THIESS PTY LTD GENERAL PURPOSE FINANCIAL … Financial Report FYE 2008.pdf · Tel: (+61 7) 3169...

DIRECTORY

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Thiess Corporate OfficeLevel 5, 179 Grey Street South Bank QLD 4101 Tel: (+61 7) 3002 9000 Fax: (+61 7) 3002 9009

QueenslandLevel 7, 189 Grey Street South Bank QLD 4101 Tel: (+61 7) 3121 8500 Fax: (+61 7) 3121 8710

New South Wales/ Australian Capital Territory Level 5, 26 College Street Sydney NSW 2000 Tel: (+61 2) 9332 9444 Fax: (+61 2) 9331 4264

Thiess ProcessLevel 4, 179 Grey Street South Bank QLD 4101 Tel: (+61 7) 3002 9000 Fax: (+61 7) 3002 9448

Victoria/South Australia/ Tasmania/New ZealandLevel 9, 417 St Kilda Road Melbourne VIC 3004 Tel: (+61 3) 9864 8888 Fax: (+61 3) 9864 8811

Western Australia/Northern TerritoryThe Forrest Centre Level 19, 221 St Georges Terrace Perth WA 6000 Tel: (+61 8) 9214 4200 Fax: (+61 8) 9214 4244

Australian MiningLevel 7, 189 Grey Street South Bank QLD 4101 Tel: (+61 7) 3121 8500 Fax: (+61 7) 3121 8710

MackayLevel 1, Wellington House Cnr Wellington & Victoria Streets Mackay QLD 4740 Tel: (+61 7) 4944 4500 Fax:(+61 7) 4944 4550

South Australia129 Greenhill Road Unley SA 5061 Tel: (+61 8) 8274 5200 Fax: (+61 8) 8271 6228

Thiess Services Corporate OfficeThe Precinct 2 Level 1, 10 Browning Street West End QLD 4101 Tel: (+61 7) 3169 8300 Fax: (+61 7) 3846 0678

Eastern RegionThe Precinct 2 Level 1, 10 Browning Street West End QLD 4101 Tel: (+61 7) 3169 8400 Fax: (+61 7) 3846 3870

Southern Region/New ZealandLevel 4 15-17 Park Street South Melbourne VIC 3205 Tel: (+61 3) 9684 3333 Fax: (+61 3) 9684 3344

Western Region4 Aitken Way Kewdale WA 6105 Tel: (+61 8) 9441 3000 Fax: (+61 8) 9441 3090

PT Thiess Contractors IndonesiaRatu Prabu 2 J1.T.B Simatupang Kav.1B Jakarta 12560 Indonesia Tel: (+62 21) 2754 9999 Fax: (+62 21) 2754 9800

Thiess India Pvt Ltd5B, RDB Boulevard, Block EP & GP, Sector V, Salt Lake, Kolkata, 700 091 West Bengal, India Tel: (+91 33) 4010 5300

THIESS PTY LTDGENERAL PURPOSE FINANCIAL REPORT YEAR ENDED 30 JUNE 2008

Thiess Pty Ltd and its controlled entities A.B.N. 87 010 221 486

www.thiess.com.au

www.thiess.com.au

FRONT COVER: Dragline at South Walker Creek, QLD

Managing director’s overview

Directors’ report

Statutory statements

Income statements

Statements of cash flows

Balance sheets

Statements of recognised income and expense

Notes to the financial statements

Audit report

Management

2

5

9

10

11

12

13

15

50

51

CONTENTS

This financial year, Thiess cemented its status as a world-leading mining, construction and services contractor. We are committed to achieving sustainable and profitable growth, and to expand our core business throughout Australia, Asia, the near Pacific and the Middle East.

Over the past 75 years, Thiess has played a pivotal role in promoting Australia’s resource sector and furthering infrastructure development. We are now shaping innovative and sustainable solutions and delivering successful outcomes for clients across the key operations of Mining, Civil Engineering, Process, Building and Services including environmental, utilities and facilities operation and maintenance.

As we continue to grow in size and diversity we will focus on delivering strong performance across our projects, while actively consolidating our core business.

