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Annual Report2013

Coffey A

nnual Report 2013

Contents02 Letter from Chairman and Managing Director04 Board of Directors05 Group Management06 Financial Highlights08 Business Overview08 — Geosciences11 — Project Management12 — International Development14 Financial Report15 — Directors’ Report21 — Remuneration Report46 — Corporate Governance Statement56 — Financial Statements62 — Notes to the Financial Statements112 Details of Shareholders and Shareholdings113 Shareholder Information

Coffey International Limited ACN 003 835 112

Financial calendar1 November 2013 Annual General Meeting31 December 2013 Half-year end10 February 2014 1 FY2014 half-year results announcement14 March 2014 1 Record date FY2014 interim dividend28 March 2014 1 Interim dividend for FY2014 payable19 May 2014 1 Trading update30 June 2014 Financial year end11 August 2014 1 FY2014 full-year results announcement12 September 2014 1 Record date FY2014 final dividend26 September 2014 1 Final dividend for FY2014 payable14 October 2014 1 Annual General Meeting

1) Likely dates. Subject to confirmation.

Coffey Annual Report 2013 01

Every Coffey relationship is built on trust. Whether it’s in geosciences, project management or international development. Trust that’s hard-earned through our proven expertise, our depth of global experience and our commitment to stay one step ahead.

Our united group of specialists – many of whom number among the best in the world – take enormous pride in collaborating with our project partners. By digging deeper. Thinking smarter. And seeing further.

All so we can deliver the smartest solutions, every time.

Our behaviours Ingenuity

Delivery

Respect

Collaboration

Integrity

IntelligentRisk

Safety

02

Coffey has emerged from the FY2013 year a much more resilient Company.

During the year, we adjusted quickly to slowing market conditions, especially in Australia, which is our largest single market for two of our three businesses, namely Geosciences and Project Management.

The result is a Company that is in a good position to weather the slow-down in business activity, and which is ready to scale-up swiftly – with a stronger balance sheet – when an upturn in the business cycle comes.

Left John Mulcahy, ChairmanRight John Douglas, Managing Director

Total revenue

Net debt down

Underlying EBITDA

$688.4m

12%

$28.8m

Letter from Chairman and Managing Director


Reporting highlights of FY2013 resultsThe major outcomes for the year were:

— EBITDA 1 of $18.6 million compared to a loss of $0.5 million in FY2012

— Underlying EBITDA 2 of $28.8 million compared to $39.7 million in FY2012, a reduction of 27.5%

— Net loss after tax of $1.0 million compared to a loss of $34.5 million the previous year

— Positive operating cash flow, at $18.1 million, compared to $21.8 million in FY2012. The Company financed a restructuring, at a cash cost of $6.2 million in FY2013, from its own generated cash flow

— Reduced net debt from $66.0 million in FY2012, to $58.0 million, a 12.1% reduction. Net debt has more than halved over the last two years; Coffey’s banking facilities were extended to February 2016

— Lowered interest cost from $14.8 million in FY2012 to $10.0 million, a 32.4% reduction

Underlying EBITDA margin – averagedacross all Coffey’s businesses – was7.0%, as a proportion of fee revenue. Thecomparable figure in FY2012 was 9.4%.

Total revenue – which includes fees and reimbursable clients’ costs – was $688.4 million, up 1.5% from $678.1 million in FY2012. However, fee revenue on its own was $411.0 million, down by 2.5% from $421.5 million in FY 2012.

These modest shifts in revenue results represent significantly different results in our two most important businesses, namely International Development and Geosciences.

International Development – which enjoyed a good year – increased its total revenue by 11% and it increased fee revenue by 12%.

On the other hand, Geosciences was exposed to a sharp slowdown in business, particularly in the second half. Geosciences’ fee revenue fell by about 3% for the full year compared to FY2012.

But fee revenue – which is more relevant than total revenue in Geosciences – fell almost 10% in the second half of the year, compared to the same period in the 2012 year.

Nonetheless, these full-year results demonstrate solid cash flows and on-going underlying earnings, despite tough trading conditions.

Confirming strategic directionThis year’s results confirm our overall strategic direction.

Beginning in 2011, we sold or closed loss-making or non-core businesses in order to concentrate on businesses where we have high-value capability.

We have also been reducing overhead costs to reflect benchmark levels for professional services firms.

Further, we have ensured diversified revenue sources, taking advantage of steady revenue in our International Development business to offset the more volatile revenues in Geosciences.

Our next challenge is to replicate – in Geosciences – the diversified, multi-country revenue streams that we enjoy in our International Development business.

Positioning for current and anticipated market conditionsDuring the second half of the year, we restructured the Company to reflect slowing business, especially in Australia, where resources and infrastructure projects were cancelled or delayed.

We reduced staff numbers in two businesses, Geosciences and Project Management. We consolidated some offices, reducing our fixed lease costs, and we flattened the organisational structure.

Company-wide staff numbers were reduced by 290 net (headcount basis) at 30 June 2013, compared to a year earlier.

The cost of the restructuring was $10.2 million, of which $6.2 million was paid from cash generated during the year. The balance of $4.0 million was accrued to FY2013, and will be settled in FY2014.

The cost of the restructure is the single reason for the difference between our underlying EBITDA, at $28.8 million, and our reported EBITDA at $18.6 million. No impairments were incurred this year.

Overall, the year ended with Coffey structured for the immediate tough trading conditions.

Our fixed costs are lower.

Our net debt is reduced.

Our revenue is diversified across two main businesses.

We also have the capacity to scale-up quickly when business activity improves.

DividendsAs announced in the fourth quarter, Coffey will not pay a final dividend for FY2013. This is due mostly to the impact of the restructuring on cash, and our priority of reducing debt.

Ensuring health and safety standardsSystematic attention to high standards of occupational health and safety, and security, are the top priority for Coffey.

Our lost-time injury frequency rate (LTIFR) in the past year was 1.43 (measured on a rolling month-by-month basis) 3. Our benchmark LTIFR is 2.0, which reflects that of comparable firms.

Assessing exchange rate impactsThe decline in the Australian dollar will make our Geosciences business more competitive in bidding for work against firms based in the United States and Europe. This includes bidding for work in Africa and South America, where some competitors are European or American.

The falling value of the Australian dollar also improves profitability when US dollar and British pound profits, from our International Development business, are exchanged to Australian currency. However, there was no substantial impact on profitability in FY2013 because the decline in the Australian dollar came late in the financial year.

However, we note the falling Australian dollar had an unfavourable impact of $3.2 million (net) on the value of our debt as at balance date; some of that debt is enumerated in US dollars and Canadian dollars.

1) EBITDA – Earnings before interest, tax, depreciation and amortisation.2) Underlying EBITDA – Earnings before interest, tax, depreciation and amortisation,

before vendor earn-out, restructuring costs and asset impairment.3) Lost-time injuries expressed per million hours worked.

04

With the exception of that executive, and new key executives, salaries remain at 2011 levels.

Short-term incentives to staff in the businesses – which are designed to ensure recruitment and retention of high-quality professionals, and also require performance measures to be met – was cut by 50% (company-wide total) relative to the previous year.

Assessing the results of the businessesGeosciences provides about 63% of Coffey’s fee revenue.

In the last 12 months – and particularly in the second half – Geosciences was exposed to a downturn in the resources sector, particularly in Australia, which is our largest geographical market.

The restructuring ensures that Geosciences is resourced to reflect immediate and anticipated demand.

Margins in Geosciences, as a proportion of EBITDA, fell to 4% in the second half, and to 7.5% for the full year. Improving these margins is our biggest challenge and our biggest opportunity in the medium-term. The restructuring is an important first step.

Reporting immediate remuneration decisions – aligned to company performanceThe Board awarded short-term remuneration payments for two executives who exceeded financial objectives. One further executive was awarded a pro-rata, short-term remuneration payment at the end of employment.

The Managing Director, and the Finance Director, elected not to be paid short-term incentives in FY2013.

The Board determined that no other executives would be awarded short-term remuneration payments based on FY2013 performance.

Addressing long-term performance incentives, 100% of shares awarded three years ago – under the FY2010 plan – were forfeited. The performance measures that would have allowed them to be vested were not met.

Fixed remuneration for Non-executive and Executive Directors, and senior managers remained unchanged during the year, other than a market-based adjustment for one executive.

Geosciences now has a modest exposure to mining, at just over 26% of Geosciences’ fee revenue. Taken as a share of company-wide fee revenue, the direct contribution from mining is no more than 17%. Indeed, the majority of Geosciences’ revenue is from infrastructure projects, and the oil and gas sector.

Project Management is our smallest business. It provides just under 5% of total revenue and 7% of fee revenue. Project management operates in Australia, New Zealand, and South Africa. Australia is the source of about 70% of the revenue.

Project Management ran at a loss overall, and it was restructured to reflect immediate and anticipated demand. Subdued activity in the commercial property market – particularly in Australia – impacted revenue.

However, falling interest rates in Australia are likely to benefit the commercial property market, with potentially positive results for Project Management.

John MulcahyChairman PhD, BE (Civil Eng) (Hons), FIEAust, MAICD

John DouglasManaging Director BEng (Hons), MBA, MAICD

Leeanne BondNon-executive Director BEng (Chem), MBA, FIEAust, RPEQ, GAICD

Urs MeyerhansFinance Director CA (CH), MAICD

Guy CowanNon-executive Director BSc (Eng) (Hons), FCA, MAICD

Stuart Black AMNon-executive Director FCA, FAICD

Susan OliverNon-executive Director B Bldg, FAICD

Board of Directors

Letter from Chairman and Managing Director


All of our businesses have schedules of contracted work for FY2014. The declining value of the Australian dollar, relative to the US dollar, is likely to work in our favour in winning new offshore work.

During the year just ended, we refreshed the Coffey brand, retiring the nine separate brands that existed earlier. Now there is one Coffey brand, with the exception of MSI, one of our International Development units, which has high recognition in the US market.

We have backed the brand refresh with six behaviours – effectively a shift in the Company’s culture – which are aimed at ensuring we deliver value for clients, and maintain safety and security as top priorities.

We anticipate this brand overhaul will be well-received by our clients in the coming months.

Undoubtedly, the global economy continues to be sluggish. The Australian economy is undergoing a substantial transition from the boom years of the early 2000s. Under such conditions, no one can provide certainty about future returns.

However, business opportunities continue to exist, particularly offshore.

We have won some of those opportunities. We are pursuing others.

We are confident the Company is on a stronger financial footing. And it is positioned for the current market, and for an upturn in the business cycle when it comes.

Recognising the contribution of staffWe recognise and acknowledge the contribution of Coffey’s staff during the year. The tough trading conditions have tested all of us.

Our performance, in these circumstances, is a credit to the commitment and effort of all our employees.

John Mulcahy John DouglasChairman Managing Director

International Development provides about 45% of total revenue, and about 30% of fee revenue. The sources of revenue are diversified, with about 70% of fee revenue earned from sources offshore (i.e. sources other than Australia).

International Development enjoyed a good year. The US-based business performed well in a tough market. The UK-based business recovered steadily. The Australian unit continued performing well.

More detail on the respective businesses is on pages 08 – 13 of this report.

Looking ahead to 2014Overall, the Company ends the year in a sound position relative to tough trading conditions.

Our fixed costs and net debt are lower. Our cost of borrowing is lower, and it will fall further in FY2014 when fixed interest debt arrangements entered into in 2008 come to an end.

Urs MeyerhansFinance Director

Rebelle MoriartyGroup Executive Human Resources

Chantalle MeijerGroup Executive Marketing & Communications

Group Management

John DouglasManaging Director

06

1) EBITDA – Earnings before interest, tax, depreciation and amortisation. 2) Underlying EBITDA – Earnings before interest, tax, depreciation and amortisation, before vendor earn-out, restructuring costs and asset impairment. A reconciliation of underlying EBITDA to reported net profits is provided in the Directors’ Report — Review of Operations.

Seven Year Performance Summary FY07 $ million unless otherwise stated restated FY08 FY09 FY10 FY11 FY12 FY13

Total revenue 362.7 558.6 808.7 769.8 680.6 678.1 688.4

Fee revenue 281.9 376.6 510.4 475.7 423.6 421.5 411.0

EBITDA 1 25.2 44.9 53.3 44.0 (39.7) (0.5) 18.6

Underlying EBITDA 2 25.2 44.9 55.4 47.9 32.3 39.7 28.8

Earnings before interest and tax 18.4 35.0 41.1 33.7 (50.0) (9.6) 9.2

Net profit after tax 8.4 15.3 16.4 13.8 (69.7) (34.5) (1.0)

EPS – cents per share 9.3 13.9 14.5 11.9 (52.9) (16.3) (0.4)

Net debt 46.1 93.9 92.8 100.5 121.2 66.0 58.0

Equity 177.6 196.1 191.1 198.2 122.4 133.4 137.2

Net debt / equity 26.0% 46.9% 48.6% 50.7% 99.0% 49.5% 42.3%

Net debt / capital (equity + net debt) 20.6% 31.9% 32.7% 33.6% 49.6% 33.1% 29.7%

Financial Highlights

No impairments were incurred in the FY2013 year.

The restructuring cost incurred in the current year of $10.2 million is the single cause of the difference between underlying EBITDA and reported EBITDA in FY2013.

The post-tax result for the year – which is a net loss of $1.0 million – while disappointing, is a credible result in the tough trading conditions.

Further, other results for the year – including reduced net debt, lowered interest cost, and solid cash flow – demonstrate resilient performance in tough trading conditions, and contribute to a strengthened balance sheet.

Net debtNet debt at 30 June 2013 was $58.0 million, a 12.1% reduction on the previous year, which was $66.0 million.

This is a major contribution to strengthening our balance sheet.

In line with the reduced net debt, and the lowered cost of borrowing, our interest cost fell 32.4%, from $14.8 million to $10.0 million.

There will be further reductions in the interest expense in the coming year when fixed-interest arrangements that date from 2008 come to an end.

Our ratio of net debt to underlying EBITDA was 2.0 times. Our target range is 1.0 – 2.0 times.

Coffey’s banking facilities were renewed during the year, for a further three years to February 2016, on more favourable terms. Given the reduction in our debt levels, we reduced our facility limit to $124.7 million.

Coffey met all its banking covenants during the year and expects to do so for the foreseeable future.

Working capital daysContinued disciplined management of our working capital meant working capital days were 61 at 30 June 2013. That is 7.6% lower than at 30 June 2012 (66 days), reflecting close attention by management to working capital.

Operating cash flowOperating cash flow was $18.1 million, compared to $21.8 million in FY2012, 17% lower.

While the FY2013 cash flow result is a decline year-on-year, it demonstrates resilience in tough trading conditions. The cash flow result also reflects the cash cost of the restructuring in FY2013 of $6.2 million, which is equal to 34.3 % of cash flow.

Risk managementThe Board-approved Financial Market Risk Policy provides a formal framework, and approach, for the effective management of Coffey’s exposure to financial market risk, comprising foreign exchange and interest rate risks.

The implementation of this policy is managed by Group Treasury.

Further details can be found in the Financial Instruments Note 21 to the Financial Statements.

In FY2013, Coffey maintained its focus on financially de-risking the Company, while implementing the necessary changes to align our operations to the deteriorating business conditions and resultant project delays.

Revenue performanceCoffey’s total revenue – which comprises fee revenue plus client reimbursables – was $688.4 million, compared to $678.1 million in FY2012. That is an increase of 1.5%.

However, fee revenue alone – excluding other forms of revenue – was $411.0 million, compared to $421.5 million in FY2012. That is a decrease of 2.5%.

Earnings performanceUnderlying EBITDA was $28.8 million, which is within the range provided in the trading update in May 2013.

The FY2013 underlying EBITDA result is 27.5% lower than the FY2012 result of $39.7 million.

The underlying EBITDA result reflects subdued trading conditions in the second half, in which infrastructure and resources projects, particularly in Australia, were cancelled or delayed.

Reported EBITDA – which takes into account any impairments, or restructuring costs – was $18.6 million, compared to a loss of $0.5 million the previous year.


FY13

58

.0

FY08

93

.9

FY09

92

.8

FY10

10

0.5

FY12

66

.0

FY07

46

.1

FY11

12

1.2

FY13

18

.1

(7.4

) (4.9

)

FY08

38

.1

FY07

FY11

FY09

34

.2

FY10

15

.9

FY12

21

.8

1) Underlying EBITDA – Earnings before interest, tax, depreciation and amortisation, before vendor earn-out, restructuring costs and asset impairment.

FY13

68

8.4

FY11

68

0.6

FY07

36

2.7

FY08

55

8.6

FY09

80

8.7

FY10

76

9.8

FY12

67

8.1

Total Revenue($m)

8.4

15.3

16.4

13.8

(1.0

)FY

13

(69.

7)

FY11

(34.

5)

FY12

Net Profit($m)

Operating Cash Flow($m)

$18.1mOperating Cash Flow

$58.0mNet Debt

FY07

FY08

FY09

FY10

FY11

32

.3

FY11

30

.8

FY11

22

.7

FY11

15

.4

FY12

39

.7

FY12

36

.8

FY12

29

.5

FY12

14

.8

Coffey Coffey Continuing Businesses

Geosciences International Development

Project

ManagementFY

11 0

.1

FY12

(0.

3)

Underlying EBITDA 1

($m)

FY13

28

.8

FY13

28

.8

FY13

17

.1

FY13

18

.3

FY13

(1.8

)

27%Down

Geosciences: 51%Project Management: 5%International Development: 45%

Total Revenue by Business

Fee revenue: 74%Reimbursablerevenue: 26%

Geosciences

Net Debt($m)

08

Business Overview – Geosciences

Fee revenue from Geosciences for FY2013 was $257.9 million, compared to $265.0 million the previous year (down 2.7%).

Geosciences’ contribution to total revenue (which includes fees plus any reimbursable client costs, such as equipment hire) was $348.9 million in FY2013, compared to $342.5 million the previous year (up 1.9%).

Fee revenue – which is effectively the revenue earned from providing expert advice and services – is the more important measure in Geosciences, because it’s the key source of profit margin in Geosciences.

Fee revenue in Geosciences slowed sharply in the second-half of FY2013: it was down 9.5%, from $132.6 million to $120 million, comparing the second half of FY2012 to FY2013.

Underlying EBITDA was $17.1 million compared to $29.5 million (down 42.0%).

Total employees working in Geosciences numbered 1,700 people at June 2013, a reduction of 12.8% (250 fewer positions, on a headcount basis, including 100 people on leave without pay in Ghana) on the previous year.

Sukumar PathmanandavelGroup Executive Geosciences Geotechnics & Mining

Robert MorrisGroup Executive Geosciences Environmental Services

Chris Fredericks Geosciences Africa

Michael RenehanGroup Executive Geosciences Testing

Craig McCloskeyGeosciences South America

Bob SimpsonGeosciences Canada

Infrastructure: 36%Mining: 26%Oil & Gas: 19%Commercial Property: 11%Other: 6%Government: 2%

Fee revenue by sector

Infrastructure work represented 35.7% of fee revenue. Oil and gas projects represented 19.0%. The mining industry represented 26.2% of fee revenue in Geosciences, down from 32.3%.

During the year, we undertook a restructuring of our Geosciences business to reflect slowing demand, mostly in Australian resources and infrastructure. The structure of the business is flatter, the number of technical and support staff have been reduced, and some offices have been consolidated.

Looking forward, over the next year, we have $100 million worth of contracted work, with the majority in Australia and New Zealand. This includes post-earthquake work in Christchurch. We also have work in Canada, the Middle East, Latin America, and in Africa.

Service Line Group Executive and Managers


LNG project, Exxon Mobil, Papua New GuineaCoffey conducted and compiled the environmental impact assessment for the PNG LNG Project. The Project’s environmental impact statement (EIS) was approved in 2009 by the PNG Department of Environment and Conservation (DEC).

The PNG LNG Project is an integrated development that includes natural gas production and processing facilities, onshore and offshore pipelines and liquefaction facilities. The PNG LNG Project is operated by Esso Highlands Limited, a subsidiary of Exxon Mobil Corporation, in co-venture with Oil Search Limited, National Petroleum Company PNG Limited, Santos Limited, JX Nippon Oil and Gas Exploration Corporation, Mineral Resources Development Company Limited and Petromin PNG Holdings Limited, and their affiliates.

Total revenue

Total employees

12 month contracted fee revenue

$348.9m

1,700

$100m

PNG Highlands

10

Sydney, AustraliaBasement and pile foundation designs for the high rise office towers on Barangaroo South. The site will be the centre of a second CBD, entertainment precinct, and residential accommodation for Sydney.

The $6.0 billion Barangaroo project – which is on a former ports site – is the largest urban redevelopment in Sydney.

Geosciences – major work underway

Auckland, New Zealand Geotechnical lead on the $NZ220 million major motorway upgrade project which will raise and widen a 5 kilometre stretch of the motorway that serves Auckland’s western suburbs. Plus add extra lanes to the motorway. Three-year project to improve traffic flows and environmental outcomes.

Christchurch, New ZealandDetailed geotechnical consultancy for repairs and reconstruction of damaged buildings, land and infrastructure across Christchurch following the devastating earthquakes in 2011. Work is contracted through to 2014. Project Management for the new bus interchange in the central city. Approx. 100 Coffey experts are working in Christchurch.

Photo: Coffey InternationalPhoto: Causeway Alliance

Photo: Barangaroo Development Authority


Project Management generated $32.5 million of total revenue, down 30.1% on the previous year (FY2012: $46.5 million). Fee revenue was $28.7 million, compared to $36.8 million (down 22.0%). Underlying EBITDA was a loss of $1.8 million, compared to a loss of $0.3 million the previous year.

Total employees in Project Management numbered 150 at June 2013, 25% fewer than the previous year (50 fewer positions on headcount basis).

During the year, we restructured Project Management to reflect subdued commercial property activity, especially in Australia where private sector commercial property development has been flat.

We anticipate continued low confidence in the Australian commercial building market however, lower interest rates will make large scale property investments more attractive financially. In the immediate future, New Zealand and South Africa – both markets where we are already working – present better opportunities. We have $14 million of fee revenue contracted for the coming year.

Integrated terminal project, Christchurch Airport, New ZealandSince 2009 Coffey has worked with Christchurch International Airport Limited to help manage the delivery of this iconic $NZ237 million project. We provided full project management services from the early stages of the project through to completion.

The new terminal building opened in April this year and has since gone on to win the Tourism and Leisure Property Award at the Property Council New Zealand’s 2013 Property Industry Awards.

Business Overview – Project Management

Richard BiesheuvelGroup Executive Project Management

Total revenue

Total employees

$32.5m

150

$14mNew terminal, Christchurch Airport, New Zealand


12

Business Overview – International Development

International Development generated $306.9 million in total revenue, an increase of 10.8% (FY2012: $277 million).

Underlying EBITDA was $18.3 million, compared to $14.8 million, an increase of 23.6%.

Employees in International Development numbered 1,700 at June 2013 (including contractors).

International Development provides highly-skilled teams in 95 countries working on behalf of three major government clients (United States Agency for International Development (USAID), the British Department for International Development (DFID), and Australian Agency for International Development (AusAID).

International Development is largely independent of the business cycles in specific countries or cycles in particular sectors. Our International Development business is based on a highly-adjustable model, that allows us to scale resources up – or down – easily in order to reflect demand.

The outlook in International Development remains positive over the immediate future. The falling value of the Australian dollar – relative to the US dollar and the British pound – will improve the Australian dollar value of profits from International Development.

Glenn SimpsonGroup Executive International Development

Larry CooleyPresident – MSI

Marina FanningExecutive Vice President – MSI

Kit BlackGeneral Manager APAC

Service Line Group Executive and Managers

Rod ReeveGeneral Manager Europe (Acting)

International Development produces steady, long-term revenue at solid profitability levels.

The business had a strong year in FY2013, with our US-based and Australian-based businesses performing well. The British-based business recovered steadily from the 2012 year.


MSI Iraq Developed the Social Safety Net system for Iraq’s Ministry of Labor and Social Affairs, streamlining the process for Iraq’s poor and marginalised citizens to receive benefits. Savings to the Iraqi Government: more than US$20 million.

Anti‑corruption program, IndonesiaCoffey’s anti-corruption project in Indonesia, funded by USAID, achieved great successes in strengthening watchdog agencies, particularly the well-known and respected KPK or Corruption Eradication Commission.

We worked with the KPK to produce four landmark films aimed at countering the culture of corruption. The films have gained attention from the news media, and interest has been high amongst citizens, officials and government workers.

More than 800,000 citizens viewed the films, including more than 120,000 online viewers. Broadly, they generated a welcome discussion of the costs of corruption in every day life and individuals’ personal choices to prevent its spread through their own actions.

Total revenue

Total employees

$306.9m

1,700 1

$73mClient: USAID

Client: USAID

1) Total employees include 1,300 contractors.


14

Coffey International Limited

Page | 14

2013 Financial Report to Shareholders

Contents

Directors’ report 15 Notes to the financial statements

Directors’ report - Remuneration report 21 1 Summary of significant accounting policies 62

Lead auditor’s independence declaration 45 2 Critical accounting estimates and judgements 71

Corporate governance statement 46 3 Determination of fair value 72

Consolidated income statement 56 4 Operating segments 73

Consolidated statement of comprehensive income 57 5 Revenue and other income 76

Consolidated statement of financial position 58 6 Expenses 77

Consolidated statement of changes in equity 59 7 Net finance costs 77

Consolidated statement of cash flows 61 8 Income tax expense 78

Notes to the financial statements 62 9 Cash and cash equivalents 79

Directors’ declaration 109 10 Cash deposits 79

Independent auditor’s report 110 11 Trade and other receivables 79

Details of Shareholders and shareholdings 112 12 Plant and equipment 80

13 Deferred tax assets and liabilities 81

14 Intangible assets 82

15 Trade and other payables 84

16 Employee benefits 84

17 Loans and borrowings 85

18 Dividends 86

19 Issued and fully paid up share capital 86

20 Reconciliation of profit after income tax to net cash flow from operating activities 87

21 Financial instruments 87

22 Director and executive disclosures 94

23 Remuneration of auditors 96

24 Contingent liabilities 97

25 Commitments 97

26 Earnings per share 98

27 Events occurring after the reporting date 98

28 Deed of cross guarantee 99

29 Parent entity disclosures 101

30 Share-based payments 101

31 Subsidiaries 107


Coffey International Limited Directors’ report

Page | 15

Your Directors present their report on the consolidated entity consisting of Coffey International Limited, domiciled in Australia, and the entities it controlled (Coffey or the Group) at the end of, or during, the year ended 30 June 2013. Directors The names and details of the Company's Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Non-executive Directors John Mulcahy Stuart Black AM Leeanne Bond Guy Cowan Susan Oliver

Executive Directors

John Douglas Urs Meyerhans

Principal activities During the year the Group provided specialist consulting services across its three businesses. These activities are summarised below by each key business segment:

Geosciences The Geosciences business comprises specialised geotechnical, environmental and mining consulting services, as well as materials testing and analysis. The business delivers services to public and private sector clients across resources, infrastructure and property. Offices are located across Asia Pacific, the United Kingdom, North and South America, Africa and the Middle East. International Development The International Development business delivers consulting and training services alongside governments and donor agencies to strengthen governance, promote economic growth, and create conditions for sustainable development. The business operates from regional offices based in Australia, the United States of America, the United Kingdom and the Middle East. Project Management The Projects business provides project management and advisory services to public and private sector clients across the property and infrastructure project lifecycles. Offices are located throughout Australia, New Zealand and South Africa. Dividends No dividends were declared or paid in the current or prior year. Review of operations Fee revenue from continuing operations of $411.0 million was down 0.9% ($3.7 million) on last year. This reflected the slowdown in the Australian market in the second half, which adversely impacted the Geosciences and Project Management businesses. Earnings before interest, tax, depreciation and amortisation (EBITDA) was $18.6 million for the year, including $10.2 million of restructuring costs. The restructuring was undertaken to ensure the Company is appropriately structured for the anticipated reduced demand in the Australian market in the medium term. Staff numbers, through redundancy, have been reduced by 275 positions during FY2013 and fixed costs were also reduced through several office consolidations. The net loss after tax of $0.9 million was adversely impacted by the $10.2 million of restructuring costs. Net operating cash inflow of $18.1 million was achieved despite tough trading conditions in the Australian market reflecting the ongoing strong working capital management of the business. Net debt (loans and borrowings net of cash and cash deposits) decreased to $58.0 million (30 June 2012 $66.0 million) as a result of continued positive operating cashflows. The gearing ratio of net debt to equity plus net debt decreased from 33% to 30%. Interest expense reduced by 32% compared with the prior year, reflecting the reduced debt level, lower interest rates and refinancing completed in February 2013. Banking facilities remain in place through to February 2016. For additional commentary refer to the Letter to Shareholders from the Chairman and Managing Director, and the Financial Highlights section of this Annual Report.

