payables
The Group has netted off previously held onerous lease provisions against right-of-use leased assets recognised on transition.
These provisions were previously held in current and non-current trade payables.
(4) Retained earnings
The retained earnings have been adjusted at 31 December 2017 for the impact of AASB 16 using the full retrospective
method which led to a decrease in equity of $48.5 million. At 31 December 2018, the retained earnings adjustment has
increased by a further $2.1 million to $50.6 million. The difference represents the 2018 profit and loss impact of the new
standard.
147
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
Basis of preparation continued
Impact on Consolidated Statement of Financial Position at 31 December 2017
Impact on Consolidated Statement of Profit or Loss
As reported
AASB 16 Transition
Restated
31 December 2017
Adjustments
31 December 2017
$m
$m
$m
As reported
31 December 2018
$m
AASB 16 Transition
Adjustments
$m
Restated
31 December 2018
$m
Revenue
Expenses
14,670.2
(1)
(13,586.1)
Share of profit / (loss) of associates and joint venture entities
Operating Profit
Provisions and asset impairment in relation to the Middle East exit
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
1Total reported at 31 December 2017 was $3,216.3 million. Of this amount, $0.8 million has been reclassed to Short term financial
Profit / (loss) for the period attributable to non-controlling interests
58.5
1,142.6
-
1,142.6
55.3
(123.2)
(67.9)
1,074.7
(300.9)
773.8
6.8
(1)
(1)
-
31.1
-
31.1
-
31.1
-
(34.2)
(34.2)
(3.1)
1.0
(2.1)
-
14,670.2
(13,555.0)
58.5
1,173.7
-
1,173.7
55.3
(157.4)
(102.1)
1,071.6
(299.9)
771.7
6.8
Profit / (loss) for the period attributable to shareholders of the parent
entity
(1)
780.6
(2.1)
778.5
Basic earnings per share
Diluted earnings per share
(2)
(2)
240.7¢
240.7¢
0.6
0.6
240.1¢
240.1¢
(1) Statement of profit or loss and other comprehensive income
AASB 16 changed the amount and presentation of lease related expenses. Under AASB 117, operating lease expenses were
presented as operating expenses, whereas AASB 16 splits the lease expenses into depreciation of the right-of-use assets
recognised and finance costs on lease liabilities. This has driven a decrease in the operating lease expense and increases in
depreciation and finance costs. Consequently, this has also impacted the Group’s key performance indicators such as Operating
Profit and EBIT.
Overall, the adoption of AASB 16 had an immaterial impact on the comprehensive income for the Group with a reduction in
profit of $2.1 million in the 12 months to 31 December 2018.
(2) Earnings per share
The adjusted profit has led to a marginal change in the Group’s basic and diluted earnings per share.
148
Current trade and other receivables
Non-current trade and other receivables
Deferred tax assets
Property, plant & equipment
Total assets impact
Current trade and other payables
Current lease liabilities
Non-current trade and other payables
Non-current lease liabilities
Total liabilities impact
Net asset impact
Retained earnings
Total equity impact
assets and investments.
3,215.51
1,090.8
145.4
1,224.0
4,737.4
152.0
-
-
(2)
(1)
(3)
(1)
(3)
(1)
3,215.7
1,091.0
164.2
1,746.1
4,722.8
134.8
112.1
509.5
0.2
0.2
18.8
522.1
541.3
(14.6)
134.8
(39.9)
509.5
589.8
(48.5)
(48.5)
(48.5)
(4)
2,183.0
2,134.5
(1) Property, plant and equipment & current and non-current lease liabilities
AASB 16 has led to recognised amounts for right-of-use assets within property, plant and equipment and lease liabilities on
the face of the balance sheet representing the Group’s portfolio of leased assets made up by property, plant, mining
equipment and vehicles utilised by the Group.
(2) Deferred tax assets
Adjustments under AASB 16 are subject to tax effect accounting and therefore the net deferred tax position has been impacted.
(3) Current and non-current trade and other payables
The Group has netted off previously held onerous lease provisions against right-of-use leased assets recognised on transition.
These provisions were previously held in current and non-current trade payables.
(4) Retained earnings
standard.
The retained earnings have been adjusted at 31 December 2017 for the impact of AASB 16 using the full retrospective
method which led to a decrease in equity of $48.5 million. At 31 December 2018, the retained earnings adjustment has
increased by a further $2.1 million to $50.6 million. The difference represents the 2018 profit and loss impact of the new
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
Impact on Consolidated Statement of Cash Flows
As reported
31 December 2018
$m
AASB 16 Transition
Adjustments
$m
Restated
31 December 2018
$m
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
(1)
16,040.8
(14,181.9)
1,858.9
-
191.8
191.8
16,040.8
(13,990.1)
2,050.7
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
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments
Cash acquired from acquisition of investments in controlled
entities and businesses
Payment for investments
Loans to associates and joint ventures
Net cash from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Dividend paid to shareholders of the company
Net cash from financing activities
Net increase 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
(1) Statement of cash flows
(1)
28.0
(119.5)
(58.9)
1,708.5
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
(53.1)
(1.1)
(545.2)
407.7
(835.6)
-
(470.2)
(898.1)
265.2
1,813.8
62.7
2,141.7
-
-
-
-
-
-
-
-
-
-
-
-
-
(191.8)
-
(191.8)
-
-
-
-
28.0
(119.5)
(58.9)
1,900.3
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
(53.1)
(1.1)
(545.2)
407.7
(835.6)
(191.8)
(470.2)
(1,089.9)
265.2
1,813.8
62.7
2,141.7
Lease payments are now classified within financing activities which were previously operating cash flows. The interest portion
of the cash payment has also been included as financing activities. This has led to an increase in cash flows from operating
activities and an increase in net cash outflows from financing activities.
149
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of preparation continued
Impact on Consolidated Statement of Cash Flows
As reported
AASB 16 Transition
Restated
31 December 2018
Adjustments
31 December 2018
$m
$m
$m
Cash flows from operating activities
Cash receipts in the course of operations (including GST)
Cash payments in the course of operations (including GST)
(1)
Cash flows from operating activities
16,040.8
(14,181.9)
1,858.9
191.8
191.8
16,040.8
(13,990.1)
2,050.7
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
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments
Cash acquired from acquisition of investments in controlled
entities and businesses
Payment for investments
Loans to associates and joint ventures
Net cash from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Dividend paid to shareholders of the company
Net cash from financing activities
Net increase 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
(1) Statement of cash flows
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28.0
(119.5)
(58.9)
1,900.3
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
(53.1)
(1.1)
(545.2)
407.7
(835.6)
(191.8)
(470.2)
265.2
1,813.8
62.7
2,141.7
(191.8)
(1,089.9)
28.0
(119.5)
(58.9)
1,708.5
(5.4)
(547.4)
(22.7)
82.6
1.2
0.7
(53.1)
(1.1)
(545.2)
407.7
(835.6)
-
(470.2)
(898.1)
265.2
1,813.8
62.7
2,141.7
Lease payments are now classified within financing activities which were previously operating cash flows. The interest portion
of the cash payment has also been included as financing activities. This has led to an increase in cash flows from operating
activities and an increase in net cash outflows from financing activities.
Basis of preparation continued
Other new and amended accounting standards
§
§
§
AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint Ventures;
AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015-2017 Cycle; and
AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty over Income Tax Treatments.
While these standards introduce new disclosure requirements, they do not materially affect the Group’s accounting policies or any
of the amounts recognised in the financial statements.
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 10: Trade and other
receivables, Note 18: Trade and other payables and Note 39: Related party disclosures.
§ Leasing:
- Determination of the existence of leases;
- Estimation of residual value guarantees and buy out options of lease liabilities; and
- Estimation of lease extension options.
(1)
(191.8)
§ 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 measurement and classification of financial instruments including fair values and trade finance arrangements; 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.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of consolidation continued
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 30: 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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CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of consolidation continued
a) Revenue recognition
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.
Investments in controlled entities are carried in the Company’s financial statements at cost less impairment.
Controlled entities
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
Joint operations
Note 30: 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.
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.
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.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
a) Revenue recognition continued
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.
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.
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CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
a) Revenue recognition continued
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
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
policy.
Contract fulfilment costs
the course of the contract.
Financing components
time value of money.
Warranties and defect periods
contingent assets.
Loss making contracts
Other revenue
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.
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, lease liability
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
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.
154
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
e) Non-derivative financial instruments
Non-derivative financial assets
Classification
(i)
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.
Short term equivalent liquid assets
Short term equivalent liquid assets includes liquid assets that are readily convertible or converted to cash subsequent to period
end.
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.
§
§
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.
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CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
e) Non-derivative financial instruments continued
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 37(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.
f) Derivative financial instruments
Derivative financial instruments are stated at fair value, with changes in fair value recognised in the statement of profit or loss.
Where derivative financial instruments qualify for hedge accounting, recognition of changes in fair value depends on the nature of
the item being hedged. Hedge accounting is discontinued when the hedging relationship is revoked, the hedging instrument
expires, is sold, terminated, exercised, or no longer qualifies for hedge accounting.
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.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
e) Non-derivative financial instruments
Non-derivative financial assets
(i)
Classification
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
Cash and cash equivalents
and an intention to settle.
Short term equivalent liquid assets
end.
Debt instruments
follows.
Short term equivalent liquid assets includes liquid assets that are readily convertible or converted to cash subsequent to period
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
§
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.
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.
(iii)
Impairment
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.
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 costs’.
Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as follows.
§
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.
156
§
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
g)
Inventories
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.
i)
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. The balance includes
right of use assets as discussed in j) Leases below.
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 recognized in the statement of profit or loss.
157
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
j)
Leases
The Group as Lessee
The Group assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In such
instances, the Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements, except
for short term leases, cancellable leases that if cancelled by the lessee the losses associated with the cancellation are borne by the
lessor and low value leased assets. For these leases, the Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
The Group has a significant lease portfolio, comprising predominately property, plant, mining equipment and fleet vehicle rentals.
Given the Group’s operational involvement in the construction, mining and services sectors, leased equipment is a key component
of the business.
Measurement and presentation of lease liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental
borrowing rate.
The following items are also included in the measurement of the lease liability:
§
§
§
§
§
Fixed lease payments offset by any lease incentives;
Variable lease payments, for lease liabilities which are tied to a floating index;
The amounts expected to be payable to the lessor under residual value guarantees;
The exercise price of purchase options (if it is reasonably certain that the option will be exercised); and
Payments of penalties for terminating leases, if the lease term reflects the lease terminating early.
The lease liability is separately disclosed on the statement of financial position. The liabilities which will be repaid within twelve
months are recognised as current and the liabilities which will be repaid in excess of twelve months are recognised as non-current.
The lease liability is subsequently measured by reducing the balance to reflect the principal lease repayments made and increasing
the carrying amount by the interest on the lease liability.
Inventories are carried at the lower of cost and net realisable value and comprise of the following.
g)
Inventories
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
to their existing condition and location.
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.
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. The balance includes
i)
Property, plant and equipment
right of use assets as discussed in j) Leases below.
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 recognized in the statement of profit or loss.
The Group is required to remeasure the lease liability and make an adjustment to the right-of-use asset in the following instances:
The term of the lease has been modified or there has been a change in the Group’s assessment of the purchase option being
§
exercised, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount
rate;
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability
is remeasured by discounting the revised lease payments using a revised discount rate; and
The lease payments are adjusted due to changes in the index or a change in expected payment under a guaranteed residual
value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate.
However, if a change in lease payments is due to a change in a floating interest rate, a revised discount rate is used.
§
§
Measurement and presentation of right-of-use asset
The right-of-use assets recognised by the Group comprise the initial measurement of the related lease liability, any lease payments
made at or before the commencement of the contract, less any lease incentives received and any direct costs. Costs incurred by the
Group to dismantle the asset, restore the site or restore the asset are included in the cost of the right-of-use asset.
It is subsequently measured under the cost model with any accumulated depreciation and impairment losses applied against the
right-of-use asset. If the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the right-of-use asset
is depreciated from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates
the asset over the shorter period of either the useful life of the asset or the lease term. The depreciation starts at the
commencement date of the lease and the carrying value of the asset is adjusted to reflect the accumulated depreciation balance.
Any remeasurement of the lease liability is also applied against the right-of-use asset value.
The right-of-use assets are presented within Property, Plant and Equipment in the statement of financial position.
158
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
j)
Leases continued
The Group as Lessor
The Group enters into lease agreements as a lessor with respect to some property subleases as well as renting equipment to its
partners, suppliers and contractors.
The leases entered into by the Group are recognised as either finance or operating leases. If the terms of the lease agreement
transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. If this is not
the case, then the lease is recognised as an operating lease. The income received from operating leases is recognised on a straight-
line basis over the lease term. Initial direct costs incurred in negotiating and arranging operating leases are included in the carrying
amount of the leased asset. Amounts due from lessees under finance leases are recognised as receivables.
k) Business combinations
The acquisition method of accounting is used to account for all business combinations. The consideration for the acquisition of a
controlled entity comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the
Group. The consideration transferred also includes the fair value of any pre-existing equity interest in the controlled entity.
Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities assumed in a business combination
are measured at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-
controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree’s net
identifiable assets. The excess of the consideration transferred over the fair value of the Group's share of the net identifiable
assets acquired is recorded as goodwill.
Where the consideration is less than the fair value of the net identifiable assets of the controlled entity acquired, the difference is
recognised directly in the statement of profit or loss as a gain on acquisition of a controlled entity.
l)
Intangible assets
Goodwill
Goodwill arising from business combinations is included in intangible assets. Goodwill on acquisition of associates is included in
equity accounted investments. Goodwill is not amortised but it is tested for impairment annually or more frequently if there is an
indication that it might be impaired. Goodwill is allocated to cash-generating units for the purpose of impairment testing.
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.
159
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
j)
Leases continued
The Group as Lessor
partners, suppliers and contractors.
The Group enters into lease agreements as a lessor with respect to some property subleases as well as renting equipment to its
The leases entered into by the Group are recognised as either finance or operating leases. If the terms of the lease agreement
transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. If this is not
the case, then the lease is recognised as an operating lease. The income received from operating leases is recognised on a straight-
line basis over the lease term. Initial direct costs incurred in negotiating and arranging operating leases are included in the carrying
amount of the leased asset. Amounts due from lessees under finance leases are recognised as receivables.
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.
IT systems
up to 8 years.
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.
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.
Share-based payment transactions
Ownership based remuneration is provided to employees via the plans outlined in Note 38: 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.
160
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
161
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2. REVENUE
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
Net gain / (loss) on sale of assets
Foreign exchange gains / (losses)
Lease payments
Design, engineering and technical consulting fees
Other expenses
Total expenses
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
(13,538.7)
(479.3)
12 months to
December 2019
$m
12 months to
December 2018
$m
Note
7,532.1
4,496.9
2,626.4
45.7
7,965.2
3,966.9
2,676.5
61.6
33
14,701.1
14,670.2
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
Note
16
17
(2,682.2)
(4,186.3)
(1,376.1)
(3,709.6)
(874.0)
(43.6)
10.8
2.7
(140.6)
(60.5)
(2,846.7)
(4,391.5)
(1,222.8)
(3,634.0)
(686.3)
(40.8)
13.8
3.4
(202.4)
(64.7)
(483.0)
(13,555.0)
162
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
4. SIGNIFICANT ITEM
Provisions and Asset Impairment in relation to Middle East exit
Significant items are those which by their size and nature or incidence are relevant in explaining the financial performance of the
Group, and as such are disclosed separately.
On 23 January 2020 the Group announced to the ASX that it had completed an extensive strategic review of its financial investment
of a non-controlling interest in BIC Contracting (BICC), a company operating in the Middle East region. As part of the review CIMIC
initiated a confidential M&A process in respect of its investment in BICC and discussions continue with a shortlist of potential
acquirers for all or part of BICC. In addition, in the context of an accelerated deterioration of local market conditions, BICC is
engaging in confidential discussions with its lenders, creditors, clients and other stakeholders.
After thorough evaluation of all available options, CIMIC has decided to exit the region and to focus its resources and capital
allocation on growth opportunities in its main core markets and geographies (Australia, New Zealand and Asia Pacific).
In the year ended 31 December 2019 the Group recognised a one off pre-tax impact of $2,724.7 million relating to provisions and
asset impairments in respect of the Middle East exit with an associated income tax benefit of $884.5 million, resulting in a post-tax
impact of $1,840.2 million (“One off financial impact of the Middle East exit”).
Presented below is the underlying performance of the Group, the one-off financial impact of the Middle East exit, which is a non-
recurring item in the current year, and the statutory consolidated statement of profit or loss.
Impact on Consolidated Statement of Profit or Loss
Revenue
Expenses
Share of profit / (loss) of associates and joint venture entities
Operating profit
Provisions and asset impairment in relation to the Middle East exit
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
Underlying1
31 December 2019
One-off financial
impact of the
Middle East exit
Statutory
31 December 2019
$m
$m
$m
14,701.1
(13,538.7)
66.7
1,229.1
-
1,229.1
56.7
(185.9)
(129.2)
1,099.9
(297.0)
802.9
-
-
-
14,701.1
(13,538.7)
66.7
1,229.1
(2,724.7)
(2,724.7)
(2,724.7)
(1,495.6)
-
-
-
(2,724.7)
884.5
(1,840.2)
56.7
(185.9)
(129.2)
(1,624.8)
587.5
(1,037.3)
(Profit) / loss for the period attributable to non-controlling interests
(2.6)
-
(2.6)
Profit / (loss) for the period attributable to shareholders of the
parent entity
800.3
(1,840.2)
(1,039.9)
Basic earnings per share
Diluted earnings per share
1Underlying represents financial performance prior to recording the one-off impact of the Group’s decision to exit the Middle East region.
