thiess pty ltd general purpose financial … financial report fye 2008.pdf · tel: (+61 7) 3169...
TRANSCRIPT
DIRECTORY
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Thiess Corporate OfficeLevel 5, 179 Grey Street South Bank QLD 4101 Tel: (+61 7) 3002 9000 Fax: (+61 7) 3002 9009
QueenslandLevel 7, 189 Grey Street South Bank QLD 4101 Tel: (+61 7) 3121 8500 Fax: (+61 7) 3121 8710
New South Wales/ Australian Capital Territory Level 5, 26 College Street Sydney NSW 2000 Tel: (+61 2) 9332 9444 Fax: (+61 2) 9331 4264
Thiess ProcessLevel 4, 179 Grey Street South Bank QLD 4101 Tel: (+61 7) 3002 9000 Fax: (+61 7) 3002 9448
Victoria/South Australia/ Tasmania/New ZealandLevel 9, 417 St Kilda Road Melbourne VIC 3004 Tel: (+61 3) 9864 8888 Fax: (+61 3) 9864 8811
Western Australia/Northern TerritoryThe Forrest Centre Level 19, 221 St Georges Terrace Perth WA 6000 Tel: (+61 8) 9214 4200 Fax: (+61 8) 9214 4244
Australian MiningLevel 7, 189 Grey Street South Bank QLD 4101 Tel: (+61 7) 3121 8500 Fax: (+61 7) 3121 8710
MackayLevel 1, Wellington House Cnr Wellington & Victoria Streets Mackay QLD 4740 Tel: (+61 7) 4944 4500 Fax:(+61 7) 4944 4550
South Australia129 Greenhill Road Unley SA 5061 Tel: (+61 8) 8274 5200 Fax: (+61 8) 8271 6228
Thiess Services Corporate OfficeThe Precinct 2 Level 1, 10 Browning Street West End QLD 4101 Tel: (+61 7) 3169 8300 Fax: (+61 7) 3846 0678
Eastern RegionThe Precinct 2 Level 1, 10 Browning Street West End QLD 4101 Tel: (+61 7) 3169 8400 Fax: (+61 7) 3846 3870
Southern Region/New ZealandLevel 4 15-17 Park Street South Melbourne VIC 3205 Tel: (+61 3) 9684 3333 Fax: (+61 3) 9684 3344
Western Region4 Aitken Way Kewdale WA 6105 Tel: (+61 8) 9441 3000 Fax: (+61 8) 9441 3090
PT Thiess Contractors IndonesiaRatu Prabu 2 J1.T.B Simatupang Kav.1B Jakarta 12560 Indonesia Tel: (+62 21) 2754 9999 Fax: (+62 21) 2754 9800
Thiess India Pvt Ltd5B, RDB Boulevard, Block EP & GP, Sector V, Salt Lake, Kolkata, 700 091 West Bengal, India Tel: (+91 33) 4010 5300
THIESS PTY LTDGENERAL PURPOSE FINANCIAL REPORT YEAR ENDED 30 JUNE 2008
Thiess Pty Ltd and its controlled entities A.B.N. 87 010 221 486
www.thiess.com.au
FRONT COVER: Dragline at South Walker Creek, QLD
Managing director’s overview
Directors’ report
Statutory statements
Income statements
Statements of cash flows
Balance sheets
Statements of recognised income and expense
Notes to the financial statements
Audit report
Management
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5
9
10
11
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15
50
51
CONTENTS
This financial year, Thiess cemented its status as a world-leading mining, construction and services contractor. We are committed to achieving sustainable and profitable growth, and to expand our core business throughout Australia, Asia, the near Pacific and the Middle East.
Over the past 75 years, Thiess has played a pivotal role in promoting Australia’s resource sector and furthering infrastructure development. We are now shaping innovative and sustainable solutions and delivering successful outcomes for clients across the key operations of Mining, Civil Engineering, Process, Building and Services including environmental, utilities and facilities operation and maintenance.
As we continue to grow in size and diversity we will focus on delivering strong performance across our projects, while actively consolidating our core business.
To achieve our priorities we will:
• investinourpeopleandpromotetheirsafetyandprofessional development
• buildcollaborativerelationshipswithourclientsandpartners to achieve industry excellence
• focusonthefuturetofindinnovativesolutionstotomorrow’s complex challenges, and
• expandonourcoreactivities,bothinAustraliaandoffshore.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 1
OUR COMPANY
Thiess entered the Indian market as the first foreign mining contractor securing the $1 billion Chitarpur mining contract. Our Australian operations were restructured to create a national mining business more aligned with the market and to leverage best practice in health, safety and environmental management. This important change has allowed our state based business units to focus on strong and profitable growth in our civil and building markets.
Other highlights included completing the $2.4 billion Eastlink road project five months ahead of schedule and winning the $4 billion Airport Link, the largest infrastructure project in the Southern hemisphere. Our Bundamba advanced water treatment project broke industry records and won global acclaim.
CommerCially suCCessful
Over the past year we have delivered innovative projects and integrated our Services capability as part of a whole Thiess package – working as one team - for major projects such as Airport Link. Our ability to develop and retain successful business relationships has enabled us to achieve these successes.
Thiess Services consolidated their position as a key player in the facilities and asset management sector, and opened two leading edge materials recycling facilities in Somersby, NSW and Petrie, Qld.
The resources sector continues to grow and we see strong opportunities for our mining business particularly in Western Australia and Queensland, as well as in our overseas markets, India and Indonesia. To strengthen our Australian business we completed a significant organisational restructure to create a national mining business. We are already seeing results from the opportunity this restructure has created with our state based business units gaining new clients to grow their market share of civil and building projects.
The $1 billion Chitarpur mining project and related infrastructure in India provides a platform for expansion as Thiess India broke into a market normally dominated by local and government owned enterprises.
In other overseas markets we continue to maintain a solid business in Indonesia where we have been operating for more than 30 years. We secured a $200 million contract with Inkor Prima coal and have opportunities to expand our current coal mining contracts at Arutmin.
The pipeline of major infrastructure projects remains very strong both in construction and facilities management. Our Bundamba project, Australia’s largest water recycling scheme, was named Global Water Project of the Year. A core component of the state government’s Western Corridor Recycled Water Scheme, the project broke industry records when the first stage was completed within 10 months – significantly faster than industry best practice.
The $2.4 billion Eastlink project was completed five months ahead of schedule and we won the $4 billion infrastructure project Airport Link. Having successfully completed the Marcus Clarke and London Circuit commercial buildings, we also secured a $101 million contract to design and construct a state of the art, environmentally sustainable office tower in North Sydney, The Ark.
A new tunnelling division was created consolidating the expertise in our state operations to meet Australia’s demand for tunnelling and underground construction. The division will provide a stronger focus on this critical sector of Australian infrastructure.
Focus on our core markets has resulted in strong work in hand of $9.9 billion, turnover of $4.6 billion with continuing growth setting the platform to build solid returns from our key sectors of mining, construction and services.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/082
MANAGING DIRECTOR’S OvERvIEW
Provide a safe and HealtHy WorkPlaCe
Each day, we work towards our ultimate goal - an incident and injury-free workplace. Every year we set injury reduction targets to measure our progress. In 2007/08 we did not meet our targets for frequency and severity rates, but completed the year with no fatalities and 88 per cent of our 245 workplaces were lost time injury free. Our WA/NT business unit ended the year lost time injury free. This is an excellent result, driving us further towards our objective of ‘zero harm’.
A Chairman’s award was created to acknowledge the outstanding results in health and safety through the development of a disciplined workplace culture. This was awarded to Thiess Contractors Indonesia who achieved 45 million man hours over two years, without a lost time injury.
future oriented
Thiess remains strongly committed to sustainable outcomes across its operations and has adopted a leading industry role including working with Government on significant policy issues such as greenhouse gas emissions and energy conservation initiatives. We completed the Energy Efficiencies Opportunities program and received special commendation as part of the Greenhouse Challenge Plus that recognised the company’s contribution to improve energy efficiency and reduce greenhouse gas emissions.
The company continues to recognise the importance of our community investment program supported with initiatives at all levels of the business. Our involvement includes support for cultural, educational, and charitable organisations such as Engineers Without Borders, the Breast Cancer Foundation’s Pink Ribbon Appeal, and Childhood Cancer Support.
foCus on PeoPle and a PerformanCe driven Culture
With a continually expanding workforce of over 15,000 (including joint ventures) we work hard to offer our people rewarding and satisfying careers. In a highly competitive labour market, we have renewed our strategies to engage and communicate with all of our people and welcome people from a diverse range of backgrounds to join Thiess.
Our mining business has been particularly innovative in recruiting women, who across the business now make up approximately 15 per cent of our workforce.
In our international operations, Thiess provides its trade apprentices with internationally recognised qualifications. This retention strategy is a proven success with 84 per cent of tradespeople trained since 1992 still with Thiess Indonesia.
Our graduate program has also been particularly successful with high retention rates for the 80 graduates we employ on average each year across a wide range of disciplines.
outlook
In 2009, Thiess will grow by approximately 15 per cent to execute $5.3 billion of work in our core mining, construction and services markets. With a strong drive to reinvigorate the culture of our Thiess values, we will consolidate recent organisational changes to grow market share, retain and develop our talented people, exploit internal synergies and reduce the cost of doing business.
Our emphasis will be on successfully starting up Airport Link and our Indian mine as well as delivering an overall higher profit from our work in hand and improving returns in the capital intensive areas of our business.
Being part of Australia’s largest contracting group brings to Thiess a strong balance sheet to support our large and growing business, particularly in mining.
The opportunity for Thiess Services to partner with Al Habtoor-Leighton in the United Arab Emirates offers great potential for further returns.
We will continue to face the challenges of rising costs in our market particularly with steel products and fuel and have implemented procurement strategies to deal with these issues. With a strong pipeline of infrastructure projects and the booming resources market, we are well positioned with an exceptionally high proportion of future turnover in hand. Shareholders can expect to see the outcomes of strategic changes made over the last 12 months in addition to returns from our new markets.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 3
Lavarack Barracks, QLD
direCtors
The directors of the Company at any time during or since the end of the financial year are:
Mr Martin C Albrecht AC Chairman Director since 1985
Mr David K Saxelby Managing Director Director since 2007
Mr Donald J Argent Director since 1992
Mr Robert J Flew Director since 1999
The Hon. Roslyn J Kelly AO Director since 1998
Mr Wallace M King AO Director since 1985
Mr Graeme E McOrist Director since 2006
Mr Wayne G Osborn Director since 2005
Mr William J Wild Appointed 15 February 2008
PrinCiPal aCtivities
During the financial year there were no significant changes in the nature of the consolidated entity’s activities, which were Construction, Mining, Telecommunications, Environmental and Utilities Services in Australia, the near Pacific and selected parts of Asia.