16


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A reconciliation of net profit/(loss) after tax to EBITDA is shown below. EBITDA reconciliation 2013 2012 Continuing Continuing Discontinued Total $’000 $’000 $’000 $’000 Loss for the year (911) (36,735) 2,529 (34,206) Add back:

Net financing expense 10,005 14,844 – 14,844 Income tax expense 128 9,374 352 9,726 Depreciation and amortisation 9,381 9,077 56 9,133 EBITDA 18,603 (3,440) 2,937 (503)

Add back:

Vendor earn-out – 1,625 – 1,625 Restructuring costs 10,159 1,170 – 1,170 Impairment – 37,418 – 37,418 EBITDA before restructure costs, impairment expense and vendor earn-out 28,762 36,773 2,937 39,710 Earnings per share

2013 Cents

2012 Cents

Basic earnings per share (0.4) (16.3)

Significant changes in the state of affairs In the opinion of the Directors, there were no significant changes in the state of affairs of Coffey International Limited that occurred during the year under review, that were not otherwise disclosed in this report or the financial statements. Matters subsequent to the end of the financial year There were no matters or circumstances specific to Coffey that have arisen since 30 June 2013 that have significantly affected or may significantly affect the:

Group’s operations in future financial years; results of those operations in future financial years; Group’s state of affairs in future financial years; or Group’s financial report at 30 June 2013.

Likely developments and expected results of operations Further information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the Directors believe including this information would likely to result in unreasonable prejudice to the consolidated entity. Environmental regulation Coffey International Limited is committed to the protection of the environment; to the health and safety of its employees, contractors, customers and the public at large; and to complying with all applicable environmental laws, rules and regulations in the jurisdictions in which it conducts its business. The consolidated entity is not subject to significant environmental regulation in respect of its operations. There are small disposals of waste from the consolidated entity’s soil science laboratories. This waste is disposed under licence to an appropriate disposal facility.



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Directors’ qualifications, experience, other directorships and special responsibilities

John Mulcahy PhD, BE (Civil Eng) (Hons), FIEAust, MAICD Chairman, Age 63

Term: Non-executive Director since September 2009 (4 years), Chairman since November 2010

Independent: Yes

Committees: Chair Nomination Committee

Member Risk and Audit Committee Human Resources and Remuneration Committee

Directorships: Non-executive Director of Mirvac Limited, Mirvac Funds Management Limited, ALS Limited and GWA Holdings Limited, and a Guardian of the Future Fund of Australia. Former Managing Director and Chief Executive Officer of Suncorp-Metway Limited.

Experience: John is one of Australia’s most respected corporate leaders, with over 27 years’ senior management experience in financial services and property investment. Prior to joining Coffey, he was Managing Director and Chief Executive Officer of Suncorp-Metway Limited. Prior to that, John held a number of senior executive roles at the Commonwealth Bank and Lend Lease Corporation.

John Douglas, BEng (Hons), MBA, MAICD Managing Director, Age 51

Term: Managing Director since March 2011

Independent: No

Committees: No Committee membership

Directorships: No other listed company directorships

Experience: John has over 25 years’ international experience in strategic consulting and senior management, as well as hands-on experience as a geotechnical engineer. Before joining Coffey, John was Executive General Manager of Boral Limited’s Australian Construction Materials business. In this role, he managed a business with a turnover of more than $2 billion spread across four business streams. Prior to working at Boral, John was a manager at Boston Consulting Group where he provided strategic advice to high profile companies across a wide range of industries and countries.

Urs Meyerhans CA (CH), MAICD Finance Director, Age 53

Term: Finance Director since February 2012

Independent: No

Committees: No Committee membership.

Directorships: Former Finance Director of Wattyl Limited.

Experience: Urs joined Coffey as Chief Financial Officer (CFO) in early 2009 and was appointed Finance Director in early 2012. Prior to joining Coffey, Urs was previously CFO of United Group Limited, Swiss Aluminium Australia Limited and Wattyl Limited where he was appointed Finance Director in 2004. With close to 30 years of finance and commercial management in the resources, engineering services and manufacturing industries across the globe, Urs has extensive experience in capital management, strategic planning and restructure, refinancing of debt requirements and merger and acquisitions. Urs also plays a key role in investor relationship management at Coffey as he did in his role at Wattyl Limited.

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Page | 18

Stuart Black AM, FCA, FAICD Age 58

Term: Non-executive Director since March 2002 (11 years)

Independent: Yes

Committees: Member Risk and Audit Committee Human Resources and Remuneration Committee Nomination Committee

Directorships: Non-executive Director of Australian Agricultural Company Limited and Netcomm Wireless Limited. Chair of Chartered Accountants Benevolent Foundation Ltd and a Non-executive Director of The Country Education Foundation of Australia Ltd. Former acting Chair and current Director of the Accounting Professional and Ethical Standards Board Ltd. Past President of the Institute of Chartered Accountants in Australia.

Experience: Stuart is a prominent Chartered Accountant and experienced company Director. He is the former Managing Partner in the chartered accounting firm Chapman Eastway and has extensive experience in professional services, agribusiness, financial services, manufacturing, import, distribution, IT and biotechnology.

Leeanne Bond BEng (Chem), MBA, FIEAust, RPEQ, GAICDAge 48

Term: Non-executive Director since February 2012 (1 year)

Independent: Yes

Committees: Member Risk and Audit Committee Human Resources and Remuneration Committee

Directorships: Non-executive Director of Liquefied Natural Gas Limited. Former Non-executive Director of Tarong Energy Corporation Limited, Queensland Bulk Water Supply Authority (Seqwater) and subsidiaries and Australian Water Recycling Centre of Excellence Ltd. Former chair of the Brisbane Water Advisory Board, Brisbane City Council.

Experience: Leeanne is an experienced company Director and holds board roles in the energy and water sectors. Leeanne has a background in chemical engineering and over 25 years senior management experience across a broad range of industrial sectors including energy, minerals, infrastructure and water resources. Leeanne also consults to industry through her own company. From 1996 to 2006 Leeanne played a key role in establishing and growing Worley Parsons in Queensland as General Manager Queensland, General Manager Hydrocarbons and Development Manager (Queensland), where she negotiated project alliances and supervised contracts and projects with many Australian and international companies.

Guy Cowan, BSc (Eng) (Hons), FCA, MAICD Age 62

Term: Non-executive Director since February 2012 (1 year)

Independent: Yes

Committees: Chair Risk and Audit Committee

Member Human Resources and Remuneration Committee

Directorships: Non-executive Director of UGL Limited and Queensland Sugar Limited. Former Non-executive Director of Ludowici Limited, Raisama Limited and Gold Oil PLC (UK).

Experience: Guy is an experienced senior executive and company Director. Guy’s extensive commercial and finance experience in the oil and gas industry includes more than 23 years for energy group Shell in international finance and strategy roles, most recently as Chief Financial Officer (CFO) of Shell Petroleum Inc. He was also CFO and a Director of Shell Oil Company (USA). From 2005 to 2009 Guy was CFO of Fonterra Co-operative Group Limited, which included responsibility for Fonterra’s strategy and growth and investments in Latin America. Guy has had 9 years’ experience as a chartered accountant with Price Waterhouse and KPMG.



Page | 19

Susan Oliver, B Bldg (Melb Uni), FAICD Age 62

Term: Non-executive Director since October 2010 (3 years)

Independent: Yes

Committees: Chair Human Resources and Remuneration Committee

Member Risk and Audit Committee Nomination Committee

Directorships: Chair of Fusion Retail Brands Pty Ltd and Non-executive Director of VLine Corporation and CNPR Limited. Former Non-executive Director of Programmed Maintenance Services Limited, Transurban Group Limited, Just Group Limited, Centro Properties Group and MBF Australia Limited.

Experience: Susan has been a company Director for 16 years and has expertise in building profitable enterprise, restructuring and turnarounds. Her background includes strategy, marketing, technology and scenario planning. Susan has held senior management positions in public and private sectors in roles focused on construction, urban renewal, policy, innovation and industry development. She also manages her own advisory practice and start-up information technology companies, and serves on the Victorian government advisory panel for small technologies.

Directors’ interests The relevant interest of each Director in the share capital of the companies within the consolidated entity, as notified by the Directors to the ASX in accordance with section 205G of the Corporations Act, at the date of this report is: Coffey International Limited – ordinary shares

John Mulcahy 1,139,286 John Douglas 9,833,279 Stuart Black AM 287,027 Leeanne Bond 150,000 Guy Cowan 147,531 Susan Oliver 276,800 Urs Meyerhans 1,877,093 Company Secretary Jennifer Waldegrave BBus, CA, GradDipACG, ACSA, MAICD Appointed Company Secretary of Coffey International Limited on 4 March 2010. Jennifer is a member of Chartered Secretaries Australia and the Australian Institute of Company Directors, and is a Chartered Accountant. She has over 25 years’ senior corporate experience in Australian and US listed companies and in her preceding role was Company Secretary for Australian listed company Wattyl Limited.

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Page | 20

Meetings of Directors The number of meetings of the Board of Directors and of each Board Standing Committee held during the year ended 30 June 2013, and the number of meetings attended by each Director is detailed below.

Committees

Board HR &

Remuneration Audit3 Risk3 Risk & Audit3 Nomination Director A1 B2 A B A B A B A B A B J Mulcahy 14 14 6 6 2 2 1 1 4 4 1 1 S Black AM 14 14 6 6 2 2 – 1# 4 4 1 1 J Douglas 14 13 – 6# – 2# – 1# – 4# – 1#

S Oliver 14 13 6 6 – 2# 1 1 4 4 1 1 G Cowan 14 14 3 3, 3# 2 2 1 1 4 4 – 1#

L Bond 14 14 6 6 – 2# – 1# 4 4 – 1#

U Meyerhans 14 13 - 6# – 2# – 1# – 4# – 1#

1 “A” represents number of meetings eligible to attend and held while in office. 2 “B” represents number of meetings attended while in office. 3 Combined Risk and Audit Committee established at the close of the 2012 Annual General Meeting. # Represents number of meetings attended although not a member of the Committee.

Retirement, election and continuation in office of Directors In accordance with Clause 21.1 of the Constitution, Ms Susan Oliver will retire as a Director of the Company at the 2013 Annual General Meeting (AGM) by way of rotation and, being eligible, intends to offer herself for re-election. In accordance with Company policy and as outlined in the Corporate Governance Statement, Mr Stuart Black AM, having been a Director for more than 10 years, will retire as a Director of the Company at the 2013 AGM and, being eligible, intends to offer himself for re-election. Insurance of officers During the financial year, the Group paid a premium to insure the Directors and Secretaries of the Company and Group entities, key Executives and the general managers of each of the businesses of the consolidated entity. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the Directors and/or officers of entities in the consolidated entity, and any other payments arising from liabilities incurred by the Directors and/or officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the Directors and/or officers or the improper use by the Directors and/or officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.


Coffey International Limited Directors’ report – Remuneration report

Page | 21

Remuneration Report FY2013 (audited) Executive Summary Key personnel changes in FY2013

Chantalle Meijer was appointed Group Executive Marketing & Communications on 27 September 2012. Ms Meijer joined Coffey in December 2011 and was previously Group Manager Marketing & Communications.

Rebelle Moriarty was appointed Group Executive Human Resources on 13 August 2012. Robert Barry had acted in this role during the prior reporting year and continues with Coffey in a senior management role.

Robert Simpson, Group Executive Strategy, became President Geotechnics Canada on 1 July 2013 and for the purposes of this report has been considered a former KMP.

Kenneth Tucker, Group Executive Projects, ceased employment with Coffey on 31 January 2013. Richard Biesheuval was appointed to the role on 4 February 2013. He was previously the Commercial Manager Projects.

Rob Slater, Group Executive Mining, ceased employment on 1 July 2013 due to the integration of Coffey’s Mining business into alternative management and reporting structures. He has been considered a former KMP in this report.

Mark Croudace, Group Executive Environments, ceases employment with Coffey on 17 September 2013. He has not been actively employed in this role from 17 June 2013 and has been considered a former KMP as a result. Robert Morris has been appointed to this role commencing 12 August 2013. Mr Morris was previously General Manager Environments, Queensland and Papua New Guinea. The terms of his appointment are in line with the remuneration arrangements for Executives as outlined in this report. He will be reported as a KMP in the next reporting period.

There have been no changes in Non-executive Director membership during this reporting period.

Key remuneration decisions in FY2013

Fixed remuneration for Executive Directors and Executives has remained unchanged during the year, other than a market-based adjustment for one Executive. With the exception of this Executive and new Executives, salaries have been maintained at levels set in FY2011.

The Short Term Rewards (STR) Plan for Executives adopted a balanced scorecard approach in FY2013 in line with changes to Executive Director STR in FY2012. The Board awarded STR payments for two Executives who exceeded the minimum financial thresholds. The Managing Director and the Finance Director chose not to be paid their STR entitlements, and the Board determined that no other Executive would receive an STR payment due to Company performance. One former KMP was awarded a pro-rata STR payment at the end of his employment.

The FY2013 Long-Term Reward (LTR) performance hurdle changed from Net Profit After Tax (NPAT) compound growth to Earnings Per Share (EPS) compound growth.

Twelve Executives were awarded LTR grants in FY2013 with vesting subject to achievement of EPS and total shareholder return (TSR) performance hurdles over three years.

There was a 100% forfeiture of loan shares granted to all LTR participants under the FY2010 performance grant as performance hurdles were not achieved.

Non-executive Director fees have remained unchanged during the year, maintaining levels set in October 2008. A combined Risk and Audit Committee was formed at the close of the 2012 Annual General Meeting (AGM). The aggregate Non-executive Director fee pool limit has also remained unchanged since the 2008 AGM despite the appointment of an additional Non-executive Director as part of the Board renewal process.

Introduction This report provides an overview of Coffey’s Remuneration Policy and details Coffey’s Key Management Personnel (KMP) remuneration for the year ended 30 June 2013 (FY2013). For the purposes of this report, reference will be made to:

Key Management Personnel (KMP) – Non-executive Directors, Executive Directors and Executives

Non-executive Directors (NED) – Non-executive Directors

Executive Directors (ED) – Managing Director and Finance Director

Executives – Managing Director, Finance Director, Group Executive Service Lines and Group Executive Functions

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Page | 22

The Remuneration Report is structured as: 1 Remuneration policy, practices and outcomes 2 Relationship between remuneration policy and Company performance 3 The Board’s role in remuneration 4 Description of Non-executive Director remuneration 5 Description of executive remuneration 6 Director and executive remuneration details 7 Executive employment contracts 8 Legacy equity-based remuneration 9 Transactions with Key Management Personnel

1 Remuneration policy, practices and outcomes 1.1 Remuneration policy and practices The objective of Coffey’s remuneration policy is to ensure its remuneration practices attract, motivate and retain employees from a diverse range of backgrounds with the experience, knowledge, skills and judgment to drive the Company’s performance. The following changes to remuneration practices have been introduced in FY2013:

Incorporation of EPS growth as the statutory profit measure in the LTR grant, replacing NPAT growth; Introduction of additional objectives within the existing at-risk STR Plan for all Executives. These changes are

consistent with a move to a balanced scorecard approach to STR award calculation, and reflect changes made to the Executive Director STR Plan in FY2012. STR on-target amounts remain unchanged; and

As foreshadowed in the FY2012 Remuneration Report, Finance Director STR and LTR components both increased to 37.5% of Total Fixed Remuneration (TFR).

1.2 Remuneration Summary in FY2013 The table on the following page compares an Executive’s contracted potential remuneration for FY2013 with the actual remuneration award for the year. The Contract TFR shows the fixed remuneration the Executive is entitled to receive for a full year of service under their employment contract, while the Actual TFR shows the fixed remuneration earned during FY2013 in the role of an Executive. The variable remuneration disclosures show the potential on-target and maximum STR and LTR awards for FY2013, compared with the actual STR and LTR award made during the year. The LTR awards are subject to performance hurdles measured over a three-year period and at risk of forfeiture if the hurdles are not met. The LTR awards are provided through a limited recourse loan, vested shares may only be exercised after repayment of this loan. As the LTR performance hurdles are measured over three years, the performance hurdles relating to the FY2010 LTR awards were measured during the year. 100% of the FY2010 performance shares were forfeited as the hurdles were not met. This disclosure is supplementary to the statutory remuneration reporting requirements which are contained in the Remuneration Summary Tables (shown in section 6.2 and onwards). The statutory remuneration table includes additional disclosures including non-monetary benefits related to car parking, long service leave accruals and termination payments. In addition, the impact of movements in LTR grants is shown at fair value in the statutory remuneration table rather the equivalent remuneration value.



Page | 23

Fixed

Remuneration Short Term Reward

Plan Long Term Reward Plan

TotalReward

FY13

Contract TFR1

Actual TFR2

On-target awardFY133

Maximum award

AvailableFY134

Award madeFY135

On-target & Maximum

award FY136

Forfeit of FY10

LTR grant7

Executive Directors

J Douglas Managing Director $800,000 $800,000 $400,000 $600,000 $0 $400,000 n/a $800,000

U Meyerhans Finance Director $550,000 $550,000 $206,250 $309,375 $0 $206,250 $0 $550,000

Other Executives

S Pathmanandavel GE Geotechnics $400,000 $393,2698 $93,750 $140,625 $0 $93,750 $0 $393,2698

M Renehan GE Testing $330,000 $323,8809 $82,500 $123,750 $17,325 $82,500 $0 $341,2059 G Simpson GE International Development

$400,000 $400,000 $100,000 $150,000 $52,500 $100,000 $0 $452,500

R Biesheuvel GE Projects $320,000 $130,07810 $32,92810 $49,39210 $0 $32,92810 n/a $130,07810 C Meijer GE Marketing & Communications

$250,000 $184,61511 $62,500 $93,750 $0 $62,500 n/a $184,61511

R Moriarty GE Human Resources $365,000 $314,811 $80,65512 $120,998 $0 $91,250 n/a $314,81112

Former Executives

K Tucker GE Projects $401,897 $240,23213 $100,474 $150,711 $53,000 $100,474 $0 $293,23213

R Slater GE Mining $345,000 $338,61714 $86,250 $129,375 $0 $86,250 $0 $338,61714

R Simpson GE Strategy $340,000 $340,000 $85,000 $127,500 $0 $85,000 $0 $340,000

M Croudace GE Environments $500,000 $500,000 $125,000 $187,500 $0 $125,000 $0 $500,000

1 The annual amount of fixed remuneration (base salary and fees plus superannuation) an Executive would receive for a full financial year of service. 2 The amount of fixed remuneration actually received during FY2013 as an Executive. Differences between contract and actual TFR may reflect incomplete service or remuneration changes for the reported financial year. 3 The on-target dollar value of the STR Plan for FY2013, calculated by multiplying TFR by STR % (see table 5.3.2 for more detail). This value may be pro-rated due to incomplete service or remuneration changes for the reported financial year. 4 The maximum dollar value an Executive can receive through the STR Plan in FY2013, calculated as 150% of the on-target amount. 5 The dollar value of the FY2013 STR Plan awarded to an Executive. Amounts are inclusive of superannuation. 6 The dollar value of LTR Plan for FY2013, calculated by multiplying TFR by LTR % (see table 5.4.2 for more detail). This value is different to the accounting value and reflects the value of shares acquired through the limited recourse loan from the Company (see 5.4.1 for more detail). This value may be pro-rated due to incomplete service or remuneration changes for the reported financial year. The shares granted are subject to the achievement of performance hurdles and are at risk of forfeiture in the future if these hurdles are not met. 7 The dollar value of any vested shares following the three-year performance hurdle testing for LTR. As performance hurdles were not met, no FY2010 LTR grants vested. N/A signifies the Executive did not receive a grant under the FY2010 LTR scheme. 8 S Pathmanandavel received a TFR increase effective 1 October 2012. 9 M Renehan changed pay cycles in FY2013 which resulted in pay moving one week in arrears. 10 R Biesheuvel appointed Group Executive Projects effective 4 February 2013, STR and LTR target awards pro-rated. TFR excludes remuneration earned prior to his appointment as an Executive. 11 C Meijer appointed Group Executive Marketing & Communications 27 September 2012. TFR excludes remuneration earned prior to her appointment as an Executive. 12 R Moriarty appointed Group Executive Human Resources 13 August 2012, STR target award pro-rated. 13 K Tucker ceased employment on 31 January 2013 and received pro-rated STR award. 14 R Slater took one week Leave Without Pay. He ceased employment on 1 July 2013.

24

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Both Short Term Reward (STR) and Long Term Reward (LTR) outcomes have reflected Coffey’s performance over measurement periods for the respective plans during this period. Consistent with the challenging conditions in some of the markets in which Coffey operates and disappointing financial results in recent years:

In FY2013, the Managing Director and the Finance Director chose not to be paid their STR entitlements, and the Board determined that no other Executive would receive an STR payment due to Company performance with the exception of those Executives leading the Testing and International Development Service Lines, whose performance exceeded the minimum financial thresholds, and a former KMP who received a pro-rated STR payment upon termination.

In FY2012, the Managing Director and Finance Director chose not to be paid their STR entitlements, and Executives did not receive STR awards with the exception of two Service Line Executives who exceeded the minimum financial thresholds.

In FY2011, the Managing Director chose not to be paid his STR entitlement and Coffey’s performance in FY2011 was such that no LTR grants were awarded to any Executive.

Coffey’s performance against both performance measures has resulted in 100% forfeiture of shares awarded under the FY2010 Plan.

In addition, fixed remuneration for Executives has been held at levels set in FY2011, with the exception of one Executive who has received market-based movements, and new Executives.

3 The Board’s role in remuneration The Board engages with Shareholders, management, and other stakeholders as required to continuously refine and improve Executive and Non-executive Director remuneration policies. The Human Resources and Remuneration Committee was established by the Board to assist in discharging the Board’s responsibilities in relation to:

The remuneration of the Board within the scope of the Shareholder approved cap on Non-executive Director fees; The performance and remuneration of the Executive Directors and direct reports to the Managing Director

(Management Team) of the Company; Remuneration strategies, practices and disclosures generally; Employee share and option plans; Management succession, capability and talent development; Diversity (excluding Board diversity, which is a responsibility of the Nomination Committee); and Talent attraction, retention and culture.

Further details of the Committee’s responsibilities are outlined in the Corporate Governance Statement. The Committee reviews remuneration strategy and policy on an annual basis for all employees including the Executive Directors and the Management Team. The decisions of the Committee are subject to approval by the Board. The Committee has the authority to engage external professional advisers without seeking approval from the Board or management. No external professional advisers were engaged in FY2013.

4 Description of Non-executive Director remuneration There has been no change to the basis of Non-executive Director fees since October 2008, other than for the formation of the combined Risk and Audit Committee at the close of the 2012 AGM. Fees paid to Non-executive Directors reflect the responsibilities of and the demands made on the Directors. Non-executive Director fees are determined within the aggregate Non-executive Director fee pool limit of $700,000 per annum which was approved by Shareholders in November 2008. In the current financial year, fees paid to Non-executive Directors totalled $675,000 (inclusive of superannuation). Non-executive Directors are remunerated by way of fixed fees in the form of cash and superannuation in accordance with Recommendation 8.3 of the ASX Corporate Governance Council’s Principles and Recommendations.

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The following annual fee structure (inclusive of superannuation) has applied to Non-executive Directors during the year. Chair Member Board base fees $190,000

1 $100,000 Committee fees Risk and Audit2 $30,000 $10,000 Audit2 $20,000 $10,000 Risk Management2 $20,000 $5,000 HR and Remuneration $20,000 $5,000 Nomination $Nil $Nil 1 The Chairman of the Board receives no standing Committee fees in addition to his Board fees. 2 At the close of the 2012 AGM, a combined Risk and Audit Committee was established replacing the two standalone Committees. Remuneration tables for Non-executive Directors for the financial year ended 30 June 2013 are set out in section 6 of this Remuneration Report. Shareholdings of Non-executive Directors are set out in the Directors’ Report. The Company and each of the Non-executive Directors have agreed terms of appointment together with a Deed of Access, Insurance and Indemnity and a Disclosure Deed (as permitted under the ASX Listing Rules). Non-executive Directors are not appointed for a specific term and their appointment may be terminated by notice from the individual Director or otherwise pursuant to section 203B or 203D of the Corporations Act 2001. While there is no formal term of office for Non-executive Directors, the Board requires any Director with 10 or more years of service as a Director to offer themselves for re-election every year.

5 Description of executive remuneration 5.1 Executive remuneration structure Executive remuneration comprises a fixed component and an at-risk component, which is contingent on performance. Total remuneration is the sum of all reward components assuming performance is on-target (i.e. 100% of pre-determined objectives are achieved). A summary of reward components and their relative weighting is presented below:

Fixed remuneration On-target at-risk remuneration

TFR1 STR2 LTR3 Total

on-target at-risk

component

Managing Director 50.0% 25.0% 25.0% 50.0%

Finance Director 57.2% 21.4% 21.4% 42.8%

Group Executives 66.6% 16.7% 16.7% 33.4%

1 TFR includes base salary and minimum legislated superannuation. 2 Cash-based incentive contingent on performance against objectives with a one year time-frame. 3 Share-based incentive contingent on performance against objectives with a three year time-frame. 5.2 Fixed remuneration Fixed remuneration (known as Total Fixed Remuneration or TFR) is the sum of base salary and fixed employee benefits such as superannuation. TFR is benchmarked against a peer group of direct competitors and a general industry peer group. Selection of the comparator group is based on the similarity of the roles in question (including but not limited to nature/comparability of the role itself, industry, revenue, headcount and complexity of operations). TFR is benchmarked against the market median, also known as the 50th percentile, which is inclusive of all fixed benefits (generally base salary, superannuation, benefits such as motor vehicles, car parking, insurances and related FBT costs). While comparative levels of remuneration are monitored on a periodic basis, there is no contractual requirement or expectation that any adjustments will be made.