(567.8¢)
(567.8¢)
(320.9¢)
(320.9¢)
246.9¢
246.9¢
163
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
4. SIGNIFICANT ITEM CONTINUED
Provisions and Asset Impairment in relation to Middle East exit continued
Asset impairments totalling $1,189.6 million includes write downs of outstanding shareholder loans of $1,072.1 million, an
impairment to the option to acquire the remaining shares in BICC of $77.1 million and $40.4 million in relation to other Middle
East related assets.
A financial liability and other amounts payable totalling $1,535.1 million have been recognised which represents amounts
expected to be paid as CIMIC’s financial guarantees of certain BICC liabilities materialise.
CIMIC has committed facilities and cash available to meet all obligations as required.
4. SIGNIFICANT ITEM
Provisions and Asset Impairment in relation to Middle East exit
Significant items are those which by their size and nature or incidence are relevant in explaining the financial performance of the
Group, and as such are disclosed separately.
On 23 January 2020 the Group announced to the ASX that it had completed an extensive strategic review of its financial investment
of a non-controlling interest in BIC Contracting (BICC), a company operating in the Middle East region. As part of the review CIMIC
initiated a confidential M&A process in respect of its investment in BICC and discussions continue with a shortlist of potential
acquirers for all or part of BICC. In addition, in the context of an accelerated deterioration of local market conditions, BICC is
engaging in confidential discussions with its lenders, creditors, clients and other stakeholders.
After thorough evaluation of all available options, CIMIC has decided to exit the region and to focus its resources and capital
allocation on growth opportunities in its main core markets and geographies (Australia, New Zealand and Asia Pacific).
In the year ended 31 December 2019 the Group recognised a one off pre-tax impact of $2,724.7 million relating to provisions and
asset impairments in respect of the Middle East exit with an associated income tax benefit of $884.5 million, resulting in a post-tax
impact of $1,840.2 million (“One off financial impact of the Middle East exit”).
Presented below is the underlying performance of the Group, the one-off financial impact of the Middle East exit, which is a non-
recurring item in the current year, and the statutory consolidated statement of profit or loss.
Impact on Consolidated Statement of Profit or Loss
Revenue
Expenses
Operating profit
Share of profit / (loss) of associates and joint venture entities
Provisions and asset impairment in relation to the Middle East exit
Earnings before interest and tax (“EBIT”)
(2,724.7)
(2,724.7)
(2,724.7)
(1,495.6)
Underlying1
31 December 2019
One-off financial
impact of the
Middle East exit
Statutory
31 December 2019
$m
$m
$m
14,701.1
(13,538.7)
66.7
1,229.1
-
1,229.1
56.7
(185.9)
(129.2)
1,099.9
(297.0)
802.9
-
-
-
-
-
-
(2,724.7)
884.5
(1,840.2)
14,701.1
(13,538.7)
66.7
1,229.1
56.7
(185.9)
(129.2)
(1,624.8)
587.5
(1,037.3)
Finance income
Finance costs
Net finance income / (costs)
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period
(Profit) / loss for the period attributable to non-controlling interests
(2.6)
-
(2.6)
Profit / (loss) for the period attributable to shareholders of the
parent entity
800.3
(1,840.2)
(1,039.9)
Basic earnings per share
Diluted earnings per share
246.9¢
246.9¢
(567.8¢)
(567.8¢)
(320.9¢)
(320.9¢)
1Underlying represents financial performance prior to recording the one-off impact of the Group’s decision to exit the Middle East region.
164
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
5. NET FINANCE INCOME / (COSTS)
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 leases liabilities
Facility fees, bonding and other finance costs
Impact of discounting
- Related parties
- Other
Total finance costs
Net finance income / (costs)
Note
39 (b)
39 (b)
39 (b)
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
29.2
24.6
2.9
-
56.7
(66.1)
(37.3)
(76.0)
-
(6.5)
25.0
27.4
2.8
0.1
55.3
(73.1)
(34.2)
(46.1)
-
(4.0)
(185.9)
(157.4)
(129.2)
(102.1)
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
165
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
5. NET FINANCE INCOME / (COSTS)
6. 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
Finance charge for leases liabilities
Facility fees, bonding and other finance costs
12 months to
12 months to
December 2019
December 2018
$m
$m
Restated^
29.2
24.6
2.9
-
56.7
(66.1)
(37.3)
(76.0)
-
(6.5)
25.0
27.4
2.8
0.1
55.3
(73.1)
(34.2)
(46.1)
-
(4.0)
Note
39 (b)
39 (b)
39 (b)
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
1Audit 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
(185.9)
(157.4)
- Other services – other auditors
Other services
12 months to
December 2019
$’000
12 months to
December 2018
$’000
3,259
780
335
4,374
105
-
10
[X]
115
31
31
3,837
765
343
4,945
104
-
14
118
21
21
11
Net finance income / (costs)
(129.2)
(102.1)
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
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.
166
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
7. INCOME TAX EXPENSE
Income tax expense recognised in the statement of profit or loss
Current tax expense
Deferred tax benefit / (expense)
Over provision in prior periods
Total income tax benefit / (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
(Loss) / Profit from continuing operations
(Loss) / Profit before tax
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
(334.0)
935.1
(13.6)
587.5
(111.6)
(186.8)
(1.5)
(299.9)
-
-
(2.8)
(2.8)
(1,624.8)
(1,624.8)
1,071.6
1,071.6
Prima facie income tax benefit / (expense) at 30% (31 December 2018: 30%)
487.4
(321.5)
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
- Other items in relation to Middle East exit
- Other
Current period income tax benefit / (expense)
(Under) / over provision in prior periods
(5.4)
33.7
-
5.4
17.0
67.1
(4.1)
(23.1)
29.0
1.6
(20.9)
16.0
-
20.5
601.1
(298.4)
(13.6)
(1.5)
Income tax benefit / (expense)
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
587.5
(299.9)
167
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
7. INCOME TAX EXPENSE
Income tax expense recognised in the statement of profit or loss
Current tax expense
Deferred tax benefit / (expense)
Over provision in prior periods
Total income tax benefit / (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
(Loss) / Profit from continuing operations
(Loss) / 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
- Other items in relation to Middle East exit
- Other
Current period income tax benefit / (expense)
(Under) / over provision in prior periods
Income tax benefit / (expense)
12 months to
12 months to
December 2019
December 2018
$m
$m
Restated^
(334.0)
935.1
(13.6)
587.5
(111.6)
(186.8)
(1.5)
(299.9)
-
-
(2.8)
(2.8)
(1,624.8)
(1,624.8)
1,071.6
1,071.6
(5.4)
33.7
-
5.4
17.0
67.1
(4.1)
(23.1)
29.0
1.6
(20.9)
16.0
-
20.5
601.1
(298.4)
(13.6)
(1.5)
587.5
(299.9)
Prima facie income tax benefit / (expense) at 30% (31 December 2018: 30%)
487.4
(321.5)
The following items have affected income tax (expense) / benefit for the year:
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
8. CASH AND CASH EQUIVALENTS
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents
December 2019
$m
December 2018
$m
446.8
1,303.2
1,750.0
966.9
1,174.8
2,141.7
As at 31 December 2019: $468.1 million (31 December 2018: $580.4 million) of cash at bank is restricted. It includes cash subject to
certain operational restrictions of $320.6 million (31 December 2018: $204.3 million) as well as cash in relation to the sale of
receivables of $147.5 million (31 December 2018: $376.1 million). The receivables only include certified amounts with the factoring
done on a non-recourse basis.
9. SHORT TERM FINANCIAL ASSETS AND INVESTMENTS
December 2019
$m
December 2018
$m
Short term financial assets and investments
4.5
3.5
This balance represents liquid assets converted or readily convertible to cash subsequent to period end.
Additional information on cash, cash equivalents and short term financial assets and
investments:
Cash and cash equivalents
Short term financial assets and investments
Cash and equivalent liquid assets
Cash flows from operating activities
Change in short term assets and investments
Total cash from operating activities and changes in equivalent liquid assets
December 2019
$m
December 2018
$m
8
1,750.0
2,141.7
4.5
3.5
1,754.5
2,145.2
December 2019
$m
December 2018
$m
1,713.3
2,050.7
1.0
2.7
1,714.3
2,053.4
168
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
10. TRADE AND OTHER RECEIVABLES
Contract receivables
Contract assets1,4
Retentions and capitalised costs to fulfil contracts
Total contract debtors
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties2
Non-current tax asset3
Total trade and other receivables
December 2019
$m
December 2018
$m
Restated^
Note
390.7
2,080.1
137.1
2,607.9
210.5
691.0
102.1
9.3
32.1
31.9
415.0
1,714.5
167.6
2,297.1
167.8
571.5
67.1
89.8
672.1
34.3
3,684.8
3,899.7
29, 37
39 (b)
Current1
Non-current2,3,4
Total trade and other receivables
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1Contract assets includes an amount equal to $1.15 billion (31 December 2018: $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).
3,554.4
130.4
3,684.8
3,122.1
777.6
3,899.7
The position is:
§
§
§
§
§
§
§
§
In November 2009 the Consortium was announced as the preferred contractor to construct the 2.1 kilometre Chevron Gorgon
LNG Jetty and Marine Structures project on Barrow Island, 70 kilometres off the Pilbara coast of Western Australia.
The scope of work consisted of the design, material supply, fabrication, construction and commissioning of the LNG Jetty. The
scope also included supply, fabrication and construction of marine structures including a heavy lift facility, tug pens and
navigation aids.
The jetty comprised steel trusses approximately 70 metres long supported by concrete caissons leading to the loading platform
approximately 4 kilometres from the shore.
Initial acceptance of the jetty and marine structures took place on 15 August 2014.
During the project, changes to scope and conditions led to the Consortium submitting Change Order Requests (CORs). The
Consortium, Chevron and Chevron’s agent, entered into negotiations in relation to some of the CORs.
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. Closing submissions
were completed on 6 – 7 November 2019 with an award from the arbitrators expected late 2020.
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 commence in 2020 with
a determination thereafter.
169
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
10. TRADE AND OTHER RECEIVABLES CONTINUED
2The Group has trade and other receivables relating to BICC. Following the Group’s decision to exit the Middle East, the shareholder
loans are fully impaired and total US$nil (31 December 2018: US$454.9 million) equivalent to $nil (31 December 2018: $640.7
million). Refer to Note 4: Significant item.
3The non-current tax asset of $31.9 million (31 December 2018: $34.3 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.
4Contract assets are net of $675.0 million (31 December 2018: $675.0 million) revenue constraint on a portfolio basis.
Additional information on contract debtors
Total contract debtors
Total contract liabilities
-
-
trade and other receivables
trade and other payables
Net contract debtors
Significant changes in contract assets and liabilities
December 2019
$m
December 2018
$m
2,607.9
(1,322.2)
1,285.7
2,297.1
(1,198.2)
1,098.9
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.
The increase in net contract debtors is mainly attributable to the growth in the mining business, where advance payments are not
commonly received, and also due to a large number of alliance construction contracts won in Australia over the past year, with a
different working capital profile compared to infrastructure projects.
Revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period was
$998.5 million (31 December 2018: $910.8 million). Revenue recognised in the reporting period from performance obligations
satisfied or partially satisfied in previous periods was $145.3 million (31 December 2018: $152.7 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 2019 are set out below.
December 2019
$m
December 2018
$m
Construction
Mining & mineral processing
Services
Corporate
Work in hand1
36,706
1Includes $5,157 million (31 December 2018: $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
16,229
10,143
8,944
2,195
37,511
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
170
10. TRADE AND OTHER RECEIVABLES
Contract receivables
Contract assets1,4
Total contract debtors
Retentions and capitalised costs to fulfil contracts
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties2
Non-current tax asset3
Total trade and other receivables
Current1
Non-current2,3,4
Total trade and other receivables
Note
29, 37
39 (b)
December 2019
December 2018
$m
390.7
2,080.1
137.1
2,607.9
210.5
691.0
102.1
9.3
32.1
31.9
$m
Restated^
415.0
1,714.5
167.6
2,297.1
167.8
571.5
67.1
89.8
672.1
34.3
3,684.8
3,899.7
3,554.4
130.4
3,684.8
3,122.1
777.6
3,899.7
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1Contract assets includes an amount equal to $1.15 billion (31 December 2018: $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.
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. Closing submissions
were completed on 6 – 7 November 2019 with an award from the arbitrators expected late 2020.
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 commence in 2020 with
a determination thereafter.
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
11. CURRENT TAX ASSETS
The current tax asset of $nil (31 December 2018: $nil) represents the amount of income taxes recoverable from the payment of tax
in excess of the amounts due to the relevant tax authority.
12. 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 2019
$m
December 2018
$m
18.5
100.7
30.1
149.3
365.7
365.7
21.5
98.8
29.2
149.5
276.7
276.7
515.0
426.2
400.1
114.9
515.0
315.1
111.1
426.2
Finance costs capitalised to property developments during the period were $1.3 million (31 December 2018: $2.6 million).
13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Associates
Joint venture entities
Total investments accounted for using the equity method
December 2019
$m
December 2018
$m
Note
28
29
54.3
196.2
250.5
72.5
64.1
136.6
171
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
11. CURRENT TAX ASSETS
14. OTHER INVESTMENTS
The current tax asset of $nil (31 December 2018: $nil) represents the amount of income taxes recoverable from the payment of tax
in excess of the amounts due to the relevant tax authority.
December 2019
$m
December 2018
$m
Note
12. 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
18.5
100.7
30.1
149.3
365.7
365.7
400.1
114.9
515.0
21.5
98.8
29.2
149.5
276.7
276.7
315.1
111.1
426.2
515.0
426.2
Finance costs capitalised to property developments during the period were $1.3 million (31 December 2018: $2.6 million).
13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Associates
Joint venture entities
Total investments accounted for using the equity method
December 2019
December 2018
Note
$m
$m
28
29
54.3
196.2
250.5
72.5
64.1
136.6
December 2019
December 2018
$m
$m
Total other financial assets at fair value through profit or loss
37 (c)
Financial assets at fair value through profit or loss
Listed investments
Unlisted investments
Current
Non-current
Total other investments
15. DEFERRED TAXES
Recognised deferred tax assets / (liabilities)
Deferred tax assets are attributed to the following:
Contract debtors
Property developments
Other inventories
Property, plant and equipment
Employee benefits
Contract profit differential
Withholding tax on retained earnings of non-resident and controlled entities
Investment revaluations
Controlled entities
Foreign exchange
Tax losses1
Other
Total deferred taxes
Comprising of:
Deferred tax assets
Deferred tax (liabilities)
Total deferred taxes
1.0
111.2
112.2
-
112.2
112.2
-
105.4
105.4
-
105.4
105.4
December 2019
$m
December 2018
$m
Restated^
265.2
14.4
4.1
75.7
103.2
(420.5)
(98.6)
40.0
(30.7)
0.1
945.6
105.8
1,004.3
1,025.2
(20.9)
1,004.3
335.8
11.1
6.1
59.3
98.5
(476.4)
(104.0)
40.4
(76.4)
15.5
90.3
50.0
50.2
69.6
(19.4)
50.2
Unrecognised deferred tax assets
Deferred tax assets which have not been recognised in respect of tax losses
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1Includes $826.5 million relating to carried forward capital losses with no expiry date. In recognising deferred tax assets the Group
considers the expected future performance of the business in line with the Group strategy, Board approved business plans as well as
future capital allocation opportunities. The group analyses strategic options to maintain its balance sheet, including investment
partnerships to grow its core businesses.