The directors present their report, together with the financial report of Thiess Pty Ltd (“the Company”) and the consolidated financial report of the consolidated entity, being the Company and its controlled entities, for the year ended 30 June 2008 and the auditors’ report thereon.
Consolidated result
The consolidated profit for the year attributable to the members of Thiess Pty Ltd was:
2008 $
2007 $
Net profit from ordinary activities after tax
209,835,798
123,079,650
Minority equity interests 11,822 -
Net profit after tax attributable to members of Thiess Pty Ltd
209,847,620
123,079,650
revieW of oPerations
The 2007/08 performance consolidates our position as a leading mining, construction and service provider throughout Australia and selected international markets. Revenue from operations and joint ventures remained constant at $4.6 billion driven by the mining discipline in Australia and Indonesia as well as civil engineering and services disciplines throughout Australia. Work in hand was reported at $9.9 billion underpinning the Group’s future prospects.
Operating profit before tax for the year was $283 million.
operating revenue, associates and joint ventures
Work in hand
$’000 $’000
Mining 1,832,404 5,868,986
Civil 1,108,493 1,745,189
Process 422,878 251,533
Building 212,819 281,820
Services 820,969 1,696,266
Other 241,973 31,880
4,639,536 9,875,674
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 5
DIRECTORS’ REPORT
dividends
Dividends paid or declared by the Company to members since the end of the previous financial year were:
In respect of the 2007/08 financial year:
ordinary dividend
$’000
Amount: 150,000
Date of payment: 2 May 2008
No dividends have been paid since the end of the financial year.
state of affairs
In the opinion of the directors there were no significant changes in the state of affairs of the consolidated entity that occurred during the financial year under review. As noted in this report, the underlying strength of the consolidated entity has continued during the financial year.
environmental regulation
During 2007/08 Thiess received a single penalty infringement notice and fine of $1,500 for an exceedance of DTD plant stack emission limits at the Thiess Services Allied Feeds project in NSW.
The Trackstar Alliance, in which Thiess is an alliance partner, was issued an Environmental Protection Order pertaining to high turbidity water in nearby waterways and inadequate erosion and sediment controls at the Caboolture to Beerburrum project.
Two warning notices were received from environmental authorities during the year, one related to a hydrocarbon spill at the Caboolture to Beerburrum project in Queensland and the other related to an exceedance of air overpressure limits from a blast at Mount Owen mine in NSW. Discussions between the project team and authorities concerning an incident involving the release of a potassium permanganate solution following a water treatment plant malfunction at Epping to Chatswood Rail Line project in NSW
is ongoing. No other environmental penalty infringement notices or prosecutions were received during the year.
Thiess has rigorous internal reporting processes in place where operating projects report the nature, severity and remedial actions of all environmental incidents regardless of whether regulations have been breached or not.
HealtH and safety
The health and safety of our employees remained our key priority in 2007/08 with our goal being a work place free of incidents and injuries. Across 245 operational projects and offices, employing 15,000 employees (including joint ventures) across Australia and Asia, 88 per cent were lost time injury free and 53 per cent were recordable injury free over the period.
Our operations in Indonesia have set new safety benchmarks. During the year, Thiess Contractors Indonesia realised over 45 million hours lost time injury free and completed the financial year only marginally above their very challenging injury reduction targets (LTIFR 0.1 and RIFR 1.4). Our Western Australian operations completed the year lost time injury free.
Our commitment to protect people from harm and eliminate workplace injuries and illnesses is paramount. We still have work to do and are committed to continual improvement. Strategic and system enhancements include:
• FurtherdevelopmenttoourHSEreporting system
• DevelopmentofFitforDutyCoreSystem of Work, and
• ImplementationofaWorkingatHeight Core System of Work
We continue our efforts in earnest to learn from all health and safety incidents and to prevent any recurrence. Our strategy of engaging all our people in these endeavours is imperative.
measure per million work-hours
2008 2007
LTIFR 1.3 0.9
LTISR 13.5 22.2
RIFR 9.15 8.8
ALT 9.7 24.0
events subsequent to balanCe date
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial years.
likely develoPments
The consolidated entity will continue to concentrate on the significant opportunities in the Services, Engineering, Infrastructure and Resource sectors, and expansion into international markets including India and the Middle East which will allow continued growth.
direCtors’ benefits
Since the end of the previous financial year no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by directors as disclosed in the accounts) by reason of a contract made by the Company, its controlled entities or a related body corporate with a director or with a firm of which the director is a member, or with an entity in which the director has a substantial financial interest.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/086
DIRECTORS’ REPORT CONTINUED
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of Thiess Pty Ltd
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2008 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Scott Guse Partner
Brisbane 29 August 2008
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Liability limited by a scheme approved under Professional Standards Legislation.
indemnifiCation of offiCers
The Company has agreed under Clause 71.2 of its Constitution to indemnify the current and past Officers of the Company against all liabilities to another person and reasonable legal defence costs that may arise from their position as Officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith.
lead auditor’s indePendenCe deClaration
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is included on this page.
rounding off
As the Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998, the directors have chosen to round off amounts in the accompanying accounts to the nearest one thousand dollars in accordance with that Class Order, unless otherwise indicated.
Dated at Brisbane this 29 day of August 2008.
Signed in accordance with a resolution of the directors.
MC Albrecht AC Chairman
DK Saxelby Managing Director
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 7
Bundamba Advanced Water Treatment Plant, QLD
direCtors’ deClaration
1. In the opinion of the directors of Thiess Pty Ltd:
(a) The financial statements and notes, set out on pages 10 to 49, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2008 and of their performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and
(ii) complying with Accounting Standards in Australia (including Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in the Summary of Significant Accounting Policies; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. There are reasonable grounds to believe that the Company and the controlled entities identified in Note 31 will be able to meet any obligations or liabilities to which they are or may become subject by virtue of the Deed of Cross Guarantee between the Company and those controlled entities pursuant to ASIC Class Order 98/1418.
Dated at Brisbane this 29 day of August 2008.
Signed in accordance with a resolution of the directors.
MC Albrecht AC Chairman
DK Saxelby Managing Director
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 9
STATUTORY STATEMENTS
for the year ended 30 June 2008 Consolidated the Company
note 2008 2007 2008 2007
$’000 $’000 $’000 $’000
Revenues and income 1 3,508,788 3,288,105 2,370,085 2,234,355Expenses 2 (3,252,074) (3,237,722) (2,161,558) (2,158,906)Finance costs 3 (10,185) (10,875) - -
Share of net profits of associates and joint venture entities
29, 30
35,987
138,061
21,110
117,448
Profit before tax 282,516 177,569 229,637 192,897
Income tax expense 5 (72,680) (54,490) (62,887) (48,944)
Profit for the year 209,836 123,079 166,750 143,953
attributable to:
- Equity holders of the parent entity 209,848 123,079 166,750 143,953
- Minority interest (12) - - -
Profit for the year 209,836 123,079 166,750 143,953
The income statements are to be read in conjunction with the notes to the financial statements set out on pages 15 to 49.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0810
INCOME STATEMENTS
as at 30 June 2008 Consolidated the Company
note 2008 2007 2008 2007
$’000 $’000 $’000 $’000
Current assets
Cash assets 6 499,026 439,486 387,423 335,455
Receivables 7 617,684 565,830 383,417 330,151
Inventories 8 33,068 22,872 26,834 17,196
Derivative financial instruments 9 - 42,500 - 42,500
total Current assets 1,149,778 1,070,688 797,674 725,302
non-Current assets
Receivables 10 5,579 5,867 80,882 42,347
Investments in associates and joint venture entities
11
54,029
79,070
999
40,103
Other financial assets 12 1 1,242 120,624 119,007Property, plant and equipment 13 513,220 454,917 253,469 232,394Intangible assets 14 10,645 2,966 837 2,966
Deferred tax assets 5 81,197 55,690 47,595 16,555
total non-Current assets 664,671 599,752 504,406 453,372
total assets 1,814,449 1,670,440 1,302,080 1,178,674
Current liabilities
Payables 15 847,512 715,239 652,836 527,676
Provisions 16 65,563 60,484 50,387 47,883
Derivative financial instruments 9 61 726 - -
total Current liabilities 913,136 776,449 703,223 575,559
non-Current liabilities
Payables 17 195,981 225,954 51,085 41,353
Provisions 18 69,781 66,350 36,575 37,698
Derivative financial instruments 9 - 23 - -
total non-Current liabilities 265,762 292,327 87,660 79,051
total liabilities 1,178,898 1,068,776 790,883 654,610
net assets 635,551 601,664 511,197 524,064
equity
Contributed equity 19 200,000 200,000 200,000 200,000
Reserves 20 (1,082) 24,876 - 29,617
Retained profits 21 436,633 376,785 311,197 294,447
Total parent entity interest 635,551 601,661 511,197 524,064
Minority interests - 3 - -
total equity 635,551 601,664 511,197 524,064
The balance sheets are to be read in conjunction with the notes to the financial statements set out on pages 15 to 49.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 11
BALANCE SHEETS
for the year ended 30 June 2008 Consolidated the Company
note 2008 2007 2008 2007
$’000 $’000 $’000 $’000
Cash flows from operating activities
Cash receipts in the course of operations 3,648,374 3,648,008 2,446,325 2,443,481
Cash payments in the course of operations (3,268,717) (3,285,284) (2,231,510) (2,249,041)
Dividends received - - 4,869 12,161
Interest received 15,327 6,550 21,559 11,263
Income taxes paid (83,864) (58,715) (55,445) (37,802)
Finance costs paid (10,185) (10,875) - -
net cash provided by operating activities 33 300,935 299,684 185,798 180,062
Cash flows from investing activities
Payments for property, plant and equipment and intangibles
(342,546)
(445,127)
(173,733)
(265,976)
Proceeds from sale of non-current assets 103,846 222,194 84,120 168,246
Decrease in associates and joint venture entities
108,059
79,630
96,492
70,743
Payments for investments in other corporations and entities
(281)
(2,113)
(1,617)
(2,116)
net cash from/(used) in investing activities (130,922) (145,416) 5,262 (29,103)
Cash flows from financing activities
Loans from/(to) related entities 41,029 14,644 10,908 (5,026)
Dividends paid (150,000) (70,000) (150,000) (70,000)
net cash used in financing activities (108,971) (55,356) (139,092) (75,026)
net increase in cash held 61,042 98,912 51,968 75,933
Cash at the beginning of the financial year 33 439,486 344,892 335,455 259,522
Effects of exchange rate fluctuations on the balances of cash held in foreign currencies
(1,502)
(4,318)
-
-
Cash at the end of the financial year 33 499,026 439,486 387,423 335,455
The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 15 to 49.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0812
STATEMENTS OF CASH FLOWS
for the year ended 30 June 2008 Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Net movement in cash flow hedges net of tax (29,536) 29,494 (29,617) 29,622
Net movement in fair value reserve net of tax - (2,914) - (2,914)
Net movement in investment reserve 8,856 486 - -
Net movement in minority interest 9 - - -
Exchange difference on the translation of foreign operations
(5,278)
(10,087)
-
-
net income recognised directly in equity (25,949) 16,979 (29,617) 26,708
Profit for the year 209,836 123,079 166,750 143,953
total recognised income and expense for the year 183,887 140,058 137,133 170,661
total recognised income and expenses for the year attributable to:
- Equity holders of the parent entity 183,890 140,058 137,133 170,661
- Minority interest (3) - - -
183,887 140,058 137,133 170,661
The statements of recognised income and expense are to be read in conjunction with the notes to the financial statements set out on pages 15 to 49.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 13
STATEMENTS OF RECOGNISED INCOME AND EXPENSE
Collinsville Coal Mine, QLD
summary of signifiCant aCCounting PoliCies
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). The financial statements and notes also comply with International Financial Reporting Standards (IFRS).