Page | 27

5.3 Short-Term Reward (STR) cash-based incentive 5.3.1 STR overview Coffey’s STR Plan ensures that a proportion of remuneration is tied to Company performance measured annually in line with the financial year. Executives can only realise their STR at-risk component if challenging pre-determined objectives are achieved. This aligns Executive interests with Shareholder interests and focuses Executive performance. The STR payment is made in cash (inclusive of any superannuation components) as part of the Annual Remuneration Review after finalisation of the Company’s audited results. 5.3.2 STR on-target and maximum levels On-target and maximum STR opportunities are expressed as a percentage of TFR. The maximum STR that can be earned is capped to control cost and limit the potential for excessive risk taking. These caps are presented below:

On-target STR as a percentage of TFR Maximum STR as a percentage of TFR

Managing Director 50% 75%

Finance Director 37.5% 56.25%

Group Executives 25% 37.5%

5.3.3 STR performance objectives In both FY2012 and FY2013 Executive Director performance was measured using a balanced scorecard. In line with Executive Director practice, a balanced scorecard was introduced in FY2013 for all other Executives, which is designed to encourage sustainable and profitable growth and drive Coffey’s strategic objectives. A summary table of the breakdown of individual objectives and their respective weightings for Executives is presented below:

Financial objectives Non-financial objectives

Profitability NPAT and

EBIT Working capital

Financial weighting

Safety improvement

Strategy implementation

Non-financial weighting

Managing Director 60.0% 10.0% 70.0% 5.0% 25.0% 30.0%

Finance Director 60.0% 10.0% 70.0% 0.0% 30.0% 30.0%

Group Executives (in aggregate)

60.0% 25.0% 85.0% 5.0% 10.0% 15.0%

Objective targets are based on the Executive’s area of responsibility such that those with whole-of-company responsibility (Executive Directors and Group Executive Functions) are measured at whole-of-company results, and those with Service Line responsibility (Group Executive Service Lines) are measured at Service Line level results. Each year, the Human Resources and Remuneration Committee considers the appropriate targets and potential payout before approving the scheme and establishing objective targets.

28


Page | 28

5.3.4 Calculating STR awards Individual STR awards are calculated once financial results are finalised based on performance against pre-determined objective targets. The Human Resources and Remuneration Committee determine the performance against each objective that represents minimum performance warranting reward, on-target performance and a maximum that can be awarded (including all points in-between). Awards relating to each individual objective are capped at 150% of individual objective on-target amount. The Board reviews performance and determines any award against each objective individually and separately in order to focus Executives performance across all objectives at all times. The Board determined that two Service Line Executives were eligible for an STR award for FY2013 based on exceeding their financial objectives. The Managing Director and the Finance Director chose not to be paid their STR entitlements, and the Board further determined that Company performance was insufficient to warrant a STR award for any other Executives. One former KMP was awarded a pro-rata STR payment calculated at departure date. The Board retains the right to vary from policy in exceptional circumstances. However, material variation from policy and the reasons for it will be disclosed. 5.3.5 Tabular STR cash based incentive summary The following table outlines the major features of the STR Plan in respect of performance for FY2013. Purpose of STR incentive Focus performance on drivers of Shareholder value and align Executive interests with Shareholder

interests over a one-year period; Ensure measurement of Executive performance is closely aligned to Executive span of control (where applicable); and Ensure a part of remuneration cost varies with the Company’s short-term performance.

Maximum value of STR that can be earned

Managing Director: 75% of fixed remuneration Finance Director: 56.25% of fixed remuneration Other Executives: 37.5% of fixed remuneration

Performance period 1 July 2012 to 30 June 2013

Performance assessed July 2013

Payment date October 2013

Payment vehicle Cash (inclusive of superannuation legislation requirements)

Performance objectives Broken into two groups: Financial and Non-financial. Financial objectives: NPAT, EBIT and Working Capital Non-financial objectives: Safety improvement and strategy implementation The measurement level of objectives is specific to the Executive’s span of control such that Executive Directors and Group Executives Functions are measured against whole-of-company results; Group Executive Service Lines are measured against their respective Service Line. STR awards are calculated based on performance against pre-determined targets where award increases as performance increases. Awards are capped (for each individual objective) at 150% of the on-target amount. The Human Resources and Remuneration Committee considers and recommends STR awards, which are then considered and approved by the Board.

Terminating Executives Eligibility for a STR payment is forfeited where an Executive’s employment terminates prior to payment in October 2013 unless the Board determines that the Executive will be treated as a Good Leaver, in which case the departing Executive may be considered for a pro-rated STR award.

Change of control The Board has discretion.



Page | 29

5.4 Long-Term Reward (LTR) share-based incentive 5.4.1 LTR performance incentive overview Coffey’s LTR Plan ensures that a proportion of Executive remuneration is tied to Company performance over a longer timeframe. Executives can only realise their LTR at-risk component if challenging pre-determined objectives are achieved. The Board believes the appropriate vehicle for such long-term remuneration is equity, further aligning Executive interests with Shareholders’ interests and managing risk. Performance is assessed over three years, which is considered to be the appropriate time period to measure performance against financial projections and detailed business plans, and is positioned within broader long-term planning. The grant is in the form of shares acquired by a limited recourse loan from the Company. The Directors determine allocations of shares and the loan incurred by the Executive is calculated as the market value of Coffey International Limited shares at the date of acquisition multiplied by the number of shares acquired on their behalf. The shares are purchased on market and held in a trust (or reallocated from forfeited shares held in the trust). Dividends on the shares held in trust are applied to pay down the Executive’s loan. The loan must be repaid by the Executive (either through dividend repayment or cash payment) before vested shares can be transferred into their name. An Executive may also instruct the Trustee to sell vested shares to which the loan is attached. The last option is only available if the net value of the shares is greater than the value of the loan. Due to their limited recourse nature, the arrangements are not considered a loan for related party disclosure purposes. All shares issued to the Coffey Rewards Share Plan rank equally with all other fully-paid ordinary shares on issue. The FY2013 LTR incentive represents an entitlement to ordinary shares, subject to satisfaction of LTR performance conditions and a continued employment condition. LTR incentive grants are in two equal tranches, with each tranche subject to an independent performance requirement. The performance requirements for both tranches share two common features:

Once minimum performance conditions are met, the proportion of shares that qualifies for vesting gradually increases pro-rata with performance. This approach avoids cliff vesting, where a large proportion of reward either vests or does not vest either side of a minimum performance requirement. It also reduces the incentive for excessive risk taking as the performance threshold for payment is reached.

The maximum reward is capped at a ‘stretch’ performance level that is considered attainable without excessive risk taking.

The FY2013 LTR incentive grant was made during the year, with performance conditions measured over the three-year period from 1 July 2012 to 30 June 2015. All shares held in the trust will be forfeited if the Board determines that an Executive has committed an act of fraud, dishonesty or gross misconduct or in other circumstances specified by the Board. 5.4.2 Maximum LTR performance incentive grant Maximum annual LTR performance incentive grants are expressed as a percentage of TFR. These are presented below:

LTR as a percentage of TFR

Managing Director 50%

Finance Director 37.5%

Group Executives 25%

30


Page | 30

5.4.3 Performance requirements One tranche of shares in the FY2013 LTR grant qualifies for vesting subject to performance relative to other companies, while the other tranche qualifies for vesting subject to a statutory profit measure. Each tranche is of equal value. The relative performance requirement is based on total shareholder return (TSR). Coffey’s TSR is calculated as the difference in share price over the performance period, plus the value of shares earned from reinvesting dividends received over this period, expressed as a percentage of the share price at the beginning of the performance period. The percentage change of Coffey’s TSR is compared to the percentage change in the S&P/ASX 300 Accumulation Index. Shares held in trust will not vest until Coffey’s TSR is greater than 3.75% above the Index. On exceeding the Index return, performance shares will start to vest on a pro-rated basis until 100% vest when Coffey’s TSR is 15% above the Index. The graduated rate of vesting after meeting the minimum TSR performance requirement is more conservative than most companies that have a relative TSR performance requirement. Coffey’s Directors believe that this more graduated vesting provides better risk management because it reduces the tendency for excessive risk taking stemming from Executives having very significant differences in reward outcomes either side of a performance cliff. The absolute statutory performance requirement applicable to the other tranche of shares is based on Earnings Per Share (EPS) growth over the three-year performance period to 30 June 2015. As the Company reported a net loss after tax for the 2012 financial year including a number of non-recurring items, the level at which vesting of this tranche of shares will commence has been determined by reference to the underlying EPS of 2.09 cents per share for the financial year 2012. The vesting of this tranche of shares will be dependent on the EPS growth performance. The shares in this tranche will start to vest on a pro-rata basis if EPS compound annual growth exceeds 30% over the period, and fully vest at 50% compound annual EPS growth. Shares will vest on a pro-rata basis for compound annual EPS growth between 30% and 50%.



Page | 31

5.4.4 Tabular LTR performance incentive summary The following table outlines the major features of the LTR grant during the year in respect of performance for FY2013. Purpose of LTR performance incentive

Focus performance on drivers of Shareholder value and align Executive interests with Shareholder interests over a three-year period using the vehicle of equity; Manage risk by countering any tendency to over-emphasise short-term performance to the detriment of longer term growth and sustainability; and Ensure a part of remuneration cost varies with the Company’s longer term performance.

Maximum value of equity that can be granted

Managing Director: 50% of fixed remuneration Finance Director: 37.5% of fixed remuneration Other Executives: 25% of fixed remuneration

Performance period 1 July 2012 to 30 June 2015

Performance assessed July 2015

Shares vest November 2015

Payment vehicle Performance contingent shares subject to loan repayment

Performance conditions In addition to the continued employment up to the vesting date, there are two performance conditions. Each applies to half the shares granted to each Executive.

Relative TSR The relative total shareholder return (TSR) performance condition is based on the Company's TSR performance relative to the TSR of companies comprising the S&P/ASX 300 Accumulation Index at the start of the performance period, measured over the three years to 30 June 2015.

The performance vesting scale applicable to the shares subject to the relative TSR test is set out below.

Coffey’s TSR ranking Percentage of shares subject to TSR condition that qualify for vesting

Less than or equal to 3.75% above the Index 0% Above 3.75% and less than 15% above the Index Pro-rata 15% or more above the Index 100%

EPS growth The Earnings Per Share (EPS) growth performance condition is based on the Company’s compound annual EPS growth over the three years to 30 June 2015 by reference to the FY2012 underlying EPS of 2.09 cents per share.

The performance vesting scale applicable to the shares subject to the EPS growth test is set out below.

Coffey’s EPS compound annual growth Percentage of shares subject to EPS condition that qualify for vesting

Less than or equal to 30% 0% Above 30% and less than 50% Pro-rata 50% or more 100%

Dilution and cash flow Shares are reallocated from forfeited holdings or bought on market. Employee equity plan shares are limited to 5% of total issued shares outstanding over a five-year period.

Treatment of dividends and voting rights on performance-contingent shares

Dividends are received by the trust. The trust repays the loan provided by the Company to acquire the shares. Participants have the right to direct the Trustee as a Shareholder on how to vote with respect to the shares standing to their credit.

Restriction on hedging Hedging of entitlements under the Plan is not permitted. Coffey’s Securities Dealing Policy prohibits designated persons from hedging an exposure to unvested or vested Coffey securities held through Coffey’s reward plans.

Terminating Executives All shares in the FY2013 LTR grant will be forfeited where an Executive’s employment terminates prior to 30 November 2015 unless the termination is due to death. The Board may determine that the Executive will be eligible to be treated as a Good Leaver, in which case unvested shares remain held in trust until the performance period is completed. If performance hurdles are achieved and the shares vest, the Good Leaver will have two years from the date of termination or 30 days from vesting (whichever comes first) to repay the loan balance (either through cash repayment, or if the value of the vested shares is greater than the loan balance, by instructing the Trustee to sell the shares).

Change of control The Board has discretion on vesting.

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Page | 32

The Board retains the right to vary from policy in exceptional circumstances. However, material variation from policy and the reasons for it will be disclosed. 5.5 Loyalty Shares Australian employees are offered annual grants of shares upon attaining five years’ service with Coffey, known as Loyalty Shares. The dollar value of each annual grant is determined based on the number of completed years of service. The grant is in the form of shares acquired by a limited recourse loan from the Company. The loan incurred by the employee is calculated as the market value of Coffey International Limited shares at the date of acquisition multiplied by the number of shares acquired on their behalf. The shares are held in trust with any dividends received applied to pay down the employee’s loan. The loan must be repaid by the employee (either through dividend repayment or cash payment) before vested shares can be transferred into their name. The Loyalty Shares vest three years after grant date, subject to the employee being continuously employed by Coffey for the full period. The Board may determine that an employee ceasing employment with Coffey may be eligible to be treated as a Good Leaver, in which case Loyalty Plan shares will vest on a pro-rata basis based on the completion of the service hurdle. Consistent with this policy, during the year Executives who have been employed for at least five years received an annual grant of Loyalty Shares with a limited recourse loan. 5.6 Termination payments in addition to statutory payments to KMPs during the year Name Position Termination date Payment1 Other

K Tucker Group Executive Projects 31/01/2013 96,357 The Board approved Good Leaver status. Unvested performance shares continue to be held in trust, with vesting subject to achievement of requirements. R Slater Group Executive Mining 01/07/2013 172,500

1 Excludes accrued statutory leave entitlements

6 Director and executive remuneration details 6.1 Nominated Executives The Nominated Executives are the Key Management Personnel (KMP) of Coffey International Limited comprising the Non-executive Directors, Executive Directors and other Executives, listed below: Non-executive Directors

J Mulcahy Chairman S Black AM Non-executive Director L Bond Non-executive Director G Cowan Non-executive Director S Oliver Non-executive Director

Executive Directors

J Douglas Managing Director U Meyerhans Finance Director

Other Executives

S Pathmanandavel Group Executive Geotechnics M Renehan Group Executive Testing G Simpson Group Executive International Development R Biesheuvel Group Executive Projects C Meijer Group Executive Marketing & Communications R Moriarty Group Executive Human Resources

This report contains information on the following former other Executives:

K Tucker Group Executive Projects R Slater Group Executive Mining R Simpson Group Executive Strategy M Croudace Group Executive Environments


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Page | 35

6.3 Relative proportions of Nominated Executive potential remuneration for the period that are fixed and those linked

to individual and Company performance

Fixed

remuneration (%) Performance related

potential remuneration (%) Value of remuneration

consisting of loan-shares (%)

At-risk – STR

On-target At-risk – LTR

Name 2013 2013 2013 2013 2012 Executive Directors

J Douglas 50.0 25.0 25.0 10 5

U Meyerhans 57.2 21.4 21.4 6 3

Other Executives

S Pathmanandavel 66.6 16.7 16.7 5 3

M Renehan 66.6 16.7 16.7 4 1

G Simpson 66.6 16.7 16.7 7 9

R Biesheuvel1 66.6 16.7 16.7 2 n/a

C Meijer2 66.6 16.7 16.7 2 n/a

R Moriarty3 66.6 16.7 16.7 2 n/a

Former Other Executives

K Tucker4 66.6 16.7 16.7 14^ 3

R Slater5 66.6 16.7 16.7 9^ 1

R Simpson6 66.6 16.7 16.7 6 6

M Croudace7 66.6 16.7 16.7 0 4

1 R Biesheuvel appointed Group Executive Projects on 4 February 2013. 2 C Meijer appointed Group Executive Marketing and Communications on 27 September 2012. 3 R Moriarty appointed Group Executive Human Resources on 13 August 2012. 4 K Tucker ceased employment on 31 January 2013. 5 R Slater ceased employment on 1 July 2013. 6 R Simpson was appointed to an operational management role commencing 1 July 2013. 7 M Croudace will cease employment on 17 September 2013. ^ On termination the Board approved Good Leaver Status. Under accounting rules expensing of the share-based payment was accelerated due to the reduced service period resulting a higher expense.

36


Page | 36

6.4 Details of Nominated Executive remuneration: variable at-risk remuneration The percentage of the available STR and LTR that was paid with respect to the 2013 financial year and the percentage that was forfeited because the person did not meet the performance criteria are set out below. No part of the STR in the table below is payable in future years.

Short-Term Rewards Long-Term Rewards

(subject to vesting hurdles)

Name Paid (%) Forfeited (%)

FY2013 remuneration

granted (%)

FY2010 grant forfeited

based onmeasurement (%)

Executive Directors

J Douglas 0% 100% 100% N/A

U Meyerhans 0% 100% 100% 100%

Other Executives

S Pathmanandavel 0% 100% 100% 100%

M Renehan 21% 79% 100% 100%

G Simpson 52% 48% 100% 100%

R Biesheuvel1 0% 100% 100% N/A

C Meijer2 0% 100% 100% N/A

R Moriarty3 0% 100% 100% N/A


K Tucker4 53% 47% 100% N/A

R Slater5 0% 100% 100% N/A

R Simpson6 0% 100% 100% 100%

M Croudace7 0% 100% 100% 100%

1 R Biesheuvel appointed Group Executive Projects on 4 February 2013. 2 C Meijer appointed Group Executive Marketing and Communications on 27 September 2012. 3 R Moriarty appointed Group Executive Human Resources on 13 August 2012. 4 K Tucker ceased employment on 31 January 2013 and was awarded pro-rata STR amount. 5 R Slater ceased employment on 1 July 2013. 6 R Simpson was appointed to an operational management role commencing 1 July 2013. 7 M Croudace will cease employment on 17 September 2013.



Page | 37

6.5 Loan share movements in the Coffey Rewards Share Plan on behalf of the Nominated Executives The Non-executive Directors of Coffey International Limited do not participate in the Coffey Rewards Share Plan.

Plan name Granted

(no.) Vested

(no.) Forfeited#

(no.) Exercised

(no.) Executive Directors J Douglas Service – – – –

Performance 1,176,470 – – –

U Meyerhans Service – 5,916 – –

Performance 606,617 – 140,044 –

Other Executives S Pathmanandavel Service 1,470 5,230 – –

Performance 275,735 – 70,022 –

M Renehan Service – – – –

Performance 242,647 – 17,858 –

G Simpson Service 1,470 25,906 – –

Performance 294,117 – 135,800 –

R Biesheuvel1 Service – – – –

Performance 96,847 – – –

C Meijer2 Service – – – –


R Moriarty3 Service – – – –



K Tucker4 Service – 7,734 – –


R Slater5 Service – – – –


R Simpson6 Service 4,117 9,202 – –

Performance 250,000 – 86,572 –

M Croudace7 Service – 8,816 – –

Performance 367,647 – 127,312 – 1 R Biesheuvel appointed Group Executive Projects on 4 February 2013. 2 C Meijer appointed Group Executive Marketing & Communications on 27 September 2012. 3 R Moriarty commenced as Group Executive Human Resources on 13 August 2012. 4 K Tucker ceased employment on 31 January 2013.

5 R Slater ceased employment on 1 July 2013.

6 R Simpson was appointed to an operational management role commencing 1 July 2013. 7 M Croudace will cease employment on 17 September 2013. # Shares subject to the Operating Earnings Per Share (OEPS) hurdle were cancelled on 12 August 2013. The current year grant date was 1 December 2012, the exercise price was initially the value of the loan and the fair value at grant date is set out in the next table. The loan balance payable on exercising of the shares reduces by the dividends per share paid during periods from grant date to exercise date. The total fair value of shares granted to eligible employees under the Coffey Reward Share Plan was $962,031.

38


Page | 38

6.6 Grants under the Coffey Rewards Share Plan to Nominated Executives together with vesting details

Performance grants

Name Plan year

Loan-shares granted

(no.) Vested

(%) Forfeited#

(%) Earliest

vesting date

Fair value at grant date

($) Executive Directors J Douglas 2010^ 694,323 – – 1-Mar-14 215,761 2011 – – – – – 2012 667,779 – – 21-Mar-15 210,350 2013 1,176,470 – – 1-Dec-15 241,176 U Meyerhans 2010 140,044 – 100% 3-Dec-13 56,508 2011 – – – – – 2012 229,549 – – 26-Mar-15 72,307 2013 606,617 – – 1-Dec-15 124,356 Other Executives S Pathmanandavel 2010 70,022 – 100% 3-Dec-13 28,254 2011 – – – – – 2012 156,510 – – 21-Mar-15 49,300 2013 275,735 – – 1-Dec-15 56,526 M Renehan 2010 17,858 – 100% 3-Dec-13 7,206 2011 – – – – – 2012 137,729 – – 21-Mar-15 43,385 2013 242,647 – – 1-Dec-15 49,743 G Simpson 2010 135,800 – 100% 3-Dec-13 54,795 2011 – – – – – 2012 166,944 – – 21-Mar-15 52,587 2013 294,117 – – 1-Dec-15 60,294

R Biesheuvel1 2013 96,847 – – 13-Mar-16 22,759

C Meijer2 2013 183,823 – – 1-Dec-15 37,684

R Moriarty3 2013 268,382 – – 1-Dec-15 55,018

Former Other Executives K Tucker4 2010 – – – – – 2011 – – – – – 2012 167,736 – – 21-Mar-15 52,837 2013 295,512 – – 1-Dec-15 60,580 R Slater5 2010 – – – – – 2011 – – – – – 2012 143,989 – – 21-Mar-15 45,356 2013 253,676 – – 1-Dec-15 52,003 R Simpson6 2010 86,572 – 100% 3-Dec-13 34,932 2011 – – – – – 2012 141,903 – – 21-Mar-15 44,699 2013 250,000 – – 1-Dec-15 51,250 M Croudace7 2010 127,312 – 100% 3-Dec-13 51,370 2011 – – – – – 2012 208,681 – – 21-Mar-15 65,735 2013 367,647 – – 1-Dec-15 75,368 1 R Biesheuvel appointed Group Executive Projects on 4 February 2013. 2 C Meijer appointed Group Executive Marketing & Communications on 27 September 2012. 3 R Moriarty commenced as Group Executive Human Resources on 13 August 2012. 4 K Tucker ceased employment on 31 January 2013. 5 R Slater ceased employment on 1 July 2013. 6 R Simpson was appointed to an operational management role commencing 1 July 2013. 7 M Croudace will cease employment on 17 September 2013. ^ Initial grant on appointment. # Shares subject to OEPS hurdle were cancelled on 12 August 2013.



Page | 39

Service grants

Name Plan year

Loan-shares granted

(no.) Vested

(%) Forfeited

(%) Earliest

vesting date

Fair value at grant date

($) Executive Directors U Meyerhans 2009 5,916 100% – 30-Nov-12 6,508 2010 35,011 – – 3-Dec-13 15,527 2011 – – – – – 2012 – – – – – Other Executives S Pathmanandavel 2009 5,230 100% – 30-Nov-12 5,753 2010 18,342 – – 3-Dec-13 8,135 2011 835 – – 16-Mar-15 276 2012 1,470 – – 13-Dec-15 265 M Renehan 2010 4,465 – – – 1,980 2011 – – – – – 2012 – – – – – G Simpson 2009 25,906 100% – 30-Nov-12 28,497 2010 34,786 – – 3-Dec-13 15,428 2011 835 – – 16-Mar-15 276 2012 1,470 – – 13-Dec-15 265 Former Other Executives K Tucker1 2009 7,734 100% – 30-Nov-12 8,507 2010 – – – – – 2011 5,008 – – 16-Mar-15 1,653 2012 – – – – – R Simpson2 2009 9,202 100% – 30-Nov-12 10,122 2010 23,985 – – 3-Dec-13 10,637 2011 2,337 – – 16-Mar-15 771 2012 4,117 – – 13-Dec-15 741 M Croudace3 2009 8,816 100% – 30-Nov-12 9,698 2010 31,829 – – 3-Dec-13 14,116 2011 – – – – – 2012 – – – – – 1 K Tucker ceased employment on 31 January 2013. 2 R Simpson was appointed to an operational management role commencing 1 July 2013. 3 M Croudace will cease employment on 17 September 2013.

40


Page | 40

7 Executive employment contracts Remuneration and other terms of employment for Executives are formalised in employment agreements. Employment agreements are unlimited in term but can be terminated at any time with at least three months’ notice and up to twelve months’ notice in the case of the Executive Directors. Employment agreements for Executives include a restriction on engaging in competitive behaviour when employment with Coffey comes to an end.

Name Position Term of agreement Termination notice Current Executives

J Douglas Managing Director No fixed term 6 months by employee 12 months by employer

U Meyerhans Finance Director No fixed term 6 months by employee 12 months by employer

S Pathmanandavel Group Executive Geotechnics No fixed term 3 months

M Renehan Group Executive Testing No fixed term 3 months

G Simpson Group Executive International Development No fixed term 13 months^

R Biesheuvel1 Group Executive Projects No fixed term 3 months

C Meijer2 Group Executive Marketing & Communications

No fixed term 3 months

R Moriarty3 Group Executive Human Resources No fixed term 3 months

Former Executives

K Tucker4 Group Executive Projects No fixed term 3 months

R Slater5 Group Executive Mining No fixed term 4 weeks

R Simpson6 Group Executive Strategy No fixed term 3 months

M Croudace7 Group Executive Environments No fixed term 3 months

^ G Simpson’s current employment agreement is dated 26 October 2009, with no further change in remuneration. 1 R Biesheuvel appointed Group Executive Projects on 4 February 2013. 2 C Meijer appointed Group Executive Marketing & Communications on 27 September 2012. 3 R Moriarty commenced as Group Executive Human Resources on 13 August 2012. 4 K Tucker ceased employment on 31 January 2013. 5 R Slater ceased employment on 1 July 2013. 6 R Simpson was appointed to an operational management role commencing 1 July 2013. 7 M Croudace will cease employment on 17 September 2013.