To achieve our priorities we will:

• investinourpeopleandpromotetheirsafetyandprofessional development

• buildcollaborativerelationshipswithourclientsandpartners to achieve industry excellence

• focusonthefuturetofindinnovativesolutionstotomorrow’s complex challenges, and

• expandonourcoreactivities,bothinAustraliaandoffshore.

THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/08 1

OUR COMPANY

Thiess entered the Indian market as the first foreign mining contractor securing the $1 billion Chitarpur mining contract. Our Australian operations were restructured to create a national mining business more aligned with the market and to leverage best practice in health, safety and environmental management. This important change has allowed our state based business units to focus on strong and profitable growth in our civil and building markets.

Other highlights included completing the $2.4 billion Eastlink road project five months ahead of schedule and winning the $4 billion Airport Link, the largest infrastructure project in the Southern hemisphere. Our Bundamba advanced water treatment project broke industry records and won global acclaim.

CommerCially suCCessful

Over the past year we have delivered innovative projects and integrated our Services capability as part of a whole Thiess package – working as one team - for major projects such as Airport Link. Our ability to develop and retain successful business relationships has enabled us to achieve these successes.

Thiess Services consolidated their position as a key player in the facilities and asset management sector, and opened two leading edge materials recycling facilities in Somersby, NSW and Petrie, Qld.

The resources sector continues to grow and we see strong opportunities for our mining business particularly in Western Australia and Queensland, as well as in our overseas markets, India and Indonesia. To strengthen our Australian business we completed a significant organisational restructure to create a national mining business. We are already seeing results from the opportunity this restructure has created with our state based business units gaining new clients to grow their market share of civil and building projects.

The $1 billion Chitarpur mining project and related infrastructure in India provides a platform for expansion as Thiess India broke into a market normally dominated by local and government owned enterprises.

In other overseas markets we continue to maintain a solid business in Indonesia where we have been operating for more than 30 years. We secured a $200 million contract with Inkor Prima coal and have opportunities to expand our current coal mining contracts at Arutmin.

The pipeline of major infrastructure projects remains very strong both in construction and facilities management. Our Bundamba project, Australia’s largest water recycling scheme, was named Global Water Project of the Year. A core component of the state government’s Western Corridor Recycled Water Scheme, the project broke industry records when the first stage was completed within 10 months – significantly faster than industry best practice.

The $2.4 billion Eastlink project was completed five months ahead of schedule and we won the $4 billion infrastructure project Airport Link. Having successfully completed the Marcus Clarke and London Circuit commercial buildings, we also secured a $101 million contract to design and construct a state of the art, environmentally sustainable office tower in North Sydney, The Ark.

A new tunnelling division was created consolidating the expertise in our state operations to meet Australia’s demand for tunnelling and underground construction. The division will provide a stronger focus on this critical sector of Australian infrastructure.

Focus on our core markets has resulted in strong work in hand of $9.9 billion, turnover of $4.6 billion with continuing growth setting the platform to build solid returns from our key sectors of mining, construction and services.

THIESS PTY LTD and its controlled entities – GENERAL PURPOSE FINANCIAL REPORT 2007/082

MANAGING DIRECTOR’S OvERvIEW

Provide a safe and HealtHy WorkPlaCe

Each day, we work towards our ultimate goal - an incident and injury-free workplace. Every year we set injury reduction targets to measure our progress. In 2007/08 we did not meet our targets for frequency and severity rates, but completed the year with no fatalities and 88 per cent of our 245 workplaces were lost time injury free. Our WA/NT business unit ended the year lost time injury free. This is an excellent result, driving us further towards our objective of ‘zero harm’.

A Chairman’s award was created to acknowledge the outstanding results in health and safety through the development of a disciplined workplace culture. This was awarded to Thiess Contractors Indonesia who achieved 45 million man hours over two years, without a lost time injury.

future oriented

Thiess remains strongly committed to sustainable outcomes across its operations and has adopted a leading industry role including working with Government on significant policy issues such as greenhouse gas emissions and energy conservation initiatives. We completed the Energy Efficiencies Opportunities program and received special commendation as part of the Greenhouse Challenge Plus that recognised the company’s contribution to improve energy efficiency and reduce greenhouse gas emissions.