The financial report was authorised for issue by the directors on 29 August 2008.
a) Basis of preparation
The financial report is presented in Australian dollars and has been prepared on a historical cost basis, except for derivative financial instruments and available for sale assets that have been measured at fair value.
The following Accounting Standards, amendments and interpretations were available for early adoption but have not been applied by the consolidated entity in these financial statements:
• RevisedAASB3BusinessCombinations; applicable to annual reporting periods beginning on or after 1 July 2009;
• RevisedAASB101Presentation of Financial Statements; applicable to annual reporting periods beginning on or after 1 July 2009;
• RevisedAASB123BorrowingCosts; applicable to annual reporting periods beginning on or after 1 July 2009;
• RevisedAASB127Consolidated and Separate Financial Statements; applicable to annual reporting periods beginning on or after 1 July 2009;
• AASB2008-1Amendmentsto Australian Accounting Standard – Share-based Payment: vesting Conditions and Cancellation; applicable to annual reporting periods beginning on or after 1 July 2009;
• AASB2008-5Amendmentsto Australian Accounting Standards arising from the Annual Improvements Project; applicable to annual reporting periods beginning on or after 1 January 2009;
• AASB2008-6FurtherAmendments to Australian Accounting Standards arising from the Annual Improvements Project; applicable to annual reporting periods beginning on or after 1 July 2009; and
• AASB2008-7Amendmentsto Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly Controlled Entity and Associate; applicable to annual reporting periods beginning on or after 1 January 2009.
The potential impact of these standards has not yet been assessed.
The accounting policies set out below have been applied consistently to all periods presented in the financial report.
The preparation of the financial report requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 15
NOTES TO THE FINANCIAL STATEMENTS
Judgements made by management in the application of Australian Accounting Standards that have a significant effect on the financial report and estimates with a significant risk of material adjustment in the next year are as follows:
• Assessmentofprojectsonapercentage of completion basis, in particular with regard to accounting for variations, the timing of profit recognition and the amount of profit recognised;
• Estimationoftheeconomiclife of property, plant and equipment;
• Testingofassetsforimpairment; and
• Determiningthefairvalueofavailable for sale assets.
Note 27 contains detailed analysis of the foreign exchange exposure of the consolidated entity and risks in relation to foreign exchange movements.
Critical accounting judgements in applying the consolidated entity’s accounting policies are as follows:
• Determiningwhetherthesignificant risks and rewards of ownership have transferred in a sale or lease transaction.
b) Basis of consolidation
The financial report includes separate financial statements for Thiess Pty Ltd as an individual entity (“the Company”) and the consolidated entity consisting of Thiess Pty Ltd and its controlled entities. These controlled entities are listed in note 31 to the financial statements.
Results of consolidated entities are included in the consolidated financial statements from the date that control commences until such time that control ceases.
Transactions and balances between entities within the consolidated entity have been eliminated in full.
Minority interests in the results and equity of the entities that are controlled by the Company are shown separately in the consolidated income statement and balance sheet.
c) Revenue recognition
Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax.
i. Revenue and profit from construction services is recognised on the basis of the value of work completed. Stage of completion is measured by reference to costs incurred to date as a percentage of estimated total costs for each contract. Profits are not recognised on contracts during the establishment and initial stages and accordingly recognition of profit is deferred during that period. For such contracts the difference between the revenue and the costs is carried forward as either a contract receivable or contract payable. Once the contract result can be reliably estimated, which is not less than 20% complete by cost, the profit earned to that point is immediately recognised. Expected losses are recognised as soon as they become apparent.
ii. Revenue from mining, telecommunications, environmental and utilities services is recognised on an accruals basis.
iii. Interest revenue is recognised as it accrues.
iv. Dividends from controlled entities are recognised when declared. Dividends from other investments are recognised when received.
d) Income tax
Income tax on profit for the period comprises current and deferred tax. Income tax is recognised in
the income statement except to the extent that it relates to items recognised directly in equity, in which case it is charged in equity. Current tax is expected tax payable on the taxable income for the period and any adjustment to tax payable in respect of previous years. The consolidated entity adopts the balance sheet liability method, providing for temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. 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.
i. Tax consolidation
The immediate parent, Leighton Holdings Limited, is the head entity in the tax consolidated group comprising all the Australian wholly-owned subsidiaries. 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 implementation of tax consolidation. Under the tax funding agreement, contributions are calculated on a “stand-alone basis” so that the contributions are equivalent to the current tax balances generated by transactions entered into the wholly-owned subsidiaries. The contributions are payable as set-out in the agreement and reflect the timing of the head entity’s obligation to make payments for tax liabilities to relevant authorities.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0816
NOTES CONTINUED
e) Cash assets
Cash assets include cash on hand, cash at bank and funds on deposit. For the purpose of the statement of cash flows, cash includes cash on hand, at bank and short term deposits at call, net of outstanding overdrafts.
All cash assets are held with high credit quality financial institutions.
f) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances GST is considered part of the cost of acquisition of the asset or as part of an item of expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financial activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
g) Foreign currency
i. Presentation currency
The consolidated financial statements are presented in Australian dollars, which is the presentation currency of Thiess Pty Ltd.
ii. Transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Exchange differences arising on settlement or restatement are brought to account in
the income statement except where deferred in equity as qualifying cash flow hedges.
iii. Translation of controlled foreign entities
Assets and liabilities of controlled foreign entities are translated into the presentation currency at the rate of exchange at reporting date and the income statement is translated at the weighted average exchange rates for the period. The resulting exchange differences are taken directly to a separate component of equity.
h) Receivables
Trade receivables include all receivables and the progressive valuation of work completed on construction contracts represented by amounts billed to and from clients less cash received. The valuation of work completed is established after bringing to account a proportion of the estimated contract profits available after recognising all known losses.
Receivables are generally settled within two months of billing. All receivables are stated at amortised cost less impairment losses.
i) Inventories
Raw materials and stores are carried at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on the basis of weighted average and include expenditure incurred in acquiring the inventories and bringing them to their existing condition and location.
j) Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment in value. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Costs may include transfers from equity of any gains/losses on qualifying cash flows and hedges of foreign currency purchases of plant and equipment.
The fair value of plant and equipment recognised as a result of a business combination is based on market values. The market value of plant and equipment and fixtures and fittings is based on the quoted market prices of similar items.
Depreciation and amortisation is calculated so as to write off the net book value of property, plant and equipment over their estimated effective useful lives. The depreciation period and methods for each class of asset for current and prior years are as follows:
• Buildings–straightlinemethod over 40 years;
• Leaseholdimprovements– straight line method over 10 years;
• Majorplantandequipment – the current cumulative number of hours worked typically over 5 to 8 years;
• Otherequipment–straightlinemethod typically over 1 to 5 years; and
• Wastemanagementassets– straight line method typically over 20 years.
Payments made under operating leases are expensed on a straight line basis over the term of the lease.
k) Impairment
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recovered. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. Any impairment is expensed in the reporting period in which it occurs.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 17
NOTES CONTINUED
Where a group of assets working together supports the generation of cash inflows, recoverable amount is assessed in relation to that group of assets.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised.
The consolidated entity has established an allowance for impairment that represents the estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific losses component that relates to individually significant exposures, and a collective loss component that relates to a group of similar assets in respect of losses that have been incurred but not yet identified. The collective loss is based on historical data from payment statistics.
l) Investments and other financial assets
i. Investments in associates and joint venture entities
Interests in associates and joint venture entities are accounted for using the equity accounting principles. The consolidated entity’s share of profits or losses are recognised in the income statement, and the share of movement in reserves is recognised in reserves in the balance sheet.
The company’s investment in associates and joint venture entities is accounted for at cost.
ii. Other investments
Available for sale assets are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the asset. After initial recognition available for sale assets are measured at fair value. Changes in fair value are recognised in the fair value reserve. The fair value of available for sale financial assets is determined by reference to their quoted market price for listed entities and internal valuations for unlisted entities.
When the asset is sold, collected, disposed or impaired, the cumulative gain or loss previously recorded in equity is included in the income statement.
m) Derivative financial instruments
Derivatives are initially recognised at fair value on the date the derivative contract is entered and are subsequently remeasured to fair value. The method of recognition depends on whether the derivative is designated as a hedging instrument. The consolidated entity has designated hedges of highly probable transactions as cash flow hedges.
i. Hedging
The consolidated entity documents at inception the relationship between the hedging instrument and the hedging item as well as the risk management objective. At each reporting date the consolidated entity assesses whether the derivatives have been, and will continue to be, highly effective in offsetting the changes in fair values or cash flows of the hedged items.