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: Tr

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perfo

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thre

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serv

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ll tra

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s th

at th

e Ex

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rem

ains

em

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ch

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ches

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del

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in th

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prop

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ns:

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1: 2

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2: 4

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nd

Tran

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3: 4

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with

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42


Page | 42

9 Transactions with key management personnel The Corporations and Related Legislation Amendment Regulation 2013 (No.1) dated 28 June 2013 amended the Corporations Regulations to effectively relocate certain disclosures formerly required by AASB124 from the notes to the financial statements to the Remuneration Report. Accordingly, the following transactions with KMPs have been disclosed in both the Remuneration Report and Note 22 ‘Director and Executive disclosures’ for the current year. a) Loans to key management personnel Loans outstanding at the end of the current and prior year are for the purchase of shares under the Coffey Rewards Share Plan (formerly Coffey International Limited Employee Leveraged Share Plan). The shares are issued on conditions no more favourable than those available to other participating employees. No interest is payable on the loan balances and the loans are limited-recourse to the Executive. The terms and conditions of the Coffey Rewards Share Plan are described in Note 30. The limited-recourse loans are reduced over the life of the arrangement by the value of dividends paid per instrument. Due to its limited recourse nature, for accounting purposes the loan is not recognised as a receivable but rather is treated as an option to purchase shares in the Company and no loan balances are disclosed. No write-downs or allowances for doubtful receivables have been recognised in relation to any loans made to key management personnel. b) Options The movement during the financial year in the number of options (including loan shares) over ordinary shares in Coffey International Limited held directly, indirectly or beneficially by each key management person, including their related parties is:

Name Held at

1 July 2012 Granted as

compensation Exercised Forfeited

Held at 30 June

2013

Vested during

the year

Vested and unexercisable

at30 June 2013

Executive Directors J Douglas 1,362,102 1,176,470 – – 2,538,572 – – U Meyerhans 410,520 606,617 – (140,044) 877,093 5,916 – Other Executives S Pathmanandavel 301,924 277,205 – (70,022) 509,107 5,230 – M Renehan 160,052 242,647 – (17,858) 384,841 – – G Simpson 395,206 295,587 – (135,800) 554,993 25,906 – R Biesheuvel – 96,847 – – 96,847 – – C Meijer – 183,823 – – 183,823 – – R Moriarty – 268,382 – – 268,382 – – Former Other Executives K Tucker 187,703 295,512 – – 483,215 7,734 – R Slater 143,989 253,676 – – 397,665 – – R Simpson 307,362 254,117 – (86,572) 474,907 9,202 – M Croudace 376,638 367,647 – (127,312) 616,973 8,816 –



Page | 43

c) Shares Movements in the number of ordinary shares in Coffey International Limited held, directly, indirectly or beneficially by each key management person, including their related parties is:

Name Held at

1 July 2012 Cash

Purchases

Received on exercise of

options and rights Sales Held at

30 June 2013 Executive Directors J Douglas 412,471 6,882,236 – – 7,294,707 U Meyerhans 150,000 850,000 – – 1,000,000 Other Executives S Pathmanandavel 94,987 130,000 – – 224,987 M Renehan 12,756 - – – 12,756 G Simpson 272,027 - – – 272,027 C Meijer 2,000 66,000 – – 68,000 Former Other Executives K Tucker 50,000 - – – 50,000 R Slater 157,647 - – – 157,647 R Simpson 50,914 500,000 – – 550,914 M Croudace 25,000 323,000 – – 348,000 d) Other transactions with Key Management Personnel Transactions entered into with Directors of the Group and specified Executives of the Group are within normal employee relationships, on terms and conditions no more favourable than those available to other employees or Shareholders. They include:

share issues under the Coffey Rewards Share Plan (formerly Coffey International Limited Employee Leveraged Share Plan) (Note 30);

dividends from shares in Coffey International Limited; and terms of employment and reimbursement of expenses.

(End of Remuneration Report).

44

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46

Coffey International Limited Corporate governance statement

Page | 46

Coffey’s approach to corporate governance Coffey International Limited (Coffey or the Company) supports the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations (Principles or Recommendations). Coffey is committed to establishing governance systems that deliver best practice in corporate governance and transparency in reporting. This is an ongoing commitment, requiring continual review, modification and enhancement of governance systems. This statement explains how Coffey conforms to the Principles. Where to locate Coffey’s corporate governance information online The charters, codes and policies relating to Coffey’s corporate governance practices referred to in this Statement are available on the corporate governance section of the Coffey website – www.coffey.com Principle 1: Lay solid foundations for management and oversight Recommendation 1.1 –Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions Board responsibilities The Coffey Board (Board) is responsible for the overall corporate governance of Coffey. The Board Charter sets out the following objectives of the Board:

provide strategic guidance for Coffey and effective oversight of management;

optimise Coffey’s performance and Shareholder value within a framework of appropriate risk assessment and management; and

recognise Coffey’s legal and other obligations to all legitimate stakeholders.

The Board derives its authority to act from the Company’s Constitution and the Board’s responsibilities are encompassed in a formal Charter, which the Board is responsible for reviewing annually and amending as required. The Charter was most recently reviewed and amended in June 2013. The matters that the Board has specifically reserved for its decision are: oversight of the Company,

including its controls and accountability systems;

providing input into, reviewing and approving Coffey’s strategic plans and performance objectives, and monitoring performance against those plans;

approving and monitoring financial outcomes and the integrity of financial reporting;

protecting Coffey’s financial position and its ability to meet its debts as and when they fall due;

approving and monitoring the progress of major capital expenditure, capital management (including determining Coffey’s dividend policy and declaring dividends), and acquisitions and divestitures;

reviewing and monitoring the effectiveness of Coffey’s systems of risk management and internal control (including matters of health, safety, security and environment);

evaluating the performance of the Board, determining its size and composition and setting Non-executive Director remuneration within Shareholder approved limits;

appointing, approving terms of engagement and termination benefits, and monitoring the performance of the Managing Director (MD) and, if required, terminating the appointment of the MD;

ratifying the appointment and removal of any Executive Director, the Chief Financial Officer (CFO), any other member of the Management Team and the Company Secretary, approving their terms of engagement and termination benefits, and monitoring their performance;

planning for Board, MD and Management Team succession;

establishing Coffey’s culture and values, and monitoring compliance with legislative and regulatory requirements (including continuous disclosure) and ethical standards, including reviewing and ratifying codes of conduct and compliance systems;

promoting diversity on the Board, reviewing and approving Coffey policies in relation to diversity, approving the measurable objectives and monitoring progress towards their achievement;

monitoring the timeliness and effectiveness of communications with Shareholders and other stakeholders;

approving and monitoring policies governing Coffey’s relationship with other stakeholders and the broader community, including policies in relation to environmental management and occupational health and safety; and

reviewing and recommending to Shareholders the appointment or, if appropriate, the termination of the appointment of the external auditor.

While at all times the Board retains full responsibility for guiding and monitoring Coffey, in discharging its responsibilities it makes use of Board Committees. Specialist committees can focus on a particular area of responsibility, and report and provide recommendations to the Board.



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The Board has established the following standing Committees: Risk and Audit Committee (see

Principles 4 and 7); Nomination Committee (see

Principle 2); and Human Resources and

Remuneration Committee (see Principle 8).

All Coffey Directors receive copies of all Board Committee papers, including minutes, and may attend meetings of all Board Committees whether or not they are Committee members provided no conflict of interest exists. The Chair of each Committee reports back on the Committee matters, conclusions and recommendations to the Board at the next full meeting. Delegation to management The Board has delegated to the MD and, through the MD, to the Management Team responsibility for the day-to-day management and operations of Coffey and implementation of the Company’s strategy and policy initiatives. The MD and Management Team are accountable to the Board for performance of these duties, including: developing, implementing and

reviewing the effectiveness of Coffey’s Health, Safety, Security and Environment Management System;

developing and implementing corporate strategies and making recommendations to the Board on significant corporate strategic initiatives;

developing Coffey’s annual budget and managing day-to-day operations within the budget;

maintaining effective risk management and compliance management frameworks;

appointing senior management, including determining terms of appointment, evaluating performance, and developing and maintaining succession plans for senior management roles;

managing day-to-day operations in accordance with standards for social, ethical and environmental practices;

promoting equal opportunity and diversity within all levels of the organisation, developing and implementing policies and initiatives in relation to diversity, and monitoring and assessing progress towards achievement of the measurable objectives; and

keeping the Board and market fully informed about material continuous disclosure.

Specific limits on the authority delegated to the MD and the Management Team are set out in the Board-approved Delegation of Authority Policy. Management Team The Management Team comprises the MD and the direct reports to the MD from each service line and function. Each Management Team member is employed under a service agreement which sets out the terms on which the Executive is employed, including details of the Executive’s duties and responsibilities, rights and remuneration entitlements. The service agreement also sets out the circumstances in which the employment of the Executive may be terminated by either Coffey or the Executive, including details of the notice periods to be given by either party, and the amounts payable to the Executive as a consequence of the termination by Coffey of the Executive’s employment. Each member of the Management Team is employed by Coffey on a permanent basis. Key terms of these service agreements are detailed in the Remuneration Report in this Annual Financial Report. Recommendation 1.2 – Companies should disclose the process for evaluating the performance of senior executives

The performance of Management Team members is reviewed annually against key performance measures as part of Coffey’s performance management system, which is in place for all managers and employees. The system includes processes for the setting of key performance measures at the commencement of the financial year and the annual assessment of performance against these measures. Some performance measures, such as Coffey’s overall financial performance, are common for the Management Team. Other performance measures are specifically set in line with the individual role and responsibilities of the Management Team member. The following process for evaluating Management Team performance was undertaken in the reporting period: the Chairman and Non-

Executive Directors, with the assistance of the Human Resources and Remuneration Committee, reviewed the performance of the MD and the Finance Director (FD); and

the Board, with the assistance of the Human Resources and Remuneration Committee, reviewed the performance of the other members of the Management Team.

Details of the evaluation process and the linkages between the result of performance evaluations and remuneration are disclosed in the Remuneration Report in this Annual Financial Report. An induction program is in place to enable newly appointed Management Team members to gain an understanding of: the Company’s financial

position, strategies, operations and risk management policies; and

the respective rights, duties, responsibilities and roles of the Board and the Management Team.

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Principle 2: Structure the Board to add value Together, the Board members represent a diverse range of backgrounds. They have a broad range of financial and other skills and experience, and the expertise necessary to oversee Coffey’s business. The Board’s size and composition are subject to limits imposed by the Company’s Constitution, which provides for a minimum of three and a maximum of eight Directors (or such number within this range as the Board may determine from time to time). The Board currently comprises five Non-executive Directors and two Executive Directors. The Executive Directors include the MD who is the Chief Executive Officer of Coffey and the FD who is Coffey’s CFO. The Directors of Coffey at any time during the financial year are listed with a brief description of their qualifications, experience and special responsibilities in the Directors’ Report of this Annual Financial Report. The Board met 14 times during the financial year. Directors’ attendances are set out in the Directors’ Report of this Annual Financial Report. The Non-executive Directors also met without the presence of management during the financial year. Recommendation 2.1 – A majority of the Board should be independent Directors As required under the Board Charter and the Principles, the Board comprises a majority of independent Non-executive Directors. The Board regularly assesses the independence of all Non-executive Directors in accordance with the principles set out below. Independent advice Under the Board Charter, the Board collectively, an individual Director, or a Committee, has the right to seek independent professional advice at

Coffey’s expense to help them carry out their responsibilities. Before the external advice is sought, consent, which cannot be unreasonably withheld, needs to be obtained as follows:

the Board – from the Chair; individual Director – from the

Chair or the relevant Committee Chair;

Committee – from the Committee Chair; or

Chairman – from the Risk and Audit Committee Chair.

Directors have unfettered access to Coffey records and information reasonably necessary to fulfil their responsibilities. Directors also have access to the Company Secretary on any matter relevant to their role as a Director. In addition, the Board has access to other relevant employees or external parties, including external auditors and internal auditors, to seek additional information concerning Coffey’s business. Director independence

The Board Charter states that Coffey will regard a Non-executive Director as independent if the Director is not a member of management and is free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their judgement as a Director of the Company. In assessing Non-executive Director independence, the Board reviews the relationship that the Director, and the Director’s associates, have with Coffey. In determining whether a Non-executive Director is independent, the Board considers whether the Director:

is a substantial Shareholder of Coffey or an officer of, or otherwise associated directly with, a substantial Shareholder of Coffey;

within the last three years, has been employed in an Executive capacity by Coffey;

within the last three years, has been:

o a principal of a material professional adviser to Coffey;

o a material consultant to Coffey; or

o an employee materially associated with the service provided by such an adviser or consultant to Coffey;

is a material supplier to, or customer of, Coffey, or an officer of or otherwise associated directly or indirectly with a material supplier or customer;

has a material contractual relationship with Coffey other than as a Director of Coffey;

has served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in Coffey’s best interests; or

has any interest, or any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in Coffey’s best interests.

The Board has determined materiality thresholds for assessing the independence of Directors. Under those thresholds:

a person will be regarded as a substantial Shareholder if they hold more than 5% of Coffey’s voting shares;

an adviser will be a material professional adviser or consultant where the annual billings to Coffey are more than 5% of the adviser’s or consultant’s total annual revenues or in aggregate, for each adviser or consultant, equal or exceed $100,000;

a supplier to Coffey will be a material supplier where Coffey accounts for more than 5% of the supplier’s annual revenues; and

a customer of the Company will be a material customer where the customer accounts for more than 5% of Coffey’s annual revenues, or Coffey accounts for more than 5% of the customer’s annual costs.



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Whether or not a material contractual relationship exists will be determined, on a case-by-case basis, consistent with these thresholds. Where a Director has dealings with, or is involved in, other companies or relationships to which this section applies, such dealings are disclosed publicly in the Director and Executive disclosures note to the Annual Financial Report in accordance with law. Applying these criteria the Board has determined that save for Mr Douglas and Mr Meyerhans (who are Executive Directors), all other Directors are independent. Current year - consideration of relationships and impact on independence Term of office – annual re-election

Mr Black joined the Board of Coffey in March 2002. The Board recognises that Mr Black’s tenure could be perceived to materially interfere with his ability to act independently. The Board has considered Mr Black’s length of service and formed the view that it has not interfered with his ability to execute his role as a Non-executive Director with an independent mind. However, to avoid any potential concerns in this regard, the Board requires any Director with 10 or more years of service as a Director to offer themselves for re-election every year. By doing so, the Board provides Shareholders with the opportunity to consider the degree to which the Director is making a significant contribution to Coffey and make a balanced assessment of the Director’s actual and perceived independence. Recommendation 2.2 – The Chair should be an independent Director Under the Board Charter, the Board elects a Chairman from among the Non-executive Directors. It is a requirement of the Charter that the Chairman be independent.

Recommendation 2.3 – The roles of Chair and Chief Executive Officer should not be exercised by the same individual The requirement in the Board Charter that the Chairman be appointed from among the Non-executive Directors means that the roles of Chairman and MD are not exercised by the same individual. The Chairman presides over Board meetings and Shareholder meetings. Under the Board Charter, the Chairman is also responsible for: leading the Board in reviewing

and discussing Board matters; managing the efficiency and

conduct of the Board’s function; briefing all Directors in relation

to key issues arising at Board meetings;

facilitating effective contribution by all Directors and monitoring Board performance;

guiding Board deliberations, free of undue bias;

promoting constructive relations between Directors and between the Board and Management;

overseeing that membership of the Board is skilled and appropriate for Coffey’s needs;

reviewing corporate governance matters with the Company Secretary and reporting on those matters to the Board; and

overseeing the implementation of policies and systems for Board performance review and renewal.

The Chairman must ensure that General Meetings are conducted efficiently, and that Shareholders have adequate opportunity to air their views and obtain answers to their queries. Recommendation 2.4 – The Board should establish a nomination committee The Board has established a Nomination Committee comprising three independent Non-executive Directors: John Mulcahy (Chairman), Stuart Black and Susan Oliver.

The MD is invited to attend meetings as required. The Committee Charter states that the role of the Committee is to assist and advise the Board on matters relating to: composition of the Board

(including Board diversity); Board and Chair succession

planning; Director independence; and Board performance. The Committee collectively and its members individually have access to internal and external resources, including access to advice from external consultants or specialists. The Committee has a formal Charter that is required to be reviewed annually. The Charter was most recently reviewed in May 2013. The Company Secretary is the secretary to the Committee. The Committee meets as required and at least annually and met once during the financial year. Details of Directors’ attendances are set out in the Directors’ Report of this Annual Financial Report. Process of selection and appointment of new Directors When a vacancy arises, the Nomination Committee considers candidates with a broad range of skills, experience and expertise from a diverse range of backgrounds, including gender. Candidates are considered on merit and against objective criteria, and with due regard for the benefits of diversity on the Board, including gender. When the Board considers that a suitable candidate has been found, that person is appointed by the Board to fill a casual vacancy in accordance with Coffey’s Constitution, but must stand for election by Shareholders at the next Annual General Meeting (AGM). New Directors are given a thorough briefing by the Chair and/or Company Secretary on key Board issues and provided with appropriate induction documentation.

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These include:

Coffey’s financial, strategic, operational and risk management position;

their rights, duties and responsibilities; and

the role of the Board and the Board Committees.

Recommendation 2.5 – Companies should disclose the process for evaluating the performance of the Board, its committees and individual Directors

Under the Board Charter, the Board is required to conduct a formal review of its effectiveness and the effectiveness of its Committees and individual Directors annually. During the financial year, the Board completed a review of its own performance, the performance of its Committees and the performance of individual Directors. That review involved each Director completing a questionnaire covering:

the role of the Board; Board composition; Board Committee structure and

Committee effectiveness; Board operations and

dynamics; Board meetings; Board member performance;

and Board Chair performance. The aggregate results of the questionnaire were discussed at a subsequent Board meeting. The Board Charter requires that every three years, the Board considers engaging an external consultant to conduct a comprehensive review of the effectiveness of the Board, its Committees and individual Directors. After considering the financial performance of the Company, its limited resources and the potential distraction of a prolonged assessment process, the Board has deferred the engagement of an external consultant to be considered by the Board for the 2014 evaluation.

During the financial year, the Human Resources and Remuneration Committee also completed a detailed review of their own performance. That review involved each Committee member, the Executive Directors and the relevant Management Team members completing a questionnaire. The review found that the Committee had been effective in performing its responsibilities under the Committee Charter. The Committee set aside time at one of its scheduled meetings to discuss its performance over the financial year in achieving the objectives set out in its Charter and to consider areas to continue improving its effectiveness. The combined Risk and Audit Committee was formed at the close of the 2012 AGM and will review its performance in November 2013. The evaluation of the MD, FD and Management Team performance is discussed in the Remuneration Report in this Annual Financial Report.

Principle 3: Promote ethical and responsible decision making

Coffey recognises that its reputation is one of its most valuable assets, and is founded largely on the ethical behaviour and integrity of the people who represent the organisation around the world. Every Coffey relationship is built on trust. Whether it’s in geosciences, project management or international development. Trust that’s hard-earned through our proven expertise, our depth of global experience and our commitment to stay one step ahead. Recommendation 3.1 –Companies should establish a code of conduct The Board has approved a Code of Conduct that sets out the principles for ethical behaviour by all Coffey employees. Coffey’s Code of Conduct therefore commits its Directors, employees, contractors and consultants (all of

which are referred to as ‘employees’ in the Code) to not only comply with the law, but to conduct business in accordance with the highest ethical conduct and is structured to enhance Coffey’s core values, which guide the policies, programs and training initiatives. Any breach of the Code of Conduct is a serious matter that may give rise to disciplinary action, including dismissal and legal action. Coffey is committed to the highest standards of integrity, fairness and ethical conduct, including full compliance with all relevant legal obligations. There is no circumstance under which it is acceptable for Coffey or a person associated with Coffey to knowingly or deliberately not comply with the law or to act unethically in the course of performing or advancing Coffey’s business. Behaviour of this kind will lead to disciplinary measures that may include dismissal. All new Coffey employees are provided with Coffey’s Code of Conduct on induction. Recommendation 3.2 – Companies should establish a diversity policy. Coffey has considerable diversity in its workforce, including differences that relate to gender, age, ethnicity, disability, religious beliefs, sexual orientation and cultural background. Having a diverse workforce promotes ingenuity, strengthens problem solving, improves delivery to clients and enables better business results. Building a business where people of different experiences and backgrounds can thrive encourages further diversity. That is why we ask our managers to focus on providing a work environment that is collaborative and where all employees are treated with dignity and respect. The Board has approved and published its policy on Board Diversity and Equal Opportunity. This provides the platform for an integrated diversity management policy across the Group.



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The Board has also established measurable objectives for improving gender diversity. The Management Team manages progress and reports at least annually to the Human Resources and Remuneration Committee on the effectiveness of diversity related initiatives. Responsibility for diversity has been included in the Board Charter, the Nomination Committee Charter (Board diversity) and the Human Resources and Remuneration Committee Charter (diversity at all levels of the organisation below Board level). Recommendation 3.3 – Companies should disclose the measurable objectives for achieving gender diversity and progress towards achieving them. The Coffey Board has established the following diversity related measurable objective for the Group:

“to increase the percentage of women at all levels in the Company, including management and Executive levels; and

having already achieved a 28.6% proportion of women on the Board, to maintain a significant participation by women at Board level”.

The Board has monitored Remuneration and Performance Rating equity for two years. There is no evidence of gender bias in either of these areas. The Management Team, supported by the Board, is now focussed on improving talent mapping and succession processes over the coming year in support of its diversity program. Our efforts are having some impact, but not yet at a satisfactory level: This year, we have improved

representation of women in our Management Team, complementing improved representation at Board level in the prior reporting period;

We have seen the successful promotion of a number of women in the past two years into General Manager roles;

Like other companies operating in our fields, we continue to have a lower level of female candidates applying for externally advertised vacancies. Our data from the prior calendar year shows that females are, on average, slightly more likely to be the successful, merit-based candidate.

Recommendation 3.4 – Companies should disclose the proportion of women employees in the organisation. The table below shows the proportion of women employees across the Coffey group as at 30 June 2013 (and prior year comparative):

Position

Percent

2013 2012 Board member 29% 29% Senior Manager 13% 13% Other 35% 35% Total 33% 33%

Principle 4: Safeguard integrity in financial reporting Recommendation 4.1 – The Board should establish an audit committee The Board established a combined Risk and Audit Committee at the close of the 2012 AGM comprising: Guy Cowan (Chairman), John Mulcahy, Stuart Black, Leeanne Bond and Susan Oliver. The Committee assists the Board in the discharge of its responsibilities with regard to independently verifying and safeguarding the integrity of Coffey’s financial reporting and risk oversight and management of opportunities and threats. Recommendation 4.2 – The audit committee should be appropriately structured Under its Charter, the Risk and Audit Committee must have at least three members, all of whom must be independent Non-executive Directors.

The Chair of the Board is not permitted to chair this Committee. The Charter also requires that all members have a working familiarity with basic accounting and finance practices and that at least one member have relevant financial qualifications and expertise (Mr Black and Mr Cowan). The Committee must also include members with an understanding of the industry in which Coffey operates. Any Non-executive Director of the Board may attend a meeting, by providing reasonable notice to the Committee Chair. Further details of the qualifications and experience of all Risk and Audit Committee members are disclosed in the Directors’ Report of this Annual Financial Report. The Committee meets as required, and at least four times per year. The Committee met four times during the financial year. Directors’ attendances are set out in the Directors’ Report of this Annual Financial Report. The MD, FD, Group Financial Controller and external auditors have a standing invitation to attend Risk and Audit Committee meetings. The internal auditors attend meetings at the discretion of the Committee. The Company Secretary is the secretary to the Risk and Audit Committee. The Risk and Audit Committee meets privately with the external auditor on general matters concerning the external audit and other related matters, including the half year and full year financial reports. The Risk and Audit Committee also meets privately with the internal auditor and in private session with management. The Risk and Audit Committee collectively, and its members individually, have access to internal and external resources, including access to advice from external consultants or specialists.

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Recommendation 4.3 – The audit committee should have a formal charter The Risk and Audit Committee has a formal Charter that is required to be reviewed annually. The Charter was most recently reviewed in September 2012. The Charter sets out the roles and responsibilities, composition, structure and membership requirements of the Risk and Audit Committee. The Risk and Audit Committee’s primary responsibilities include:

monitoring the integrity of financial reporting;

monitoring the effectiveness of financial risk management processes;

monitoring the effectiveness of the internal controls environment;

monitoring and reviewing the effectiveness and performance of internal audit;

monitoring and reviewing the external auditor’s qualifications, performance and independence;

reviewing the Group’s risk management policy application and effectiveness; and

monitoring legislative and regulatory compliance.

Discussion of the Risk and Audit Committee’s involvement in business risks is disclosed under Principle 7. Auditor independence

Coffey’s external auditor Independence Policy contains details of the procedures for the selection and appointment of the external auditor and for reviewing the independence of the external auditor. The external auditor is precluded from providing any services that might threaten their independence, or conflict with their assurance and compliance role. The Directors have concluded that non-audit services provided during the financial year did not compromise the external auditor’s

independence requirements under the Corporations Act 2001. The lead and signing external audit partners are required to rotate off the audit after a maximum of five years, unless exceptional circumstances arise. The internal audit function may not be performed by the external auditors.

Principle 5: Make timely and balanced disclosure Recommendation 5.1 –Companies should establish continuous disclosure policies and ensure compliance with those policies Coffey complies with its disclosure obligations under the ASX Listing Rules and the Corporations Act 2001, and has in place established procedures for dealing with compliance. Coffey has a Continuous Disclosure Policy that establishes a framework to enable Coffey to provide Shareholders and the market generally with timely, direct and equal access to relevant information about the Company. The Policy sets out Coffey’s disclosure obligations, notification process and how Coffey communicates with financial markets. The Board is responsible for considering and approving ASX announcements containing Material Information, based on the recommendations of the Disclosure Committee. The Disclosure Committee – which comprises the Chairman (or another Non-executive Director), MD, FD and Company Secretary (the nominated Disclosure Officer) – is responsible for monitoring compliance with the Continuous Disclosure Policy. The Company Secretary, or in their absence the FD, is the convenor of meetings of the Disclosure Committee. The Committee is responsible for administering the Continuous Disclosure Policy including overseeing preparation of proposed external announcements ensuring

they contain material information that is both objective and factual, and are clearly written to allow investors to assess the impact of information on their investment decisions. The Committee is also responsible for recommending changes to the Continuous Disclosure Policy to the Board. The Company Secretary reports regularly to the Board on matters that were either notified or not notified to the ASX. Directors receive copies of all announcements immediately after notification to the ASX. All ASX announcements are available on the Coffey website. Communication with the financial market, investors and media is the responsibility of the Chairman, MD or FD. The Continuous Disclosure Policy covers briefings to investors and stock broking analysts, general briefings, one-on-one briefings, blackout periods, compliance and review, as well as media briefings. The Continuous Disclosure Policy was most recently reviewed and amended in May 2013. Principle 6: Respect the rights of Shareholders Recommendation 6.1 –Companies should design a Shareholder communications policy Coffey has established a Shareholder Communication Policy to promote effective engagement with its Shareholders, both retail and institutional, and strives to keep Shareholders informed about the Company’s activities. Coffey, on an ongoing basis, examines how best to take advantage of technology to enhance Shareholder communications and how to use General Meetings to enhance two-way communication. The policy reflects the matters set out in the commentary and guidance for Recommendation 6.1. Coffey utilises the means of communication that is best suited to the information and audience at the time and most relevant and effective for our Shareholders.



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Coffey’s website allows Shareholders to access Board and Committee charters, corporate governance policies, ASX announcements, annual and half year reports, information for Shareholder meetings, investor presentations and other corporate information. Information release practices Coffey seeks to ensure that all investors have equal and timely access to price sensitive information. Prior to making a presentation to investors or stock broking analysts, Coffey will lodge the presentation material with the ASX so that all Shareholders can access the information. Coffey will not expressly or implicitly provide investors, stock broking analysts or the media with forecast profit guidance, unless that information has been disclosed previously to the ASX. Coffey is committed to ensuring that information released to the ASX is factual and is expressed in a balanced, objective and clear manner. General meetings Coffey’s AGM is an important forum for our Shareholders. Shareholders are invited to submit questions before the meeting and, at the meeting, the Chairman attempts to answer as many of these as is practicable. The Chairman encourages Shareholders at the meeting to ask questions and make comments about Coffey’s operations and the performance of the Board and senior management. The Chairman may respond directly to questions or, at his/her discretion, may refer a question to another Director, the MD, the FD or a member of the Management Team. New Directors or Directors seeking re-election are given the opportunity to address the meeting about why they should be elected. Shareholders can ask questions of any Director seeking re-election at the meeting.