159.9
165.7
172
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
16. PROPERTY, PLANT AND EQUIPMENT
Restated^
Buildings
At 1 January 2018
Cost or fair value
Accumulated depreciation
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
Year ended 31 December 2019
Opening net book amount
Additions
Acquisitions
Disposals
Transfers
Depreciation
Effects of exchange rate
fluctuations
Closing net book amount
Year ended 31 December 2019
Cost or fair value
Accumulated depreciation and
impairment
Net book amount
$m
0.2
(0.2)
-
-
0.1
-
-
-
-
-
0.1
0.1
-
0.1
0.1
-
-
-
-
-
-
0.1
0.1
-
0.1
Leasehold land,
buildings and
improvements
Plant and
equipment
Right-of-
use
Land and
buildings
Right-of-
use plant
and
equipment
Total
property,
plant and
equipment
$m
$m
$m
$m
$m
85.5
(41.2)
44.3
3,222.6
(2,042.9)
1,179.7
593.3
(270.4)
322.9
44.3
0.8
-
-
-
1,179.7
560.3
0.3
(68.4)
12.6
322.9
10.1
1.9
-
-
267.0
(67.8)
199.2
199.2
408.6
-
-
-
4,168.6
(2,422.5)
1,746.1
1,746.1
979.9
2.2
(68.4)
12.6
(8.1)
(510.3)
(65.0)
(102.9)
(686.3)
-
81.4
37.0
1,255.6
1.3
271.2
(0.7)
504.2
82.0
2,068.1
87.4
3,434.8
607.8
672.0
4,802.1
(50.4)
(2,179.2)
(336.6)
(167.8)
(2,734.0)
37.0
1,255.6
271.2
504.2
2,068.1
37.0
5.2
-
-
-
1,255.6
786.6
5.1
(12.3)
5.1
271.2
124.0
1.2
(6.0)
-
504.2
177.0
-
(11.1)
2.2
(7.8)
(580.8)
(65.7)
(219.7)
-
9.4
-
34.4
1,468.7
324.7
(1.4)
451.2
2,068.1
1,092.8
6.3
(29.4)
7.3
(874.0)
8.0
2,279.1
82.3
3,690.6
664.9
766.1
5,204.0
(47.9)
(2,221.9)
(340.2)
(314.9)
(2,924.9)
34.4
1,468.7
324.7
451.2
2,279.1
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
173
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
16. PROPERTY, PLANT AND EQUIPMENT
17. INTANGIBLES
Restated^
Buildings
Leasehold land,
Plant and
Right-of-
buildings and
equipment
improvements
use
Land and
buildings
Right-of-
use plant
and
equipment
Total
property,
plant and
equipment
$m
$m
$m
$m
$m
At 1 January 2018
Cost or fair value
Accumulated depreciation
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
Year ended 31 December 2019
Opening net book amount
Additions
Acquisitions
Disposals
Transfers
Depreciation
Effects of exchange rate
fluctuations
Closing net book amount
Year ended 31 December 2019
Cost or fair value
Accumulated depreciation and
impairment
Net book amount
$m
0.2
(0.2)
0.1
0.1
0.1
-
0.1
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
0.1
-
0.1
85.5
(41.2)
44.3
3,222.6
(2,042.9)
1,179.7
593.3
(270.4)
322.9
44.3
0.8
-
-
-
-
-
-
-
-
37.0
5.2
1,179.7
560.3
0.3
(68.4)
12.6
81.4
1,255.6
786.6
5.1
(12.3)
5.1
9.4
322.9
10.1
1.9
-
-
1.3
271.2
271.2
124.0
1.2
(6.0)
-
-
(8.1)
(510.3)
(65.0)
(102.9)
(686.3)
37.0
1,255.6
87.4
3,434.8
607.8
672.0
4,802.1
(50.4)
(2,179.2)
(336.6)
(167.8)
(2,734.0)
37.0
1,255.6
271.2
504.2
2,068.1
267.0
(67.8)
199.2
199.2
408.6
-
-
-
(0.7)
504.2
504.2
177.0
-
(11.1)
2.2
(1.4)
451.2
4,168.6
(2,422.5)
1,746.1
1,746.1
979.9
2.2
(68.4)
12.6
82.0
2,068.1
2,068.1
1,092.8
6.3
(29.4)
7.3
(874.0)
8.0
2,279.1
(7.8)
(580.8)
(65.7)
(219.7)
34.4
1,468.7
324.7
82.3
3,690.6
664.9
766.1
5,204.0
(47.9)
(2,221.9)
(340.2)
(314.9)
(2,924.9)
34.4
1,468.7
324.7
451.2
2,279.1
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
At 1 January 2018
Cost or fair value
Accumulated amortisation and impairment
Net book amount
Year ended 31 December 2018
Opening net book amount
Additions / acquisitions
Disposals
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
Year ended 31 December 2019
Opening net book amount
Additions / acquisitions
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2019
Cost or fair value
Accumulated amortisation and impairment
Net book amount
1Other intangibles include:
§
§
Goodwill
Note
$m
Other
intangibles1
$m
Total
intangibles
$m
936.1
(13.6)
922.5
922.5
21.7
-
-
-
4.0
948.2
961.8
(13.6)
948.2
948.2
31.3
-
-
(0.3)
979.2
992.8
(13.6)
979.2
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
145.3
44.4
(20.5)
(43.6)
(0.4)
125.2
397.6
(272.4)
125.2
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
1,093.5
75.7
(20.5)
(43.6)
(0.7)
1,104.4
1,390.4
(286.0)
1,104.4
4
IT software systems of $53.8 million with a useful life of up to 8 years (31 December 2018: $74.1 million up to 8 years);
Customer contracts, concessions and other intangibles with useful lives of:
-
-
-
1 to 5 years $8.2 million (31 December 2018: $11.3 million);
6 to 15 years $57.7 million (31 December 2018: $54.4 million); and
Indefinite useful life $5.5 million (31 December 2018: $5.5 million).
174
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
17. INTANGIBLES CONTINUED
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 2019
$m
December 2018
$m
451.2
114.8
413.2
979.2
452.1
98.1
398.0
948.2
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
11–15%
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 2019. 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.
175
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
exceeds its carrying amount.
rates:
Discount rate:
Growth rate:
Cash-generating units
Construction
Mining & mineral processing
Services
Sensitivity to changes in assumptions
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
Discount rate
Growth rate
range
11–15%
8–18%
11%
range
3-5%
3%
3%
The recoverable amount of intangible assets exceeds their carrying values at 31 December 2019. 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.
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
17. INTANGIBLES CONTINUED
18. TRADE AND OTHER PAYABLES
December 2019
December 2018
$m
$m
451.2
114.8
413.2
979.2
452.1
98.1
398.0
948.2
Trade creditors and accruals
Other creditors
Amounts payable to related parties
Trade and other payables
Note
December 2019
$m
December 2018
$m
Restated^
5,849.9
5,144.6
346.6
16.3
585.9
20.2
6,212.8
5,750.7
39 (b)
37 (a,b)
Derivative financial liabilities
37 (a,b)
12.6
1.0
Total trade and other payables
Current
6,225.4
5,751.7
6,024.6
5,669.7
Non-current
Total trade and other payables
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
6,225.4
200.8
82.0
5,751.7
Risk in the industry and country in which each unit operates
Relevant to the market conditions and business plan
19. CURRENT TAX LIABILITIES
The current tax liability of $60.3 million (31 December 2018: $68.4 million) represents the amounts payable in respect of current
and prior periods.
20. PROVISIONS
Employee Benefits
Current
Non-current
Total provisions
December 2019
$m
December 2018
$m
327.2
60.5
387.7
326.0
62.4
388.4
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and
deferred bonuses.
176
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
21. INTEREST BEARING LIABILITIES
Current interest bearing loans
Non-current interest bearing loans
Total interest bearing liabilities
22. LEASE LIABILITIES
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Note
December 2019
$m
December 2018
$m
164.3
758.6
922.9
50.7
472.1
522.8
37
Note
December 2019
$m
December 2018
$m
277.8
624.3
902.1
279.2
629.7
908.9
37
Extension options
Certain leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable contract
period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility.
The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement
whether it is reasonably certain to exercise the extension options, and where it is reasonably certain, the extension period has been
included in the lease liability. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant
event or significant change in circumstances within its control.
Residual value guarantees and buy out options
Certain lease contracts may include an option to buy-out the asset at the end of the lease term or include contingent rental
guarantees where the Group could be exposed to the variability of returns in relation to return conditions at lease expiry.
The Group will include the payments for the contingent rental guarantee or the buy-out option only if it is reasonably certain that
the payment will occur at the end of the lease term. The Group reassesses whether it is reasonably certain to exercise the options if
there is a significant event or significant change in circumstances within its control.
177
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
21. INTEREST BEARING LIABILITIES
23. SHARE CAPITAL
Current interest bearing loans
Non-current interest bearing loans
Total interest bearing liabilities
22. LEASE LIABILITIES
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Extension options
December 2019
December 2018
Note
$m
$m
164.3
758.6
922.9
50.7
472.1
522.8
37
37
December 2019
December 2018
Note
$m
$m
277.8
624.3
902.1
279.2
629.7
908.9
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 2019
No. of shares
December 2018
No. of shares
324,254,097
324,254,097
(527,341)
-
323,726,756
324,254,097
Company
12 months to
December 2019
$m
12 months to
December 2018
$m
1,750.3
1,750.3
(11.9)
-
Certain leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable contract
period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility.
The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement
whether it is reasonably certain to exercise the extension options, and where it is reasonably certain, the extension period has been
included in the lease liability. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant
event or significant change in circumstances within its control.
Residual value guarantees and buy out options
Certain lease contracts may include an option to buy-out the asset at the end of the lease term or include contingent rental
guarantees where the Group could be exposed to the variability of returns in relation to return conditions at lease expiry.
The Group will include the payments for the contingent rental guarantee or the buy-out option only if it is reasonably certain that
the payment will occur at the end of the lease term. The Group reassesses whether it is reasonably certain to exercise the options if
there is a significant event or significant change in circumstances within its control.
Balance at reporting date
1,750.3
1On 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.
1,738.4
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 which commenced on 29 December 2018 and concluded on 28 December 2019. As at 31
December 2019, 527,341 shares were bought back for $16.7 million and subsequently cancelled. The associated par value of the
shares cancelled totalling $11.9 million reduced share capital with the total premium paid over par value of $4.8 million taken to
the share buy-back reserve in 2019.
On 13 December 2019, 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 2019. 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.
178
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
24. RESERVES
Foreign currency translation reserve
Balance at beginning of reporting period
Adjustment on implementation of new accounting standards
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
Balance at reporting date
12 months to
December 2019
$m
12 months to
December 2018
$m
Note
206.8
-
0.7
207.5
(6.6)
(8.6)
(15.2)
162.3
(80.1)
124.6
206.8
(7.1)
0.5
(6.6)
(619.6)
(619.6)
-
-
(619.6)
(619.6)
(123.7)
(4.8)
(128.5)
28.8
-
-
28.8
(123.7)
-
(123.7)
33.8
0.1
(5.1)
28.8
38
Total reserves at reporting date
(527.0)
(514.3)
179
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
24. RESERVES
Foreign currency translation reserve
Balance at beginning of reporting period
Adjustment on implementation of new accounting standards
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
Balance at reporting date
12 months to
12 months to
December 2019
December 2018
Note
$m
$m
(619.6)
(619.6)
(619.6)
(619.6)
206.8
-
0.7
207.5
(6.6)
(8.6)
(15.2)
-
(123.7)
(4.8)
(128.5)
28.8
-
-
28.8
162.3
(80.1)
124.6
206.8
(7.1)
0.5
(6.6)
-
-
(123.7)
(123.7)
33.8
0.1
(5.1)
28.8
38
Total reserves at reporting date
(527.0)
(514.3)
24. RESERVES CONTINUED
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial
statements of operations where their functional currency is different to the presentation currency of the Group, as well as from
the translation of liabilities that hedge the Group’s net investment in foreign operations.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments relating to future transactions.
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.
25. RETAINED EARNINGS
Closing balance of previous reporting period
Adjustment on implementation of IFRS 16
Balance at beginning of reporting period
Adjustment on implementation of IFRS 15 and IFRS 9
Adjusted balance at beginning of period
Included in statement of profit or loss
Dividends paid
Note
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
1
1,094.6
-
1,094.6
2,183.0
(48.5)
2,134.5
-
(1,348.2)
1,094.6
(1,039.9)
786.3
778.5
26
(509.1)
(470.2)
Balance at reporting date
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
(454.4)
1,094.6
180
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
26. DIVIDENDS
2019 final dividend
Cents per
share
$m
Subsequent to reporting date the Company announced no final dividend would be paid in
respect of the year ended 31 December 2019
-
-
Dividends recognised in the reporting period to 31 December 2019
30 June 2019 interim ordinary dividend 100% franked paid on 3 October 2019
31 December 2018 final dividend 100% franked paid on 4 July 2019
Total dividends recognised in reporting period to 31 December 2019
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
Dividend franking account
Balance of the franking account, adjusted for franking credits / debits which arise from the
payment / refund of income tax provided for in the financial statements
71.0
86.0
70.0
75.0
230.2
278.9
509.1
227.0
243.2
470.2
Company
December 2019
$m
December 2018
$m
6.1
43.7
The impact of the 2019 final dividend, determined after the reporting date, on the dividend franking account will be a reduction of
$nil (2018: $119.5 million).
181
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
26. DIVIDENDS
27. EARNINGS PER SHARE
2019 final dividend
respect of the year ended 31 December 2019
Subsequent to reporting date the Company announced no final dividend would be paid in
-
-
Basic earnings per share
Diluted earnings per share
Profit / (loss) attributable to shareholders of the parent entity used in the calculation of basic
and diluted earnings per share ($m)
12 months to
December 2019
12 months to
December 2018
Restated^
(320.9¢)
(320.9¢)
240.1¢
240.1¢
(1,039.9)
778.5
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
Contingently issuable shares1
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1Contingently issuable shares relate to share rights under plans disclosed in Note 38: Employee benefits.
324,092,283
324,092,283
-
324,254,097
-
324,254,097
Cents per
share
$m
71.0
86.0
70.0
75.0
230.2
278.9
509.1
227.0
243.2
470.2
Company
December 2019
December 2018
$m
$m
Dividends recognised in the reporting period to 31 December 2019
30 June 2019 interim ordinary dividend 100% franked paid on 3 October 2019
31 December 2018 final dividend 100% franked paid on 4 July 2019
Total dividends recognised in reporting period to 31 December 2019
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
Dividend franking account
$nil (2018: $119.5 million).
Balance of the franking account, adjusted for franking credits / debits which arise from the
6.1
43.7
payment / refund of income tax provided for in the financial statements
The impact of the 2019 final dividend, determined after the reporting date, on the dividend franking account will be a reduction of
182
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
28. ASSOCIATES
The Group has the following investments in associates:
Name of entity
Principal activity
Country
Canberra Metro Holdings Pty Ltd1
Canberra Metro Holdings Trust1
Canberra Metro Pty Ltd1
CIP Holdings General Partner Limited1
Cornerstone Infrastructure Partners Holdings LP1
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 Ltd1
Momentum Trains Holding Trust1
On Talent Pty Ltd
Shaped NZ Hold GP Limited3
Shaped NZ Hold LP3
Wellington Gateway General Partner No.1 Limited2
Wellington Gateway Partnership No.1 Limited2
Construction
Construction
Construction
Investment
Investment
Development
Investment
Services
Services
Services
Investment
Investment
Recruitment
Investment
Investment
Investment
Investment
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
Ownership interest
December 2019
%
December 2018
%
30
30
30
-
-
20
11
20
20
20
-
-
30
23
23
15
15
30
30
30
40
40
20
11
20
20
20
49
49
30
23
23
15
15
All associates have a statutory reporting date of 31 December with the following exceptions:
1Entities have a 30 June statutory reporting date.
2The 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.
3Entities have a 31 March statutory reporting date.
183
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
28. ASSOCIATES
The Group has the following investments in associates:
28. ASSOCIATES CONTINUED
The Group’s share of associates’ results, assets and liabilities are as follows:
Name of entity
Principal activity
Country
December 2019
December 2018
Ownership interest
Canberra Metro Holdings Pty Ltd1
Canberra Metro Holdings Trust1
Canberra Metro Pty Ltd1
CIP Holdings General Partner Limited1
Cornerstone Infrastructure Partners Holdings LP1
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 Ltd1
Momentum Trains Holding Trust1
On Talent Pty Ltd
Shaped NZ Hold GP Limited3
Shaped NZ Hold LP3
Wellington Gateway General Partner No.1 Limited2
Wellington Gateway Partnership No.1 Limited2
Construction
Construction
Construction
Investment
Investment
Development
Investment
Services
Services
Services
Investment
Investment
Recruitment
Investment
Investment
Investment
Investment
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
%
30
30
30
-
-
20
11
20
20
20
-
-
30
23
23
15
15
%
30
30
30
40
40
20
11
20
20
20
49
49
30
23
23
15
15
All associates have a statutory reporting date of 31 December with the following exceptions:
1Entities have a 30 June statutory reporting date.
2The 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.
3Entities have a 31 March statutory reporting date.
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 2019
$m
12 months to
December 2018
$m
551.3
(515.2)
36.1
1.0
(15.7)
(14.7)
21.4
(5.1)
16.3
528.8
(503.9)
24.9
1.2
(6.1)
(4.9)
20.0
(4.5)
15.5
December 2019
$m
December 2018
$m
Restated^
191.5
339.9
531.4
162.6
314.5
477.1
135.7
396.6
532.3
124.7
335.1
459.8
72.5
Equity accounted associates at reporting date1
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
54.3
1The Group’s shareholding in listed associates for which there are published quotations had a market value at reporting date of: $nil
(31 December 2018: $nil).
There were no impairments of equity accounted associates during the reporting period (31 December 2018: $nil).
In the opinion of the directors, there are no individually material associates as at 31 December 2019.
184
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
29. JOINT VENTURE ENTITIES
The Group has the following joint venture entities:
Name of entity
Principal activity
Country
Ownership interest
December 2019
%
December 2018
%
Australian Terminal Operations Management Pty Ltd
BIC Contracting LLC
Services
Construction
Canberra Metro Operations Pty Ltd
CIP Holdings General Partner Limited1
City West Property Holdings Pty Limited
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
Cornerstone Infrastructure Partners Holding LP1
Great Eastern Highway Upgrade
GSJV Guyana Inc1
GSJV Limited (Barbados)1
Kings Square No.4 Unit Trust1
Kings Square Pty Ltd1
Leighton Abigroup Joint Venture1
Leighton Kumagai Joint Venture (Metrorail)1
Leighton-Infra 13 Joint Venture2
Leighton-Ose Joint Venture2
Majwe Mining Joint Venture (Proprietary) Limited
Mode Apartments Pty Ltd
Mode Apartments Unit Trust
Momentum Trains Holding Pty Ltd1
Momentum Trains Holding Trust1
Mpeet Pty Limited
Mulba Mia Leighton Broad Joint Venture1
Naval Ship Management (Australia) Pty Ltd2
Ngarda Civil and Mining Pty Limited1
Northern Gateway Alliance
Pulse Partners Holding Pty Ltd1
Pulse Partners Holding Trust1
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
185
Services
Investment
Development
Development
Development
Development
Development
Development
Development
Contract Mining
Investment
Construction
Contract Mining
Contract Mining
Development
Development
Construction
Construction
Construction
Construction
Contract Mining
Development
Development
Investment
Investment
Services
Construction
Services
Contract Mining
Construction
Investment
Investment
Contract Mining
Construction
Construction
Construction
Construction
Construction
Construction
Investment
Development
Australia
United Arab
Emirates
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Guyana
Barbados
Australia
Australia
Australia
Australia
India
India
Botswana
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
50
45
50
40
-
-
-
-
-
-
-
50
40
75
50
50
50
50
50
55
50
50
-
30
30
49
49
50
50
50
-
50
49
49
44
44
-
50
69
-
50
47
-
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
50
50
50
-
-
44
44
50
50
69
50
50
47
50
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Name of entity
Principal activity
Country
December 2019
December 2018
29. JOINT VENTURE ENTITIES CONTINUED
Ownership interest
Name of entity
Principal activity
Country
Ownership interest
December 2019
%
December 2018
%
Viridian Noosa Trust1
Wallan Project Pty Ltd1
Wallan Project Trust
WSO M7 Stage 3 JV
Development
Investment
Investment
Construction
Australia
Australia
Australia
Australia
-
30
30
50
50
30
30
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
CIMIC’s investment in BICC is held at nil value.