The effective portion of changes in the fair value of cash flow hedges is recognised in equity in the hedging reserve. The gain or loss on the ineffective portion is recognised immediately in the income statement.
When a hedging instrument expires or is sold or terminated amounts accumulated in equity are transferred to the income statement in the periods when the hedged item affects profit or loss. When the forecast transaction results in the recognition of a non-financial asset or liability, the gains or losses previously deferred in equity are included in the measurement of the initial cost or carrying amount of the asset or liability.
The fair value of forward exchange contracts is determined using forward exchange market rates at balance sheet date.
n) Intangibles
i. Goodwill
Goodwill represents the excess purchase consideration over the fair value of the identifiable net assets acquired of controlled entities and businesses at the date of acquisition. Goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.
The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash generating units that are expected to benefit from the synergies of the combination.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0818
NOTES CONTINUED
ii. Software
Costs incurred in acquiring software and developing systems that will contribute to future period financial benefits are capitalised. Amortisation is calculated on the straight line method typically over 1-5 years.
o) Payables
Liabilities are recognised for amounts to be paid in the future for goods and services received which represents amortised cost. Trade accounts payable are generally to be settled within two months.
p) Employee entitlements
i. Annual leave
The provision for employee entitlements to annual leave represents that amount which the consolidated entity has a present obligation to pay resulting from employee’s services provided up to the balance date. The provisions have been calculated using the remuneration rates the consolidated entity expects to pay at each reporting date and includes related on-costs.
ii. Long service leave
The provision for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made by the employer resulting from employee’s services provided up to the balance date. Liabilities for employee entitlements which are not expected to be settled within twelve months are discounted using the rates attaching to national government securities at balance date, which most closely match the terms of maturity of the related liabilities. In determining the liabilities for employee entitlements consideration has been given to future wage and salary
increases and the consolidated entities experience with staff departures. Related on-costs have also been included in the liability.
q) Restoration provisions
Provision for restoration represents restoration obligations in respect of landfills. The provisions are best estimates of the expenditure required to settle the restoration at reporting date. The amount for future restoration costs is capitalised as a waste management asset.
r) Capital management
The consolidated entity is 100% owned by Leighton Holdings Limited, a publicly listed entity. Management of capital takes into account the operational requirements and future plans of the consolidated entity. Surplus capital is distributed by way of dividends to Leighton Holdings Limited.
s) Rounding of amounts
As the company is of a kind referred to in Class Order 98/100 issued by ASIC, the directors have chosen to round off amounts in the financial report to the nearest thousand dollars, unless otherwise stated.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 19
NOTES CONTINUED
Consolidated the Company
note 2008 2007 2008 2007
$’000 $’000 $’000 $’000
1 revenues
Construction, mining, telecommunications, environmental and utilities services contracts
3,407,249
3,234,728
2,273,443
2,191,641
Other operating revenues 21,708 31,894 8,421 8,393
revenues from external customers 3,428,957 3,266,622 2,281,864 2,200,034
Dividends:- Controlled entities - - - 10,213
- Associates - - 4,869 1,948Interest:- Controlled entities - - 7,949 4,972
- Associates 59 56 59 55
- Other related entities 13,450 6,090 13,450 6,090
- Other entities 1,818 404 101 146
Net gains on disposal of property, plant and equipment
21,635
7,561
18,924
3,525
Net gains on disposal of other financial assets 42,869 7,372 42,869 7,372
other income 79,831 21,483 88,221 34,321
total revenues and income 3,508,788 3,288,105 2,370,085 2,234,355
The consolidated entity’s share of revenues from associates and joint venture entities is excluded from Revenues noted above and from the Income Statement in accordance with Australian Accounting Standards. The delivery of major projects by the consolidated entity is increasingly in the form of associates and joint ventures. Details of the consolidated entity’s share of associates and joint ventures’ revenues is provided as additional information below.
Revenues from external customers 3,428,957 3,266,622 2,281,864 2,200,034
Revenues from associates and joint ventures 29, 30 1,130,748 1,517,780 757,809 1,177,598
Total revenue from external customers, associates and joint ventures
4,559,705
4,784,402
3,039,673
3,377,632
Other income 79,831 21,483 88,221 34,321
Revenues from external customers, associates and joint ventures
4,639,536
4,805,885
3,127,894
3,411,953
2 expenses
Materials 917,029 969,868 630,109 635,028
Subcontractors 335,128 433,509 288,729 373,748
Plant 639,951 589,662 404,047 366,501
Labour * 903,578 819,108 565,160 532,905
Insurance 14,372 14,344 13,401 13,750
Depreciation and amortisation 225,175 213,045 132,460 131,105
Operating lease payments 167,008 144,295 83,840 57,087
Professional fees 5,523 4,135 4,501 3,112
Technical advice 44,310 49,756 39,311 45,670
total expenses 3,252,074 3,237,722 2,161,558 2,158,906
* Includes $67,601,562 (2007: $49,492,650) in contributions to defined contribution superannuation plans paid by the consolidated entity and $51,408,810 (2007: $37,380,099) by the Company.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0820
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
3 Profit before income tax expense
Profit before income tax expense includes the following specific expenses:
Finance costs:
- Interest - related entities 10,185 10,875 - -
Depreciation of:- Buildings 115 137 60 83
- Plant and equipment 217,229 205,190 130,202 128,109
Total depreciation 217,344 205,327 130,262 128,192
Amortisation of:- Waste management assets 3,330 3,085 - -
- Intangibles 2,791 2,913 2,198 2,913
- Leasehold improvements 1,710 1,720 - -
Total amortisation 7,831 7,718 2,198 2,913
Gross amount charged to provisions:
- Employee entitlements 105,297 95,536 69,796 62,362
Operating lease rental expense:- Minimum lease payments 167,008 144,295 83,840 57,087
Net foreign exchange loss/(gain) 815 1,715 (93) 502
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 21
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007$’000 $’000 $’000 $’000
4 auditors remunerationAudit services:Auditors of the company – KPMG
Australia
- Audit and review of financial reports 393 360 367 335
- Other regulatory services 54 46 54 46
Overseas
- Audit and review of financial reports 192 178 - -
639 584 421 381
Other services:Auditors of the company – KPMG
Australia
- Taxation services 1 1 - -
- Other assurance services 61 89 61 65
Overseas
- Taxation services 4 73 - -
66 163 61 65
Leighton Holdings Limited engaged KPMG to provide taxation services on behalf of Thiess Pty Ltd. The fees associated with this work have been paid by Leighton Holdings Limited and as such have not been disclosed above.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0822
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
5 income tax expense
Recognised in the income statement:
Current tax) 94,878 73,172 86,096 59,947
Deferred tax (12,814) (23,758) (18,347) (5,199)
(Over)/under provided in prior years (9,384) 5,076 (4,862) (5,804)
Income tax expense 72,680 54,490 62,887 48,944
reconciliation between tax expense and pre-tax net profitProfit before income tax 282,516 177,569 229,637 192,897
Income tax using the domestic corporate tax rate of 30% (2007:30%)
84,755
53,271
68,891
57,869
Tax effect of amounts which are not deductible / (taxable) in calculating taxable income:
- Depreciation and amortisation 1,197 505 439 25
- Tax losses not recognised 78 528 - -
- Sundry items 503 1,232 (120) 502
- Income not subject to tax/rebatable dividends (4,463) (6,184) (1,461) (3,648)
- Overseas tax differential (6) 62 - -
Current period income tax 82,064 49,414 67,749 54,748
(Over)/under provision in prior years:
- Research and development allowance (6,078) (7,620) (4,884) (6,061)
- Overseas tax differential (3,288) 11,263 - -
- Sundry (18) 1,433 22 257
income tax expense 72,680 54,490 62,887 48,944
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 23
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
5 income tax expense (continued)
deferred income tax assets
Balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
- Employee benefits 50,181 44,231 36,412 32,463
- Property, plant and equipment 62,746 61,469 45,107 34,991
- Joint venture temporary differences 3,484 332 3,133 -
- Tax losses carried forward - 1,908 - -
- Sundry 9,658 6,740 3,149 1,760
126,069 114,680 87,801 69,214
Amounts recognised directly in equity:
- Joint venture cash flow hedges - 57 - 57
- 57 - 57
total deferred tax assets 126,069 114,737 87,801 69,271
Set off of tax (44,872) (59,047) (40,206) (52,716)
net deferred tax assets 81,197 55,690 47,595 16,555
Movements:
Opening balance 1 July 114,737 95,170 69,271 56,301
Recognised in the income statement 11,389 19,513 18,587 12,915
Recognised in equity (57) 54 (57) 55
126,069 114,737 87,801 69,271
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0824
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
5 income tax expense (continued)
deferred income tax liabilities
Balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
- Profit recognition variance 41,163 14,071 38,780 9,197
- Joint venture temporary differences - 29,665 - 29,665
- Sundry 3,709 2,561 1,426 1,104
44,872 46,297 40,206 39,966
Amounts recognised directly in equity:- Cash flow hedges - 12,750 - 12,750
- 12,750 - 12,750
total deferred tax liabilities 44,872 59,047 40,206 52,716
Set off of tax (44,872) (59,047) (40,206) (52,716)
net deferred tax liabilities - - - -
Movements:
Opening balance 1 July 59,047 51,812 52,716 33,499
Recognised in the income statement (1,425) (4,245) 240 7,716
Recognised in equity (12,750) 11,480 (12,750) 11,501
44,872 59,047 40,206 52,716
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 25
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
6 Current assets – cash assets
Deposits 34,723 1,635 - -
Cash at bank and on hand 464,303 437,851 387,423 335,455
499,026 439,486 387,423 335,455
7 Current assets – receivables
Trade debtors receivable 350,297 320,031 245,381 169,713
Other receivables 141,257 96,644 42,492 27,407
Prepayments 8,153 4,137 2,495 -
Income tax prepaid 40,166 31,347 - -
Related entities:
- Immediate parent entity 77,811 113,671 77,811 113,671