All Directors and members of the Management Team generally attend the AGM. Following recent changes in legislation relating to voting on remuneration related matters, and to ensure the voting results reflect the votes of all Shareholders who have voted, Coffey has adopted the practice of conducting a poll on each remuneration related motion being considered at the meeting. The Chairman ensures each motion has been discussed and Shareholder questions have been answered prior to conducting the poll. Representatives of KPMG, Coffey’s external auditor, also attend the meeting and are available to respond to questions from Shareholders. Shareholders may submit written questions to the auditor, to be considered at the meeting in relation to the conduct of the audit and the preparation and content of the Independent Audit Report, by providing the questions to Coffey or to KPMG at least one week prior to the meeting. Shareholders who are unable to attend the AGM can watch and listen to the business of the meeting via a webcast that can be accessed from the Coffey website. Notices of meeting sent to Coffey’s Shareholders comply with the ‘Guidelines for notices of meeting’ issued by the ASX in August 2007. Electronic communication Coffey encourages Shareholders to receive Company information electronically and advises Shareholders when the Annual Financial Report is available for viewing on the Coffey website. Coffey provides a printed copy of the Annual Financial Report only to those Shareholders who have specifically elected to receive a printed copy. Shareholders have the option of electing to receive all Shareholder communications, including dividend statements, by email.

Coffey’s website allows Shareholders to view all ASX and media releases for the last three years; various investor presentations; a copy of the most recent Annual Financial Report and Annual Financial Reports for the two previous financial years; and the Notice of Meeting and accompanying explanatory material for the most recent AGM and the AGMs for the two previous financial years. Shareholder meetings and analyst/media briefings in relation to half year and full year financial results are webcast, and other significant events can be heard by teleconference. The Shareholder Communication Policy was most recently reviewed and amended in May 2013. Principle 7: Recognise and manage risk The Board is responsible for the oversight of Coffey’s risk management and control framework. The Risk and Audit Committee assists the Board in fulfilling its responsibilities in this regard. The MD and Management Team are responsible for the design and implementation of risk management systems and managing the material business risks. Risk exposures stem from Coffey’s business risk profile which covers areas including operations, environment, brand and reputation, compliance, finance, information and strategic. Coffey’s risk management practices are aimed at protecting the health and wellbeing of Coffey employees, ensuring that Coffey complies with its obligations at law and to the community, and protecting Shareholder value. Coffey recognises that risk management can also include identifying opportunities that create value for the business and Shareholders.

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Recommendation 7.1 –Companies should establish policies for the oversight and management of material business risks The Board has approved a Risk Management Framework and supporting policies and processes to oversee and manage risk. Coffey is implementing a Risk Management Framework designed to ensure that the Company’s material business risks are identified and that adequate controls are in place and function effectively. This framework incorporates the establishment of comprehensive policies, procedures and guidelines across the global business. This Framework acknowledges that all employees have a role in managing risk and in particular they are encouraged to report incidents, hazards and risks. The Board has approved a Risk Management Policy which is reviewed annually by the Board. Recommendation 7.2 – Establish risk management and internal control systems to manage material business risk and require management to report on the effectiveness of these systems and material business risk management Risk management processes The processes supporting risk management that operate throughout the global organisation include:

a clearly defined organisation structure with approved authority limits;

a culture that encourages managers at all levels in the organisation to consider the risk and rewards of each decision;

a comprehensive Health, Safety, Security and Environment (HSSE) management system that protects the safety and security of our staff and contractors, identifies and responds to incidents in a timely manner, and provides for appropriate protection of environments;

an enterprise risk management approach based on:

o a risk management framework derived from AS/NZ 4360;

o annual budgeting and monthly reporting systems for all business units, which enable risks to the achievement of financial results to be monitored, trends to be evaluated and variances to be addressed;

o active management of risk associated with contractual obligations including professional liability;

o policies to manage financial risks, including hedging foreign exchange exposures;

o a comprehensive group-wide insurance program;

specific compliance with ASX Principle 7 which requires Executives to sign off that all material non-compliance with regulatory obligations in their area of responsibility have been reported; and

appropriate due diligence procedures for corporate acquisitions and disposals.

Coffey has a number of other policies that directly or indirectly serve to reduce and/or manage risk. These include but are not limited to:

Health, Safety, Security and Environment Policy;

Delegation of Authority Policy; Code of Conduct; Continuous Disclosure Policy; Securities Dealing Policy; Treasury Policy; and Privacy Policy. Roles and responsibilities Board - the Board is responsible for reviewing and approving changes to risk management policies and for satisfying itself that Coffey has a sound system of risk management and internal control that is operating effectively. Risk and Audit Committee (Committee) - the Committee oversees the effectiveness of the system of risk management and internal control. The Committee receives an annual presentation of Coffey’s material business risks and

review the controls in place to mitigate the consequences of those risks. The Committee also receives regular presentations from management throughout the year on specific risk topics. Management Team - the MD has primary responsibility for designing, implementing and reporting on Coffey’s risk management framework. The Service Line Executives have primary responsibility for promoting a risk management culture within their service lines. The Management Team collectively has responsibility for promoting a risk management culture throughout Coffey, including consistent application of risk management policies across the Group. Business Units - are responsible for maintaining effective internal controls, consistently applying risk management on a risk reward basis, and reporting new or changed risk events. Internal audit -internal audit provides assurance to the Committee on the effectiveness of Coffey’s risk management framework and the adequacy and effectiveness of the system of internal controls. Recommendation 7.3 – MD and CFO assurance on financial reporting risks In accordance with section 295A of the Corporations Act 2001, the MD and FD have provided a written Certificate to the Board. The Certificate states that, in their opinion, the Company’s financial reports present a true and fair view in all material respects, of the financial position and performance of the Company, and that management’s risk management and internal controls over financial reporting, which implement the policies and procedures adopted by the Board, are operating effectively in all material respects.



Page | 55

Principle 8: Remunerate fairly and responsibly Recommendation 8.1 – The Board should establish a remuneration committee The Board has established a Human Resources and Remuneration Committee comprising at least three independent Non-executive Directors:

Susan Oliver (Chair), John Mulcahy, Leeanne Bond, Stuart Black and Guy Cowan. Any Non-executive Director of the Board may attend a meeting by providing reasonable notice to the Committee Chair. The MD and Group Executive Human Resources attend meetings of the Committee by invitation when required to report on and discuss senior management performance, and remuneration and related matters, but are not present at meetings when their own performance or remuneration is discussed. Recommendation 8.2 – The remuneration committee should be appropriately structured Under its Charter, the Human Resources and Remuneration Committee must have at least three members, the majority of whom must be independent Non-executive Directors. The Committee Chair must be an independent Director. Further details of the qualifications and experience of all Committee members are disclosed in the Directors’ Report of this Annual Financial Report. The role of the Committee is to assist the Board in fulfilling its corporate governance responsibilities in regard to remuneration and strategic human resources matters, including:

establishing and implementing a human resources strategy to ensure that appropriately talented and trained people are available to achieve the business strategy;

undertaking the appropriate performance management, succession planning and talent development activities and programs; and

providing effective remuneration policies having regard to the creation of value for Shareholders and the external remuneration market.

The Committee is responsible for ensuring Coffey has and observes coherent remuneration policies and practices which enable it to attract and retain high calibre Executives, Directors and employees who will create value for Shareholders, generate sustained business performance and support Coffey’s objectives, goals and behaviours. The Committee has a formal Charter that is required to be reviewed annually. The Charter was most recently reviewed in May 2013. The Company Secretary is the secretary to the Committee. The Committee may engage and/or terminate, at the expense of the Company, any independent external adviser which it considers may assist it in the full performance of its functions. The Committee meets as required, and at least four times per year. The Committee met six times during the year. Directors’ attendances are set out in the Directors’ Report of this Annual Financial Report. Recommendation 8.3 –Companies should distinguish between Non-executive Directors’ remuneration and that of Executive Directors and senior management Coffey’s remuneration structure distinguishes between Non-executive Directors and that of the MD and Management Team. Remuneration for Non-executive Directors is fixed. Board and Committee fee rates are reviewed by the Human Resources and Remuneration Committee and approved by the Board (subject to the Shareholder approved fee pool) for each coming year.

There has been no increase in Non-executive Director fees since October 2008 and the Board has resolved that there will be no increase in fees for the 2014 financial year. Remuneration does not include any performance-based components and Non-executive Directors do not participate in any reward plans or bonus schemes. The Non-executive Directors receive statutory superannuation (and may salary sacrifice fees to superannuation). Coffey does not have a retirement benefits scheme for Non-executive Directors. Fees paid to the Non-executive Directors reflect the responsibilities and demands made on the Directors. In the 2013 financial year, fees paid to Non-executive Directors totalled $675,000 well within the maximum Board remuneration pool of $700,000 per annum, inclusive of statutory entitlements. This pool was approved by Shareholders at the AGM held in November 2008. Hedging of securities under Coffey long-term reward plans by Designated Persons Coffey’s share trading policy prohibits Designated Persons from hedging an exposure to unvested or vested Coffey securities held through Coffey’s reward plans. A Remuneration Report required under section 300A(1) of the Corporations Act 2001 is provided in the Directors’ Report of this Annual Financial Report.

56


Page | 56

Consolidated income statement For the year ended 30 June 2013

2013 2012 Notes $’000 $’000 Continuing operations Revenue 5 686,594 667,595 Other income 1,774 1,855 Raw materials, subcontractor costs and travel (257,300) (243,426) Employee benefits expense (335,287) (321,580) Depreciation and amortisation 6 (9,381) (9,077) Occupancy costs (28,054) (23,685) Other expenses 6 (49,087) (47,186) Impairment expense 12,14 – (37,418) Net foreign exchange (loss)/gain (37) 405 Profit/(loss) before interest and income tax 9,222 (12,517) Net financing expenses 7 (10,005) (14,844) Loss before income tax (783) (27,361) Income tax expense 8 (128) (9,374) Loss for the year – continuing operations (911) (36,735) Discontinued operations Profit from discontinued operations (net of income tax) – 2,529 Loss for the year (911) (34,206) Profit/(loss) attributable to: Members of Coffey International Limited (1,027) (34,516) Non-controlling interest 116 310 Loss for the year (911) (34,206) Earnings per share attributable to the ordinary equity Shareholders of the Company

Basic earnings per share (cents) 26 (0.4)c (16.3)c

Diluted earnings per share (cents) 26 (0.4)c (16.3)c

Earnings per share attributable to the ordinary equity Shareholders of the Company – continuing operations

Basic earnings per share (cents) 26 (0.4)c (17.5)c

Diluted earnings per share (cents) 26 (0.4)c (17.5)c

The above consolidated income statement should be read in conjunction with the accompanying notes.



Page | 57

Consolidated statement of comprehensive income For the year ended 30 June 2013

2013 2012 $’000 $’000 Loss for the year (911) (34,206) Other comprehensive income/(expense) Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations 6,221 807 Effective portion of changes in fair value of cash flow hedges 2,067 (2,423) Ineffective hedge instruments transferred to profit and loss – 2,072 Income tax on other comprehensive income and expense (2,719) 611 Total items that may be reclassified subsequently to profit and loss 5,569 1,067 Total comprehensive income/(expense) for the year 4,658 (33,139) Total comprehensive income/(expense) attributable to: Members of Coffey International Limited 4,664 (33,284) Non-controlling interest (6) 145 Total comprehensive income/(expense) for the year 4,658 (33,139)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

58


Page | 58

Consolidated statement of financial position As at 30 June 2013

2013 2012 Notes $’000 $’000 ASSETS Current assets Cash and cash equivalents 9 23,387 34,130 Cash deposits 10 7,318 3,127 Trade and other receivables 11 103,518 112,575 Other financial assets – 226 Work in progress 32,329 35,608 Income tax receivables 3,255 – Total current assets 169,807 185,666 Non-current assets Cash deposits 10 – 412 Receivables 94 222 Property, plant and equipment 12 25,528 25,175 Deferred tax assets 13 18,661 18,698 Intangible assets 14 111,161 108,636 Total non-current assets 155,444 153,143 Total assets 325,251 338,809 LIABILITIES Current liabilities Trade and other payables 15 59,570 52,972 Loans and borrowings 17 5,077 99 Income tax payable – 101 Other financial liabilities 2,175 1,088 Employee benefits 16 31,038 35,416 Total current liabilities 97,860 89,676 Non-current liabilities Loans and borrowings 17 83,636 103,581 Other financial liabilities – 4,124 Deferred tax liabilities 13 253 165 Employee benefits 16 937 1,436 Other non-current liabilities 5,319 6,443 Total non-current liabilities 90,145 115,749 Total liabilities 188,005 205,425 Net assets 137,246 133,384 EQUITY Share capital 19 129,899 239,148 Reserves 6,327 (441) Retained earnings 339 (106,534) Equity attributable to ordinary equity holders of the Company 136,565 132,173 Non-controlling interest 681 1,211 Total equity 137,246 133,384

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.


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Page | 61

Consolidated statement of cash flows For the year ended 30 June 2013

2013 2012 Notes $'000 $'000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 746,677 719,368 Payments to suppliers and employees (inclusive of goods and services tax) (716,830) (682,321) 29,847 37,047

Interest received 265 255 Interest paid (9,372) (12,173) Income taxes paid (2,665) (3,309) Net cash inflow from operating activities 20 18,075 21,820 Cash flows from investing activities Payments for plant and equipment (7,794) (7,452) Payments for intangible assets (462) (184) Proceeds from sale of business – 8,300 Proceeds from sale of plant and equipment 707 120 Net cash outflow from investing activities (7,549) 784 Cash flows from financing activities Repayments of borrowings (31,224) (45,000) Proceeds from borrowings 12,303 2,000 Payment of borrowing costs (1,108) – Proceeds from issue of shares, net of costs – 36,948 Payments from share buybacks (1,349) (151) Dividends paid to minority Shareholders in South Africa (308) – Equity acquired from minority interest (495) – Payments on finance lease and other liabilities (52) (355) Net cash (outflow)/inflow from financing activities (22,233) (6,558) Net (decrease)/increase in cash held (11,707) 16,046 Cash and cash equivalents at the beginning of the year 34,130 17,792 Effects of exchange rate changes on cash 964 292 Cash and cash equivalents at the end of the year 23,387 34,130

The current and non-current cash deposits (Note 10) have not been included in the closing cash balance for the purposes of preparing the 30 June 2013 and the prior year comparative consolidated cash flow statement as this represents restricted cash.

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

62

Coffey International Limited Notes to the financial statements For the year ended 30 June 2013

Page | 62

1 Summary of significant accounting policies

Coffey International Limited (“the Company” or “the parent entity”) is a company domiciled in Australia. The address of the Company’s registered office is Level 10, 1 Market St, Sydney NSW 2000. The Group is a for-profit entity and is primarily involved in the provision of specialist consulting services. The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all years presented and have been applied consistently by the Group entities, unless otherwise stated. The consolidated financial statements as at and for the year ended 30 June 2013 comprises Coffey International Limited and its subsidiaries (together referred to as the Group). a) Basis of preparation (i) Statement of compliance The consolidated financial statements are a general purpose financial report that has been prepared in accordance with Australian Accounting Standards (AAS) including Australian interpretations, adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards Board (IASB). (ii) Changes in accounting policy From 1 July 2012, the Group applied amendments to AASB 101 Presentation of Financial Statements outlined in AASB2011-9 Amendments to Australian Accounting Standards – Presentation of items of other comprehensive income. This change only impacted disclosure and had no impact on consolidated earnings per share or profit or loss. The changes have been applied retrospectively and require the Group to separately present those items of other comprehensive income that may be reclassified to

profit or loss in the future. These changes are reflected in the statement of comprehensive income.

(iii) New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2012 or are available for early adoption and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements when they become mandatory for the Group’s consolidated financial statements in 2014 except for AASB 12 Disclosure of Interests in Other Entities, AASB 13 Fair value measurement and AASB 9 Financial Instruments. The Group does not plan to adopt these standards early and the extent of any impact has not yet been determined. (iv) Historical cost basis These consolidated financial statements have been prepared under the historical cost basis except for the following material items in the statement of financial position, measured at fair value:

derivative financial instruments (Note 1 (t));

non-derivative financial instruments designated as fair value through profit or loss (Note 1 (aa)); and

liabilities for cash-settled share-based payment arrangements (Note 1 (u)(vi)).

The methods used to measure fair values are discussed in Note 3. (v) Use of estimates and judgements The preparation of financial statements requires management to exercise judgement in applying the Group’s accounting policies. It also requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are changed and in any future periods affected. The areas involving a higher degree of judgement or complexity are set out below and in more detail in the related notes:

revenue recognition (Note 1 (g) and 2 (a)).

The areas involving the most sensitive estimates and assumptions that are significant to the financial statements are set out below and described in the following notes:

Impairment testing of goodwill (Note 2(b)(i), Note 14),– measurement of the recoverable amounts of cash-generating units containing goodwill and other intangible assets;

measurement of non-controlling interest put option liability (Note 3 (e), Note 21);

calculation of current and deferred tax (Note 2 (b)(ii), Note 13); and

measurement of share-based payments (Note 3 (d), Note 30).

(vi) Going concern basis The accounts have been prepared on a going concern basis for the year ended 30 June 2013. b) Principles of consolidation (i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Group as at 30 June 2013 and the results of all controlled entities for the year then ended. Subsidiaries are all those entities over which the Group has direct or indirect control. Control is the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.



Page | 63

1 Summary of significant accounting policies (continued) Subsidiaries are fully consolidated into the financial statements from the date at which control commences until the date at which control ceases. In the Company’s financial statements, investments in subsidiaries are carried at cost less accumulated impairment. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to Note 1 (e)). On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained. Inter-company transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with all material policies adopted by the Group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, consolidated statement of comprehensive income and statement of financial position respectively.

(ii) Employee share trusts The Group has formed trusts to administer the Group’s employee share schemes. These trusts are consolidated, as the substance of the relationship is that the trusts are controlled by the Group. c) Income tax The income tax expense/benefit for the year is the tax payable/receivable on the current year’s taxable income based on the national income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses and tax credits. The income tax expense excludes items which are recognised directly in equity. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are reviewed at each reporting date and are recognised for deductible temporary differences, unused tax losses and tax credits only if it is probable that future taxable amounts will be available to use those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised. (i) Tax consolidation Coffey International Limited and its wholly owned Australian entities have implemented the tax consolidation legislation as of 1 July 2003. The entities have entered into a tax funding arrangement under which the wholly owned entities fully compensate Coffey International Limited for any current tax payable assumed, and are compensated by Coffey International Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Coffey International Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial statements. The amounts receivable/payable under the tax funding agreement are due on receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as inter-company receivables or payables.

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1 Summary of significant accounting policies (continued) d) Foreign currency (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars (AUD), which is the Company’s functional and presentation currency as Australia is the primary economic environment in which the Group operates. The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated. (ii) Transactions and balances Foreign currency transactions are translated into the respective functional currencies of Group entities using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on translation of such assets and liabilities are recognised in profit or loss, except for differences arising from equity instruments or a financial liability designated as a hedge of the net investment in a foreign operation or qualifying cash flow hedges (to the extent that the hedges are effective), which are recognised directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. (iii) Foreign operations The results and financial position of all foreign operations (none of which has the currency of a hyperinflationary economy), are translated into Australian dollars as follows:

assets and liabilities, including goodwill and fair value adjustments arising on acquisition, are translated at the closing rate at the reporting date; and

income and expenses are translated at average monthly exchange rates for the year (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions).

All resulting exchange differences are recognised as a separate component of equity, the foreign currency translation reserve (FCTR). (iv) Hedge of net investment in foreign operation The Group applies hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and AUD, regardless of whether the net investment is held directly by the Company or through an intermediate parent. Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in other comprehensive income to the extent that the hedge is effective, and are presented within equity in the FCTR. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged part of a net investment is disposed of, the relevant amount in the FCTR is reclassified to profit or loss as part of the gain or loss on disposal.

e) Business combinations Business combinations are accounted for by applying the acquisition method as at the acquisition date. The Group measures goodwill at the acquisition date as:

the fair value of the consideration transferred; plus

the recognised amount of any non-controlling interests in the acquiree; less

the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

If the excess of the above calculation is positive, this amount is recognised within Intangible Assets in the statement of financial position as goodwill. If negative, the difference is recognised directly in profit or loss, but only after a reassessment of the identification and measurement of the net assets acquired. Consideration transferred is measured at the fair value of the assets given (usually cash), shares issued or liabilities incurred or assumed at the date of exchange. Transaction costs incurred in connection with a business combination, such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees, are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. For further information on the methods of measuring fair values of such balances see Note 3. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.



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1 Summary of significant accounting policies (continued) Contingent consideration arises where the Group agrees to transfer additional consideration to former owners of an acquired business after acquisition date if certain specific events occur or conditions are met in the future. Contingent consideration is recognised either as a liability or equity at fair value based on the facts and circumstances that exist at acquisition date. Where a contingent consideration is classified as equity, it is not subject to re-measurement after initial recognition and differences arising on settlement are adjusted to equity. Amounts classified as liability are re-measured to fair value at each reporting date, with adjustments being recorded in the income statement. f) Segment reporting The Group determines and presents operating segments based on the information that internally is provided to the Managing Director (MD), who is the chief operating decision maker. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including those that relate to transactions with any of the Group’s other components. Segment results are regularly reviewed by the MD to assess their performance and to make decisions about resource allocation. Inter-segment pricing is determined on an arm’s length basis. Segment results that are reported to the MD include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The allocation of costs is undertaken to provide information on the business performance of the segment and costs are allocated on a basis that aligns the charge with the resources employed and revenue performance of the segment. Unallocated items mainly comprise central business

support and corporate assets, corporate expenses, and income tax assets and liabilities. g) Revenue recognition Revenue is primarily derived from the rendering of services and is measured at the fair value of the consideration received and receivable. Amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for the major business activities as follows:

(i) Geosciences business Revenue from time and materials contracts is recognised at the contractual hourly rates as labour hours are delivered and the direct expenses are incurred. Where contracts stipulate a contract price ceiling, the rates used reflect the amounts that are expected to be recoverable. Costs for such contracts are generally incurred in proportion to contracted billing schedules. This method is expected to result in reasonably consistent profit margins over the contract term. Key performance indicator (KPI) revenue is derived from contracts that have certain performance hurdles, as set out in the contract. KPI revenue is only recognised when it is probable that the economic benefits associated with the transaction will flow to the Group. The Group’s policy is to recognise KPI income on a pro-rata basis to the extent that the Group and its contractual partners are capable of achieving the desired outcomes under the terms of the contract and the value of the KPI revenue can be reliably estimated. The recognition of such revenue therefore is subject to management judgement. Where it is no longer probable that a contract will meet the agreed upon performance criteria, amounts previously recognised as revenue for that contract are reversed with the corresponding debit against revenue.

(ii) International Development business Contract revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Where the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred. For fixed price contracts, the stage of completion is measured by reference to costs incurred to date as a percentage of estimated total costs for each contract. Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred during the reporting period plus the percentage of fees earned. Percentage of fees earned is measured by reference to the costs incurred to date as a proportion of the estimated total costs of the contract.

(iii) Project Management business Contract revenue is recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Revenue from time and materials contracts is recognised at the contractual hourly rates as labour hours are delivered, and the direct expenses are incurred. Fixed price contracts are accounted for as noted in International Development above. Where the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.

(iv) Reimbursable revenue Reimbursable revenue exists across all businesses. For customer contracts where there exists the right to charge certain costs on to the customer relating to the delivery of the contract, revenue is recognised at the time the costs are incurred on a gross basis in the income statement in line with the risks and rewards.

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1 Summary of significant accounting policies (continued) (v) Other income Other income is recognised when received or receivable. h) Finance income and finance expense Finance income comprises interest income, changes in fair value of financial assets at fair value through profit or loss and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance expense comprises interest expense on borrowings and bank overdrafts, amortisation of ancillary costs incurred in connection with the arrangement of borrowings, amortisation of discounts or premiums related to borrowings, unwinding of the discount on provisions, changes in fair value of financial liabilities at fair value through profit or loss, losses on hedging instruments that are recognised in profit or loss and finance lease charges. Borrowing costs are recognised in profit or loss using the effective interest method. i) Trade receivables All trade receivables are recognised initially at the value of the invoice sent to the customer and subsequently at the amount considered recoverable (amortised cost). Trade receivables are generally due for settlement between 30 and 60 days from the date of recognition. The carrying value of trade receivables is considered to approximate fair value.

Receivables that are known to be uncollectible are written off with the associated expense recognised in Other expenses in profit or loss. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. If amounts originally provided for are subsequently received, the reversal of the provision is also credited to other expenses.

j) Work in progress (i) Geosciences business Work in progress represents the sales value of unbilled labour and disbursements, less provisions, for amounts considered non-recoverable. (ii) International Development business Long-term contract work in progress is stated at the aggregate of contract costs incurred to date plus recognised profits, less recognised losses and progress billings. If there are contracts where progress billings exceed the aggregate costs incurred plus profits less losses, the net amounts are presented as unearned revenue. Contract costs include all costs directly related to specific contracts and costs that are specifically chargeable to the customer under the terms of the contract. (iii) Project Management business Work in progress on project management contracts is stated at the aggregate of contract costs incurred to date plus recognised profits less recognised losses and progress billings. If there are contracts where progress billings exceed the aggregate costs incurred plus profits less losses, the net amounts are presented as unearned revenue. Contract costs include all costs directly related to specific contracts and costs that are specifically chargeable to the customer under the terms of the contract. k) Impairment of non-financial assets The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset is tested for impairment. For goodwill, impairment testing is performed at least annually. In some cases assets cannot be tested for impairment on a standalone basis. In that case, assets are grouped together into the

smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit). An impairment test is performed by assessing the recoverable amount of each asset, or for goodwill, the cash-generating unit (or group of cash generating units) (CGU’s) related to the goodwill, in comparison to its carrying value. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. 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. An impairment loss is recognised in the income statement if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amount of the other assets in the CGU on a pro-rata basis. 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 otherwise be recognised if the impairment change had never been recorded. l) Plant and equipment All plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.