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. Following the Group’s decision to exit the Middle East as at 31 December 2019, the
fair value of the call option was determined to be $nil for 31 December 2019 (31 December 2018: US$54.0 million),
equivalent to $nil (31 December 2018: $76.1 million).
CIMIC continues to guarantee BICC’s facilities. CIMIC has recognised the full value of these guarantees as a financial liability as
at 31 December 2019 (31 December 2018: $nil). Refer to Note 4: Significant item.
The amounts recognised in profit and loss in the period represent all of CIMIC’s exposure in relation to BICC, accordingly
management have not presented BICC as a material joint venture.
No other material joint ventures have been identified by management.
186
29. JOINT VENTURE ENTITIES
The Group has the following joint venture entities:
Australian Terminal Operations Management Pty Ltd
BIC Contracting LLC
Canberra Metro Operations Pty Ltd
CIP Holdings General Partner Limited1
City West Property Holdings Pty Limited
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
Cornerstone Infrastructure Partners Holding LP1
Great Eastern Highway Upgrade
GSJV Guyana Inc1
GSJV Limited (Barbados)1
Kings Square No.4 Unit Trust1
Kings Square Pty Ltd1
Leighton Abigroup Joint Venture1
Leighton Kumagai Joint Venture (Metrorail)1
Leighton-Infra 13 Joint Venture2
Leighton-Ose Joint Venture2
Mode Apartments Pty Ltd
Mode Apartments Unit Trust
Momentum Trains Holding Pty Ltd1
Momentum Trains Holding Trust1
Mpeet Pty Limited
Mulba Mia Leighton Broad Joint Venture1
Naval Ship Management (Australia) Pty Ltd2
Ngarda Civil and Mining Pty Limited1
Northern Gateway Alliance
Pulse Partners Holding Pty Ltd1
Pulse Partners Holding Trust1
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
Services
Construction
Services
Investment
Development
Development
Development
Development
Development
Development
Development
Australia
United Arab
Emirates
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Contract Mining
Investment
Construction
New Zealand
Australia
Contract Mining
Guyana
Contract Mining
Barbados
Development
Development
Construction
Construction
Construction
Construction
Development
Development
Investment
Investment
Services
Construction
Services
Contract Mining
Investment
Investment
Contract Mining
Construction
Construction
Construction
Construction
Construction
Construction
Investment
Development
Australia
Australia
Australia
Australia
India
India
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Construction
New Zealand
%
50
45
50
40
-
-
-
-
-
-
-
50
40
75
50
50
50
50
50
55
50
50
-
30
30
49
49
50
50
50
-
50
49
49
44
44
-
50
69
-
50
47
-
%
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
50
50
50
-
-
44
44
50
50
69
50
50
47
50
Majwe Mining Joint Venture (Proprietary) Limited
Contract Mining
Botswana
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
29. JOINT VENTURE ENTITIES CONTINUED
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
Revenue
Expenses
Earnings before interest and tax (EBIT)
Finance income
Finance costs
Net finance income / (costs)
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 months to
December 2019
$m
12 months to
December 2018
$m
1,954.7
(1,784.1)
170.6
2,053.8
(1,897.7)
156.1
8.3
(110.5)
(102.2)
68.4
(18.0)
50.4
0.8
(93.3)
(92.5)
63.6
(20.6)
43.0
December 2019
$m
December 2018
$m
Restated^
1,865.4
1,350.0
3,215.4
1,821.4
1,329.9
3,151.3
2,070.9
1,847.6
3,918.5
1,765.8
1,956.5
3,722.3
The Group’s share of joint venture entities’ net assets at reporting date
196.2
64.1
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
There were no impairments of investments in joint ventures during the reporting period (31 December 2018: $nil).
187
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 2019
December 2018
$m
$m
1,954.7
(1,784.1)
170.6
2,053.8
(1,897.7)
156.1
December 2019
December 2018
$m
$m
Restated^
8.3
(110.5)
(102.2)
68.4
(18.0)
50.4
2,070.9
1,847.6
3,918.5
1,765.8
1,956.5
3,722.3
0.8
(93.3)
(92.5)
63.6
(20.6)
43.0
1,865.4
1,350.0
3,215.4
1,821.4
1,329.9
3,151.3
The Group’s share of joint venture entities’ net assets at reporting date
196.2
64.1
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
There were no impairments of investments in joint ventures during the reporting period (31 December 2018: $nil).
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
29. JOINT VENTURE ENTITIES CONTINUED
30. JOINT OPERATIONS
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2019
%
December 2018
%
Construction
Development
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
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 BAM Ghella UGL 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
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)
Construction
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
Construction
Construction
Construction
Construction
Australia
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
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
Singapore
Hong Kong
Singapore
Australia
Hong Kong
50
33
50
-
50
54
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
50
70
75
51
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
50
70
75
51
188
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
30. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2019
%
December 2018
%
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)
PTA Radio
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
Construction
Construction
Construction
Construction
Construction
Construction
Hong Kong
Hong Kong
Hong Kong
Indonesia
Australia
Australia
Malaysia
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Australia
Services
Australia
Services
Australia
Construction
Australia
Services
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Canada
Contract Mining
Construction
Australia
Contract Mining Australia
Australia
Services
Australia
Construction
Hong Kong
Construction
50
55
51
67
50
71
50
50
50
50
40
50
44
50
50
60
67
65
33
50
50
51
-
50
50
50
24
50
55
51
67
50
71
50
50
50
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:
1Arrangements 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.
189
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
30. JOINT OPERATIONS CONTINUED
31. NOTES TO THE STATEMENT OF CASH FLOWS
Name of arrangement
Principal activity
Country
December 2019
December 2018
Ownership interest
a) Reconciliation of profit / (loss) for the year to net cash from operating activities
(Loss) / profit for the year
Adjustments for:
- Depreciation of property, plant and equipment
- Amortisation of intangibles
- Net (gain) / loss on sale of assets
-
-
-
- Net amounts set aside to provisions
- Provision and asset impairment for Middle East
-
Impairment of intangibles
Foreign exchange (gain) / loss
Interest on lease liabilities
Share of (profits) / losses of associates
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 2019
$m
12 months to
December 2018
$m
Restated^
(1,037.3)
771.7
874.0
43.6
(10.8)
-
(2.7)
37.3
296.6
1,840.2
(16.3)
(426.7)
(16.6)
(91.2)
125.5
(300.7)
(65.4)
686.3
40.8
(13.8)
2.7
(3.4)
34.2
236.1
-
(15.5)
(590.7)
16.7
(34.8)
768.2
(234.5)
236.3
1,900.3
Net cash from operating activities
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of significant
accounting policies – basis of preparation.
1,249.5
b) Reconciliation of liabilities arising from financing activities
Interest bearing liabilities
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
PTA Radio
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
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Services
Services
Services
Construction
Services
Construction
Construction
Construction
Construction
Construction
Construction
Hong Kong
Hong Kong
Hong Kong
Indonesia
Australia
Australia
Malaysia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Contract Mining
Canada
Construction
Australia
Contract Mining Australia
Services
Construction
Construction
Australia
Australia
Hong Kong
%
50
55
51
67
50
71
50
50
50
50
40
50
44
50
50
60
67
65
33
50
50
51
-
50
50
50
24
%
50
55
51
67
50
71
50
50
50
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:
1Arrangements 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.
December
2018
.
Cash flows
Addition /
acquisition
$m
522.8
$m
390.0
$m
-
Amortisation
of borrowing
costs
$m
Foreign
exchange
movement
$m
3.8
6.3
Other
December
2019
$m
-
$m
922.9
Interest bearing loans
Lease liabilities
Restated^
Lease liabilities
908.9
(320.0)
303.4
December
2018
$m
.
Cash flows
$m
Addition /
acquisitions
$m
Interest
charged
$m
37.3
Disposals
Other
$m
(19.1)
$m
(8.4)
December
2019
$m
902.1
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
190
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
32. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
2019 Acquisitions
Majwe Mining
On 18 March 2019, CIMIC through its wholly owned subsidiary Thiess Pty Ltd acquired a controlling interest (70%) in Majwe Mining,
a joint venture which Thiess previously owned 60%. The Majwe Mining joint venture comprises of Thiess and Bothakga Burrow
Botswana and provides full scope mining services, including drill and on-bench services, mine planning, equipment maintenance,
load and haul and mining operations at the Debswana Diamond Company’s Jwaneng Mine Cut 9 project in Botswana. The purchase
consideration was $6.0 million cash.
The acquisition has been accounted for under AASB 3 Business Combinations.
The contribution by Majwe Mining to the Group from the acquisition date to the end of the period ended 31 December 2019 was
immaterial. Had the acquisition occurred on 1 January 2019, Majwe Mining’s contribution to the Group for the period ended 31
December 2019 would have been immaterial. Majwe Mining is now reported within the Mining segment (refer to Note 33:
Segment information).
RCR Tomlinson
On 28 February 2019, CIMIC through its wholly owned subsidiary UGL Pty Ltd acquired assets and liabilities from an incorporated
company RCR Tomlinson Pty Ltd. This company is an engineering company that operates in the infrastructure, energy and
resources sectors. The Group acquired assets in the form of active contracts, plant and equipment as well as liabilities assumed for
employee liabilities, bank guarantees and insurance bonds. The purchase consideration was $8.0 million cash, of which $1.8 million
was deferred and subsequently paid.
The acquisition has been accounted for under AASB 3 Business Combinations.
The active contracts acquired did not have a material contribution to the Group for the period ended 31 December 2019. Had the
active contracts been acquired on 1 January 2019, the contribution to the Group for the period ended 31 December 2019 would
have been immaterial. The company is now reported within the Services segment (refer to Note 33: Segment information).
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 $22.7m 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 33: Segment information).
Disposals
There were no significant disposals of controlled entities or businesses during the 12 months to 31 December 2019 (31 December
2018: $nil).
191
2019 Acquisitions
Majwe Mining
Segment information).
RCR Tomlinson
On 18 March 2019, CIMIC through its wholly owned subsidiary Thiess Pty Ltd acquired a controlling interest (70%) in Majwe Mining,
a joint venture which Thiess previously owned 60%. The Majwe Mining joint venture comprises of Thiess and Bothakga Burrow
Botswana and provides full scope mining services, including drill and on-bench services, mine planning, equipment maintenance,
load and haul and mining operations at the Debswana Diamond Company’s Jwaneng Mine Cut 9 project in Botswana. The purchase
consideration was $6.0 million cash.
The acquisition has been accounted for under AASB 3 Business Combinations.
The contribution by Majwe Mining to the Group from the acquisition date to the end of the period ended 31 December 2019 was
immaterial. Had the acquisition occurred on 1 January 2019, Majwe Mining’s contribution to the Group for the period ended 31
December 2019 would have been immaterial. Majwe Mining is now reported within the Mining segment (refer to Note 33:
On 28 February 2019, CIMIC through its wholly owned subsidiary UGL Pty Ltd acquired assets and liabilities from an incorporated
company RCR Tomlinson Pty Ltd. This company is an engineering company that operates in the infrastructure, energy and
resources sectors. The Group acquired assets in the form of active contracts, plant and equipment as well as liabilities assumed for
employee liabilities, bank guarantees and insurance bonds. The purchase consideration was $8.0 million cash, of which $1.8 million
was deferred and subsequently paid.
The acquisition has been accounted for under AASB 3 Business Combinations.
The active contracts acquired did not have a material contribution to the Group for the period ended 31 December 2019. Had the
active contracts been acquired on 1 January 2019, the contribution to the Group for the period ended 31 December 2019 would
have been immaterial. The company is now reported within the Services segment (refer to Note 33: Segment information).
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 $22.7m 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 33: Segment information).
Disposals
2018: $nil).
There were no significant disposals of controlled entities or businesses during the 12 months to 31 December 2019 (31 December
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
32. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
33. SEGMENT INFORMATION
Description of segments
Operating segments have been identified based on separate financial information that is regularly reviewed by the CIMIC CEO, who
is also the Chief Operating Decision Maker (CODM). The CIMIC Group is structured on a decentralised basis comprising the
following main segments and a corporate head office:
Construction
§
§ Mining & Mineral Processing
§
§
Services
Corporate
§
§
§
§
Public Private Partnerships (PPPs)
Engineering
Commercial & Residential
BIC Contracting (“BICC”)
The performance of each segment forms the primary basis for all management reporting to the CODM.
Consistent with prior years, PPPs, Engineering, BICC 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 2019
$m
12 months to
December 2018
$m
December 2019
$m
December 2018
$m
Restated^
11,241.0
3,460.1
14,701.1
10,873.2
3,797.0
14,670.2
2,165.0
1,333.4
3,498.4
1,884.2
1,388.5
3,272.7
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
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.
192
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
33. SEGMENT INFORMATION CONTINUED
12 months to
December 2019
Construction
Mining &
Mineral
Processing
Services
Corporate
Eliminations
Significant
items
Total
$m
$m
$m
$m
$m
$m
$m
Revenue
Segment revenue
Inter-segment revenue
Segment associates and joint
venture revenue
7,556.2
4,544.8
3,201.4
1,904.7
-
(24.1)
-
-
-
(47.9)
(575.0)
(1,859.0)
Revenue
7,532.1
4,496.9
2,626.4
45.7
Result
Operating profit
Significant item
Segment EBIT
Net finance income / (costs)
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
521.8
-
521.8
(51.4)
470.4
642.4
-
642.4
(39.0)
603.4
169.6
(104.7)
-
169.6
(14.9)
154.7
-
(104.7)
(23.9)
(128.6)
(Profit) / loss for the year attributable to non-controlling interests
Profit / (loss) for the year attributable to shareholder of the parent entity
Other
Share of profit / (loss) of associates
and joint venture entities
(1.4)
3.0
16.2
Depreciation & amortization
(201.7)
(661.6)
(44.7)
Other material non-cash income /
(expenses)
-
-
-
48.9
(9.6)
1.4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,207.1
-
(2,506.0)
14,701.1
-
1,229.1
(2,724.7)
(2,724.7)
(2,724.7)
(1,495.6)
-
(129.2)
(2,724.7)
(1,624.8)
587.5
(1,037.3)
(2.6)
(1,039.9)
-
-
66.7
(917.6)
(2,724.7)
(2,723.3)
193
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
33. SEGMENT INFORMATION CONTINUED
33. SEGMENT INFORMATION CONTINUED
12 months to
December 2018
Restated^
Revenue
Segment revenue
Inter-segment revenue
Segment associates and joint
venture revenue
Revenue
Result
Operating profit
Significant item
Segment EBIT
Net finance income / (costs)
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
Construction
Mining &
Mineral
Processing
Services
Corporate
Eliminations
Total
$m
$m
$m
$m
$m
$m
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
644.2
-
644.2
(22.5)
621.7
465.1
-
465.1
(36.6)
428.5
167.8
-
167.8
(6.8)
161.0
(103.4)
-
(103.4)
(36.2)
(139.6)
-
-
-
-
-
-
-
-
-
-
-
-
17,252.8
-
(2,582.6)
14,670.2
1,173.7
-
1,173.7
(102.1)
1,071.6
(299.9)
771.7
6.8
778.5
58.5
(727.1)
4.2
(Profit) / loss for the year attributable to non-controlling interests
Profit / (loss) for the year attributable to shareholder of the parent entity
Share of profit / (loss) of associates
(1.4)
3.0
16.2
Depreciation & amortization
(201.7)
(661.6)
(44.7)
Other material non-cash income /
-
-
-
(2,724.7)
(2,723.3)
48.9
(9.6)
1.4
(Profit) / loss for the year attributable to non-controlling interests
Profit / (loss) for the year attributable to shareholder of the parent entity
Other
Share of profit / (loss) of associates
and joint venture entities
3.6
16.3
17.1
Depreciation & amortization
(189.8)
(486.3)
(46.2)
Other material non-cash income /
(expenses)
-
-
-
21.5
(4.8)
4.2
12 months to
December 2019
Construction
Services
Corporate
Eliminations
Significant
Total
items
Mining &
Mineral
Processing
$m
$m
$m
$m
$m
$m
$m
Revenue
Segment revenue
Inter-segment revenue
Segment associates and joint
venture revenue
Revenue
Result
Operating profit
Significant item
Segment EBIT
Net finance income / (costs)
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
Other
and joint venture entities
(expenses)
7,556.2
4,544.8
3,201.4
1,904.7
-
(24.1)
-
-
-
(47.9)
(575.0)
(1,859.0)
7,532.1
4,496.9
2,626.4
45.7
521.8
-
521.8
(51.4)
470.4
642.4
-
642.4
(39.0)
603.4
169.6
(104.7)
-
169.6
(14.9)
154.7
-
(104.7)
(23.9)
(128.6)
-
-
-
-
17,207.1
-
(2,506.0)
14,701.1
-
1,229.1
(2,724.7)
(2,724.7)
(2,724.7)
(1,495.6)
-
(129.2)
(2,724.7)
(1,624.8)
587.5
(1,037.3)
(2.6)
(1,039.9)
-
-
66.7
(917.6)
-
-
-
-
-
-
-
-
-
-
-
-
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
194
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
34. COMMITMENTS
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
December 2019
$m
December 2018
$m
Restated^
Property, plant and equipment
Payable:
- within one year
-
-
Total
later than one year but not later than five years
later than five years
Investments
Payable:
- within one year
-
-
Total
later than one year but not later than five years
later than five years
Share of Joint Ventures’ commitments - property, plant and equipment
Payable:
- within one year
-
-
Total
later than one year but not later than five years
later than five years
107.5
5.1
-
112.6
15.3
-
-
15.3
4.3
-
-
4.3
Share of Associates’ commitments - property, plant and equipment
Payable:
- within one year
-
-
Total
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
later than one year but not later than five years
later than five years
0.7
-
-
0.7
157.1
13.1
-
170.2
15.3
-
-
15.3
1.9
-
-
1.9
0.3
-
-
0.3
195
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
34. COMMITMENTS
35. CONTINGENT LIABILITIES
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
Bank guarantees, insurance bonds and letters of credit
Property, plant and equipment
Payable:
- within one year
later than one year but not later than five years
-
-
-
-
-
-
-
-
later than five years
Total
Investments
Payable:
- within one year
later than five years
Total
Payable:
- within one year
later than five years
Total
Payable:
- within one year
later than five years
Total
later than one year but not later than five years
Share of Joint Ventures’ commitments - property, plant and equipment
later than one year but not later than five years
Share of Associates’ commitments - property, plant and equipment
later than one year but not later than five years
December 2019
December 2018
$m
$m
Restated^
107.5
5.1
-
112.6
15.3
-
-
15.3
4.3
-
-
4.3
0.7
-
-
0.7
157.1
13.1
-
170.2
15.3
-
-
15.3
1.9
-
-
1.9
0.3
-
-
0.3
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
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 2019
$m
December 2018
$m
3,005.9
1,890.0
254.6
2,771.8
1,579.3
129.0
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 $201.5 million (31 December
2018: $598.1 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.