- Controlled entities - - 15,238 19,360
617,684 565,830 383,417 330,151
Contract valuations
Progressive value of work completed at year end
11,422,343
10,005,258
8,479,994
7,305,724
Progressive billingsNet contract receivables 323,791 280,540 223,754 137,036
Retentions held by clients - 1,857 - -
net contract debtors receivable from clients 323,791 282,397 223,754 137,036
Cash received to date 11,098,552 9,722,861 8,256,240 7,168,688
total progressive value 11,422,343 10,005,258 8,479,994 7,305,724
Amounts due from customers
- Trade debtors receivable 350,297 320,031 245,381 169,713
Amounts due to customers
- Trade creditors (26,506) (37,634) (21,627) (32,677)
net contract debtors receivable from clients 323,791 282,397 223,754 137,036
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0826
NOTES CONTINUED
Consolidated the Company
note 2008 2007 2008 2007
$’000 $’000 $’000 $’000
8 Current assets – inventories
Raw materials and spares - at cost 33,068 22,872 26,834 17,196
9 derivative financial instruments
Current assets
Other cash flow hedges - 42,500 - 42,500Current liabilities Forward foreign exchange contracts:- Cash flow hedges 61 726 - -
Non-current liabilities Forward foreign exchange contracts:- Cash flow hedges - 23 - -
10 non-current assets – receivables
Related entities
- Controlled entities - - 80,073 41,509
- Associates 809 838 809 838
- Other related entities 4,770 5,029 - -
5,579 5,867 80,882 42,347
11 non-current assets – investments in associates and joint venture entities
Associates 29 53,030 38,967 - -
Joint venture entities
- Accounted for using the equity method 30 999 40,103 - -
- Profit distributions receivable - - 999 40,103
54,029 79,070 999 40,103
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 27
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
12 non-current assets – other financial assets
available for sale financial assetsCarrying amount at the beginning of the year
1
35,521
1
35,521
Additions - 1,613 - 1,613
Disposals - (32,971) - (32,971)
Revaluation through equity - (4,162) - (4,162)
Total available for sale financial assets 1 1 1 1
other financial assets
Controlled entities - - 118,541 117,206
Other entities - 1,241 - -
Shares in associates - - 2,082 1,800
- 1,241 120,623 119,006
total other financial assets 1 1,242 120,624 119,007
13 non-current assets – property, plant and equipment
land
Cost 1,688 3,285 1,628 3,225
buildings
Cost 3,029 4,737 1,604 3,312
Accumulated depreciation (738) (797) (256) (369)
2,291 3,940 1,348 2,943
leasehold improvements
Cost 11,991 11,095 - -
Accumulated amortisation (5,163) (3,667) - -
6,828 7,428 - -
Waste management assets
Cost 49,438 48,808 - -
Accumulated amortisation (27,144) (23,814) - -
22,294 24,994 - -
Plant and equipment
Cost 1,223,351 1,071,878 728,477 653,570
Accumulated depreciation (743,232) (656,608) (477,984) (427,344)
480,119 415,270 250,493 226,226
total property, plant and equipment 513,220 454,917 253,469 232,394
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0828
NOTES CONTINUED
13 non-current assets – property, plant and equipment (continued)
reconciliation of property, plant and equipment carrying values
Consolidated
land buildings leasehold improvements
Waste management
assets
Plant and equipment
total property, plant and
equipment$’000 $’000 $’000 $’000 $’000 $’000
Carrying amount at the beginning of the financial year
3,285
3,940
7,428
24,994
415,270
454,917
Additions 24 38 1,810 630 318,936 321,438
Additions through business combinations
-
-
-
-
10,639
10,639
Disposals (1,621) (1,572) - - (36,147) (39,340)
Depreciation/amortisation expense
-
(115)
(1,710)
(3,330)
(217,229)
(222,384)
Net foreign currency translation
-
-
(700)
-
(11,350)
(12,050)
Carrying amount at the end of the financial year
1,688
2,291
6,828
22,294
480,119
513,220
the Company
land buildings Plant and equipment
total property, plant and
equipment$’000 $’000 $’000 $’000
Carrying amount at the beginning of the financial year
3,225
2,943
226,226
232,394
Additions 24 38 173,602 173,664
Disposals (1,621) (1,573) (19,133) (22,327)
Depreciation expense - (60) (130,202) (130,262)
Carrying amount at the end of the financial year
1,628
1,348
250,493
253,469
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 29
NOTES CONTINUED
13 non-current assets – property, plant and equipment (continued)
sale and leaseback During the period the consolidated entity entered into numerous sale and leaseback transactions for plant and equipment. All sale and leaseback transactions were at fair value and resulted in operating leases being established.
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Cost 31,664 187,057 15,137 128,482
Accumulated depreciation (1,141) (19,488) (727) (5,614)
Carrying amount 30,523 167,569 14,410 122,868
Proceeds 30,995 167,741 14,468 123,115
Profit recognised in the income statement 472 172 58 247
14 non-current assets – intangible assets
Consolidated the Company
goodwill
software & Contracts
goodwill
software & Contracts
$’000 $’000 $’000 $’000
year ended 30 June 2007
Opening net book amount - 5,802 - 5,802
Additions - 77 - 77
Amortisation and impairment charge - (2,913) - (2,913)
Closing net book amount - 2,966 - 2,966
year ended 30 June 2008
Opening net book amount - 2,966 - 2,966
Additions 9,055 1,415 - 69
Amortisation and impairment charge - (2,791) - (2,198)
Closing net book amount 9,055 1,590 - 837
at 30 June 2008
Cost 9,055 20,990 - 19,575
Accumulated amortisation and impairment - (19,400) - (18,738)
Net book amount 9,055 1,590 - 837
The amortisation and impairment charge is recognised in the expense line item in the income statement.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0830
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
15 Current liabilities – payables
Trade creditors and accruals 646,084 562,102 454,337 400,515
Related entities
- Immediate parent entity 99,921 83,094 91,945 71,831
- Controlled entities - - 16,156 1,018
- Associates 10,731 15,731 - -
- Joint venture entities 90,776 54,312 90,398 54,312
847,512 715,239 652,836 527,676
16 Current liabilities – provisions
Employee entitlements 65,563 60,484 50,387 47,883
17 non-current liabilities – payables
Trade creditors and accruals 75,519 102,580 51,085 41,353
Related entities
- Immediate parent entity 1,140 1,290 - -
- Other related entities 119,322 122,084 - -
195,981 225,954 51,085 41,353
18 non-current liabilities – provisions
Restoration
Balance at beginning of financial year 5,186 4,315 - -
Change in estimate - 871 - -
Balance at end of year 5,186 5,186 - -
Employee entitlements 64,595 61,164 36,575 37,698
69,781 66,350 36,575 37,698
19 Contributed equity
issued and paid-up share capital
200,000,000 (2007:200,000,000) ordinary shares, fully paid
200,000
200,000
200,000
200,000
ordinary shares
Balance at beginning of year 200,000 200,000 200,000 200,000
Balance at end of year 200,000 200,000 200,000 200,000
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.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 31
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
20 reserves
Hedging reserve – cash flow hedges - 29,536 - 29,617
Foreign currency translation reserve (21,082) (15,804) - -
Investment reserve 20,000 11,144 - -
(1,082) 24,876 - 29,617
Hedging reserve – cash flow hedges
Balance 1 July 29,536 42 29,617 (5)
Revaluation joint venture - gross - (184) - (183)
Deferred tax - 55 - 55
Revaluation - gross - 42,267 - 42,500
Deferred tax - (12,680) - (12,750)
Transfer to net profit - gross (42,192) 51 (42,309) -
Deferred tax 12,656 (15) 12,692 -
- 29,536 - 29,617
fair value reserve
Balance 1 July - 2,914 - 2,914
Revaluation - gross - - - -
Deferred tax - - - -
Transfer to net profit - gross - (4,162) - (4,162)
Deferred tax - 1,248 - 1,248
- - - -
foreign currency translation reserve
Balance 1 July (15,804) (5,717) - -
Translation adjustment on overseas controlled entities financial statements
(5,278)
(10,087)
-
-
(21,082) (15,804) - -
investment reserve
Balance 1 July 11,144 10,658 - -
Revaluation 8,856 486 - -
20,000 11,144 - -
fair value reserveChanges in the fair value of investments, such as equities classified as available for sale financial assets, are taken to the fair value reserve. Amounts are recognised in profit and loss when the associated assets are sold or impaired.
Hedging reserveThe hedging reserve is used to record gains and losses on a hedging instrument in a cash flow hedge that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.
foreign currency translation reserveExchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve. The reserve is recognised in profit and loss when the net investment is disposed of.
investment reserveThe investment reserve is used to record post acquisition increases in reserves of associates.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0832
NOTES CONTINUED
Consolidated the Company
note 2008 2007 2008 2007
$’000 $’000 $’000 $’000
21 retained profits
Balance at beginning of year 376,785 323,706 294,447 220,494
Net profit for the year 209,848 123,079 166,750 143,953
Dividends paid (150,000) (70,000) (150,000) (70,000)
Balance at end of year 436,633 376,785 311,197 294,447
22 dividends
Interim ordinary dividends 150,000 70,000 150,000 70,000
23 employee entitlements
Aggregate employee entitlements
- Current 16 65,563 60,484 50,387 47,883
- Non-current 18 64,595 61,164 36,575 37,698
130,158 121,648 86,962 85,581
Number of employees at year end 13,658 11,642 5,267 4,552
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 33
NOTES CONTINUED
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
24 Commitments
Capital expenditure commitments
Capital expenditure contracted for but not provided for are as follows:
Property, plant and equipment payable:
- Within one year 82,782 215,983 22,185 145,442
investments payable
- Within one year - 130,000 - 130,000
Joint venture commitments
Property, plant and equipment payable:
- Within one year 651 4,107 326 3,182
operating leases
The consolidated entity leases plant and equipment used in contract mining, civil engineering activities and property for the purposes of office accommodation under operating leases. The average lease term is three to ten years.
Cancellable operating lease commitments
Future operating lease rentals of property, plant and equipment payable:
- Within one year 178,405 168,663 89,566 78,030
- Later than one year and not later than five years
413,859
499,331
246,868
204,195
- Later than five years 45,556 82,645 35,932 49,560
637,820 750,639 372,366 331,785
25 bank guarantees, insurance bonds and letters of credit
Contingent liability under indemnities given on behalf of controlled entities and joint ventures in respect of:
- Bank guarantees 335,820 220,056 280,069 178,614
- Insurance bonds 43,780 64,429 21,281 35,792
- Letters of credit 611 281,638 611 281,579
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0834
NOTES CONTINUED
26 business combinationsDuring the year to 30 June 2008 the consolidated entity made the following acquisitions.
a) southWest energyOn 3 September 2007 the consolidated entity acquired selected assets and liabilities of SouthWest Energy for consideration of $4.94 million, including acquisition costs.