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1 Summary of significant accounting policies (continued) Depreciation is calculated on either a straight-line basis or on a diminishing value basis to write off the net cost of each item of plant and equipment over its expected useful life to the Group. Estimates of residual values and remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. The expected useful lives of plant and equipment and motor vehicles held at the reporting date ranges from three to eight years. Gains and losses on disposals are determined by comparing proceeds with the carrying amount of the related asset. These are recognised in the income statement. m) Leasehold improvements The cost of improvements to or on leasehold properties is capitalised at historic cost and depreciated on a straight line basis over the unexpired period of the lease or the estimated useful life of the improvement to the Group, whichever is shorter. Options to extend premises leases are excluded when determining the period over which the cost is to be depreciated. Leasehold improvements held at the reporting date are being depreciated over three to fifteen years. The Group has a policy which requires providing for costs associated with making good leased premises. Such liabilities are recognised in other payables in the statement of financial position with the related debit recognised in leasehold improvement assets. This asset is amortised over the remaining term of the lease. n) Leases Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease

payments. The corresponding rental obligations, net of finance charges, are included in other payables. Each lease payment is allocated between the liability and finance charges. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The plant and equipment and motor vehicles acquired under finance leases are depreciated over the shorter of the asset’s useful life and the lease term. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight line basis over the period of the lease. Incentives received on entering into operating leases are recognised as liabilities. The liability is reduced in line with the lease term. o) Intangible assets (i) Goodwill Goodwill represents the future economic benefits that arise from assets that are not capable of being individually identified and separately recognised following the acquisition of subsidiaries, associates and jointly controlled entities. See Note 1 (e) for further details on recognition and measurement. (ii) Customer contracts and customer relationships Customer contracts and customer relationships, where reliably measurable, acquired as part of a business combination are considered to have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated based on the timing of the projected cash flows of the contracts over their estimated useful lives, which currently vary from one to four years.

(iii) Non-compete agreements Non-compete agreements acquired as part of a business combination have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of non-compete agreements over their estimated useful life (typically three years).

(iv) Brand names Brand names are considered to have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of brand names over their estimated useful lives, which vary from three to five years.

(v) Software Costs incurred in developing systems that will contribute to future period financial benefits through revenue generation and/or cost reductions are capitalised at cost and amortised on a straight-line basis over their estimated useful lives, which vary from between three and ten years, depending on the nature of the software. IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of a technical feasibility study, and where the Group has an intention and ability to use the asset. p) Trade and other payables Trade payables represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid and are recognised at the value of the supplier invoice received. The amounts are unsecured and are usually paid within 45 days of recognition. The carrying value of trade payables is considered to approximate fair value. Included in other payables are accruals for liabilities that are not yet billed or due for payment and provisions.

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1 Summary of significant accounting policies (continued) Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required (normally cash) to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time from the unwinding of this discount is recognised as interest expense in the income statement. q) Loans and borrowings Loans and borrowings are initially recognised at fair value, net of directly attributable transaction costs incurred. Loans and borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the loans using the effective interest method. Fees paid on the establishment of loan facilities, which are incremental costs relating to the actual draw down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility. Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liabilities for at least 12 months after the reporting date. r) Dividends Provision is made for the amount of any dividend declared, determined or publicly recommended by the

Directors on or before the end of the financial year but not distributed at reporting date. s) Classification of financial instruments The financial assets and liabilities of the Group are classified into the following financial statement captions in the statement of financial position in accordance with AASB 39: financial instruments: ‘Loans and receivables’ –

separately disclosed as cash and cash equivalents, cash deposits, trade and other receivables and work in progress;

‘Financial assets/liabilities at fair value through profit or loss’ – separately disclosed as other financial assets and other financial liabilities and includes derivative financial instruments and a non-controlling interest put option liability; and

‘Financial liabilities measured at amortised cost’ – separately disclosed as trade and other payables and loans and borrowings.

t) Other financial assets and

liabilities – derivative financial instruments

The Group uses derivative instruments to hedge its foreign currency and interest rate risk exposures including forward foreign exchange contracts and interest rate swaps. The Group does not enter into derivative financial instruments for speculative trading purposes. Financial instruments entered into to hedge an underlying exposure that do not qualify for hedge accounting are accounted for as trading instruments. Derivatives are recognised at fair value in either other financial assets or liabilities; attributable transaction costs are recognised in the income statement when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes in the fair value, if designated as a hedge of the variability in cash flows or a recognised asset or liability, are

recognised directly to other comprehensive income to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in net financing costs in the income statement. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then the hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs and is transferred to the income statement in the same period. u) Employee benefits (i) Wages and salaries, and sick leave Liabilities for wages and salaries expected to be settled within 12 months of the reporting date are recognised in current other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Annual leave and long service leave The liabilities for annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in the current provision for employee benefits and are measured in accordance with (i) above. The liability for long service leave expected to be settled more than 12 months from the reporting date is recognised in the non-current provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.



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1 Summary of significant accounting policies (continued)

Consideration is given to expected future wage and salary levels, average employee service period and periods of service. Expected future payments are discounted using interest rates on national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows. (iii) Bonus plans A liability for employee benefits in the form of bonus plans is recognised in other payables when there is no realistic alternative but to settle the liability and at least one of the following conditions is met: there are formal terms in the

plan for determining the amount of the benefit;

the amounts to be paid can be reliably determined before the time of completion of the financial report; or

past practice gives clear evidence of the amount of the obligation.

Liabilities for bonus plans are settled within 12 months and are measured at amounts expected to be paid when they are settled. (iv) Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as a personnel expense in profit or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. (v) Employee benefit on-costs Employee benefit on-costs, including superannuation, other retirement benefits, payroll tax and workers compensation, are recognised and included in employee benefit liabilities and costs

when the employee benefits to which they relate are recognised as liabilities. (vi) Ownership-based remuneration schemes and other share-based payments Ownership-based remuneration is provided to employees through the Coffey Rewards Share and Option Plans. Shares issued under these schemes are treated as options in accordance with AASB 2 Share-based Payments. Information relating to these share plans is set out in Note 30 ‘Share-based payments’. The fair value of shares granted under the Coffey Rewards Share and Option Plans are recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the shares. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except for those that fail to vest due to market conditions not being met. The fair value of the options granted excludes the impact of any non-market vesting conditions, such as operating earnings per share targets. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity. Where shares are issued to employees as compensation for the provision of services and receipt by the employee is subject to completion of a service period, the market value of shares issued is recognised as an employee benefit expense with a corresponding

increase in equity when the employees become entitled to the shares. v) Cash and cash equivalents and cash deposits Cash and cash equivalents includes cash on hand; deposits held at call with financial institutions; other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value; and bank overdrafts. Cash deposits are recognised separately from cash and cash equivalents in the statement of financial position. These are interest bearing financial assets that relate to contract revenue received in advance and held on deposit as security against a standby letter of credit on issue for those contracts. The balance of this account is periodically released to revenue in the statement of profit or loss in line with delivery of the contract. For both cash and cash equivalents and cash deposits, carrying value is considered to approximate fair value. w) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration. x) Earnings per share (i) Basic earnings per share Basic earnings per share is determined by dividing net profit/loss after income tax attributable to ordinary equity Shareholders of the Company by the weighted average number of ordinary shares outstanding during the financial year.

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1 Summary of significant accounting policies (continued)

(ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in determining basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares, which comprise share options granted to employees and shares issued as consideration as part of acquisitions. Options granted to employees, which are accounted for as share-based payments, are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share. The options have not been included in determining basic earnings per share. (iii) Operating earnings per share Operating earnings per share is calculated and disclosed for the information of users of these financial statements as it is the EPS performance hurdle for the Coffey Reward Plan (see Note 30 for details of this plan). Operating earnings per share is determined by dividing net profit after income tax excluding amortisation, vendor earn out and vendor share-based payment expense attributable to the ordinary equity Shareholders of the Company. y) Discontinued operations Classification as a discontinued operation occurs on disposal or when an operation in the Group meets the criteria to be classified as held for sale or distribution. When an operation is classified as a discontinued operation, the comparative statement of comprehensive income statement is presented as if the operation had been discontinued from the start of the comparative year. The post-tax profit or loss of the discontinued operation is disclosed separately on the face of the income statement.

z) Goods and services tax (GST) and other transaction taxes Revenues, expenses and assets are recognised net of the amount of associated GST and other transactional taxes, unless the GST or other transactional tax incurred is not recoverable from the taxation authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST or other transactional tax receivable or payable. The net amount recoverable from the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST and other transactional tax components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow. aa) Other financial liabilities - Non-controlling interest put option liability Liabilities in respect of put option agreements that allow the Group’s equity partners to require the Group to purchase the non-controlling interest of a subsidiary are recognised as a financial liability at fair value through profit or loss as they are settled in cash. The fair value of such put options is remeasured at each reporting date and the movement in the fair value is recognised in interest expense in the income statement. The Group recognises its best estimate of the amount it is likely to pay, should these put options be exercised by the non-controlling interests, as a liability in the statement of financial position. When the initial fair value of the liability in respect of the put options is created, the corresponding debit is included in the put option reserve when the non-controlling interest retains present access to ownership benefits.

ab) Reserves (i) Foreign currency translation The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations, where their functional currency is different to the presentation currency of the reporting entity. The reserve is recognised in profit and loss when the net investment is disposed of. (ii) Share-based payments reserve The share-based payments reserve comprises the fair value of share-based payments recognised as an expense in the income statements. (iii) Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. The cumulative deferred gain or loss on the hedge is recognised in profit and loss when the hedged transaction impacts the profit or loss, consistent with applicable accounting policy.



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2 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group that are believed to be reasonable under the circumstances. a) Critical accounting judgements (i) Revenue recognition in relation to long-term contracts The timing of revenue recognition in relation to long-term contracts, primarily in the International Development and Project Management businesses, is subject to significant judgement. Management ensures that the timing of revenue recognition in relation to these contracts is appropriate through regular reassessments of the percentage completion and the costs to completion of the projects. The recognition of key performance indicator (KPI) revenue is also subject to significant judgement. Management, together with the Group’s contract partners, ensure that revenue recognised is appropriate through regular reassessments of projects against performance criteria and contracted standards that need to be met for revenue to accrue to the Group. Where it is probable that these criteria will be met, management ensures that the timing of revenue recognition is appropriate through regular reassessments of the percentage completion and the costs to completion of the projects. b) Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Impairment testing of goodwill The Group tests at least annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 1 (k). The recoverable amounts of cash-generating units have been determined by applying a value in use method, using future cash flow models involving a number of assumptions. Estimates are used in deriving the future cash flows and the discount rates used to calculate the present value of such cash flows. Such estimates are based on current approved budgets and forecasts, extrapolated for an appropriate period taking into account growth rates that are based on internal management estimates or industry growth rates. The impact of cost savings or restructurings is reflected in future cash flow estimates only if approved by the Board. The Directors then estimate an appropriate pre-tax discount rate to apply to the future cash flows. Such rates reflect current market assessments of such rates and the risks specific to the CGUs. The estimation process is complex due to inherent risks and uncertainties. If different estimates of the projected future cash flows or a different selection of an appropriate discount rate or long term growth rate were made, these changes could materially alter the projected value of the cash flows of the asset or CGU, and as a consequence materially different amounts would be reported in the financial statements. (ii) Income taxes The Group is subject to income taxes in Australia and in the foreign jurisdictions where it has operations. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on expectations of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which the determination is made. (iii) Recoverability of financial assets The Group continually assesses the recoverability of work in progress and trade and other receivables and recognises provisions where appropriate. Certain estimates and judgement need to be made with the recognition of such provisions relating to the probability of recoverable amounts. Assessment of the collectability of trade receivables involves the use of estimates in determining the level of receivables that will not be collected. These estimates are based on historical experience, the current state of the respective economies and industry operated in and customer specific factors. Recoverability of work in progress involves the use of estimates in determining the amounts that are not able to be billed to the customer. These estimates are based on historical experience and industry and customer specific factors.

72


Page | 72

(iv) Provisions Provisions for restructuring are recognised when the Group has approved a detailed and formal restructuring plan and the restructuring has either commenced or has been announced to relevant stakeholders. Future operating losses are not provided for. Provisions for making good the Group’s leased premises are recognised on the basis of the best estimate of the likely payments required to be made to exit the premises. This can be based on agreed contractual amounts as set out in the lease agreement with the landlord or estimates formed on the basis of historical experience of rates paid per square metre on similar premises.

3 Determination of fair value A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair value has been determined for measurement and/or disclosure purposes based on the methods listed below. Where applicable, further information about the assumptions made in determining fair value is disclosed in the notes specific to that asset or liability. a) Identifiable assets and liabilities acquired in a business combination (i) Property, plant and equipment The fair value of property, plant and equipment recognised as a result of a business combination is based on market value. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market values of items of plant and equipment and motor vehicles are based on the quoted market prices for similar items when available and replacement cost when appropriate. (ii) Intangible assets The fair value of customer contracts, customer relationships, non-compete agreements and brand names identified as acquired as part of a business combination are normally based on discounted cash flows expected to be derived from the use of those assets. This requires the use of estimates in relation to the timing and amount of future cash flows derived from exploiting the assets acquired. Such estimates are based on current approved budgets and forecasts, extrapolated for an appropriate period taking into account growth rates, expected contract prices, operating costs and the expected useful lives of assets. The Directors then estimate an appropriate pre-tax discount rate to apply to the future cash flows. Such rates reflect current market assessments of the time value of money and the risks specific to the businesses acquired. (iii) Other financial assets The fair value of work in progress acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the work in progress. The fair value of trade and other receivables, excluding work in progress, is estimated as its recoverable amount on the basis of customer specific factors and historical experience. b) Derivatives The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds). The fair value of interest rate swaps is based on broker quotes. Fair value reflects the credit risk of the instrument and includes adjustments to take account of the credit risk of the Group entity and counterparty when appropriate. c) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes only, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases, the market rate of interest is determined by reference to similar lease agreements. d) Share-based payment transactions The valuation methodology used to determine the share-based payment expense was the Monte Carlo simulation model in relation to both grants with only service (loyalty) or non-market performance conditions (operating EPS). The Monte Carlo simulation model was also used for grants with a performance condition, to create an estimate of the share price values which would generate the required total Shareholder return (TSR) at the end of the measurement period to meet the hurdle.



Page | 73

As required by AASB 2, the model took into account the exercise price of the option, the life of the option, the current price of the underlying shares, the expected volatility of the share price, the dividends expected on the shares and the risk-free interest rate for the life of the option. The expected life of the instrument was deemed to be the period from grant date to first available date plus 24 months. e) Non-controlling interest put option liability Fair value is calculated as the present value of the estimated future redemption amount to be paid to minority Shareholders, discounted at the appropriate weighted average cost of capital at the reporting date. This requires the use of estimates as to the amount and timing of such payments.

4 Operating segments During the year the Group provided specialist consulting services across its three businesses. These activities are summarised below by each reportable segment:

a) Geosciences The Geosciences business comprises specialised geotechnical, environmental and mining consulting services, as well as materials testing and analysis. The business delivers services to public and private sector clients across resources, infrastructure and property. Offices are located across Asia Pacific, the United Kingdom, North and South America, Africa and the Middle East. b) International Development The International Development business delivers consulting and training services alongside governments and donor agencies to strengthen governance, promote economic growth, and create conditions for sustainable development. The business operates from regional offices based in Australia, the United States of America, the United Kingdom and the Middle East. c) Project Management The Projects business provides project management and advisory services to public and private sector clients across the property and infrastructure project lifecycles. Offices are located throughout Australia, New Zealand and South Africa. d) Unallocated corporate Unallocated corporate comprises Group corporate management and Group treasury activities.

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76


Page | 76

4 Operating segments (continued)

2013 2013 2012 2012

Geographical Information Revenue and other income

Non-currentassets

Revenue and other income

Non-currentassets

$’000 $’000 $’000 $’000 Australia 448,483 84,604 423,491 85,912

New Zealand 21,978 7,297 17,058 6,019

Americas 145,803 29,623 166,092 28,253

United Kingdom 41,532 13,525 32,668 12,796

Middle East 22,775 1,176 24,531 730

Africa 7,797 558 14,304 735

Total 688,368 136,783 678,144 134,445

Split by: Continuing 688,368 136,783 669,450 134,445

Discontinued – – 8,694 –

Total 688,368 136,783 678,144 134,445

Non-current assets exclusive of deferred tax assets of $18,661,000 (2012: $18,698,000).

5 Revenue and other income

2013 2012 $'000 $'000

Continuing operations

Fee revenue 411,039 414,705

Reimbursable revenue 275,555 252,890

Sub-total 686,594 667,595

Other income 1,774 1,855

Total – continuing operations 688,368 669,450

Discontinued operations

Fee revenue – 6,821

Reimbursable revenue – 636

Sub-total – 7,457

Other income – 1,237

Total – discontinued operations – 8,694

Total revenue and other income 688,368 678,144



Page | 77

6 Expenses

2013 2012 $'000 $'000

Profit before income tax for continuing operations includes the following specific expenses:

Depreciation

Plant and equipment 4,684 4,325

Leasehold improvements 2,641 2,517

Total depreciation 7,325 6,842

Amortisation

Software 1,708 1,697

Other 348 538

Total amortisation 2,056 2,235

Total depreciation and amortisation 9,381 9,077

Other expenses

Vehicle and equipment operating leases 4,851 4,741

Communication expense 4,801 4,953

Bad and doubtful debt expense 803 (1,794)

Net (gain)/loss on disposal of plant and equipment (174) 764

Audit Fees 989 970

Other expenses 37,817 37,552

Total other expenses 49,087 47,186

7 Net finance costs

2013 2012 $'000 $'000

Interest income 265 255 Interest expense (10,433) (13,027)

Ineffective hedge instruments expensed 163 (2,072)

Net finance costs (10,005) (14,844)

78


Page | 78

8 Income tax expense

2013 2012 $’000 $'000

a) Income tax expense Current tax (940) 9,306

Deferred tax 1,555 203

(Over)/under provision in prior years (487) (135)

Income tax expense - continuing operations 128 9,374

Income tax from discontinued operations – 352

Total income tax expense 128 9,726

b) Numerical reconciliation of income tax expense to prima facie tax payable

Loss before tax from continuing operations (783) (27,361)

Profit before tax from discontinued operations – 2,881

Total loss before tax (783) (24,480)

Tax at the Australian tax rate of 30% (2012:30%) (235) (7,344) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income

Share-based payments 264 254

Tax incentive allowances (625) (262)

Current year losses for which no deferred tax asset was recognised 247 437

De-recognition of tax losses that were previously recognised as tax receivable – 1,005

Impairment of goodwill – 10,908

Effect of changes in tax legislation – 1,168

Impact of foreign tax rates and other miscellaneous items 915 1,737

Non-deductible expenses 48 1,958

614 9,861

(Over)/under provision in prior years (486) (135)

Total income tax expense 128 9,726 Total income tax expense attributable to:

Continuing operations 128 9,374

Discontinued operations – 352

Total income tax expense 128 9,726

c) Amounts recognised directly in equity

Financial instruments (2,719) 611

Equity raising – 907

Total amounts recognised in equity (2,719) 1,518



Page | 79

9 Cash and cash equivalents

2013 2012 $'000 $'000

Cash at bank and in hand 23,387 34,130

10 Cash deposits

2013 2012 $'000 $'000

Current

Interest bearing deposits 7,318 3,127

Non-current

Interest bearing deposits – 412

Total cash deposits 7,318 3,539 The interest-bearing cash deposits relate to contract revenue received from customers in advance, some of which are held on deposit as security against a standby letter of credit on issue for those contracts. Coffey is contractually entitled to periodically step down the letter of credit in line with delivery of the contract. Each step down enables the release of a corresponding amount from the cash held on deposit.

11 Trade and other receivables

2013 2012 $'000 $'000

Trade receivables 89,386 102,742

Less allowance for impairment losses (1,803) (3,200)

87,583 99,542 Prepayments 5,162 5,510

Project advances 6,997 5,100

Other receivables 3,776 2,423

Total 103,518 112,575 Effective interest rates and credit risk The Group’s exposure to credit and currency risk and impairment losses related to trade and other receivables are disclosed in Note 21.

80


Page | 80

12 Plant and equipment

Plant and

equipment Leasehold

improvements Total $'000 $'000 $'000

Year ended 30 June 2013 Opening net book amount 14,303 10,872 25,175 Additions 5,513 2,281 7,794 Disposals (530) (3) (533) Depreciation (4,684) (2,641) (7,325) Foreign exchange rate differences 378 39 417 Closing net book amount 14,980 10,548 25,528 At 30 June 2013 Cost 38,404 22,146 60,550 Accumulated depreciation (22,227) (11,598) (33,825) Accumulated impairment (1,197) – (1,197) Net book amount 14,980 10,548 25,528 Year ended 30 June 2012 Opening net book amount 13,517 13,114 26,631

Additions 6,354 1,098 7,452

Disposals (161) (724) (884)

Impairment of plant and equipment (1,057) – (1,057)

Depreciation – continuing operations (4,325) (2,517) (6,842)

Depreciation – discontinued operations (18) (38) (56)

Foreign exchange rate differences (7) (62) (69)

Closing net book amount 14,303 10,872 25,175

At 30 June 2012

Cost 43,502 22,990 66,492

Accumulated depreciation (28,142) (12,118) (40,260)

Accumulated impairment (1,057) – (1,057)

Net book amount 14,303 10,872 25,175



Page | 81

13 Deferred tax assets and liabilities

2013 2012 $'000 $'000

The balance comprises temporary differences attributable to:

Intangibles (32) (165)

Impairment of receivables 427 522

Employee benefits 5,796 6,571

Amortisation of assets 3,509 3,848

Financial derivatives at fair value 560 (69)

Accrued expenses 4,268 3,637

Tax losses 3,518 625

Unrealised foreign exchange 362 3,564

Total 18,408 18,533 Movements:

Opening balance at 1 July 18,533 17,042

Credited/(charged) to the income statement 1,555 177

Credited to equity (2,719) 1,518

Tax loss carry-forwards 1,464 625

Difference due to changes in tax rates (64) (53)

Differences arising on translation of foreign controlled entities (361) (776)

Closing balance at 30 June 18,408 18,533 The balances above are recognised in the statement of financial position as:

Deferred tax asset 18,661 18,698

Deferred tax liability (253) (165)

Net deferred tax asset 18,408 18,533 The Group has recognised the benefit for tax losses as deferred tax assets only if:

the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; or

the losses are transferred to an eligible entity within the Group; and the Group continues to comply with the conditions for deductibility imposed by tax legislation; and no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses.

The Group’s net tax losses for which no deferred tax asset has been recognised on the statement of financial position amounted to:

2013 2012 $'000 $'000

Tax losses not brought to account 2,293 2,046

82


Page | 82

14 Intangible assets

Goodwill Software Other

intangibles Total $'000 $'000 $'000 $'000

Year ended 30 June 2013 Opening net book amount 103,618 4,673 345 108,636 Intangible additions – 462 – 462 Amortisation charge – (1,708) (348) (2,056) Foreign exchange rate differences 4,113 3 3 4,119

Closing net book amount 107,731 3,430 – 111,161 At 30 June 2013 Cost or fair value 202,968 8,940 15,011 226,919 Accumulated amortisation – (5,439) (15,011) (20,450) Accumulated impairment (95,237) (71) – (95,308) Net book amount 107,731 3,430 – 111,161 Year ended 30 June 2012 Opening net book amount 139,926 6,281 873 147,080

Intangible additions – 184 – 184

Amortisation charge – (1,697) (538) (2,235)

Impairment (36,361) – – (36,361) Foreign exchange rate differences 53 (95) 10 (32)

Closing net book amount 103,618 4,673 345 108,636

At 30 June 2012 Cost or fair value 197,913 8,903 14,697 221,513

Accumulated amortisation – (4,159) (14,352) (18,511)

Accumulated impairment (94,295) (71) – (94,366)

Net book amount 103,618 4,673 345 108,636



Page | 83

14 Intangible assets (continued) a) Impairment tests for goodwill For purposes of goodwill impairment testing, goodwill is allocated to the Group’s cash-generating units (CGUs) or groups of CGUs identified on a service line basis. As part of a restructuring exercise that was undertaken by the Company during the year, the Mining ANZ business was integrated into Geotechnics ANZ along with the reporting structure that manages these capabilities. In accordance with AASB 36 Impairment of Assets, the goodwill allocated to the previous Mining CGU has been reallocated to the Geotechnics CGU for the purposes of testing goodwill for impairment at 30 June 2013 on the basis that this is the level at which this goodwill is monitored by management and is where the synergies are expected to be realised. A discrete assessment of the Mining CGU immediately prior to this change showed that the goodwill attaching to the CGU was not impaired as at 30 June 2013. The Company’s updated groups of CGUs remain compliant with the requirements of AASB 8 Operating Segments. A summary of the goodwill allocation as at 30 June 2013 by CGU is presented below.

2013 2012 $'000 $'000

Geotechnics 41,403 40,253

Environments 26,294 26,294

Testing 1,491 1,419

International Development 38,543 35,652

Total goodwill 107,731 103,618 b) Key assumptions used for calculations

The recoverable amount of each CGU, or where applicable, groups of CGUs is determined based on value-in-use (VIU) calculations for continuing operations. The VIU calculations use cash-flow projections based on financial plans approved by the Board of Directors for FY2014 and management’s estimates of the growth in revenue and margin percentage for the next four years. After the fourth year, a long-term growth rate of 3% is used. The pre-tax discount rates used were determined using information provided by third-party experts engaged by management, and reflect the appropriate cost of capital for that CGU, adjusted for risks specific to the CGU such as the specialised service line and geographical region from which the cash-flows of that CGU will be derived. Revenue growth assumptions have been based on management’s estimate of the revenue growth in FY2014 and the average industry growth rates forecast for the industries in which these consulting businesses operate from FY2015-FY2018. The average industry growth rates were derived from external market information which was weighted to fit with Coffey’s basket of operations. In addition to revenue growth assumptions, the CGUs have forecast an improvement in margins over the five year future cash-flows from a range of 7-10% in FY2014 to a range of 11-15% in FY2018. The assumed margins in FY2018 are broadly in-line with industry benchmarking undertaken by the Group. The assumptions below have been used to analyse each CGU.

Average revenue

growth2 Forecast cash-flow

growth rate1 Discount rate

pre-tax Cash-generating unit 2014-2018 2014-2018 2013 Geotechnics 1% 15% 17.5%

Environments 1.5% 8% 16.7%

Testing 5.3% 14% 18.6%

International Development 1.1% 7% 15.6% 1 Average annual forecast growth in cash-flows incorporates forecast revenue growth, margin improvement, further operating efficiencies and working capital management. 2 Average annual growth. In 2012, cash-flow growth rates averaged between 7% and 23%, and discount rates ranged between 18.6% and 21.8% across all CGUs. Sensitivity analyses performed indicate any reasonable possible change in any of the key assumptions would not result in impairment.

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15 Trade and other payables

2013 2012 $'000 $'000

Trade payables 19,720 23,319 Unearned revenue 8,241 5,867

Other payables1 31,609 23,786

Total 59,570 52,972 1 Other payables includes provisions for onerous contracts in relation to the delivery of consulting services of $81,758 (2012:$nil) for which the

unavoidable costs of meeting the obligations under the contracts exceed the economic benefits expected to be derived from those contracts. Other payables also includes provisions for vacant premises leased by the Group. The vacant premises provision of $229,435 recognised at 30 June 2012 has been paid in the year and an increase to the provision of $1,941,104 was recognised in the current year within occupancy costs as a result of the Group’s restructuring plan and is included in other payables at the reporting date.