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.
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 40: 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. Since then, ASIC has 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 (DoJ) are also
inquiring into related matters. The Company continues to cooperate with all official investigations and has entered into an
investigation agreement with the DoJ. The Company does not know when any investigation will be concluded. No CIMIC
Group company, current or former employee has been charged.
vii) On 6 December 2016, 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 23 November 2016. On 20
December 2019 the Company announced that the proceedings have settled subject to Court Approval.
196
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
35. CONTINGENT LIABILITIES CONTINUED
Other contingencies continued
viii) 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). On 19 December 2019 the Company announced that the Federal Court had approved the
Settlement of the proceedings.
36. 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, lease facilities and trade finance facilities. The Group is not subject to any
externally imposed capital requirements.
197
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CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
35. CONTINGENT LIABILITIES CONTINUED
Other contingencies continued
Settlement of the proceedings.
36. CAPITAL RISK MANAGEMENT
viii) 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). On 19 December 2019 the Company announced that the Federal Court had approved the
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, lease facilities and trade finance facilities. The Group is not subject to any
externally imposed capital requirements.
37. FINANCIAL INSTRUMENTS
a) Classification of financial assets and financial liabilities
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents
Short term financial assets and investments
Contract debtors
Trade debtors
Amounts receivable from related parties
Other amounts receivable
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
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
1,750.0
2,141.7
4.5
3.5
2,607.9
2,297.1
210.5
32.1
825.0
112.2
9.3
-
167.8
672.1
672.9
105.4
13.7
76.1
Balance at reporting date
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
5,551.5
6,150.3
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables
Financial liability
Interest bearing liabilities
Lease liabilities
Derivative financial instruments:
Used for hedging
Balance at reporting date
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
6,212.8
1,483.4
922.9
902.1
5,750.7
-
522.8
908.9
12.6
1.0
9,533.8
7,183.4
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
The Group’s exposure to various risks associated with the financial instruments is discussed in Note 37(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 37(c): Financial instruments – Fair value
hierarchy. All other assets and liabilities in the Group’s consolidated statement of financial position approximate fair values.
198
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. FINANCIAL INSTRUMENTS CONTINUED
a) Classification of financial assets 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:
Interest from assets held at amortised cost
Net fair value gain / (loss) on equity investments mandatorily measured at FVPL
Gain / (loss) on de-recognition of financial assets measured at amortised cost
12 months to
December 2019
$m
12 months to
December 2018
$m
56.7
5.8
(48.4)
55.3
6.9
(22.3)
Net foreign exchange gain / (losses) recognised in profit before income tax for the
period
In addition to the above, losses have been recognised in the consolidated profit and loss statement in relation to the Middle East exit
of $2,724.7 million. Refer to Note 4: Significant item.
3.4
2.7
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.
Financial risk management is controlled by a central treasury department based on financial 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 written principles for overall risk management cover 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 2019
$m
12 months to
December 2018
$m
9.3
13.7
12.6
1.0
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.
199
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. FINANCIAL INSTRUMENTS CONTINUED
a) Classification of financial assets and financial liabilities continued
37. 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:
Interest from assets held at amortised cost
Net fair value gain / (loss) on equity investments mandatorily measured at FVPL
Gain / (loss) on de-recognition of financial assets measured at amortised cost
Net foreign exchange gain / (losses) recognised in profit before income tax for the
period
of $2,724.7 million. Refer to Note 4: Significant item.
b) Financial risk management
In addition to the above, losses have been recognised in the consolidated profit and loss statement in relation to the Middle East exit
12 months to
12 months to
December 2019
December 2018
$m
$m
56.7
5.8
(48.4)
2.7
55.3
6.9
(22.3)
3.4
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.
Financial risk management is controlled by a central treasury department based on financial 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 written principles for overall risk management cover 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 2019
December 2018
$m
9.3
$m
13.7
12.6
1.0
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: $383.5 million not due (31 December 2018: $400.0 million); $283.0
million past due (31 December 2018: $261.8 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: 4%
(31 December 2018: 5%).
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.
200
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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.
201
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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.
202
37. 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 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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 10: 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 was $3,675.5 million (31 December 2018: $3,902.8 million). Across all
segments, there were no material operational movements over the last 12 months. The split by geography was: Australia Pacific
$2,212.8 million (31 December 2018: $1,623.5 million) and Asia, Middle East, Americas & Africa $1,462.7 million (31 December
2018: $2,279.3 million).
Contract debtors, trade and other receivables are rated performing, assessed under the lifetime ECL simplified method and have a
net carrying amount of $3,643.4 million (31 December 2018: $3,137.5 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 $32.1 million (31 December 2018: $34.9 million). The loss allowance
recognised is less than 3% of the total balance.
Following the decision to exit the Middle East region, the loans to BICC, which are rated as non-performing, assessed under lifetime
ECL – credit impaired, have a carrying value of $nil (31 December 2018: $640.7 million). The loss allowance is equal to the face
value of the loan. Refer to Note 4: Significant item.
Opening loss allowance as at 31 December 2018
Increase in loss allowance recognised in profit or loss during the period
Foreign exchange movement
Receivables impaired due to Middle East exit
Closing loss allowance as at 31 December 2019
12 months to
December 2019
$m
12 months to
December 2018
$m
Note
558.6
24.4
8.0
1,072.1
1,663.1
487.4
23.1
48.1
-
558.6
4
Following the Group’s decision to exit the Middle East region, the shareholder loans have been impaired to $nil. Refer to Note 4:
Significant item.
203
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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 10: 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 was $3,675.5 million (31 December 2018: $3,902.8 million). Across all
segments, there were no material operational movements over the last 12 months. The split by geography was: Australia Pacific
$2,212.8 million (31 December 2018: $1,623.5 million) and Asia, Middle East, Americas & Africa $1,462.7 million (31 December
2018: $2,279.3 million).
Contract debtors, trade and other receivables are rated performing, assessed under the lifetime ECL simplified method and have a
net carrying amount of $3,643.4 million (31 December 2018: $3,137.5 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 $32.1 million (31 December 2018: $34.9 million). The loss allowance
recognised is less than 3% of the total balance.
Following the decision to exit the Middle East region, the loans to BICC, which are rated as non-performing, assessed under lifetime
ECL – credit impaired, have a carrying value of $nil (31 December 2018: $640.7 million). The loss allowance is equal to the face
value of the loan. Refer to Note 4: Significant item.
Opening loss allowance as at 31 December 2018
Increase in loss allowance recognised in profit or loss during the period
Foreign exchange movement
Receivables impaired due to Middle East exit
Closing loss allowance as at 31 December 2019
Note
4
12 months to
12 months to
December 2019
December 2018
$m
558.6
24.4
8.0
1,072.1
1,663.1
$m
487.4
23.1
48.1
-
558.6
Following the Group’s decision to exit the Middle East region, the shareholder loans have been impaired to $nil. Refer to Note 4:
Significant item.
37. 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 2019 the Group had undrawn bank facilities of $3,000.0 million (31 December 2018: $2,775.0 million), and
undrawn guarantee facilities of $753.4 million (31 December 2018: $1,089.0 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 2019 are as follows:
December 2019
Carrying amount
Contractual
cash flows
$m
$m
Less than
1 year
$m
1-5 years
More than
5 years
$m
$m
Non-derivative financial liabilities
Interest bearing loans
Lease liabilities
922.9
902.1
(1,000.1)
(997.9)
(191.4)
(308.6)
(808.7)
(542.0)
Total interest bearing liabilities
1,825.0
(1,998.0)
(500.0)
(1,350.7)
Financial liability
1,483.4
(1,483.4)
(1,483.4)
-
Trade and other payables
6,212.8
(6,212.8)
(6,012.0)
(200.8)
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)1
Inflow
- Outflow
- Other cashflow hedges:
- Net derivative financial liabilities / (assets)
Inflow
- Outflow
(3.3)
808.0
(811.3)
802.1
(805.4)
5.9
(5.9)
-
(147.3)
(147.3)
-
-
-
-
- Total net derivative financial liabilities / (assets)
(3.3)
-
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $9.3 million (31 December 2018: $8.6
million) of derivatives in an asset position and $12.6 million (31 December 2018: $1.0 million) of derivatives in a liability position.
(3.3)
(3.3)
-
204
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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 2018:
December 2018
Restated^
Carrying amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1-5 years
$m
More than
5 years
$m
Non-derivative financial liabilities
Interest bearing loans
Lease liabilities
Total interest bearing liabilities
522.8
908.9
1,431.7
(618.9)
(1,006.6)
(1,625.5)
(77.5)
(310.9)
(388.4)
(541.4)
(587.6)
(1,129.0)
-
(108.1)
(108.1)
Trade and other payables
5,750.7
(5,750.7)
(5,668.7)
(82.0)
-
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)1
(7.5)
Inflow
- Outflow
Other cashflow hedges:
534.7
(527.2)
533.5
(526.0)
1.0
(1.0)
0.2
(0.2)
Net derivative financial liabilities / (assets)1
(5.2)
Inflow
Outflow
- Total net derivative financial liabilities / (assets)
(12.7)
5.2
-
12.7
5.2
-
12.7
-
-
-
-
-
-
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $9.3 million (31 December 2018: $8.6
million) of derivatives in an asset position and $12.6 million (31 December 2018: $1.0 million) of derivatives in a liability position.
Trade finance arrangements
The Group enters into various factoring agreements with banks and financial institutions. These agreements only relate to certified
receivables, acknowledged by the client with payment only being subject to the passage of time. 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 level of non-recourse factoring across the Group was $1,960.3
million as at 31 December 2019 (31 December 2018: $1,953.0 million).
The Group also enters into supply chain finance 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. The level of
supply chain finance across the Group was $851.3 million as at 31 December 2019 (31 December 2018: $561.0 million).
205
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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 2018:
December 2018
Restated^
Carrying amount
Less than
1-5 years
More than
Contractual
cash flows
$m
$m
1 year
$m
$m
5 years
$m
Non-derivative financial liabilities
Interest bearing loans
Lease liabilities
Total interest bearing liabilities
522.8
908.9
1,431.7
(618.9)
(1,006.6)
(1,625.5)
(77.5)
(310.9)
(388.4)
(541.4)
(587.6)
(1,129.0)
-
(108.1)
(108.1)
Trade and other payables
5,750.7
(5,750.7)
(5,668.7)
(82.0)
-
534.7
(527.2)
533.5
(526.0)
1.0
(1.0)
0.2
(0.2)
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)1
(7.5)
Other cashflow hedges:
Net derivative financial liabilities / (assets)1
(5.2)
Inflow
- Outflow
Inflow
Outflow
- Total net derivative financial liabilities / (assets)
(12.7)
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
1Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $9.3 million (31 December 2018: $8.6
million) of derivatives in an asset position and $12.6 million (31 December 2018: $1.0 million) of derivatives in a liability position.
5.2
-
12.7
5.2
-
12.7
-
-
-
-
-
-
Trade finance arrangements
The Group enters into various factoring agreements with banks and financial institutions. These agreements only relate to certified
receivables, acknowledged by the client with payment only being subject to the passage of time. 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 level of non-recourse factoring across the Group was $1,960.3
million as at 31 December 2019 (31 December 2018: $1,953.0 million).
The Group also enters into supply chain finance 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. The level of
supply chain finance across the Group was $851.3 million as at 31 December 2019 (31 December 2018: $561.0 million).
37. 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.
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 $12.6 million (31 December 2018: $7.5 million). It is expected that the current hedged forecast transactions will occur
during the periods outlined in section (b(ii)) above and will affect the statement of profit or loss in the same periods. There are no
gains or losses recognised in the statement of profit or loss during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currencies the Group is exposed to is the United States dollar (US$) 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 2019 December 2018
12 months to
December 2019
12 months to
December 2018
US$ United States dollar
0.70
0.71
0.70
0.74
At 31 December 2019, the share of the Group’s assets and liabilities denominated in US$ was: assets US$3,299.4 million (31
December 2018: US$3,348.4 million restated for AASB 16: Leases); liabilities US$2,478.2 million (31 December 2018: US$1,485.2
million restated for AASB 16: Leases). The majority of these US$ balances are held in entities with a US$ functional currency.
206
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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 2018.
Restated^
Equity
Statement of Profit or Loss
December 2019
$m
December 2018
$m
12 months to
December 2019
$m
12 months to
December 2018
$m
US$ depreciates by 5% against AU$ (AU$ appreciates)
(24.5)
(125.0)
(5.4)
US$ appreciates by 5% against AU$ (AU$ depreciates)
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
125.0
24.5
4.8
(3.5)
3.2
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’, interest payable on ‘Interest bearing loans’ and interest payable on ‘lease liabilities’.
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 $6.5 million (31 December 2018: increased by $3.5 million restated for AASB 16:
Leases). 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
Lease liabilities
Total fixed rate instruments
Variable rate instruments
Financial assets
Financial liabilities
Lease liabilities
December 2019
$m
December 2018
$m
Restated^
(451.9)
(324.7)
(776.6)
1,750.0
(471.0)
(577.4)
(445.5)
(271.2)
(716.7)
2,141.7
(77.3)
(637.7)
Total variable rate instruments
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
701.6
1,426.7
207
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. FINANCIAL INSTRUMENTS CONTINUED
b) Financial risk management continued
iv)
Foreign currency risk continued
Sensitivity analysis
A movement in the US$ 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 2018.
Restated^
Equity
Statement of Profit or Loss
December 2019
December 2018
December 2019
December 2018
$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)
(24.5)
24.5
(125.0)
125.0
(5.4)
4.8
(3.5)
3.2
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
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’, interest payable on ‘Interest bearing loans’ and interest payable on ‘lease liabilities’.
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 $6.5 million (31 December 2018: increased by $3.5 million restated for AASB 16:
Leases). 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
Lease liabilities
Total fixed rate instruments
Variable rate instruments
Financial assets
Financial liabilities
Lease liabilities
Total variable rate instruments
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
December 2019
December 2018
$m
$m
Restated^
(451.9)
(324.7)
(776.6)
1,750.0
(471.0)
(577.4)
701.6
(445.5)
(271.2)
(716.7)
2,141.7
(77.3)
(637.7)
1,426.7
37. 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
Level 3:
prices) or indirectly (i.e. derived from prices); and
inputs for the asset or liability that are not based on observable market data.
31 December 2019
Assets
Financial assets at fair value through profit or loss
-
Listed
- Unlisted
Derivatives
-
-
Used for hedging
Held for trading at fair value through profit or loss
- Total assets
Liabilities
- 0BDerivatives
- Total liabilities
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 loss
- Total assets
Liabilities
- Derivatives
- Total liabilities
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
1.0
-
-
-
1.0
-
-
Level 1
$m
-
-
-
-
-
-
-
-
9.3
-
9.3
(12.6)
(12.6)
Level 2
$m
-
111.2
-
-
1.0
111.2
9.3
-
111.2
121.5
-
-
Level 3
$m
(12.6)
(12.6)
Total
$m
-
105.4
105.4
13.7
-
13.7
(1.0)
(1.0)
-
76.1
181.5
-
-
13.7
76.1
195.2
(1.0)
(1.0)
208
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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:
Financial assets at fair value through profit or loss
Balance at beginning of reporting period
Additions
Disposals
Gains recognised through profit or loss
Foreign exchange recognised in other comprehensive income
Balance at reporting date
12 months to
December 2019
$m
12 months to
December 2018
$m
105.4
100.0
5.4
-
1.4
-
0.1
(1.5)
6.9
(0.1)
112.2
105.4
Changing inputs to the Level 3 valuations to reasonably possible alternative assumptions would not change significantly amounts
recognised in profit or loss, total assets, 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.