At the date of acquisition, SouthWest Energy was involved in electrical field maintenance services. As a result of the combination it was decided the business activity would continue after the acquisition.
It is impractical to determine the net profit or loss before tax that SouthWest Energy contributed to the consolidated net profit for the year. This is because the acquired business is not segregated and was integrated into an existing operating unit. For the same reason, it is impractical to determine the consolidated net profit before tax and revenue if the combination had taken place on 1 July 2007.
b) mini PickersOn 3 September 2007 the consolidated entity acquired selected assets and liabilities of Mini Pickers for consideration of $4.73 million, including acquisition costs.
At the date of acquisition, Mini Pickers was involved in equipment and labour hire services. As a result of the combination it was decided the business activity would continue after the acquisition.
In the year to 30 June 2008, Mini Pickers contributed a net loss before tax of $0.18 million to the consolidated net profit for the year. If the combination had taken place at 1 July 2007, management estimates that consolidated net profit before tax and revenue would have been $282.48 million and $3,509.35 million respectively.
c) Champ ConstructionsOn 1 October 2007 the consolidated entity acquired selected assets and liabilities of Champ Constructions for consideration of $5.69 million.
At the date of acquisition, Champ Constructions was involved in gas and electrical construction services. As a result of the combination it was decided the business activity would continue after the acquisition.
In the year to 30 June 2008, Champ Constructions contributed net profit before tax of $0.11 million to the consolidated net profit for the year. If the combination had taken place at 1 July 2007, management estimates that consolidated net profit before tax and revenue would have been $282.55 million and $3,511.33 million respectively.
d) ozboreOn 7 April 2008 the consolidated entity acquired selected assets and liabilities of Ozbore for consideration of $5.29 million.
At the date of acquisition, Ozbore was involved in underground drilling and telecommunications services. As a result of the combination it was decided the business activity would continue after the acquisition.
In the year to 30 June 2008, Ozbore contributed net profit before tax of $0.14 million to the consolidated net profit before tax for the year. If the combination had taken place at 1 July 2007, management estimates that consolidated net profit before tax and revenue would have been $282.97 million and $3,515.44 million respectively.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 35
NOTES CONTINUED
26 business combinations (continued)
These acquisitions had the following effect on the consolidated entity’s assets and liabilities at their respective acquisition dates:
recognised values on acquisition
$’000
assets
Cash 26
Inventories 40
Property, plant and equipment 10,639
Intangibles 1,347
liabilities
Employee entitlements 452
Net identifiable assets and liabilities 11,600
Goodwill on acquisition 9,055
20,655
Purchase consideration
Cash paid 20,480
Direct costs relating to acquisitions 175
20,655
Cash outflow on acquisitions
Net cash acquired with acquisition 26
Cash paid (20,655)
Net consolidated cash outflow (20,629)
The amounts recognised at acquisition dates for each class of acquiree’s assets and liabilities were the same as the carrying amounts of those items in the accounts of the acquiree’s immediately before acquisition.
The goodwill is mainly attributable to acquiring skilled workforces, high profitability of trading in relevant markets and the synergies expected to be achieved from integrating the acquisitions into the consolidated entity’s existing businesses.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0836
NOTES CONTINUED
27 financial risk managementMarket, liquidity and credit risk (including foreign currency, commodity and interest rate risk) arise in the normal course of the consolidated entity’s business. The overall financial risk management strategy is to seek to ensure the consolidated entity and the Company are able to fund its business plans. These risks are managed under Board approved directives as well as treasury policies set by Leighton Holdings Limited.
Risk management policies are established to identify and analyse the risks faced by the consolidated entity and the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to the limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the consolidated entity and the Company’s activities. The aim is to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
The consolidated entity and the Company’s financial instruments, other than derivatives, consist primarily of interest-bearing debt, cash and short term deposits. Other financial instruments include trade receivables and trade payables which arise directly from operations.
a) Credit riskCredit risk arises from cash assets, derivative financial instruments and deposits with banks and financial institutions as well as credit exposure to customers, including outstanding receivables and committed transactions. It represents the potential financial loss if counterparties fail to perform as contracted. Management has credit policies in place and the exposure to credit risk is monitored on an ongoing basis. The consolidated entity and the Company minimises credit risk by undertaking transactions with a large number of customers and counterparties in various countries. Concentration of credit risk on trade and term debtors exists in respect of the contracting business. As at reporting date, 16% of the consolidated entity’s trade debtors was owed by a customer in the Asian segment and 9% by a customer in the Australian segment.
The consolidated entity’s policy is to provide guarantees to wholly owned subsidiaries (refer Note 32) and as part of its operating activities (refer Notes 25 and 28).
The consolidated entity does not hold collateral, nor does it securitise trade and other receivables. Credit risk is limited to the carrying value of the consolidated entity’s financial assets.
The ageing of financial assets at balance date was as follows:
impairment gross
2008 2007 2008 2007
$’000 $’000 $’000 $’000ConsolidatedPast due 0-30 days 5 52 12,623 17,532
Past due 31-60 days 13 89 1,883 17,218
Past due 61-90 days 465 427 13,896 17,201
483 568 28,402 51,951
the Company
Past due 0-30 days - - 3,869 7,282
Past due 31-60 days - - 431 15,706
Past due 61-90 days - - 11,756 14,799
- - 16,056 37,787
All other financial assets were not past due.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Consolidated
2008 2007
$’000 $’000
Balance 1 July 568 216
Impairment (85) 352
Balance 30 June 483 568
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 37
NOTES CONTINUED
27 financial risk management (continued)
b) liquidity riskPrudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The consolidated entity aims at maintaining flexibility in funding to meet ongoing operational requirements, tender expenditure and small to medium opportunistic projects and investments by keeping committed credit facilities available.
The following table analyses the contractual maturities of the consolidated entity’s financial liabilities into the relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed are the contractual, undiscounted cash flows comprising principal and interest repayments and excluding the impact of netting arrangements.
average interest rate
Contractual cash flows
less than 1 year
1 - 2 years
2 - 5 years
% $’000 $’000 $’000 $’000
2008 Consolidated
Trade creditors - 627,844 627,844 - -
Related entities 8.59 154,434 11,378 10,238 132,818
Forward contract used for hedging - 61 61 - -
782,339 639,283 10,238 132,818
2008 the Company
Trade creditors - 435,553 435,553 - -
Related entities 7.25 16,156 16,156 - -
451,709 451,709 - -
2007 Consolidated
Trade creditors - 541,509 541,509 - -
Related entities 5.00 169,398 12,499 11,209 145,690
Forward contract used for hedging - 750 727 23 -
711,657 554,735 11,232 145,690
2007 the Company
Trade creditors - 378,374 378,374 - -
Related entities 5.53 1,018 1,018 - -
379,392 379,392 - -
Cash flows associated with derivatives that are classified as cash flow hedges are expected to occur and impact profit in the same period they mature.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0838
NOTES CONTINUED
27 financial risk management (continued)
c) foreign currency riskForeign currency risk arises from commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the entity’s functional currency. The consolidated entity is exposed to foreign currency risk principally through specific project revenue and expenditure and plant and equipment purchase commitments denominated in foreign currencies.
To manage this risk members of the consolidated entity enter into forward exchange contracts classified as cash flow hedges and states them at fair value. Changes in fair value of cash flows hedges are recorded in equity to the extent that the hedge is deemed effective and until the hedged transaction occurs. Any ineffective portion is immediately recorded in the income statement.
Exposure to foreign currency risk at balance date, based on notional amounts was:
usd idr JPy euro
$’000 $’000 $’000 $’000
2008 Consolidated
Trade receivables - 1,278 - -
Forward exchange contracts 216 - - -
216 1,278 - -
2007 Consolidated
Trade receivables - 1,030 - -
Forward exchange contracts 14,021 - 669 1,722
14,021 1,030 669 1,722
The Company’s foreign currency risk exposure is nil (2007:$1,722,000).
The following significant exchange rates applied during the year:
average rate spot rate
2008 2007 2008 2007
USD 0.89 0.84 0.95 0.85
EURO 0.63 0.63 0.61 0.63
JPY 103.18 103.00 101.07 104.69
IDR 8,365 7,372 8,716 7,696
The following table summaries the sensitivity of financial instruments held at balance date to movements in the exchange rates. This analysis assumes that all other variables remain constant.
increase/(decrease) impact on equity impact on profit
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Consolidated
AUD / USD +10% - (772) (21) (501)
AUD / USD -10% - 943 24 612
AUD / EURO +10% - (157) - -
AUD / EURO -10% - 192 - -
AUD / JPY +10% - (61) - -
AUD / JPY -10% - 74 - -
USD / IDR +10% - - (116) (103)
USD / IDR -10% - - 142 126
For the Company, a 10% increase in the strength of the AUD against EURO had a nil (2007: ($157,000)) impact on profit and loss. A 10% decrease in the strength of the AUD against EURO had a nil (2007:$192,000) impact on profit and loss.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 39
NOTES CONTINUED
27 financial risk management (continued)
d) interest rate riskInterest rate risk is the risk the consolidated entity’s financial position will be adversely affected by movements in interest rates. Interest rate risk on cash and short-term deposits is not considered to be a material risk due to the short term nature of these financial instruments. The consolidated entity interest rate risk arises on long term debt and adopts a policy of ensuring that the majority of its exposure to changes in interest rates on borrowing is on a floating rate basis.
The financial instruments exposed to interest rate risk are as follows:Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Cash assets* 499,026 439,486 387,423 335,455
Financial and other assets 78,620 114,509 158,693 156,019
Interest-bearing liabilities 119,322 122,084 - -
The following table summaries the sensitivity of fair value of financial instruments held at reporting date and the effect of a movement in interest rates with all other variables held constant.
impact on profit increase/(decrease) Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
100bp increase (369) (11) 1,601 1,584
100bp decrease 369 11 (1,601) (1,584)
* Sensitivity based on cash holdings throughout the year.
e) fair value
The carrying amounts of financial assets and liabilities in the consolidated entity’s and the Company’s balance sheet approximate fair values.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0840
NOTES CONTINUED
28 other contingent liabilities and assets
The Company, together with other members of the Leighton Group, has indemnified various banks for all monies owing from time to time by the Leighton Group of companies, in respect of various credit agreements entered into with these banks.