16 Employee benefits

2013 2012 $'000 $'000

Current

Annual leave 9,751 10,794

Long service leave 9,055 9,442

Other employee benefit accruals1 12,232 15,180

Current employee benefits 31,038 35,416

Non-current

Long service leave 937 1,436

Non-current employee benefits 937 1,436

Total employee benefits liabilities 31,975 36,852 1 Included within other employee benefit accruals is $2,154,277 for redundancy costs incurred in relation to the restructuring activity undertaken in the year that remains unpaid at the reporting date.



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17 Loans and borrowings

Credit standby arrangements Total facilities Secured bill and bank overdraft facility 124,738 149,000 Guarantee facility 15,000 20,000 Guarantee facility – contract specific 3,800 3,418

143,538 172,418 Used at balance date Secured bill and bank overdraft facility 90,517 105,314 Guarantee facility 11,855 11,424 Guarantee facility – contract specific 3,800 3,418

106,172 120,156 Unused at balance date Secured bill and bank overdraft facility 34,221 43,686 Guarantee facility 3,145 8,576 Guarantee facility – contract specific – –

37,366 52,262 Bank loan facilities Total facilities 143,538 172,418 Used at balance date 106,172 120,156 Unused at balance date 37,366 52,262 Group bank facility The Group cash advance and overdraft facilities of $124,738,000 are a combination of $106,388,000 in commercial bill facilities and overdraft facilities of $18,350,000. In addition, the Group has a general guarantee facility of $15,000,000 and a specific client contract facility of USD$3,472,968 (AUD$3,799,747). The commercial bill facilities of $106,388,000 have a three-year term ending February 2016. The facility includes a scheduled amortisation over the term of the facility, of which, $5,000,000 is payable within the next twelve months and hence is classified as current loans and borrowings. In addition, the facility requires a certain percentage of future net free cash flows to be applied to debt reduction, consistent with the Group’s commitment to reducing our debt levels, the quantum of which is dependent upon the future cash flows of the Group. The overdraft and general guarantee facility are annual revolving facilities. The Group’s facilities are subject to security over certain assets of the Group. In addition to the above facilities, the Group has a $4,000,000 credit card facility and a $10,000,000 EFT payment facility.

2013 2012 $’000 $’000

Current Bills payable 5,000 – Finance lease and other liabilities 77 99 Total current loans and borrowings 5,077 99 Non-current Bills payable 85,517 105,314 Facility establishment fees (1,883) (1,765) Finance lease and other liabilities 2 32 Total non-current loans and borrowings 83,636 103,581

Total loans and borrowings 88,713 103,680

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18 Dividends There have been no dividends declared or paid in the current period or prior comparative period. Franking credits of the parent entity available for the payment of dividends in subsequent financial years is $11,447,216 (2012: $9,382,094) based on an Australia company tax rate of 30% (2012: 30%). This balance represents the franking account balance at reporting date adjusted for provisions for Australian income tax and franking debits that will arise from the payment of dividends recognised as a liability at reporting date. The Directors have recommended that no final ordinary dividend be paid in respect of the 2013 financial year. As such, the reduction in the franking account as a result of payments of dividends subsequent to year end will be $nil (2012: $nil).

19 Issued and fully paid up share capital a) Movements in share capital Date Details Shares $'000 Balance at the beginning of the year 255,833,165 239,148 Oct-12 Shares repurchased – (1,349)

Nov-12 Capital reduction* – (107,900)

Balance at the end of the year 255,833,165 129,899

* On 29 November 2012, Coffey International Limited reduced its share capital by $107.9 million in accordance with section 258F of the Corporations Act 2001, eliminating accumulated losses in the parent entity which were driven by capital losses deemed to be a permanent nature. b) Ordinary shares Ordinary shares entitle the holder to participate in dividends and proceeds on winding-up of the Company in proportion to the number of, and amounts paid on, the shares held. On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.



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20 Reconciliation of profit after income tax to net cash flow from operating activities

2013 2012 $'000 $'000

Loss for the year (911) (34,206)

Depreciation and amortisation 9,381 9,133

Non-cash employee benefits – share-based payments 861 857

Impairment expense – 37,418

Notional interest on put option agreements (199) (322)

Net foreign exchange differences 978 (468)

Profit from sale of business – (1,237)

Net (profit)/loss on sale of non-current assets (174) 764

Amortisation of facility costs 989 1,176

Non-cash vendor earn-out payment 190 1,625

Ineffective interest rate hedge (163) 2,072 Change in operating assets and liabilities net of disposal of business

(Increase)/Decrease trade debtors 11,976 (862)

(Increase)/Decrease in work in progress 3,279 (7,591)

(Increase)/Decrease in other current receivables (2,081) 1,699

Decrease in non-current receivables 129 2,752

Increase in cash deposits (3,779) (205)

Increase in trade payables and employee benefits 1,260 4,058

Decrease in other non-current liabilities (1,124) (1,260)

(Increase)/Decrease in tax balances (2,537) 6,417

Net cash inflow from operating activities 18,075 21,820 21 Financial instruments The Group’s principal financial instruments comprise receivables, cash, cash deposits, payables, bank loans, overdrafts, finance leases and derivatives. The Group is exposed to the following risks from its use of financial instruments:

market risk, including interest rate risk and currency risk; liquidity risk; and credit risk.

This note presents both qualitative and quantitative information about the Group’s exposure to each of the above risks and its objectives, policies and processes for measuring and managing those risks. a) Interest rate risk As at the reporting date, interest rate swaps which were entered into in 2008 are in place, with the maturity of the swap contracts being 27 February 2014. The Group’s policy on managing interest rate risk is that fixed interest rate swaps are to be considered by the Board where debt/EBITDA ratio is above a pre-defined value for a sustained period. With the Board’s focus on debt reduction in recent years, no additional fixed interest rate swaps have been entered into. The Group designates qualifying derivatives (interest rate swaps) as cash flow hedges and applies hedge accounting in order to manage volatility in the income statement.

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21 Financial instruments (continued)

Exposure to interest rate risk At the reporting date, the interest rate profile of the Group’s interest bearing financial instruments was:

2013 2012 $'000 $'000

Fixed rate instruments

Financial liabilities1 (71,062) (84,795)

(71,062) (84,795)

Variable rate instruments

Financial assets2 30,520 37,530

Financial liabilities1 (19,533) (20,650)

10,987 (16,880) 1 Excludes capitalised facility establishment fees of $1,883,022 (2012: $1,764,821). 2 Excludes cash on hand. Cash flow sensitivity analysis for interest rate risk A 100 basis point change in interest rates would have increased or decreased the Group’s profit and equity by the amounts shown below. This analysis assumes that all other variables, in particular foreign exchange rates, remain constant (for a foreign exchange rate sensitivity analysis, refer to part (d) of this Note). The analysis was performed on the same basis for 2012.

2013 2012

Profit/ (loss)

Increase/ (decrease)

equity Profit/ (loss)

Increase/ (decrease)

equity

$'000 $'000 $'000 $'000 Interest rate increase 1% Variable rate loans and borrowings (137) (137) (145) (145)

Interest rate swaps – 801 – 1,277

Interest rate decrease 1%

Variable rate loans and borrowings 137 137 145 145

Interest rate swaps – (801) – (1,277)



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21 Financial instruments (continued) b) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The lines of credit available to the Group at balance date are disclosed in Note 17. The following are the contractual maturities of the financial liabilities of the Group, including estimated interest.

Carrying amount

Contractedcash flows

6 months or less

6-12 months

1-2 years

2-5years

2013 Notes $'000 $'000 $'000 $'000 $'000 $'000 Non-derivative financial liabilities Secured bank loans1 17 90,517 95,207 2,987 3,949 8,750 79,521 Trade and other payables 15 59,570 59,570 59,570 – – – Employee benefit accruals 16 31,975 31,989 21,635 9,403 285 666 Finance leases 17 79 89 52 37 – – Derivative financial liabilities Interest rate swaps used for hedging2 1,583 1,468 1,143 325 – – Forward exchange contracts used for hedging 85 (89) (89) – – –

2012 Non-derivative financial liabilities

Secured bank loans1 17 105,314 113,708 2,637 2,637 108,434 –

Trade and other payables 15 52,972 52,972 52,972 – – –

Employee benefit accruals 16 37,940 37,997 26,386 10,118 420 1,493

Finance leases 17 131 149 55 55 39 –

Derivative financial liabilities Interest rate swaps used for hedging2 3,952 3,306 1,027 972 1,307 – Forward exchange contracts used for hedging 172 115 71 – 44 –

1 Excludes capitalised facility establishment fees of $1,883,022 (2012: $1,764,821). Effective interest rate on secured bank loans is 5.2% (2012: 5.0%). 2 Effective interest rate on interest rate swaps is 6.7% (2012: 6.7%). Other financial liabilities (current) on the statement of financial position includes $507,059 (2012: $1,088,074) in respect of put option agreements that allow the Group’s minority interest equity partners to require the Group to purchase their non-controlling interest. The liability is recorded at fair value and has no contractual maturity date.

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21 Financial instruments (continued) c) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and work in progress.

Exposure to credit risk The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, have less of an influence on credit risk. The Group has two major customers in its International Development business, USAID and AusAID, however there is minimal credit risk arising from these customers as they represent the United States and Australian governments respectively. The Group has a credit policy under which each new major customer is analysed for creditworthiness before the Group’s payment and delivery terms and conditions are offered. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis. The Group has recognised an allowance for impairment that represents the estimate of incurred losses in respect of trade receivables and work in progress. The main components of this allowance are a specific loss component that relates to individually significant exposures. The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was:

Carrying amount 2013 2012 $'000 $'000

Trade receivables 87,583 99,542

Prepayments, project advances, other receivables and unbilled charges 48,264 48,641

Cash, cash equivalents and cash deposits 30,705 37,669

Other financial assets – 226

166,552 186,078

The Group's maximum exposure to credit risk for trade receivables at the reporting dates by geographical region was:

Carrying amount 2013 2012 $'000 $'000

Asia Pacific 56,592 65,643

Americas 20,289 23,967

Europe and Middle East 9,463 7,550

Africa 1,239 2,382

87,583 99,542



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21 Financial instruments (continued) Impairment losses The ageing and impairment of the Group’s trade receivables at the reporting date was:

Gross Impairment Gross Impairment 2013 2013 2012 2012 $'000 $'000 $'000 $'000

Not past due 30,538 – 35,928 –

Due 0-30 days 34,400 – 37,291 121

Past due 31-120 days 17,373 24 20,693 72

Past due 121 days to one year 4,292 274 3,903 885

More than one year 2,783 1,505 4,927 2,122

Balance at 30 June 89,386 1,803 102,742 3,200 The movement in the allowance for impairment losses in respect of trade receivables during the year was:

Carrying amount 2013 2012 $'000 $'000

Balance at 1 July 3,200 5,856

Recognised/(reversed) 803 (1,794)

Utilised (2,200) (862)

Balance at 30 June 1,803 3,200 Trade receivables have been aged according to their original due date in the above ageing analysis, including where certain long-outstanding trade receivables have been renegotiated as a result of the extended nature of some of the Group’s service provision. No collateral has been obtained for any amounts that have been identified as impaired or overdue but not impaired. d) Currency risk The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. Interest on borrowings is denominated in currencies that match the cash flows generated by the underlying operations for the Group, primarily the Australian dollar (AUD), United States dollar (USD) and Canadian dollar (CAD).

Exposure to currency risk The Group is exposed to the effect of changes in exchange rates on its operations. The Group has entered into forward exchange contracts and currency options to hedge against its currency risk on USD cash flows. The Group operates internationally and is exposed to foreign exchange risk arising from exposures to world currencies, principally the United States dollar. Foreign exchange risk on borrowings not denominated in Australian dollars is principally managed through natural hedges as borrowings are drawn in the currency of foreign operating subsidiaries.

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21 Financial instruments (continued) The Group’s year-end exposure to currency risk was as follows, based on notional amounts. The following are financial assets and liabilities in currencies other than the reporting currency of the Group.

2013 (Australian $'000)

Great British Pound

NewZealand

dollar

United Arab Emirates

Dirham

SouthAfrican

Rand Non-derivative financial assets and liabilities Cash and cash equivalents 215 2,552 129 1,146 Trade receivables 6,133 3,398 – 910 Trade payables (2,387) (627) (3) (184) Gross exposure 3,961 5,323 126 1,872


United States dollar

BrazilianReal

Canadian dollar

Other currencies

Non-derivative financial assets and liabilities Cash and cash equivalents 6,387 598 179 2,227 Cash deposits 7,318 – – – Trade receivables 15,877 806 6,558 358 Trade payables (5,060) (159) (1,986) (204) Borrowings (32,823) – (9,324) – Gross exposure (8,301) 1,245 (4,573) 2,381


Great British Pound

New Zealand

dollar

United Arab Emirates

Dirham

SouthAfrican

Rand Non-derivative financial assets and liabilities

Cash and cash equivalents 877 1,527 153 1,623

Trade receivables 4,238 2,814 66 1,295

Trade payables (1,017) (135) (23) (218)

Borrowings (1,706) – – –

Gross exposure 2,392 4,206 196 2,700


United States dollar

Brazilian Real

Canadian dollar

Other currencies

Non-derivative financial assets and liabilities

Cash and cash equivalents 8,321 508 1,425 3,022

Cash deposits 3,539 – – –

Trade receivables 19,319 552 7,859 553

Trade payables (7,259) (88) (1,550) 32

Borrowings (25,098) – (8,609) –

Gross exposure (1,178) 972 (875) 3,607



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21 Financial instruments (continued) The following significant exchange rates applied for the Group during the year.

Average

rate Reporting date spot

rate 2013 2012 2013 2012

Great British Pound 0.66 0.65 0.60 0.65

New Zealand dollar 1.26 1.28 1.18 1.27

United Arab Emirates Dirham 3.79 3.81 3.36 3.73

South African Rand 8.98 7.92 9.03 8.41

United States dollar 1.03 1.03 0.91 1.02

Brazilian Real 2.09 1.81 2.04 2.12

Canadian dollar 1.04 1.04 0.96 1.04 Foreign exchange rate sensitivity analysis A 10% strengthening/(weakening) of the Australian dollar against all the currencies noted above at 30 June would have (decreased)/increased profit and equity by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant (for an interest rate sensitivity analysis, refer to part (a) of this Note). The analysis was performed on the same basis for 2012.

2013 2013 2012 2012

Profit/(loss)

Increase/(decrease)

in equity Profit/ (loss)

Increase/(decrease)

in equity $'000 $'000 $'000 $'000

AUD strengthens by 10% (679) (757) 188 (205)

AUD weakens by 10% 830 757 (230) 205 e) Fair value The fair value of financial assets and liabilities, together with the carrying amounts as shown in the statement of financial position, are:

2013 2013 2012 2012

Carryingamount Fair value

Carrying amount Fair value

$'000 $'000 $'000 $'000 Receivables and work in progress2 135,847 135,847 148,183 148,183

Cash and cash equivalents1 23,387 23,387 34,130 34,130

Cash deposits1 7,318 7,318 3,539 3,539

Other financial assets1 – – 226 226

Secured bank loans1 (88,634) (88,634) (103,549) (103,549)

Other financial liabilities1 (2,175) (2,175) (5,212) (5,212)

Trade and other payables2 (59,570) (59,570) (52,972) (52,972)

Other employee benefit accruals2 (9,568) (9,568) (15,180) (15,180)

Finance leases1 (79) (74) (131) (122) 1 The fair value measurement of these items is classified as Level 2 under the fair value hierarchy, being inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). 2 The fair value measurement of these items is classified as Level 3 under the fair value hierarchy, being inputs for the asset or liability that is not based on observable market data.

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21 Financial instruments (continued) Further information on the basis for determining fair value is disclosed in Note 3. f) Capital management The Board’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors debt to profit ratios and the level of dividends to ordinary Shareholders.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Board closely monitors the relationship between earnings and borrowings which at 30 June 2013 was 2.0 (2012: 1.66). At 30 June 2013, Group capital, defined as total Shareholders’ equity, excluding non-controlling interests, was $136,565,000 (2012: $132,173,000). Management closely monitors the Group to ensure that banking debt covenants are complied with.

22 Director and executive disclosures a) Key Management Personnel compensation

2013 2012 $ $

Short-term employee benefits 5,107,531 4,627,771

Post-employment benefits 234,590 190,967

Long service leave 50,818 78,871

Termination benefits 268,857 431,938

Share-based payments 348,562 228,718

Total Key Management Personnel compensation 6,010,358 5,558,265 b) Loans to key management personnel Loans outstanding at the end of the current and prior year are for the purchase of shares under the Coffey Rewards Share Plan (formerly Coffey International Limited Employee Leveraged Share Plan). The shares are issued on conditions no more favourable than those available to other participating employees. No interest is payable on the loan balances and the loans are limited-recourse to the Executive. The terms and conditions of the Coffey Rewards Share Plan are described in Note 30. The limited-recourse loans are reduced over the life of the arrangement by the value of dividends paid per instrument. Due to its limited recourse nature, for accounting purposes the loan is not recognised as a receivable but rather is treated as an option to purchase shares in the Company and no loan balances are disclosed. No write-downs or allowances for doubtful receivables have been recognised in relation to any loans made to key management personnel.



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22 Director and executive disclosures (continued) c) Options The movement during the financial year in the number of options (including loan shares) over ordinary shares in Coffey International Limited held directly, indirectly or beneficially by each key management person, including their related parties is:

Name Held at

1 July 2012 Granted as

compensation Exercised Forfeited

Held at 30 June

2013

Vested during

the year

Vested and unexercisable

at30 June 2013

Executive Directors J Douglas 1,362,102 1,176,470 – – 2,538,572 – – U Meyerhans 410,520 606,617 – (140,044) 877,093 5,916 – Key Management Personnel S Pathmanandavel 301,924 277,205 – (70,022) 509,107 5,230 – M Renehan 160,052 242,647 – (17,858) 384,841 – – G Simpson 395,206 295,587 – (135,800) 554,993 25,906 – R Biesheuvel – 96,847 – – 96,847 – – R Moriarty – 268,382 – – 268,382 – – C Meijer – 183,823 – – 183,823 – – K Tucker 187,703 295,512 – – 483,215 7,734 – R Slater 143,989 253,676 – – 397,665 – – R Simpson 307,362 254,117 – (86,572) 474,907 9,202 – M Croudace 376,638 367,647 – (127,312) 616,973 8,816 – d) Shares The movement during the financial year in the number of ordinary shares in Coffey International Limited held, directly, indirectly or beneficially by each key management person, including their related parties is:

Name Held at

1 July 2012 Purchases

Received on exercise of

options and rights Sales Held at

30 June 2013 Executive Directors J Douglas 412,471 6,882,236 – – 7,294,707 U Meyerhans 150,000 850,000 – – 1,000,000 Key Management Personnel S Pathmanandavel 94,987 130,000 – – 224,987 M Renehan 12,756 – – – 12,756 G Simpson 272,027 – – – 272,027 C Meijer 2,000 66,000 – – 68,000 K Tucker 50,000 – – – 50,000 R Slater 157,647 – – – 157,647 R Simpson 50,914 500,000 – – 550,914 M Croudace 25,000 323,000 – – 348,000

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22 Director and executive disclosures (continued) e) Other transactions with Key Management Personnel Transactions entered into with Directors of the Group and specified Executives of the Group are within normal employee relationships, on terms and conditions no more favourable than those available to other employees or Shareholders. They include:

share issues under the Coffey Rewards Share Plan (formerly Coffey International Limited Employee Leveraged Share Plan) (Note 30);

dividends from shares in Coffey International Limited; and terms of employment and reimbursement of expenses.

23 Remuneration of auditors During the year, the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms:

2013 2012 $ $

Audit services Fees paid to KPMG Australia for audit and review of financial reports and other audit work under the Corporations Act 2001 579,400 527,326 Fees paid to KPMG overseas firms for audit and review of financial reports and other audit work 358,000 401,035 Remuneration paid to KPMG for audit services 937,400 928,361 Fees paid to non-KPMG audit firms for the audit or review of financial reports of any entity in the Group 52,253 41,760 Total remuneration paid to non-KPMG firms for audit services 52,253 41,760

Non-audit assurance services Fees paid to KPMG Australia in relation to other assurance and advisory services1 108,300 372,800

Fees paid to KPMG overseas firms for taxation and other assurance and advisory services 8,400 18,500 Total remuneration paid to KPMG for non-audit assurance services 116,700 391,300 1 Includes costs associated with share capital raising of $324,000 in 2012. It is the Group’s policy to employ KPMG on assignments additional to its statutory audit duties where its expertise or experience within the Group are important. These assignments are principally other assurance services approved by the Audit Committee, or where KPMG is awarded assignments on a competitive basis. These assignments are measured against an independence agreement between the Group and KPMG, to establish compliance with the agreement before the assignments are awarded to the firm. It is the Group’s policy to seek competitive tenders for all major consulting projects.



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24 Contingent liabilities a) Guarantees The Company and consolidated entity had contingent liabilities at 30 June 2013 in respect of:

2013 2012 $’000 $’000

Guarantees given in respect of performance under contracts and premises leases 11,855 11,424

Guarantees in respect of a specific contract 3,800 3,418

Total guarantees on issue 15,655 14,842 These guarantees may give rise to liabilities in the Group if the subsidiaries do not meet their obligations under the terms of the bank overdrafts, loans, leases or other liabilities subject to the guarantees. b) Other As at the date of this report, there is no current litigation, or pending or threatened litigation, which would not be covered by professional indemnity insurance or has not already been provided for in the financial statements of the Group; is capable of reliable measurement; or where the likelihood of a material effect on the financial performance of the Group is not considered remote.

25 Commitments

2013 2012 $'000 $'000

a) Capital commitments

Capital expenditure contracted at the reporting date but not recognised as liabilities is: Plant and equipment Payable: Within one year 1,200 – b) Lease commitments - operating

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable: Within one year 18,470 17,116 Later than one year but not later than five years 49,693 39,109 Later than five years 37,424 21,748 Total lease commitments 105,587 77,973 Representing: Non-cancellable operating leases 105,587 77,973 The operating lease commitments above relate primarily to commercial premises, office, IT and laboratory equipment leases which expire from within one to fifteen years. These leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated. During the year, rental income of $1,879,943 (2012: $1,322,673) was recognised as other income in the income statement.

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26 Earnings per share 2013 2012 cents cents

a) Basic earnings per share

From continuing operations attributable to the ordinary equity holders of the Company (0.4) (17.5) From discontinued operations – 1.2 Total basic earnings per share attributable to the ordinary equity holders of the Company (0.4) (16.3) b) Diluted earnings per share From continuing operations attributable to the ordinary equity holders of the Company (0.4) (17.5) From discontinued operations – 1.2 Total diluted earnings per share attributable to the ordinary equity holders of the Company (0.4) (16.3) c) Operating earnings per share (EPS performance hurdle in Coffey Rewards Plan) Profit after tax excluding amortisation, vendor earn-out and vendor share-based payment expense attributable to the ordinary equity holders of the Company 0.5 (14.4)

2013 2012 $’000 $'000

d) Reconciliations of earnings used in calculating earnings per share

Basic earnings per share Loss for the year (911) (34,206) Profit/(Loss) for the year attributable to non-controlling interests 116 310 Profit for the year attributable to the ordinary equity holders of the Company used in calculating basic earnings per share (1,027) (34,516)

Diluted earnings per share Profit for the year attributable to the ordinary equity holders of the Company used in calculating diluted earnings per share (1,027) (34,516)

Operating earnings per share Profit/(Loss) for the year attributable to the ordinary equity holders of the Company used in calculating operating earnings per share 1,219 (30,472) Vendor earn-out and vendor share-based payment and amortisation (2,246) (4,044) Total (1,027) (34,516)

2013 No. of

shares

2012 No. of

shares e) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share and operating earnings per share 245,747,123 211,290,542 Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 245,747,123 211,290,542 As at 30 June 2013, 10,086,042 (2012: 8,993,248) shares held in trust and options were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.

27 Events occurring after the reporting date No matter or circumstance has arisen since 30 June 2013 that has a material effect, or may materially affect:

the Group’s operations in future financial periods the results of those operations in future financial periods the Group’s state of affairs in the future financial periods; or the Group’s financial report at 30 June 2013.



Page | 99

28 Deed of Cross Guarantee Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and Directors' Reports. It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company guarantees to each creditor payment in full in the event of winding up of any of the subsidiaries 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 subsidiaries have also given similar guarantees in the event that the Company is wound up. The subsidiaries subject to the Deed are:

Coffey International Limited; Coffey Australian Holdings Pty Ltd; Macsis Pty Ltd; Coffey Testing Pty Ltd (formerly Coffey Information Pty Ltd); Coffey Natural Systems Pty Ltd; Coffey Environments Pty Ltd; Coffey International Development Pty Ltd; Coffey Projects (Australia) Pty Ltd; Coffey Geotechnics Pty Ltd; Coffey Mining Pty Ltd; Coffey Corporate Pty Ltd; Coffey Corporate Services Pty Ltd; and Coffey Environments Australia Pty Ltd.

A consolidated statement of comprehensive income and consolidated statement of financial position, comprising the Company and controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, for the year ended 30 June 2013 is set out as follows. Statement of comprehensive income and retained earnings 2013 2012 $’000 $’000

Continuing operations Revenue and other income 445,805 407,608 Raw materials, subcontractor costs and travel (161,585) (138,131) Employee benefits expense (209,528) (201,172) Depreciation and amortisation (6,794) (6,685) Occupancy costs (20,057) (15,972) Other expenses (37,832) (31,044) Related party debt forgiveness (29,071) – Impairment expense – (34,046) Net foreign exchange gain/(loss) 3,367 (1,460) Loss before interest and income tax (15,695) (20,902)Net financing expenses (10,734) (12,191) Loss before income tax (26,429) (33,093) Income tax benefit/(expense) 392 (4,766) Loss for the year (26,037) (37,859) Other comprehensive expense (166) (1,268) Total comprehensive income/(expense) (26,203) (39,127) Retained earnings at the beginning of the year (88,353) (50,494)Capital reduction 107,900 – Loss for the year (26,037) (37,859) Retained earnings at the end of the year (6,490) (88,353)

100


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28 Deed of Cross Guarantee (continued) Statement of financial position

2013 2012 $’000 $’000

ASSETS Current assets Cash and cash equivalents 15,403 19,308 Receivables – external 52,478 61,080 Receivables – inter-group 20,159 79,283 Other financial assets – 226 Work in progress 14,797 15,531 Income tax receivable 3,508 – Total current assets 106,345 175,428 Non-current assets Receivables – inter-group 91,576 81,547 Investments in subsidiaries 106,713 101,981 Plant and equipment 19,735 19,714 Deferred tax assets 11,777 15,592 Intangible assets 28,330 23,423 Total non-current assets 258,131 242,257 Total assets 364,476 417,685 LIABILITIES Current liabilities Bank overdraft 153 – Payables – external 28,665 26,773 Payables – inter-group 23,859 25,645 Loans and borrowings 5,032 49 Other financial liabilities 1,668 – Income tax payable – 4,508 Employee benefits 21,808 26,301 Total current liabilities 81,185 83,276 Non-current liabilities Loans and borrowings 83,634 103,575 Other financial liabilities – 4,124 Employee benefits 922 1,410 Other non-current liabilities 3,923 4,432 Payables – inter-group 37,904 36,137 Total non-current liabilities 126,383 149,678 Total liabilities 207,568 232,954 Net assets 156,908 184,731

EQUITY Share capital 129,899 239,149 Reserves 33,499 33,935 Retained earnings (6,490) (88,353) Total equity 156,908 184,731



Page | 101

29 Parent entity disclosures a) Result of the parent entity: 2013 2012 $'000 $'000 Profit/(Loss) for the year 12,315 (77,788)

Other comprehensive income – – Total comprehensive income for the period 12,315 (77,788)

b) Financial position of the parent entity comprising:

Current assets 127 127 Non-current assets 199,288 187,319 Total assets 199,415 187,446 Current liabilities 1,920 2,396 Non-current liabilities 37,882 37,264 Total liabilities 39,802 39,660 c) Total equity of the parent entity comprising:

Share capital 129,899 239,148

Reserves – share-based payments 17,371 16,510

Retained earnings 12,343 (107,872) Total equity 159,613 147,786 d) Parent entity guarantees in respect of the debts of its subsidiaries The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in respect of its subsidiaries. Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed are disclosed in Note 28.