209
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. 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:
12 months to
12 months to
December 2019
December 2018
$m
$m
105.4
100.0
5.4
1.4
-
-
0.1
(1.5)
6.9
(0.1)
112.2
105.4
Financial assets at fair value through profit or loss
Balance at beginning of reporting period
Additions
Disposals
Gains recognised through profit or loss
Foreign exchange recognised in other comprehensive income
Balance at reporting date
Methods and valuation techniques
reporting period.
Listed and unlisted investments
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
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
37. 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$214.1 million, equivalent to $305.9 million; carrying value
US$201.3 million, equivalent to $287.6 million (31 December 2018: fair value US$208.3 million, equivalent to $293.4 million;
carrying value US$201.3 million, equivalent to $283.5 million).
Unlisted debt: Guaranteed Senior Notes fair value US$119.1 million, equivalent to $170.1 million; carrying value US$115.0
million, equivalent to $164.3 million (31 December 2018: fair value US$123.9 million, equivalent to $174.6 million; carrying
value US$115.0 million, equivalent to $162.0 million).
Cash flow hedges
The Group’s foreign currency forward contracts are not traded in active markets. The fair values of these contracts are estimated
using a valuation technique that maximises the use of observable market inputs, e.g. market exchange and interest rates are
included in Level 2 of the fair value hierarchy.
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 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.
210
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. FINANCIAL INSTRUMENTS CONTINUED
d)
Interest bearing loans
Syndicated loans
On 30 September 2019, CIMIC Finance Limited, a wholly owned subsidiary of the Company, refinanced and expanded one
tranche of its core syndicated bank debt facility. The facility now matures across three tranches:
§
§
§
$1,300 million maturing on 22 September 2022
$950 million maturing on 25 September 2023
$950 million maturing on 25 September 2024
Carrying amount at 31 December 2019: $200.0 million (carrying amount at 31 December 2018: $nil). There are $15.9 million of
capitalised borrowing costs recognised against the loan facility (31 December 2018: $9.4 million).
Guaranteed Senior Notes
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 2019: US$115.0 million (31 December 2018: US$115.0 million) equivalent to $164.3 million (31 December 2018:
$162.0 million), of which US$115.0 million is due for repayment within twelve months from the reporting date.
CIMIC Finance (USA) Pty Limited (2012)
On 13 November 2012, CIMIC Finance (USA) Pty Limited 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 2019:
US$201.3 million (31 December 2018: US$201.3 million) equivalent to $287.6 million (31 December 2018: $283.5 million).
Bilateral loans
At 31 December 2019, bilateral and other unsecured loan facilities outstanding were $286.9 million (31 December 2018: $86.7
million).
Subsequent event
Subsequent to year end, on 28 January 2020, through its subsidiary CIMIC Finance (USA) Pty Limited, the Group entered into
a syndicated banking arrangement for US$1,060.0 million, equivalent to $1,514.3 million.
e) Assets pledged as security
The total carrying value of financial assets pledged as security as at 31 December 2019: $nil (31 December 2018: $nil).
211
37. FINANCIAL INSTRUMENTS CONTINUED
d)
Interest bearing loans
Syndicated loans
§
§
§
$1,300 million maturing on 22 September 2022
$950 million maturing on 25 September 2023
$950 million maturing on 25 September 2024
On 30 September 2019, CIMIC Finance Limited, a wholly owned subsidiary of the Company, refinanced and expanded one
tranche of its core syndicated bank debt facility. The facility now matures across three tranches:
Carrying amount at 31 December 2019: $200.0 million (carrying amount at 31 December 2018: $nil). There are $15.9 million of
capitalised borrowing costs recognised against the loan facility (31 December 2018: $9.4 million).
Guaranteed Senior Notes
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 2019: US$115.0 million (31 December 2018: US$115.0 million) equivalent to $164.3 million (31 December 2018:
$162.0 million), of which US$115.0 million is due for repayment within twelve months from the reporting date.
CIMIC Finance (USA) Pty Limited (2012)
On 13 November 2012, CIMIC Finance (USA) Pty Limited 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 2019:
US$201.3 million (31 December 2018: US$201.3 million) equivalent to $287.6 million (31 December 2018: $283.5 million).
At 31 December 2019, bilateral and other unsecured loan facilities outstanding were $286.9 million (31 December 2018: $86.7
Bilateral loans
million).
Subsequent event
Subsequent to year end, on 28 January 2020, through its subsidiary CIMIC Finance (USA) Pty Limited, the Group entered into
a syndicated banking arrangement for US$1,060.0 million, equivalent to $1,514.3 million.
e) Assets pledged as security
The total carrying value of financial assets pledged as security as at 31 December 2019: $nil (31 December 2018: $nil).
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
37. FINANCIAL INSTRUMENTS CONTINUED
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)
$m
Gross amounts of
bank accounts with
a credit balance
(financial liability)
$m
186.7
(13.7)
December 2019
Cash1
Net cash amount
Amounts subject to
master netting
arrangements
Net amount
$m
173.0
$m
-
December 2018
Cash1
1The Group has transactional banking facilities that notionally pool grouped bank accounts with credit and debit balances.
(31.3)
84.3
53.0
-
$m
-
-
212
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
38. EMPLOYEE BENEFITS
a) Rights plans
There were no active right plans in the current or corresponding financial periods.
b) Share Appreciation Rights
Share Appreciation Rights – 2014 One-off Award to Marcelino Fernández Verdes (Executive Chairman)
Board approval was obtained on 11 December 2014 for the granting of share appreciation rights (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: Loss $1.6 million (31 December 2018: Gain $1.3 million).
Share Appreciation Rights - 2014 One-off Award to M Fernández Verdes
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised rights
Unexercised rights at 31 December 2017
- Granted
-
-
Exercised
Forfeited/Lapsed
Unexercised rights at 31 December 2018
- Granted
-
-
Exercised2
Forfeited/Lapsed
Unexercised rights at 31 December 2019
Exercisable rights
- At 31 December 2018
- At 31 December 2019
Non-exercisable rights
- At 31 December 2018
10 June 2014
13 March 2019
$25.26
1,200,000
240,000
-
-
-
240,000
-
(240,000)
-
-
240,000
-
-
- At 31 December 2019
-
1The fair value was valued 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.
2The closing market share price on 15 February 2019 was $49.81. Refer to ‘Remuneration – Executive Chairman’ in the
Remuneration Report within this annual report.
213
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
38. EMPLOYEE BENEFITS
a) Rights plans
b) Share Appreciation Rights
There were no active right plans in the current or corresponding financial periods.
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: Loss $1.6 million (31 December 2018: Gain $1.3 million).
Share Appreciation Rights - 2014 One-off Award to M Fernández Verdes
38. 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.
Unexercised rights at 31 December 2017
Unexercised rights at 31 December 2018
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised rights
- Granted
Exercised
Forfeited/Lapsed
- Granted
Exercised2
Forfeited/Lapsed
-
-
-
-
Exercisable rights
- At 31 December 2018
- At 31 December 2019
Non-exercisable rights
- At 31 December 2018
- At 31 December 2019
Unexercised rights at 31 December 2019
10 June 2014
13 March 2019
$25.26
1,200,000
240,000
240,000
(240,000)
240,000
-
-
-
-
-
-
-
-
-
1The fair value was valued 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.
2The closing market share price on 15 February 2019 was $49.81. Refer to ‘Remuneration – Executive Chairman’ in the
Remuneration Report within this annual report.
214
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
38. EMPLOYEE BENEFITS CONTINUED
c) Options continued
Amount recognised during the reporting period: Gain $0.5 million (31 December 2018: Expense $0.1 million).
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised options
Unexercised options at 31 December 2017
- Granted
-
-
Exercised2
Lapsed
Unexercised options at 31 December 2018
- Granted
-
-
Exercised3
Lapsed
Unexercised options at 31 December 2019
Exercisable options
- At 31 December 2018
- At 31 December 20194
Non-exercisable options
- At 31 December 2018
Options – 2015 Long-Term Incentive
29 October 2015
29 October 2020
$4.53
735,636
311,088
-
(121,131)
(11,444)
178,513
-
(74,508)
-
104,005
81,390
104,005
97,123
-
- At 31 December 2019
1The 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.
2The volume weighted average share price during the reporting period to 31 December 2018 was $45.83.
3The volume weighted average share price during the reporting period to 31 December 2019 was $38.52.
4All remaining 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 $227.1 million (31 December 2018: $205.3 million) of defined contribution expenses.
215
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Amount recognised during the reporting period: Gain $0.5 million (31 December 2018: Expense $0.1 million).
KMP compensation:
39. RELATED PARTY DISCLOSURES
a) Key management personnel (KMP)
Options – 2015 Long-Term Incentive
29 October 2015
29 October 2020
$4.53
735,636
311,088
(121,131)
(11,444)
178,513
-
-
-
(74,508)
104,005
81,390
104,005
97,123
-
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Total KMP compensation
12 months to
December 2019
$’000
12 months to
December 2018
$’000
6,061
133
-
-
1,409
7,603
7,836
131
-
-
(930)
7,037
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.
38. EMPLOYEE BENEFITS CONTINUED
c) Options continued
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised options
- Granted
Exercised2
Lapsed
- Granted
Exercised3
Lapsed
-
-
-
-
Unexercised options at 31 December 2017
Unexercised options at 31 December 2018
Unexercised options at 31 December 2019
Exercisable options
- At 31 December 2018
- At 31 December 20194
Non-exercisable options
- At 31 December 2018
- At 31 December 2019
1The 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.
2The volume weighted average share price during the reporting period to 31 December 2018 was $45.83.
3The volume weighted average share price during the reporting period to 31 December 2019 was $38.52.
4All remaining 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 $227.1 million (31 December 2018: $205.3 million) of defined contribution expenses.
216
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
39. 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 2019
$’000
December 2018
$’000
13,200
23,472
13,927
661,663
(3,338)
(12,999)
(3,389)
(16,793)
1Refer to Note 10: 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 2019
$’000
12 months to
December 2018
$’000
3,822
11,045
4,075
7,947
4,027
25,203
1,074
23,891
-
2,916
-
2,808
(49)
(49)
217
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
39. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties
39. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties continued
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.
Number of employees
Number of employees at reporting date1
1Includes a proportional share of employees of Ventia and BICC.
c) Company information
December 2019
Number of
employees
December 2018
Number of
employees
40,200
47,000
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 2018: 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 4 February 2020, HOCHTIEF Australia Holdings Limited held 235,661,965 shares in the
Company.
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.
1Refer to Note 10: Trade and other receivables, which contains the disclosure of interest free and interest bearing loan receivables
Revenue – income from related parties
Associates
Joint venture entities
Revenue - interest received / receivable from related parties
Associates
Joint venture entities
Associates
Joint venture entities
Finance costs - impact of discounting - related parties
Associates
Revenue - unwinding of discounts on non-current receivables - related parties
December 2019
December 2018
$’000
$’000
13,200
23,472
13,927
661,663
(3,338)
(12,999)
(3,389)
(16,793)
12 months to
12 months to
December 2019
December 2018
$’000
$’000
3,822
11,045
4,075
7,947
4,027
25,203
1,074
23,891
-
2,916
-
2,808
(49)
(49)
218
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2019 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 2019 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
Company
12 months to
December 2019
$m
12 months to
December 2018
$m
(4,236.9)
(11.9)
-
-
(4,236.9)
(11.9)
December 2019
$m
December 2018
$m
141.9
2,923.5
3,065.4
3,224.3
1,468.2
4,692.5
68.6
4,446.3
4,514.9
30.9
1,348.4
1,379.3
Net assets / (net liabilities)
(1,627.1)
3,135.6
Equity
Share capital
Reserves
Retained earnings / (accumulated losses)
Total equity
1,738.4
(96.7)
(3,268.8)
(1,627.1)
1,750.3
(91.9)
1,477.2
3,135.6
The loss for the Company in the period is due to the exit from the Middle East, refer to Note 4: Significant item. Certain intra-group
amounts within the consolidated group have now crystallised in the parent entity following this decision and have adversely
impacted the profit and loss for the period. The company has the ability to draw on all Group financing facilities and has access to
$2,814.3 million of underlying retained earnings relating to its subsidiaries.
219
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2019 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 2019 is set out below:
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities
Name of entity
Interest
held
Place of
incorporation
Comprehensive income
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income for the period
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Equity
Share capital
Reserves
Total equity
Retained earnings / (accumulated losses)
Net assets / (net liabilities)
(1,627.1)
3,135.6
The loss for the Company in the period is due to the exit from the Middle East, refer to Note 4: Significant item. Certain intra-group
amounts within the consolidated group have now crystallised in the parent entity following this decision and have adversely
impacted the profit and loss for the period. The company has the ability to draw on all Group financing facilities and has access to
$2,814.3 million of underlying retained earnings relating to its subsidiaries.
Company
12 months to
12 months to
December 2019
December 2018
$m
$m
(4,236.9)
(11.9)
-
-
(4,236.9)
(11.9)
December 2019
December 2018
$m
$m
141.9
2,923.5
3,065.4
3,224.3
1,468.2
4,692.5
68.6
4,446.3
4,514.9
30.9
1,348.4
1,379.3
1,738.4
(96.7)
(3,268.8)
(1,627.1)
1,750.3
(91.9)
1,477.2
3,135.6
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.
Access Arterial NRU Finance Pty Limited
Access Arterial SERU Finance Pty Limited
Arus Tenang SND BHD
Ausindo Holdings Pte Ltd
BCJHG Nominees Pty Ltd
BCJHG Trust
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
Curara Pty Ltd
D.M.B. Pty. Ltd.
DAIS VIC Pty Ltd
Devine Bacchus Marsh Pty Ltd
Devine Building Management Services Pty Ltd
Devine Constructions Pty Ltd
Devine Funds Pty Ltd
Devine Funds Unit Trust
Devine Homes Pty Ltd
Devine Land Pty Ltd
Devine Limited
Devine Management Services Pty Ltd
(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
VIC
VIC
Malaysia
Singapore
VIC
VIC
QLD
QLD
QLD
WA
WA
WA
NSW
NSW
NSW
VIC
VIC
VIC
VIC
VIC
VIC
100% Papua New Guinea
100%
100%
100%
59%
100%
59%
59%
59%
59%
59%
59%
59%
59%
59%
NSW
VIC
WA
QLD
VIC
QLD
QLD
QLD
VIC
QLD
QLD
QLD
QLD
QLD
220
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
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
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 Enzo Pty Ltd
Fleetco Rentals HD Pty. Limited
Fleetco Rentals Magni Pty Limited
Fleetco Rentals No. 1 Pty Limited
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
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
221
Interest
held
Place of
incorporation
59%
59%
59%
59%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
QLD
QLD
QLD
NSW
QLD
QLD
QLD
QLD
New Zealand
VIC
Canada
Chile
VIC
VIC
VIC
VIC
VIC
QLD
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
Hong Kong
QLD
VIC
NSW
NT
VIC
WA
WA
VIC
VIC
VIC
QLD
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
Interest
held
Place of
incorporation
b) Controlled entities continued
Name of entity
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
Leighton Harbour Trust
Hong Kong
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 Middle East & Africa (Holding) Limited
Leighton Offshore Eclipse Pte Ltd
Leighton Offshore Faulkner Pte Ltd
DoubleOne 3 Building Management Services Pty Ltd
b) Controlled entities continued
Name of entity
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
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 Enzo Pty Ltd
Fleetco Rentals HD Pty. Limited
Fleetco Rentals Magni 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
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
Fleetco Rentals Omega Pty Limited (formerly known as Fleetco Finance Pty
59%
59%
59%
59%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
New Zealand
VIC
Canada
Chile
QLD
QLD
QLD
NSW
QLD
QLD
QLD
QLD
QLD
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
QLD
VIC
NSW
NT
VIC
WA
WA
VIC
VIC
VIC
QLD
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Interest
held
Place of
incorporation
(B)
(B)
100%
100%
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%
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
QLD
VIC
VIC
VIC
India
NSW
Cayman Islands
Mauritius
Mauritius
Hong Kong
Cayman Islands
Singapore
Singapore
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
222
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
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
Majwe Mining (Proprietary) Limited
MTCT Services Pty Ltd1
Nexus Point Solutions Pty Ltd
Newest Metro 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
RailFleet Maintenance Services Pty Ltd
Regional Trading Limited
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Sedgman Asia Ltd
223
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
95%
99%
100%
100%
59%
59%
100%
Singapore
Singapore
Malaysia
Singapore
ACT
China
QLD
VIC
NSW
QLD
United Arab
Emirates
United States
Hong Kong
VIC
VIC
VIC
VIC
NSW
Botswana
WA
NSW
NSW
Canada
SA
Singapore
NSW
VIC
VIC
VIC
VIC
New Zealand
QLD
Indonesia
Indonesia
NSW
Hong Kong
QLD
QLD
Hong Kong
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
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
Majwe Mining (Proprietary) Limited
MTCT Services Pty Ltd1
Nexus Point Solutions Pty Ltd
Newest Metro 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
RailFleet Maintenance Services Pty Ltd
Regional Trading Limited
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Sedgman Asia Ltd
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
95%
99%
100%
100%
59%
59%
100%
Singapore
Singapore
Malaysia
Singapore
ACT
China
QLD
VIC
NSW
QLD
United Arab
Emirates
United States
Hong Kong
VIC
VIC
VIC
VIC
NSW
Botswana
WA
NSW
NSW
Canada
SA
Singapore
NSW
VIC
VIC
VIC
VIC
New Zealand
QLD
Indonesia
Indonesia
NSW
Hong Kong
QLD
QLD
Hong Kong
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
b) Controlled entities continued
Name of entity
Sedgman Botswana (Pty) Ltd
Sedgman Canada Limited
Sedgman Chile SPA
Sedgman Consulting Pty Ltd
Sedgman CPB Joint Venture (SCJV)
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)
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
Tasconnect Finance Pty Limited
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
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%
59%
100%
100%
100%
100%
10+0%
100%
100%
100%
100%
Botswana
Canada
Chile
QLD
QLD
QLD
China
QLD
Mongolia
Malaysia
Mozambique
QLD
QLD
QLD
Colombia
South Africa
South Africa
United States
WA
QLD
QLD
Mauritius
VIC
VIC
Thailand
Mauritius
South Africa
Botswana
Chile
Malaysia
100% Papua New Guinea
100%
100%
100%
100%
100%
100%
80%
90%
100%
Canada
Canada
India
VIC
VIC
VIC
Mongolia
India
QLD
224
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(A)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
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
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
225
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
80%
80%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Mongolia
Mozambique
New Zealand
QLD
South Africa
VIC
NSW
QLD
QLD
QLD
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
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
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
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
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
UGL Utilities Pty Ltd (Formerly known as Newcastle Engineering Pty Ltd)
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
80%
80%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Mongolia
Mozambique
New Zealand
South Africa
Malaysia
New Zealand
Singapore
Canada
QLD
VIC
NSW
QLD
QLD
QLD
QLD
QLD
India
NSW
QLD
VIC
WA
QLD
NSW
NSW
NSW
VIC
VIC
NSW
NSW
NSW
NSW
USA
VIC
NSW
VIC
NSW
VIC
ACT
Malaysia
New Zealand
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
b) Controlled entities continued
Name of entity
United KG Engineering Services Pty Ltd
United KG Maintenance Pty Ltd
Wai Ming M&E Limited
Western Port Highway Trust
Wood Buffalo Employment Ltd
Interest
held
Place of
incorporation
(B)
(B)
(B)
(A)
100%
100%
100%
100%
100%
VIC
WA
Hong Kong
VIC
Canada
1These companies have the benefit of ASIC Instrument 2016/785 as at 31 December 2019.