The total amounts of bank bills, guarantees, loans and letters of credit advanced to other companies within the Leighton Group amount to $3,572,785,000 (2007: $2,108,619,000).
The consolidated entity has the normal contractor’s liability in relation to construction contracts. This liability may include litigation by or against the consolidated entity and/or joint venture arrangements in which the consolidated entity has an interest. It is not possible to estimate the financial effect of these claims should they be successful. The directors are of the opinion, based on legal advice, that no provision is required. In the directors’ opinion, disclosure of any further information about the claims would be prejudicial to the interests of the consolidated entity.
The Company is called upon to give in the ordinary course of business guarantees and indemnities in respect of the performance by controlled entities of their contractual and financial obligations.
The consolidated entity has entered into various joint venture arrangements under which the consolidated entity is jointly and severally liable for the liabilities of the joint ventures.
Under the terms of the Class Order described in Note 32, the Company has entered into approved deeds of indemnity for the cross-guarantee of liabilities with participating Australian subsidiary companies.
No claims or losses are anticipated in respect of contingent liabilities.
29 investments – associates
ownership interest Consolidated
name Principal activities Country of incorporation
reporting date
2008 %
2007 %
Sedgman Ltd Design Australia 30 June 36 38
Promet Engineers Pty Ltd Design Australia 30 June 50 50
Silcar Pty Ltd Maintenance Services Australia 30 June 50 50
Thiess Kentz Pty Ltd Engineers & Constructors Australia 30 June 50 50
Thiess Leighton India Pvt Ltd
Engineers & Constructors India 31 March 50 -
There were no post reporting date events which would materially affect the financial position or performance of any associate and there were no dissimilar accounting policies used by associates.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 41
NOTES CONTINUED
29 investments – associates (continued)
summarised financial information of associates
Consolidated
2008 2007
$’000 $’000
share of associates profits
Profit before tax 23,597 29,472
Income tax expense (8,720) (8,859)
Profit for the year 14,877 20,613
share of associates
Assets 160,470 141,089
Liabilities 107,440 102,122
Revenue 372,939 340,182
Costs 358,062 319,569
fair value of listed investments in associates
Sedgman Ltd 173,348 208,407
30 investments - joint venture entities
ownership interest Consolidated
name Principal activities reporting date
2008 %
2007 %
Roche Thiess Linfox Joint venture
Contract mining/mobile plant/earthmoving
30 June
44
44
Thiess Hochtief Joint venture Design & construction railway 30 June 50 50
Thiess Alstom Joint venture Design & construction railway 30 June 50 50
Thiess John Holland Joint venture
Design & construction road/ Design & construction tunnel
30 June
50
50
Thiess Sedgman Joint venture
Design & construction coal handling plant
30 June
50
50
Thiess United Group Joint venture
Design & construction railway
30 June
50
50
Thiess Black & veatch Joint venture
Design & construction water treatment plants
30 June
50
50
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0842
NOTES CONTINUED
30 investments - joint venture entities (continued)
Consolidated
2008 2007
$’000 $’000
results of joint venture entities
The Company’s and consolidated entity’s share of the joint venture entities results consist of:
Revenues 757,809 1,177,598
Expenses (736,699) (1,060,150)
Profit before tax 21,110 117,448
Income tax expense - -
Profit accounted for using the equity method 21,110 117,448
balance sheet
The Company’s and consolidated entity’s share of the joint venture entities assets and liabilities consist of:
Current assets 175,757 319,522
Non-current assets 15,442 20,567
Total assets 191,199 340,089
Current liabilities 179,488 286,749
Non-current liabilities 10,712 13,237
Total liabilities 190,200 299,986
Net assets accounted for using the equity method 999 40,103
share of post acquisition retained profits attributable to joint venture entities
Share of joint ventures’ retained profits at beginning of the year - -
Share of net profits of the joint venture entities 21,110 117,448
Distributions from joint venture entities (21,110) (117,448)
Share of joint ventures entities retained profits at the end of the year
-
-
movements in carrying amounts of joint venture entities
Carrying amount at the beginning of the year 40,103 6,026
Contributions to the joint venture entities 535,590 377,690
Share of joint venture entities net profit 21,110 117,448
Drawings from the joint venture entities (595,804) (461,061)
Carrying amount at end of year 999 40,103
During the year funds were advanced from the joint venture entities amounting to $90,776,000 (2007: $54,312,000). Refer note 15.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 43
NOTES CONTINUED
31 thiess Pty ltd and controlled entities
All controlled entities carry on business in the country of incorporation except where noted.
Place of incorporation interest held
note 2008 2007% %
Thiess Pty Ltd Queensland
Controlled entities
Thiess Investments Pty Ltd 3 Queensland 100 100
Thiess Services Pty Ltd 3 Queensland 100 100
Subsidiary Company:
Thiess Services Limited 1 New Zealand 100 100
Thiess Southland Pty Ltd 4 New South Wales 100 100
Thiess Contractors (Malaysia) Sdn Bhd 1 Malaysia 100 100
Ausindo Holdings Pte Ltd 1 Singapore 100 100
Subsidiary Company:
PT Thiess Contractors Indonesia 1 Indonesia(owned 99% by Ausindo Holdings Pte Ltd and 1% by Thiess Pty Ltd)
Thiess Contractors (PNG) Ltd 1 Papua New Guinea 100 100
Thiess NZ Limited 1 New Zealand 100 100
Thiess SA Pty Ltd 4 victoria 100 100
Thiess Q Pty Ltd 4 Queensland 100 100
Hunter valley Earthmoving Co Pty Ltd 3 New South Wales 100 100
BOS Australia Pty Ltd 4 Western Australia 100 100
Thiess NC 1 New Caledonia 100 100
Thiess Mauritius Pty Ltd 1 Mauritius 100 100
Subsidiary Company:
Thiess Minecs India Pvt Ltd 1 India 90 90Thiess Infraco Pty Ltd (formerly Quantum Explosives Pty Ltd)
4Queensland 100 100
Swan Water Services Pty Ltd 3 New South Wales 100 100
Thiess Infraco (Bayside) Pty Ltd 2 victoria 100 100
Thiess Infraco (Swanston) Pty Ltd 2 victoria 100 100
Thiess India Pvt Ltd 1 India 100 100
(owned 99% by Thiess Pty Ltd and
1% by Thiess Mauritius Pty Ltd)
Notes:1. These overseas controlled entities are audited by other member firms of KPMG International.2. These corporations are small proprietary companies as defined by the Corporations Act 2001 and are not required
to be audited for statutory purposes.3. These corporations (Thiess Pty Ltd (TPL) Class Order companies) have the benefit of an ASIC Class Order
98/1418.4. These corporations are parties to the Deed of Cross Guarantee but do not have the benefit of ASIC Class Order
98/1418 at 30 June 2008 as they are small proprietary companies.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0844
NOTES CONTINUED
32 deed of cross guarantee
Pursuant to ASIC Class Order 98/1418 dated 13 August 1998, relief was granted to the Thiess Pty Ltd (TPL) Class Order Companies (refer Note 31) from the Corporations Act 2001 requirements for preparation, audit and publication of financial statements. As a condition of the Class Order the Company and each of the TPL Class Order Companies are party to a Deed of Cross Guarantee dated 17 May 2000. The effect of the Deed is that the Company guarantees to each creditor payment in full any debt of a TPL Class Order Company in the event of its winding up under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The TPL Class Order Companies have also given similar guarantees in the event that the Company or other TPL Class Order Companies party to the Deed of Cross Guarantee are wound up.
A consolidated income statement and consolidated balance sheet comprising the Company and controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2008 are set out below:
income statement
2008 2007
$’000 $’000
Profit before tax 268,108 194,099
Income tax expense (71,047) (58,313)
Profit for the year 197,061 135,786
Retained profits at beginning of year 346,298 280,512
Dividends provided for or paid (150,000) (70,000)
retained profits at end of year 393,359 346,298
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 45
NOTES CONTINUED
32 deed of cross guarantee (continued)
2008 2007
$’000 $’000
balance sheet
assets
Cash assets 457,550 425,154
Receivables 476,212 409,176
Inventories 32,497 22,872
Derivative financial instruments - 42,500
total current assets 966,259 899,702
Receivables 22,387 3,651
Investments accounted for using the equity method 23,109 59,418
Other financial assets 44,046 42,710
Property, plant and equipment 411,447 340,451
Intangible assets 10,645 2,966
Deferred tax assets 65,967 66,788
total non-current assets 577,601 515,984
total assets 1,543,860 1,415,686
liabilities
Payables 757,935 641,861
Provisions 63,957 58,902
Derivative financial instruments 61 726
total current liabilities 821,953 701,489
Payables 73,463 48,930
Provisions 55,080 53,399
Deferred tax liabilities 5 36,014
Derivative financial instruments - 23
total non-current liabilities 128,548 138,366
total liabilities 950,501 839,855
net assets 593,359 575,831
equity
Contributed equity 200,000 200,000
Reserves - 29,533
Retained profits 393,359 346,298
total equity 593,359 575,831
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0846
NOTES CONTINUED
33 notes to the statements of cashflowsFor the purposes of the statements of cash flows, cash includes cash on hand and at bank and short-term deposits at call. Cash as at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the statements of financial position as follows:
Consolidated the Company
note 2008 2007 2008 2007
$’000 $’000 $’000 $’000
(i) reconciliation of cash
Cash 6 464,303 437,851 387,423 335,455
Deposits 6 34,723 1,635 - -
499,026 439,486 387,423 335,455
(ii) reconciliation of operating profit from ordinary activities after income tax to net cash provided by operating activities
Profit after tax 209,836 123,079 166,750 143,953
Add/(less) non-cash items:
Depreciation 217,344 205,327 130,262 128,192
Amortisation/impairment 7,831 7,718 2,198 2,913
Derivative financial instruments 61 631 - -
Amounts set aside to provisions 105,297 95,536 69,796 62,362
Share of associates net profit (14,877) (20,613) - -
Share of joint venture entities’ net profit (21,110) (117,448) (21,110) (117,448)
(Profit)/loss on sale of non-current assets (64,504) (14,933) (61,793) (10,897)
Net cash provided by operating activities before change in assets and liabilities
439,878
279,297
286,103
209,075
Change in assets and liabilities:
(Increase)/decrease in receivables (86,984) 75,170 (90,753) (5,236)
(Increase)/decrease in inventories (10,196) (9,111) (9,638) (7,898)
(Increase)/decrease in prepayments (4,188) (837) (2,495) 996
Increase/(decrease) in provisions (95,258) (83,384) (68,415) (57,494)
Increase/(decrease) in taxes payable (11,184) (4,225) 7,442 11,142
Increase/(decrease) in accounts payable 68,867 42,774 63,554 29,477
Net cash provided by operating activities 300,935 299,684 185,798 180,062
(iii) financing facilities
The Company and the consolidated entity are subject to a group treasury facility and all financing arrangements are dealt with at the immediate parent entity level.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 47
NOTES CONTINUED
34 related parties
directors
The directors who held office as directors of Thiess Pty Ltd during the year ended 30 June 2008 were:
Mr Martin C Albrecht AC (Chairman) Mr David K Saxelby (Managing Director) Mr Donald J Argent Mr Robert J Flew The Hon Roslyn J Kelly AO Mr Wallace M King AO Mr Graeme E McOrist Mr Wayne G Osborn Mr William J Wild (Appointed 15 February 2008)
No director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors’ interests subsisting at year end.