30 Share-based payments Expenses arise from equity-based payments. Equity-based payments include employee participation in either the Coffey Rewards Share Plan or the Coffey Rewards Option Plan. Shares and options issued under both plans are accounted for as equity-settled share-based payments as required by AASB 2 Share-based Payment. They are deemed to be equity-settled share-based payments for employee services. An expense has been recognised for the fair value of the shares or options, and is recognised on a straight-line basis, over the vesting period attaching to the shares or options. Vendor share-based payments In addition, certain Executives have participated as vendors in business acquisitions entered into by the Group during prior years. In each instance, the individual was not an Executive of the Group prior to the acquisition. Due to the nature of certain acquisition terms, payments or benefits received by individuals are considered to be remuneration earned subsequent to the business acquisition date. In some instances, a component of the equity-based acquisition consideration is deferred and contingent on the individual remaining an employee for a three-to-five-year period. This component of the acquisition consideration is considered to be a share-based payment for accounting purposes (pursuant to AASB 2 Share-based payment) and is excluded from the acquisition accounting and included as remuneration. The Board of Directors considers that these arrangements are aligned with the Group’s and Shareholder interests as they either reward individuals for contributing to the performance of the Group or encourage Executives to remain with the Group post-acquisition.

102


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30 Share-based payments (continued) a) Coffey Rewards Share Plan (formerly Coffey International Limited Employee Leveraged Share Plan) The Coffey Rewards Share Plan was approved by special resolution at the Annual General Meeting (AGM) of the Company held on 21 November 1995 and later amended at the AGM of the Company in November 2007. The Coffey Rewards Share Plan entitles nominated employees in the Group (including Executive Directors) to purchase shares, subject to vesting, in Coffey International Limited (ASX code: COF) funded by way of interest-free limited recourse loans from Coffey International Limited. The loans arising from the grant of shares under the Share Plan are limited recourse in nature and accordingly provide equity upside opportunity to the individual without equity downside price risk. The loan reduces over the life of the arrangement by the value of dividends paid per instrument. In respect of options, the full exercise price of the options being exercised is required for delivery to the Company before issue of shares to the individual occurs. For accounting purposes, the arrangements are considered to be an option whereby the employee effectively has the option to repay the remaining loan balance to take ownership of the shares after the vesting conditions have been satisfied. Due to their limited recourse nature, the arrangements are not considered a loan for related party disclosure purposes. All shares issued to the Coffey Rewards Share Plan rank equally with all other fully-paid ordinary shares on issue. Vesting conditions The number of shares ultimately vesting depends on the level of achievement of the service and performance hurdles attached to each grant. Maximum shares are vested only when 100% of each measure is achieved. The service condition requires that the participants must remain employed by the Group at the time of vesting. The performance measures are based on the earnings per share (EPS) annualised compound growth rate over three years and total shareholder return (TSR) compared to the ASX 300 Accumulation Index performance over the same period. These vesting conditions are subject to certain exceptions as set out in the Share Plan’s trust deed. If the vesting conditions for the Share Plan are met, the arrangement vests, allowing the individual the choice to settle the remaining exercise price and take ownership of the shares available to them under the grant, or to leave the current arrangement in place and repay the loan through dividends earned. Loyalty grants are subject only to the three-year service condition. Allocations of shares are determined by the Directors and the loan incurred by the employee is calculated as the market value of the Company shares at the date of acquisition multiplied by the number of shares acquired on their behalf.



Page | 103

30 Share-based payments (continued) Coffey Rewards Share Plan – summary of Long-Term Rewards issues

Plan year Grant date

Vesting date

No. ofparticipants

at issue date

No. of participants

at 30 June 2013 Vesting conditions

2013 Mar 2013 Mar 2016 Incentive & Service 1 1 50% EPS + Service

50% TSR + Service

2013 Dec 2012 Dec 2015

Loyalty 89 88 100% Service

Incentive & Service 11 11 50% EPS + Service

50% TSR + Service

2012 Mar 2012 Mar 2015 Incentive & Service 1 1 50% NPAT + Service

50% TSR + Service

2012 Mar 2012 Mar 2015

Incentive & Service 8 8 50% NPAT + Service

50% TSR + Service


2010 Mar 2011 Mar 2014 Incentive & Service 1 1 50% OEPS + Service

50% TSR + Service

2010 Dec 2010 Dec 2013


Incentive & Service 193 140

20% Service 40% OEPS + Service

40% TSR + Service

2009 Dec 2009 Nov 2012 Loyalty 175 126 100% Service

Shares granted but not yet vested at balance date under the Coffey Rewards Share Plan

Grant date No. of shares

Loan value atgrant date

(per share)

Loan value at grant date

$’000

Exercise price at 30 June 2013

(per share) 3-Dec-2010 Loyalty 1,081,905 $1.04 1,127 $1.04

12-Mar-2011 Incentive & Service 694,323 $0.81 563 $0.81 16-Mar-2012 Loyalty 314,232 $0.65 205 $0.65 16-Mar-2012 Incentive & Service 1,791,271 $0.65 1,167 $0.65 26-Mar -2012 Incentive & Service 229,549 $0.65 150 $0.65 13-Dec-2012 Loyalty 415,247 $0.385 160 $0.385 1-Dec-2012 Incentive & Service 4,214,626 $0.3939 1,660 $0.3939

13-Mar-2013 Incentive & Service 96,847 $0.385 38 $0.385 Total 8,838,000

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30 Share-based payments (continued) The weighted average share price and number of equity shares accounted for as options are:

Weighted average

exercise price Number of options Weighted average

exercise price Number of options 2013 2013 2012 2012

Outstanding at 1 July $1.29 9,512,495 $1.57 8,772,971 Forfeited $1.11 (3,367,589) $1.92 (1,642,905) Exercised – – – – Granted $0.39 4,729,661 $0.65 2,382,429 Outstanding at 30 June $0.95 10,874,567 $1.29 9,512,495

Exercisable at 30 June $2.59 2,036,567 $2.90 1,722,185 Share-based options outstanding at 30 June 2013 have an exercise price ranging from nil to $3.64 and weighted average contractual life of five years. The total amount outstanding on the Coffey Rewards Share Plan at the balance date excluding forfeited shares is $10,349,322 (2012: $12,261,188). b) Coffey Rewards Option Plan The Coffey Rewards Option Plan (Option Plan) implemented during the 2009 financial year, entitles nominated employees in the Group to be granted options to acquire shares on exercise, subject to vesting, in the Coffey International Limited entity. By virtue of their country of residency, certain Executives selected to participate in the Coffey Rewards Plan, are unable to participate in the Coffey Rewards Share Plan; to accommodate this restriction, the Company has invited those Executives to participate in the Option Plan. Allocations of options are determined by the Directors and the exercise price for each option is calculated as the market value of the Company’s shares at the date of grant. Details of recent grants for issue of options under the scheme to eligible employees are shown below. The options issued under the scheme are subject to a minimum three-year vesting condition during which period the employee must remain employed by the Group (subject to certain conditions as set out in the Plan Rules). The vesting conditions and performance hurdles in respect of the options are identical to those applying to the Coffey Rewards Share Plan. Coffey Rewards Option Plan – summary of Long-Term Rewards issues

Plan year

Grant date

Vesting date

No. of participants at issue date

No. of participants at 30 June 2013 Vesting conditions

2010 Dec 2010 Nov 2013 Incentive & Service

45 26 20% Service40% OEPS + Service

40% TSR + Service

2009 Dec 2009 Nov 2012 Incentive & Service

46 18 20% Service



Page | 105

30 Share-based payments (continued) Options issued Details of the options issued not yet vested at balance sheet date under the Coffey Rewards Option Plan are:

Date of issue

Minimum vestingconditions

Number ofoptions

Expiry date

Exercise price

3-Dec-10 3 years continuous service 144,576 03-Dec-15 $1.04 The weighted average share price and number of equity shares accounted for as options are:

Weighted average

exercise price Number of

options Weighted average

exercise price Number of

options 2013 2013 2012 2012

Outstanding at 1 July $1.20 793,298 $1.51 1,560,834 Forfeited $1.06 (523,921) $1.82 (767,536) Exercised – – – – Granted – – – – Outstanding at 30 June $1.47 269,377 $1.20 793,298 Exercisable at 30 June $1.96 124,801 $1.58 28,689 c) Valuation – Coffey Rewards Share Plan and Coffey Rewards Option Plan The valuation methodology used to determine the option-based payment expense is identical to that applying to shares, and is set out below. The Directors obtained an independent valuation of the shares in the Coffey Rewards Share Plan and the options in the Coffey Rewards Option Plan. The independent valuer was Ernst & Young. The reports were prepared on the basis that the shares granted in the plan required valuation as options, with an exercise price equal to the loan repayment value plus the net present value of expected dividends over the vesting period. The valuation methodology used to determine the share-based payment expense was the Monte Carlo simulation model. As required by AASB 2, the model took into account the exercise price of the option, the life of the option, the current price of the underlying shares, the expected volatility of the share price, the dividends expected on the shares and the risk-free interest rate for the life of the option. The expected life of the instrument was deemed to be the period from grant date to first available exercise date plus 24 months.

106


Page | 106

30 Share-based payments (continued) The model inputs were as follows for the options and shares subject to valuation for the purposes of share-based payment expense in 2013. Instruments Shares Shares Shares Date of issue 1-Dec-2012 13-Mar-2013 13-Dec-2012 Date of valuation report 8-Jul-2013 8-Jul-2013 8-Jul-2013 Incentive & Service Incentive & Service ServiceRisk-free rate 2.68% 3.15% 2.86%

Standard deviation 55% 55% 55%

Share price at effective date $0.40 $0.435 $0.33

Exercise price (low repayment) $0.3939 $0.385 $0.385

Annualised dividend yield 6.3% 5.5% 6.0%

Number of options or shares 4,214,626 96,847 415,247

Performance conditions EPS and TSR vesting conditions

EPS and TSR vesting conditions Service Only

Fair value of the share-based payment

EPS tranche: $0.23TSR tranche: $0.18

EPS tranche: $0.26 TSR tranche: $0.21

$0.18

Instruments Shares Shares Shares Date of issue 16-Mar-2012 26-Mar-2012 16-Mar-2012 Date of valuation report 24-Jul-2012 24-Jul-2012 24-Jul-2012 Incentive & Service Incentive & Service ServiceRisk-free rate 3.82% 3.82% 3.82%

Standard deviation 55% 55% 55%

Share price at effective date $0.68 $0.68 $0.68

Exercise price (low repayment) $0.65 $0.65 $0.65

Annualised dividend yield 5% 5% 5%

Number of options or shares 1,791,271 229,549 363,946

Performance conditions NPAT and TSR vesting conditions

NPAT and TSR vesting conditions Service only

Fair value of the share-based payment

NPAT tranche: $0.33TSR tranche: $0.30

NPAT tranche: $0.33 TSR tranche: $0.30 $0.33

d) Expenses arising from share-based payment transaction Total expenses (including forfeitures) arising from share-based payment transactions recognised during the period as part of employee benefit expense were:

2013 2012 $'000 $'000

Shares issued under Coffey Rewards Share Plan 861 711

Shares issued through business combinations – 146

Total recognised in employee benefits expense 861 857



Page | 107

31 Subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1:

Name of entity Country of

incorporation Class of shares

Equity holding 2013 2012

Coffey Afghanistan LLC Afghanistan Ordinary 100% 100% A.C.N. 003 890 480 Pty Ltd (formerly Coffey Rail Pty Ltd) Australia Ordinary 100% 100% A.C.N. 070 821 939 (formerly John Wertheimer Consultants Pty Ltd) Australia Ordinary 100% 100% A.C.N. 119 095 037 Pty Ltd (formerly Asia Pacific Rail (NSW) Pty Ltd) Australia Ordinary 100% 100% Aquaclear Technology Pty Ltd Australia Ordinary 100% 100% Balance Consulting Australia Pty Ltd Australia Ordinary 100% 100% BFP Consultants Pty Ltd Australia Ordinary 100% 100% Carson Group Australia Pty Ltd Australia Ordinary 100% 100% Carson Group NSW Admin Pty Ltd Australia Ordinary 100% 100% Carson Group Pty Ltd Australia Ordinary 100% 100% Carson Group QLD Pty Ltd Australia Ordinary 100% 100% Carson Group Vic Admin Pty Ltd Australia Ordinary 100% 100% Carson Group Vic Pty Ltd Australia Ordinary 100% 100% CCG Group Pty Ltd Australia Ordinary 100% 100% Clifton Coney Group (NSW) Pty Ltd Australia Ordinary 100% 100% Clifton Coney Group (QLD) Pty Ltd Australia Ordinary 100% 100% Clifton Coney Group (SA) Pty Ltd Australia Ordinary 100% 100% Clifton Coney Group (VIC) Pty Ltd Australia Ordinary 100% 100% Clifton Coney Group (WA) Pty Ltd Australia Ordinary 100% 100% Coffey Afghanistan Pty Ltd Australia Ordinary 100% 100% Coffey Africas Holdings Pty Ltd Australia Ordinary 100% 100% Coffey Americas Holdings Pty Ltd Australia Ordinary 100% 100% Coffey Asia Holdings Pty Ltd3 Australia Ordinary 100% 100% Coffey Australia Holdings Pty Ltd Australia Ordinary 100% 100% Coffey Commercial Advisory Pty Ltd Australia Ordinary 100% 100% Coffey Corporate Pty Ltd Australia Ordinary 100% 100% Coffey Corporate Services Pty Ltd Australia Ordinary 100% 100% Coffey Environments Australia Pty Ltd Australia Ordinary 100% 100% Coffey Environments Pty Ltd Australia Ordinary 100% 100% Coffey Europe ME Holdings Pty Ltd Australia Ordinary 100% 100% Coffey Geosciences Pty Ltd Australia Ordinary 100% 100% Coffey Geotechnics Pty Ltd Australia Ordinary 100% 100% Coffey Institute Pty Ltd3 Australia Ordinary 100% 100% Coffey International Development Pty Ltd Australia Ordinary 100% 100% Coffey International Development (Middle East) Pty Ltd Australia Ordinary 100% 100% Coffey IP Pty Ltd Australia Ordinary 100% 100% Coffey Justice Services Pty Ltd3 Australia Ordinary 100% 100% Coffey LPM Pty Ltd Australia Ordinary 100% 100% Coffey Metago Environmental Engineers Pty Ltd3 Australia Ordinary 50% 50% Coffey Mine Development Pty Ltd Australia Ordinary 100% 100% Coffey Mining Pty Ltd Australia Ordinary 100% 100% Coffey MPW Pty Ltd Australia Ordinary 100% 100% Coffey Natural Systems Pty Ltd Australia Ordinary 100% 100% Coffey Oman Pty Ltd Australia Ordinary 100% 100% Coffey Partners International Pty Ltd Australia Ordinary 100% 100% Coffey Project Management Pty Ltd Australia Ordinary 100% 100% Coffey Projects (Australia) Pty Ltd Australia Ordinary 100% 100% Coffey Testing Pty Ltd (formerly Coffey Information Pty Ltd) Australia Ordinary 100% 100% Coffey Services Australia Pty Ltd Australia Ordinary 100% 100% Coffey Strategy Pty Ltd Australia Ordinary 100% 100% DASCEM Pty Ltd Australia Ordinary 100% 100% Farsands Facilities Management Ltd Australia Ordinary 100% 100% Farsands Risk Management Pty Ltd Australia Ordinary 100% 100% Farsands Solutions Pty Ltd1 Australia Ordinary 100% 100% Farsands Project Solutions Pty Ltd Australia Ordinary 100% 100% Geosciences Consulting (ME) Pty Ltd Australia Ordinary 100% 100% Global Justice Solutions (Pacific) Pty Ltd Australia Ordinary 100% 100% Global Justice Solutions (Asia) Pty Ltd Australia Ordinary 100% 100% Global Justice Solutions Pty Ltd Australia Ordinary 100% 100% IT Environmental (Australia) Pty Ltd Australia Ordinary 100% 100% Macsis Pty Ltd Australia Ordinary 100% 100% RSG Global Consulting Pty Ltd Australia Ordinary 100% 100% Soil & Rock Engineering Pty Ltd Australia Ordinary 100% 100% Specialist Training Australia Pty Ltd Australia Ordinary 100% 100% Water Studies Pty Ltd Australia Ordinary 100% 100%

108


Page | 108

31 Subsidiaries (continued)

Name of entity Country of

incorporation Class of shares

Equity holding 2013 2012

Coffey Consultoria e Servicos Ltda Brazil Ordinary 100% 100% Coffey Canada Inc. Canada Ordinary 100% 100% Coffey Geotechnics Inc. Canada Ordinary 100% 100% Coffey Consultoria Servicios SpA Chile Ordinary 100% 100% Coffey Asia Ltd Hong Kong Ordinary 100% 100% Development Company for Technical & Environmental Consultancy LLC Iraq Ordinary 100% 100% Coffey Projects (Middle East) Ltd Jersey Ordinary 100% 100% Coffey (Malaysia) Sdn Bhd Malaysia Ordinary 100% 100% Coffey Holdings Sdn Bhd Malaysia Ordinary 100% 100% 2187616 Ltd (formerly Coffey Rail (NZ) Ltd)4 New Zealand Ordinary 100% 100% Carson Group (AKL) Ltd New Zealand Ordinary 100% 100% Carson Group (SI) Ltd4 New Zealand Ordinary 100% 100% Carson Group (WGTN) Ltd4 New Zealand Ordinary 100% 100% Carson Group Assets Ltd4 New Zealand Ordinary 100% 100% Carson Group Ltd New Zealand Ordinary 100% 100% Carson Investments (AKL) Ltd4 New Zealand Ordinary 100% 100% Carson Investments (SI) Ltd7 New Zealand Ordinary 100% 100% Carson Investments (WGTN) Ltd4 New Zealand Ordinary 100% 100% Clifton Coney Group (NZ) Ltd New Zealand Ordinary 100% 100% Coffey Environments (NZ) Ltd4 New Zealand Ordinary 100% 100% Coffey Geotechnics (NZ) Ltd New Zealand Ordinary 100% 100% Coffey Information (NZ) Ltd5 New Zealand Ordinary 100% 100% Coffey International NZ Ltd New Zealand Ordinary 100% 100% Coffey Projects (New Zealand) Ltd New Zealand Ordinary 100% 100% Coffey Nigeria Ltd Nigeria Ordinary 100% 100% Coffey Projects Oman LLC6 Oman Ordinary 70% 70% Aquaclear Technology (Pakistan) Pvt Ltd Pakistan Ordinary 95% 95% Coffey Services PNG Limited Papua New Guinea Ordinary 100% 100% Coffey Consultoria y Servicios S.A.C. Peru Ordinary 100% 100% Coffey International Inc. Philippines Ordinary 40% 40% Coffey Philippines Inc.2 Philippines Ordinary 100% 100% Coffey International Development Sp. z o.o Poland Ordinary 100% 100% Coffey Projects (Singapore) Pte. Ltd Singapore Ordinary 100% 100% Bovell Freeman Holly Pty Ltd South Africa Ordinary 100% 100% Coffey International (Africa) Pty Ltd South Africa Ordinary 100% 100% Coffey Mining (South Africa) Pty Ltd South Africa Ordinary 100% 100% Coffey Projects (Africa) Pty Ltd South Africa Ordinary 73% 51% Duncan Rhodes Construction Pty Ltd South Africa Ordinary 51% 51% Duncan Rhodes Procurement Pty Ltd South Africa Ordinary 51% 51% RSG Global Consulting (SA) Pty Ltd South Africa Ordinary 100% 100% Coffey Thailand Ltd Thailand Ordinary 49% 49% STA Free Zone Ltd Liability Company United Arab Emirates Ordinary 100% 100% Coffey (UK) Ltd UK Ordinary 100% 100% Coffey Geotechnics Ltd UK Ordinary 100% 100% Coffey International Development Holdings Ltd UK Ordinary 100% 100% Coffey International Development Ltd UK Ordinary 100% 100% Coffey UK Finance Limited UK Ordinary 100% 100% EDGE Consultants UK Ltd UK Ordinary 100% 100% Global Justice Solutions EMEA Ltd UK Ordinary 100% 100% Libra Advisory Group Ltd UK Ordinary 100% 100% Libra Knowledge Network Ltd UK Ordinary 100% 100% Libra Ventures Ltd UK Ordinary 100% 100% Webber Associates UK Ltd UK Ordinary 100% 100% The Evaluation Partnership Ltd UK Ordinary 100% 100% Coffey International Development Inc.8 U.S.A. Ordinary 100% 100% Coffey International Inc. U.S.A. Ordinary 100% 100% Management Systems International Inc. U.S.A. Ordinary 100% 100% Clifton Coney Group (Indo-China) Ltd Vietnam Ordinary 100% 100% Clifton Coney Group (Vietnam) Ltd Vietnam Ordinary 100% 100% 1 Farsands Solutions Pty Ltd has a minority holding of less than 0.01% 2 The remaining 60% of the issued capital is held by a third party for the benefit of the Coffey International Group 3 Deregistered 19 June 2013 4 Liquidated 10 June 2013 5 Amalgamated with Coffey Geotechnics (NZ) Ltd 1 January 2013 6 Liquidated April 2013 7 Liquidated 25 June 2013 8 Amalgamated with Coffey International Inc. on 26 June 2013


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112

Coffey International Limited Details of shareholders and shareholdings

Page | 112

The Shareholder information set out below was applicable as at 30 July 2013. Substantial shareholdings The following notices of substantial shareholdings have been received by the Company. Holder Date of notice No. of units Commonwealth Bank of Australia & Subsidiaries 13 May 2013 20,268,278 Northcape Capital Pty Ltd 12 September 2012 20,312,596 Celeste Funds Management 27 January 2011 10,005,996 Distribution of ordinary shareholdings

Size of holding Holders No. of units Percentage

held 1-1,000 792 384,493 0.15 1,001 – 5,000 1,587 4,524,963 1.77 5,001 – 10,000 878 6,947,320 2.72 10,001 – 100,000 1,836 60,216,540 23.54 100,001 and over 265 183,759,849 71.82

Total 5,358 255,833,165 100.00

The number of Shareholders holdings less than a marketable parcel of ordinary shares is 1,962. Using the 30 July 2013 closing price of $0.13, an unmarketable parcel is one of 3,846 or fewer shares. Options The Company has on issue 476,097 options over unissued ordinary shares in the Company held by 34 option holders as at 30 July 2013. Equity security holders The names of the 20 largest holders of quoted equity securities as at 10 July 2013 are listed below.

Holder name No. of ordinary

shares Percentage of issued shares

JP Morgan Nominees Australia Limited 38,509,826 15.05 Citicorp Nominees Pty Limited 17,102,578 6.69 Pacific Custodians Pty Limited (Leveraged Share Plan Trust) 14,212,951 5.56 JP Morgan Nominees Australia Limited (Cash Income A/C) 10,776,232 4.21 HSBC Custody Nominees (Australia) Limited 7,512,268 2.94 Mr John Matheson Douglas 7,278,992 2.85 Citicorp Nominees Pty Limited (Colonial First State Inv A/C) 5,036,711 1.97 National Nominees Limited 3,701,018 1.45 Mr Charles Carnegie (Sorrento A/C) 3,500,000 1.37 RBC Investor Services Australia Nominees Pty Limited (BKCUST A/C) 2,080,350 0.81 Mr Peter John Stirling & Mrs Rosalind Verena Stirling 2,000,000 0.78 Banlan Pty Ltd 2,000,000 0.78 BNP Paribas Noms Pty Ltd (DRP) 1,881,228 0.74 UBS Wealth Management Australia Nominees Pty Ltd 1,387,548 0.54 CTSF Pty Ltd (VC Superannuation Fund A/C) 1,350,000 0.53 Mr Stanley Henry Goodhew 1,274,912 0.50 Juntos Investments Pty Ltd (Juntos Superannuation A/C) 1,139,286 0.45 Mr Paul Stuart Nichols & Ms Therese Mary Nichols (Nichols Super Fund A/C) 1,000,287 0.39 Troxfield Pty Ltd (Rosebery Super Fund A/C) 1,000,000 0.39 Mr Urs Beat Meyerhans 850,000 0.33 Coral Capital Pty Ltd 710,000 0.28

Total 124,304,187 48.61 Voting rights The voting rights attached to the ordinary shares are that on a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.



Page | 113

Shareholder information

Annual General Meeting Directors

Date: Friday, 1 November 2013 Time: 10.00am (AEDT) Venue: The Mint 10 Macquarie Street Sydney NSW 2000

Dr John Mulcahy (Chairman) Mr John Douglas (Managing Director) Mr Urs Meyerhans (Finance Director) Mr Stuart Black AM Ms Leeanne Bond Mr Guy Cowan Ms Susan Oliver

Dividends Company Secretary

Final dividend: No final dividend has been declared with respect to the year ended 30 June 2013

Ms Jennifer Waldegrave E-mail: [email protected]

Share registry Registered office

Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 Australia Telephone: 1300 365 798 (within Australia) +61 1300 365 798 (outside Australia) Website: linkmarketservices.com.au

Level 10 1 Market Street Sydney NSW 2000 Australia Telephone: +61 2 9287 2100 Facsimile: +61 2 9287 2188 E-mail: [email protected]

Securities exchange listing

Australian Securities Exchange (code: COF)

Website

coffey.com Electronic communication Auditor

Coffey encourages all Shareholders to receive communications from the Group by e-mail if possible. Coffey publishes, and posts to its website, its Annual Financial Report by September each year. This Financial Report is lodged with the ASX and ASIC and is also available within the investor section of the Coffey website.

KPMG 10 Shelley Street Sydney NSW 2000

Registered officeLevel 10 1 Market Street Sydney NSW 2000 Australia

Telephone: +61 2 9287 2100 Facsimile: +61 2 9287 2188 E-mail: [email protected]

Websitecoffey.com

Share registryLink Market Services Limited Level 12 680 George Street Sydney NSW 2000 Australia

Telephone: 1300 365 798 (within Australia)

+61 1300 365 798 (outside Australia)

Web: linkmarketservices.com.au

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