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 2019.
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 32: Acquisitions and disposals of controlled entities and businesses for further details.
226
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
d)
Liquidation of controlled entities
The following controlled entities have been liquidated during the period to 31 December 2019 as they are no longer required by
the Group in the ordinary course of business:
Ashmore Developments Pty Ltd
§
§
City West Property Holdings Pty Ltd
§
City West Property Investments (No. 1)
§
City West Property Investments (No. 2)
§
City West Property Investments (No. 3)
§
City West Property Investments (No. 4)
§
City West Property Investments (No. 5)
§
City West Property Investments (No. 6)
§
Viridian Noosa Pty Ltd
§
Viridian Noosa Trust
§
BKP Electrical Ltd (Fiji)
§ Moorookyle Devine Pty Ltd
§
Devine Woodforde Pty Ltd
§
Devine Colton Avenue Pty Ltd
§
Sedgman LLC (Mongolia)
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $2,721.3
million (31 December 2018: $2,699.8 million); insurance bonds: $1,883.2 million (31 December 2018: $1,566.4 million); letters of
credit: $254.6 million (31 December 2018: $128.9 million).
During the reporting period, the parent was released from bank guarantees totalling $nil (31 December 2018: $nil), insurance,
performance and payments bonds totalling $nil (31 December 2018: $nil) and letters of credit totalling $nil (31 December 2018:
$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 2018:
$nil).
227
The following controlled entities have been liquidated during the period to 31 December 2019 as they are no longer required by
the Group in the ordinary course of business:
Ashmore Developments Pty Ltd
City West Property Holdings Pty Ltd
City West Property Investments (No. 1)
City West Property Investments (No. 2)
City West Property Investments (No. 3)
City West Property Investments (No. 4)
City West Property Investments (No. 5)
City West Property Investments (No. 6)
Viridian Noosa Pty Ltd
Viridian Noosa Trust
BKP Electrical Ltd (Fiji)
§ Moorookyle Devine Pty Ltd
Devine Woodforde Pty Ltd
Devine Colton Avenue Pty Ltd
Sedgman LLC (Mongolia)
§
§
§
§
§
§
§
§
§
§
§
§
§
§
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $2,721.3
million (31 December 2018: $2,699.8 million); insurance bonds: $1,883.2 million (31 December 2018: $1,566.4 million); letters of
credit: $254.6 million (31 December 2018: $128.9 million).
During the reporting period, the parent was released from bank guarantees totalling $nil (31 December 2018: $nil), insurance,
performance and payments bonds totalling $nil (31 December 2018: $nil) and letters of credit totalling $nil (31 December 2018:
$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 2018:
$nil).
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
d)
Liquidation of controlled entities
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
f) Material subsidiaries including consolidated structured entities
Set out below are the Company’s principal subsidiaries at 31 December 2019. 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
Cayman
Islands
Ownership interest held by the
Company
Ownership interest held by non-
controlling interests
December 2019
December 2018
December 2019
December 2018
%
100
100
100
100
%
100
100
100
100
%
-
-
-
-
%
-
-
-
-
UGL Pty Limited1
-
1CPB Contractors Pty Limited and UGL Pty Limited have the benefit of ASIC Instrument 2016/785 as at 31 December 2019. For further
information, refer to section (i).
Australia
Services
100
100
-
Non-controlling interests
There were no material non-controlling interests relating to the Company’s material subsidiaries disclosed above as at 31 December
2019. There were no material transactions with non-controlling interests during the period to 31 December 2019.
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 21: Interest bearing liabilities and Note 34: Commitments.
The table below provides a summary of the Group’s exposure to unconsolidated structured entities.
Exposures to unconsolidated structured entities
Lease liabilities
Total liabilities due to unconsolidated structures
December 2019
$m
December 2018
$m
Restated^
457.9
457.9
309.4
309.4
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
228
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
h) Parent entity transactions with wholly-owned controlled entities
Transactions with wholly-owned controlled entities were as follows: aggregate amounts receivable: $898.1 million (31 December
2018: 1,318.1 million); aggregate amounts payable: $4,616.2 million (31 December 2018: $1,347.3 million); interest received /
receivable: $22.4 million (31 December 2018: $36.1 million); interest paid / payable: $20.1 million (31 December 2018: $24.2
million); fees charged: $nil (31 December 2018: $nil); dividends received: $146.0 million (31 December 2018: $nil); fees paid:
$130.0 million (31 December 2018: $118.0 million).
i) Deed of Cross Guarantee
Pursuant to the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (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.
As at 31 December 2019, 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 2019:
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).
229
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
h) Parent entity transactions with wholly-owned controlled entities
40. 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 2019 is set out
below:
As at 31 December 2019, the following entities are party to the CIMIC Deed and seek to rely on financial reporting relief in respect
Dividends paid
Adjustments for entities added/removed and new accounting standards
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
12 months to
December 2019
$m
12 months to
December 2018
$m
Restated^
(5,011.1)
658.6
(4,352.5)
4,061.1
-
(509.1)
704.8
(167.2)
537.6
4,153.0
(159.3)
(470.2)
Retained earnings at reporting date
4,061.1
The loss in the period is due to the exit from the Middle East, refer to Note 4: Significant item. Certain intra-group amounts within
the consolidated group have now crystallised following this decision and have adversely impacted the profit and loss for the
period.
(800.5)
Transactions with wholly-owned controlled entities were as follows: aggregate amounts receivable: $898.1 million (31 December
2018: 1,318.1 million); aggregate amounts payable: $4,616.2 million (31 December 2018: $1,347.3 million); interest received /
receivable: $22.4 million (31 December 2018: $36.1 million); interest paid / payable: $20.1 million (31 December 2018: $24.2
million); fees charged: $nil (31 December 2018: $nil); dividends received: $146.0 million (31 December 2018: $nil); fees paid:
$130.0 million (31 December 2018: $118.0 million).
i) Deed of Cross Guarantee
Pursuant to the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (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.
of the financial year ended 31 December 2019:
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).
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
230
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. 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
8Total current assets
Trade and other receivables
Investments
Property, plant and equipment
Deferred tax asset
Intangibles
Total non-current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Lease liabilities
Interest bearing liabilities
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
December 2019
$m
December 2018
$m
Restated^
811.7
3,173.0
265.8
4,250.5
1,611.5
922.9
635.7
706.6
608.6
4,485.3
8,735.8
1,363.0
2,360.4
109.2
3,832.6
3,706.8
1,518.7
489.8
-
613.3
6,328.6
10,161.2
8,024.1
4,354.9
6.5
146.5
50.2
-
8.8
144.3
61.1
50.7
8,227.3
4,619.8
67.8
37.2
434.1
237.9
-
777.0
9,004.3
727.5
36.2
-
231.8
235.1
1,230.6
5,850.4
(268.5)
4,310.8
1,738.4
(1,206.4)
(800.5)
1,750.3
(1,502.4)
4,062.9
Total equity
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
(268.5)
4,310.8
231
CIMIC Group Limited Annual Report 2019 | Financial Report
CIMIC Group Limited Annual Report 2019 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2019
40. 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
8Total current assets
Trade and other receivables
Investments
Property, plant and equipment
Deferred tax asset
Intangibles
Total non-current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Lease liabilities
Interest bearing liabilities
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
December 2019
December 2018
$m
$m
Restated^
811.7
3,173.0
265.8
4,250.5
1,611.5
922.9
635.7
706.6
608.6
4,485.3
8,735.8
6.5
146.5
50.2
-
67.8
37.2
434.1
237.9
-
777.0
9,004.3
1,363.0
2,360.4
109.2
3,832.6
3,706.8
1,518.7
489.8
-
613.3
6,328.6
10,161.2
8.8
144.3
61.1
50.7
727.5
36.2
-
231.8
235.1
1,230.6
5,850.4
8,024.1
4,354.9
8,227.3
4,619.8
(268.5)
4,310.8
1,738.4
1,750.3
(1,206.4)
(1,502.4)
(800.5)
(268.5)
4,062.9
4,310.8
41. NEW ACCOUNTING STANDARDS
New accounting standards
Had AASB 16 Leases not been applied and the financial statements were still produced under previous guidance, including AASB 117
Leases, the financial report for the year ended 31 December 2019 would have been impacted as follows:
§
§
The consolidated statement of financial position as at 31 December 2019 would be impacted by:
§
§
§
Reducing property, plant and equipment by the right of use assets balance, $775.9 million; and
Reducing the current and non-current liabilities by the lease liabilities, $902.1 million.
This would have a net increase of $126.2 million on the Group’s net assets.
The consolidated statement of profit or loss and the consolidated statement of other comprehensive income would be
impacted by:
§
§
§
Reducing depreciation by the amount related to right of use assets, $285.4 million;
Reducing finance costs by the interest charged on lease liabilities, $37.3 million; and
Increasing operating lease expenses by a similar amount for depreciation and finance costs, as the net impact on the
profit and loss for the current period would not be material for the operating leases that would have been
recognised under the preceding standard.
Standards in issue but not yet effective
§
§
§
§
§
§
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an investor and its
Associate or Joint Venture
AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
AASB 2018-7 Amendment to Australian Accounting Standards – Definition of Material
AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework
AASB Conceptual Framework for Financial Reporting
AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform
42. EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to reporting date:
§
§
§
§
§
On 23 January 2020 the Group announced its decision to exit the Middle East Region. Refer to Note 4: Significant item.
On 28 January 2020, through its subsidiary CIMIC Finance (USA) Pty Limited, the Group entered into a syndicated
banking arrangement for US$1,060.0 million, equivalent to $1,514.3 million.
On 4 February 2020 the Group appointed a new Chief Executive Officer and Managing Director, Juan Santamaria. The
appointment is effective from 5 February 2020.
The Group determined that no final dividend would be paid for the year ending 31 December 2019.
The Directors approved the financial report on 4 February 2020.
^Amounts have been restated due to the adoption of AASB 16: Leases where required, as discussed in Note 1: Summary of
significant accounting policies – basis of preparation.
232
CIMIC Group Limited Annual Report 2019 | Financial Report
Statutory Statements
DIRECTORS’ DECLARATION
1.
In the opinion of the Directors of CIMIC Group Limited (the Company):
a)
The financial statements and notes, set out on pages 138-232, 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
2019 and of their performance for the financial year ended on that date; and
ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
There are reasonable grounds to believe that the Company and the controlled entities identified in Note 40 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.
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 2019.
The Directors draw attention to Note 1 to the financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
2.
3.
4.
Dated at Sydney this 4th day of February 2020.
Signed for and on behalf of the Board in accordance with a resolution of the Directors:
Michael Wright
Chief Executive Officer and Managing Director
Russell Chenu
Chairman Audit and Risk Committee
233
CIMIC Group Limited Annual Report 2019 | Financial Report
Statutory Statements
DIRECTORS’ DECLARATION
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
1.
In the opinion of the Directors of CIMIC Group Limited (the Company):
Report on the Audit of the Financial Report
a)
The financial statements and notes, set out on pages 138-232, are in accordance with the Corporations Act 2001,
Opinion
Independent Auditor’s Report to the members of CIMIC Group Limited
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
2019 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 40 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.
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 2019, 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 2019 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
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 2019.
Basis for Opinion
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 4th day of February 2020.
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
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 Asia Pacific Limited and the Deloitte Network.
234
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 10 ‘Trade and
other receivables’.
recognised over
As disclosed in Note 1(a), construction revenues
are
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 assets 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
is based on
these amounts
recognition of
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
Ltd
Contract”)
(“Chevron”). Initial acceptance of the jetty and
marine structures took place on 15 August 2014.
for Chevron Australia Pty
the project, changes
During
to scope and
led to the Consortium submitting
conditions
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 disclosed in Note 10 contract assets include an
amount of $1.15 billion (31 Dec 2018: $1.15
billion) in relation to the Gorgon Contract being
revenue CIMIC has recognised in prior reporting
periods in accordance with the relevant accounting
standards.
On 9 February 2016, although negotiations
continued, the Consortium formally issued a Notice
235
How the scope of our audit responded to the
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:
-
-
-
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
in unapproved changes,
-
-
history of issues identified;
significant
resulting
variations and claims;
delay risk;
high potential
likelihood of risk events;
- material new contracts;
-
-
high value contracts; and
loss making contracts.
-
-
impact and high
•
For the contracts selected the
following
procedures were performed as appropriate,
amongst others:
-
-
-
-
-
terms and conditions
obtaining an understanding of the
contract
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
to
forecast
complete
through discussion and
challenging of project managers and
finance personnel;
testing contractual entitlement relating
to contract modifications, variations
and claims recognised within contract
revenue to supporting documentation
costs
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Recognition of construction revenue and recovery
Our procedures included, amongst others:
of related contract receivables and contract assets
including recovery of Gorgon LNG Jetty and
Marine Structures Project contract assets
•
Evaluating management’s processes and
controls in respect of the recognition of
construction revenue. As part of this process
Refer to Note 1(a) ‘Revenue recognition’,
we tested key controls including:
Note 2 ‘Revenue’ and Note 10 ‘Trade and
-
the review process conducted at the
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 assets 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 disclosed in Note 10 contract assets include an
amount of $1.15 billion (31 Dec 2018: $1.15
billion) in relation to the Gorgon Contract being
revenue CIMIC has recognised in prior reporting
periods in accordance with the relevant accounting
standards.
On 9 February 2016, although negotiations
continued, the Consortium formally issued a Notice
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
revenue to supporting documentation
-
-
-
-
-
-
-
-
of Dispute to Chevron pursuant to the relevant
provisions of the Gorgon Contract and moved into
an arbitration prescribed by the contract (“Chevron
arbitration”).
Since December 2016 the arbitration has continued
in accordance with the contractual terms. The
Arbitrators were appointed, made orders for the
conduct of the proceedings and held hearings
during 2019 with a determination expected to
follow in 2020.
-
-
-
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
other
supporting documentation.
recoveries
and
In order to further pursue its entitlement under the
Gorgon Contract, on 20 August 2016 CIMIC
announced
commenced
proceedings in the United States against Chevron
Corporation Inc., KBR Inc. and related companies.
it had also
that
Additionally, there is an arbitration procedure
against Saipem pursuant to the Consortium
Agreement seeking
recovery of outstanding
amounts (“Saipem arbitration”). 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 a key audit matter 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.
•
In respect of the Gorgon Contract, the following
procedures were performed:
-
-
-
-
of
the
status
evaluating the probability and timing of
recovery of outstanding amounts by
reference to the status of contract
negotiations, the status of the Chevron
arbitration and Saipem arbitration
processes,
legal
proceedings and other supporting
documentation;
enquiring of management and internal
legal counsel in respect of the current
status of negotiations with Chevron;
enquiring of internal legal counsel on
the status of proceedings in the United
States
Chevron
Corporation and KBR Inc.; and
reading documents submitted into the
Chevron arbitration process and
transcripts of closing statements made
in arbitration, and enquiring of
management, internal legal counsel
and management appointed external
legal counsel in respect of the current
status of the arbitration process.
against
courts
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
236
Our procedures included, amongst others:
•
Evaluating the estimates and judgements in
management’s assessment of:
-
-
impairments of shareholder
loans
receivable from BICC, a derivative
financial asset to acquire shares, and
other Middle East related assets; and
provisions
financial guarantees
issued by the Group, and other Middle
East exit costs.
for
•
Evaluating the accounting consequences, and
in conjunction with our tax experts, the
taxation implications, of the Middle East exit.