Wholly-owned group
Details of interests in controlled entities are set out in Note 31.
Thiess Pty Ltd is part of the Leighton Holdings Limited consolidated entity and as such enters into various transactions with other companies in the consolidated entity and related parties. These transactions give rise to various intercompany receivables (refer Note 7 & 10) and borrowings (refer Note 15 & 17). Interest payable to and receivable from related corporations is detailed in Notes 1 and 3.All related party transactions are at normal commercial terms and conditions. The immediate parent entity, Leighton Holdings Limited, is required from time to time to guarantee and indemnify to third parties the performance of companies within the Group. The Company and other members of the Leighton consolidated entity are also required from time to time to guarantee and indemnify to third parties the performance of companies within the Group (refer Note 32).
other related parties
The following entities are considered to be related parties.
(i) Hochtief Australia Limited’s interest in the shareholding of Leighton Holdings Limited is 54.99% (2007:54.99%).
(ii) Associates (with the consolidated entity’s % interest shown)
Sedgman Ltd 36%
Silcar Pty Ltd 50%
Promet Engineers Pty Ltd 50%
Thiess Kentz Pty Ltd 50%
Thiess Leighton India Pvt Ltd 50%
These associates have been equity accounted (refer Note 29).
(iii) Joint venture entities (with the consolidated entity’s % interest shown)
Roche/Thiess/Linfox 44%
Thiess Hochtief 50%
Thiess Alstom 50%
Thiess John Holland 50%
Thiess Sedgman 50%
Thiess United Group 50%
Thiess Black & veatch 50%
These joint venture entities have been equity accounted (refer Note 30).
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0848
NOTES CONTINUED
34 related parties (continued)
ultimate parent entity:
The immediate parent entity of Thiess Pty Ltd is Leighton Holdings Limited.The ultimate Australian parent entity of Thiess Pty Ltd is Hochtief Australia Limited.The ultimate parent entity is Hochtief AG incorporated in Germany.
key management personnel
transactions with key management personnel
In addition to their salaries, the consolidated entity also provides non-cash benefits to key management personnel and contributes to a post-employment superannuation fund on their behalf.
Consolidated the Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
key management personnel compensation
Short term employee benefits 11,007 10,512 9,120 8,967
Other long term benefits 1,002 1,848 739 1,547
Post-employment benefits 1,250 1,923 1,069 1,769
Share based payments* 599 - 599 -
Termination benefits 1,066 6,200 1,066 6,200
14,924 20,483 12,593 18,483*Share based payments relate to the issue of options in Leighton Holdings Limited.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 49
NOTES CONTINUED
Independent auditor’s report to the members of Thiess Pty Ltd
We have audited the accompanying financial report of Thiess Pty Ltd (the Company), which comprises the balance sheets as at 30 June 2008, and the income statements, statements of recognised income and expense and cash flow statements for the year ended on that date, a summary of significant accounting policies and other explanatory notes 1 to 34 and the directors’ declaration of the Group comprising the Company and the entities they controlled at year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In the Summary of Significant Accounting Policies, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.
Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australia Accounting Interpretations), a view which is consistent with our understanding of the Company’s and the Group’s financial position, and of their performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion In our opinion:
(a) the financial report of Thiess Pty Ltd is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2008 and of their
performance for the ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001. (b) the financial report also complies with International Financial Reporting Standards as disclosed in the Statement of
Significant Accounting Policies.
KPMG
Scott Guse Partner
Brisbane 29 August 2008
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Liability limited by a scheme approved under Professional Standards Legislation.
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/0850
AUDIT REPORT
ric burattoBE (Civil) (Hons), FIEAust
General Manager WA/NT
david saxelbyBE (Civil)
Managing Director
dennis WalshBE (Elec & Comms), FIRSE, FIEAust
Manager Thiess Rail
marcus geislerFAICD
General Manager Western Region Thiess Services
Chris forsterlingBE (Civil), FIEAust, CP Eng
Country Manager India
bob brownlee
General Manager Southern Region Thiess Services
Paul grabhamBSc C.Eng MIET
General Manager Major Projects
david mcadamBE (Chem 1st Class Hons), MBA (Exec) FAICD, FIEAust
General Manager Queensland
Peter king
General Manager Eastern Region Thiess Services
leigh ainsworth
Chief Executive Thiess Services
don argentBCom, CPA, FCIS, FAICD
Director Finance & Administration
Paul CassanoBE (Mining) (Hons), MBA (Exec), MAusIMM
Executive General Manager Resources Development
greg millerBE (Civil) (Hons), Grad. Dip. Bus., MIE, FAIM, MAICD
Executive General Manager Process
bruce kenny
Executive General Manager Plant
mark lynchBSc, LLB (Hons), LLM
Executive General Manager Infrastructure & Investments
bruce munroBE (Civil)
Chief Executive Asia Operations
sue netterfieldBSc(Psych) (Hons), MBA
Executive General Manager Strategic Communication
nev PowerBE (Mech), MBA, FIEAust, FIMMAust, CP Eng
Chief Executive Australian Operations
ian sampsonBComm, LlB., GAICD
Executive General Manager People and Sustainability
ian WadeBE (Civil), FIEAust, CP Eng
Executive General Manager Business Services
tony damianiBE (Civil)
Acting General Manager vIC/SA/Tas/NZ
brendan donohueBE (Civil) (Hons), MEng Sci (Structural)
General Manager NSW/ACT
michael rosengrenBE (Mining) (Hons), BA (Oxon), MSc, FAusIMM
General Manager Australian Mining
dale smartDip Eng (Civil)
General Manager Defence & International Thiess Services
roy olsenBE (Civil)
President Director Thiess Indonesia
management
THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 51
MANAGEMENT
7 London Circuit, ACT
FRONT COVER: Dragline at South Walker Creek, QLD
Managing director’s overview
Directors’ report
Statutory statements
Income statements
Statements of cash flows
Balance sheets
Statements of recognised income and expense
Notes to the financial statements
Audit report
Management
2
5
9
10
11
12
13
15
50
51
CONTENTS
DIRECTORY
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Thiess Corporate OfficeLevel 5, 179 Grey Street South Bank QLD 4101 Tel: (+61 7) 3002 9000 Fax: (+61 7) 3002 9009
QueenslandLevel 7, 189 Grey Street South Bank QLD 4101 Tel: (+61 7) 3121 8500 Fax: (+61 7) 3121 8710
New South Wales/ Australian Capital Territory Level 5, 26 College Street Sydney NSW 2000 Tel: (+61 2) 9332 9444 Fax: (+61 2) 9331 4264
Thiess ProcessLevel 4, 179 Grey Street South Bank QLD 4101 Tel: (+61 7) 3002 9000 Fax: (+61 7) 3002 9448
Victoria/South Australia/ Tasmania/New ZealandLevel 9, 417 St Kilda Road Melbourne VIC 3004 Tel: (+61 3) 9864 8888 Fax: (+61 3) 9864 8811
Western Australia/Northern TerritoryThe Forrest Centre Level 19, 221 St Georges Terrace Perth WA 6000 Tel: (+61 8) 9214 4200 Fax: (+61 8) 9214 4244
Australian MiningLevel 7, 189 Grey Street South Bank QLD 4101 Tel: (+61 7) 3121 8500 Fax: (+61 7) 3121 8710
MackayLevel 1, Wellington House Cnr Wellington & Victoria Streets Mackay QLD 4740 Tel: (+61 7) 4944 4500 Fax:(+61 7) 4944 4550
South Australia129 Greenhill Road Unley SA 5061 Tel: (+61 8) 8274 5200 Fax: (+61 8) 8271 6228
Thiess Services Corporate OfficeThe Precinct 2 Level 1, 10 Browning Street West End QLD 4101 Tel: (+61 7) 3169 8300 Fax: (+61 7) 3846 0678
Eastern RegionThe Precinct 2 Level 1, 10 Browning Street West End QLD 4101 Tel: (+61 7) 3169 8400 Fax: (+61 7) 3846 3870
Southern Region/New ZealandLevel 4 15-17 Park Street South Melbourne VIC 3205 Tel: (+61 3) 9684 3333 Fax: (+61 3) 9684 3344
Western Region4 Aitken Way Kewdale WA 6105 Tel: (+61 8) 9441 3000 Fax: (+61 8) 9441 3090
PT Thiess Contractors IndonesiaRatu Prabu 2 J1.T.B Simatupang Kav.1B Jakarta 12560 Indonesia Tel: (+62 21) 2754 9999 Fax: (+62 21) 2754 9800
Thiess India Pvt Ltd5B, RDB Boulevard, Block EP & GP, Sector V, Salt Lake, Kolkata, 700 091 West Bengal, India Tel: (+91 33) 4010 5300
THIESS PTY LTDGENERAL PURPOSE FINANCIAL REPORT YEAR ENDED 30 JUNE 2008
Thiess Pty Ltd and its controlled entities A.B.N. 87 010 221 486
www.thiess.com.au