• Assessing the sufficiency, as well as the terms
and conditions of the syndicated banking
arrangement entered into by the Group to fund
the expected payment of financial guarantee
contracts of certain of BICC’s
financial
undertakings.
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
Provisions and asset impairment in relation to
Middle East exit
Refer to Note 4 ‘Significant item’, Note 10
‘Trade and other receivables’ and Note 42
‘Events subsequent to reporting date’.
its
financial
Following the Group’s completion of its strategic
review of
in BIC
Contracting LLC (“BICC”), on 23 January 2020
CIMIC announced its decision to exit the Middle
East region resulting in provisions and asset
impairments of $2,724.7 million before
tax
($1,840.2 million after tax).
investment
Management assessed the financial implications of
the Middle East exit and recognised:
•
•
•
impairments in respect of shareholder loans
receivable from BICC, a derivative financial
asset to acquire shares, and other Middle East
related assets;
provisions for obligations under the Group’s
financial guarantees of certain BICC financial
undertakings and other amounts payable; and
a tax benefit relating to these impairments and
provisions.
Subsequent to year end, the Group entered into a
syndicated banking arrangement to meet all
obligations including amounts expected to be paid
as the Group’s financial guarantees of certain BICC
financial undertakings materialise.
We focused on this area as a key audit matter as
the accounting associated with the Middle East exit
requires significant judgements and estimates in
determining the amounts recognised
in the
financial statements.
Recoverability of deferred tax assets for carried
forward capital losses
In conjunction with tax experts, our procedures
included, amongst others:
prepared
• Assessing the appropriateness of the deferred
by
calculations
in accordance with relevant
tax
tax
assets
management
accounting standards and applicable
regulations.
Evaluating management’s assessment of the
probability of future capital gains to be realised
and evidence supporting such assessment.
• Assessing the appropriateness of the relevant
•
disclosures in the financial statements.
Refer to Note 15 ‘Deferred taxes’.
As at 31 December 2019 the Group has recognised
deferred tax assets of $826.5 million (31 Dec 2018:
$nil) relating to carried forward capital losses. Such
capital losses arose from the taxation implications
and the accounting consequences of the Group’s
decision to exit the Middle East region.
The recoverability of the deferred tax assets for
carried forward capital losses is dependent on the
availability of sufficient capital gains in subsequent
years and the ability to satisfy certain statutory
tests at the time the losses are recouped.
We focused on this area as a key audit matter as
there are significant judgements and estimates
required in determining the recorded amounts, in
assessing the likelihood of future capital gains
being available and estimating such capital gains.
237
Provisions and asset impairment in relation to
Our procedures included, amongst others:
Carrying value of construction goodwill
Middle East exit
•
Evaluating the estimates and judgements in
Refer to Note 17 ‘Intangibles’.
Refer to Note 4 ‘Significant item’, Note 10
management’s assessment of:
‘Trade and other receivables’ and Note 42
-
impairments of shareholder
loans
‘Events subsequent to reporting date’.
Following the Group’s completion of its strategic
review of
its
financial
investment
in BIC
Contracting LLC (“BICC”), on 23 January 2020
CIMIC announced its decision to exit the Middle
East region resulting in provisions and asset
impairments of $2,724.7 million before
tax
($1,840.2 million after tax).
receivable from BICC, a derivative
financial asset to acquire shares, and
other Middle East related assets; and
-
provisions
for
financial guarantees
issued by the Group, and other Middle
East exit costs.
•
Evaluating the accounting consequences, and
in conjunction with our tax experts, the
taxation implications, of the Middle East exit.
Management assessed the financial implications of
• Assessing the sufficiency, as well as the terms
and conditions of the syndicated banking
arrangement entered into by the Group to fund
the expected payment of financial guarantee
contracts of certain of BICC’s
financial
undertakings.
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
Included in the Group’s consolidated statement of
financial position at 31 December 2019 is goodwill
relating to the Construction segment of $451
million (31 Dec 2018: $452 million).
Management has assessed the recoverable amount
of the goodwill relating to the Construction
segment utilising discounted cash flow models
which require significant management judgement
in respect of certain 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 in the selection of assumptions
involved in forecasting future cash flows.
In conjunction with valuation experts, our
procedures included, amongst others:
•
Evaluating the ‘value in use’ discounted cash
flow model developed by management to
assess the recoverable amount of the goodwill,
including critically assessing the following
assumptions:
-
-
-
-
discount rate;
forecast cash flows;
growth rates by reference to recent bid
wins and pipeline of prospective
projects; and
terminal growth rate.
• Corroborating 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.
Performing sensitivity analysis on a number of
including discount rate and
assumptions,
forecast profitability.
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Company’s annual report for the year ended 31 December 2019, 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.
238
the Middle East exit and recognised:
•
impairments in respect of shareholder loans
receivable from BICC, a derivative financial
asset to acquire shares, and other Middle East
related assets;
•
provisions for obligations under the Group’s
financial guarantees of certain BICC financial
undertakings and other amounts payable; and
•
a tax benefit relating to these impairments and
provisions.
Subsequent to year end, the Group entered into a
syndicated banking arrangement to meet all
obligations including amounts expected to be paid
as the Group’s financial guarantees of certain BICC
financial undertakings materialise.
We focused on this area as a key audit matter as
the accounting associated with the Middle East exit
requires significant judgements and estimates in
determining the amounts recognised
in the
financial statements.
As at 31 December 2019 the Group has recognised
deferred tax assets of $826.5 million (31 Dec 2018:
$nil) relating to carried forward capital losses. Such
capital losses arose from the taxation implications
and the accounting consequences of the Group’s
decision to exit the Middle East region.
The recoverability of the deferred tax assets for
carried forward capital losses is dependent on the
availability of sufficient capital gains in subsequent
years and the ability to satisfy certain statutory
tests at the time the losses are recouped.
We focused on this area as a key audit matter as
there are significant judgements and estimates
required in determining the recorded amounts, in
assessing the likelihood of future capital gains
being available and estimating such capital gains.
Recoverability of deferred tax assets for carried
In conjunction with tax experts, our procedures
forward capital losses
included, amongst others:
Refer to Note 15 ‘Deferred taxes’.
• Assessing the appropriateness of the deferred
tax
assets
calculations
prepared
by
management
in accordance with relevant
accounting standards and applicable
tax
regulations.
•
Evaluating management’s assessment of the
probability of future capital gains to be realised
and evidence supporting such assessment.
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
239
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.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 46 to 57 of the Directors’ Report for the year
ended 31 December 2019.
In our opinion, the Remuneration Report of CIMIC Group Limited, for the year ended 31 December 2019,
complies with section 300A of the Corporations Act 2001.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
Responsibilities
judgement and maintain professional scepticism throughout the audit. We also:
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, 4 February 2020
•
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.
240
241
CIMIC Group I Annual Report 2019
Mackay Ring Road CPB Contractors, Queensland, Australia
The Mackay Ring Road project in Queensland will reduce the frequency of
heavy freight vehicles and hazardous loads travelling through Mackay’s city
centre, and significantly improve the operation of local, regional and national
road networks.
CPB Contractors is working with the Department of Transport and Main
Roads to deliver Stage 1 of the project, which includes an 11.3km highway to
divert traffic from the Bruce Highway at Stockroute Road (south of Mackay)
to the Bald Hill Road intersection (north of Mackay); 13 bridge structures; four
underpasses for local traffic; and two dual-lane roundabouts.
Leveraging its extensive roads and major project experience, CPB Contractors
continues to deliver the work efficiently and to the highest safety standards.
The delivery team is also using its procurement strategy to expand the
project’s social benefits. By allocating work to local companies wherever
practical, the project is generating local employment and building the
region’s skills and capabilities for the future.
A
d
d
i
t
i
o
n
a
l
I
n
f
o
r
m
a
t
i
o
n
CIMIC Group I Annual Report 2019
242
CIMIC Group Limited Annual Report 2019 | Additional Information
Shareholdings
The information below is current as at 20 January 2020.
TWENTY LARGEST SHAREHOLDERS
The 20 largest shareholders on the Company’s register of members held 91.91% 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 NOMINEES PTY LTD
MILTON CORPORATION LIMITED
BNP PARIBAS NOMS PTY LTD A/C>
AMP LIFE LIMITED
CS FOURTH NOMINEES PTY LIMITED
GWYNVILL INVESTMENTS PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
3RD WAVE INVESTORS LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
GWYNVILL TRADING PTY LIMITED
BKI INVESTMENT COMPANY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
Total
Total shares on issue
No. of shares
235,661,965
26,736,719
14,643,535
7,824,971
5,622,331
1,850,722
845,739
630,187
603,756
483,530
427,188
399,105
369,953
300,000
249,021
244,791
175,251
168,060
156,000
140,000
% of issued
capital
72.80
8.26
4.52
2.42
1.74
0.57
0.26
0.19
0.19
0.15
0.13
0.12
0.11
0.09
0.08
0.08
0.05
0.05
0.05
0.04
297,532,824
323,726,756
91.91
100
DISTRIBUTION SCHEDULE
The Company has 323,726,756 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
26,520
4,873
477
205
29
32,104
Ordinary shares held
7,029,654
10,065,280
3,363,049
4,674,218
298,594,555
323,726,756
% of issued capital
2.17
3.11
1.04
1.44
92.24
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.
243
CIMIC Group Limited Annual Report 2019 | Additional Information
CIMIC Group Limited Annual Report 2019 | Directors’ Report
There were 693 shareholders with less than a marketable parcel (15 shares), based on the closing market price of $34.94 on
20 January 2020.
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 104,005 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
-
16
2
3
-
21
Options
-
35,303
12,114
56,588
-
104,005
The 20 largest shareholders on the Company’s register of members held 91.91% of the Company’s issued capital.
Shareholdings
The information below is current as at 20 January 2020.
TWENTY LARGEST SHAREHOLDERS
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 NOMINEES PTY LTD
MILTON CORPORATION LIMITED
BNP PARIBAS NOMS PTY LTD A/C>
AMP LIFE LIMITED
CS FOURTH NOMINEES PTY LIMITED
GWYNVILL INVESTMENTS PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
3RD WAVE INVESTORS LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
GWYNVILL TRADING PTY LIMITED
BKI INVESTMENT COMPANY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
A/C>
Total
The Company has 323,726,756 ordinary shares on issue. The distribution of shareholders is as follows:
No. of holders
Ordinary shares held
% of issued capital
297,532,824
323,726,756
91.91
100
26,520
4,873
477
205
29
32,104
7,029,654
10,065,280
3,363,049
4,674,218
298,594,555
323,726,756
Total shares on issue
DISTRIBUTION SCHEDULE
Size of shareholding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
that member.
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
No. of shares
235,661,965
26,736,719
14,643,535
7,824,971
5,622,331
1,850,722
845,739
630,187
603,756
483,530
427,188
399,105
369,953
300,000
249,021
244,791
175,251
168,060
156,000
140,000
% of issued
capital
72.80
8.26
4.52
2.42
1.74
0.57
0.26
0.19
0.19
0.15
0.13
0.12
0.11
0.09
0.08
0.08
0.05
0.05
0.05
0.04
2.17
3.11
1.04
1.44
92.24
100
244
CIMIC Group Limited Annual Report 2019 | 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 59th 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 1 April 2020. 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.
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CIMIC Group Limited Annual Report 2019 | Additional Information
CIMIC Group Limited Annual Report 2019 | Glossary
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 59th 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 1 April 2020. Shareholders will be notified of the meeting and any resolutions in
Report.
CORPORATE GOVERNANCE STATEMENT
(www.cimic.com.au/corporate-governance).
ANNUAL GENERAL MEETING
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.
Glossary
Term
2Q19
3Q19
4Q19
2018 Financial Year/ FY 2018 / FY18
2019 Financial Year/ FY 2019 / FY19
FY20
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
Description
Second quarter of the 2019 Financial Year
Third quarter of the 2019 Financial Year
Fourth quarter of the 2019 Financial Year
Financial year ending 31 December 2018
Financial year ending 31 December 2019
Financial year ending 31 December 2020
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 of CIMIC
CEO and Managing Director of CIMIC
Chief Financial Officer of CIMIC
A fatality or permanently disabling injury
A term for describing different greenhouse gases in a common unit
CIMIC Group Code of Conduct
Any Board/management committee of the Company from time to time
CIMIC Group Limited
Constitution of CIMIC Group Limited
Corporations Act 2001 (Cth)
An annual ranking, published since 1995 by Transparency International (TI) of countries "by
their perceived levels of corruption, as determined by expert assessments and opinion
surveys"
CPB Contractors Pty Ltd
An entitlement to a Share subject to satisfaction of applicable conditions (including service
based vesting conditions)
Deputy Chief Executive Officer of CIMIC
Deloitte Touche Tohmatsu
Devine Limited
Director of CIMIC
Dow Jones Sustainability Index
DJSI Australia Index
Dow Jones Sustainability Australia Index
Dragados
EBIT
Is an international contractor established in 1941 and is the construction arm of the ACS
Group specialising in major infrastructure projects
Earnings before interest and taxes
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CIMIC Group Limited Annual Report 2019 | Glossary
Term
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
JV
KMP
KPI
Leighton Asia
Leighton India
Leighton International
Leighton Properties
LNG
LTI
Moody's
NGER Scheme
NGO
NPAT
Non-executive Director
Operating Companies
Pacific Partnerships or PP
PBT
Performance Right
Potential Class 1 Injury or PC1
PPP
Principles
Description
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, now known as BIC Contracting or BICC
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
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
Moody's Investors Service
National Greenhouse and Energy Reporting Scheme which operates under the National
Greenhouse and Energy Reporting Act 2007 (Cth)
Non-governmental organisation that is independent from states and international
governmental organisations
Net profit after tax
Non-executive Director of CIMIC
CPB Contractors Pty Limited & Leighton Asia Limited, Leighton India Contractors Private
Limited, Leighton Offshore, Thiess Pty Ltd, Sedgman Pty Limited, UGL Pty Limited, Pacific
Partnerships Pty Ltd, EIC Activities Pty Ltd and Leighton Properties Pty Limited
Pacific Partnerships Pty Ltd
Profit before tax
An entitlement to a Share subject to satisfaction of applicable conditions (including
performance based vesting conditions)
An incident that has the potential to be a Class 1 Injury
Public private partnership
CIMIC Group Limited Principles of integrity, accountability, innovation underpinned by
safety.
247
CIMIC Group Limited Annual Report 2019 | Glossary
CIMIC Group Limited Annual Report 2019 | Glossary
Earnings before interest, taxes, depreciation and amortisation
Description
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
environmental, social and governance practices.
Financial year
spatial or geographical data
A member of the Graduate Program
CIMIC Group Graduate Program
The Global Reporting Initiative
The FTSE4Good Index measures the performance of companies demonstrating strong
Geographic Information Systems capture, store, manipulate, analyse, manage, and present
Term
Safety Essentials
SAR
Sedgman
Special Committee
S&P
STI
Subsidiary
SDG
TFR
Thiess
TRIFR
TSR
UGL or Services
Ventia
VWAP
Whistleblower Policy
Description
A core element of the safety management system that provides critical controls,
procedures and governance processes specifically designed to safely manage high-risk
activities.
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
UGL Pty Limited
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
CIMIC Group Whistleblower Policy
Term
EBITDA
EIC Activities
EIP
EPS
ESA
ESG
FY
GIS
GRI
FleetCo
Former Director
FTSE4Good Index
Graduate
Graduate Program
ISCA
ISO
JV
KMP
KPI
LNG
LTI
NGO
NPAT
Leighton Asia
Leighton India
Moody's
NGER Scheme
Non-executive Director
Operating Companies
PBT
Performance Right
PPP
Principles
Green Standard projects
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.
Group or CIMIC Group
CIMIC Group Limited and certain entities it controls
HAZOP
HLG Contracting or HLG
HOCHTIEF Australia
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, now known as BIC Contracting or BICC
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
Leighton International
A controlled entity of CIMIC that is responsible for the Group’s offshore oil and gas
Leighton Properties
Leighton Properties Pty Limited
Infrastructure Sustainability Council of Australia
Denotes a standard of the International Organisation for Standardisation
Joint venture
Key Management Personnel as defined in AASB 124 Related Party Disclosures
Key performance indicators
Leighton Asia Limited
Leighton India Contractors Private Limited
business
Liquefied natural gas
Long-Term Incentive
Moody's Investors Service
governmental organisations
Net profit after tax
Non-executive Director of CIMIC
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
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 or PP
Pacific Partnerships Pty Ltd
Profit before tax
Potential Class 1 Injury or PC1
An incident that has the potential to be a Class 1 Injury
An entitlement to a Share subject to satisfaction of applicable conditions (including
performance based vesting conditions)
Public private partnership
safety.
CIMIC Group Limited Principles of integrity, accountability, innovation underpinned by
248
Peak Downs coal mine
Thiess, Queensland, Australia
249
CIMIC Group I Annual Report 2019
Trusted experience.
Integrated solutions.
CIMIC Group I Annual Report 2019
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
CIMIC.COM.AU
© CIMIC Group Limited I 2020