The company continues to recognise the importance of our community investment program supported with initiatives at all levels of the business. Our involvement includes support for cultural, educational, and charitable organisations such as Engineers Without Borders, the Breast Cancer Foundation’s Pink Ribbon Appeal, and Childhood Cancer Support.

foCus on PeoPle and a PerformanCe driven Culture

With a continually expanding workforce of over 15,000 (including joint ventures) we work hard to offer our people rewarding and satisfying careers. In a highly competitive labour market, we have renewed our strategies to engage and communicate with all of our people and welcome people from a diverse range of backgrounds to join Thiess.

Our mining business has been particularly innovative in recruiting women, who across the business now make up approximately 15 per cent of our workforce.

In our international operations, Thiess provides its trade apprentices with internationally recognised qualifications. This retention strategy is a proven success with 84 per cent of tradespeople trained since 1992 still with Thiess Indonesia.

Our graduate program has also been particularly successful with high retention rates for the 80 graduates we employ on average each year across a wide range of disciplines.

outlook

In 2009, Thiess will grow by approximately 15 per cent to execute $5.3 billion of work in our core mining, construction and services markets. With a strong drive to reinvigorate the culture of our Thiess values, we will consolidate recent organisational changes to grow market share, retain and develop our talented people, exploit internal synergies and reduce the cost of doing business.

Our emphasis will be on successfully starting up Airport Link and our Indian mine as well as delivering an overall higher profit from our work in hand and improving returns in the capital intensive areas of our business.

Being part of Australia’s largest contracting group brings to Thiess a strong balance sheet to support our large and growing business, particularly in mining.

The opportunity for Thiess Services to partner with Al Habtoor-Leighton in the United Arab Emirates offers great potential for further returns.

We will continue to face the challenges of rising costs in our market particularly with steel products and fuel and have implemented procurement strategies to deal with these issues. With a strong pipeline of infrastructure projects and the booming resources market, we are well positioned with an exceptionally high proportion of future turnover in hand. Shareholders can expect to see the outcomes of strategic changes made over the last 12 months in addition to returns from our new markets.


Lavarack Barracks, QLD

direCtors

The directors of the Company at any time during or since the end of the financial year are:

Mr Martin C Albrecht AC Chairman Director since 1985

Mr David K Saxelby Managing Director Director since 2007

Mr Donald J Argent Director since 1992

Mr Robert J Flew Director since 1999

The Hon. Roslyn J Kelly AO Director since 1998

Mr Wallace M King AO Director since 1985

Mr Graeme E McOrist Director since 2006

Mr Wayne G Osborn Director since 2005

Mr William J Wild Appointed 15 February 2008

PrinCiPal aCtivities

During the financial year there were no significant changes in the nature of the consolidated entity’s activities, which were Construction, Mining, Telecommunications, Environmental and Utilities Services in Australia, the near Pacific and selected parts of Asia.

The directors present their report, together with the financial report of Thiess Pty Ltd (“the Company”) and the consolidated financial report of the consolidated entity, being the Company and its controlled entities, for the year ended 30 June 2008 and the auditors’ report thereon.

Consolidated result

The consolidated profit for the year attributable to the members of Thiess Pty Ltd was:

2008 $

2007 $

Net profit from ordinary activities after tax

209,835,798

123,079,650

Minority equity interests 11,822 -

Net profit after tax attributable to members of Thiess Pty Ltd

209,847,620

123,079,650

revieW of oPerations

The 2007/08 performance consolidates our position as a leading mining, construction and service provider throughout Australia and selected international markets. Revenue from operations and joint ventures remained constant at $4.6 billion driven by the mining discipline in Australia and Indonesia as well as civil engineering and services disciplines throughout Australia. Work in hand was reported at $9.9 billion underpinning the Group’s future prospects.

Operating profit before tax for the year was $283 million.

operating revenue, associates and joint ventures

Work in hand

$’000 $’000

Mining 1,832,404 5,868,986

Civil 1,108,493 1,745,189

Process 422,878 251,533

Building 212,819 281,820

Services 820,969 1,696,266

Other 241,973 31,880

4,639,536 9,875,674


DIRECTORS’ REPORT

dividends

Dividends paid or declared by the Company to members since the end of the previous financial year were:

In respect of the 2007/08 financial year:

ordinary dividend

$’000

Amount: 150,000

Date of payment: 2 May 2008

No dividends have been paid since the end of the financial year.

state of affairs

In the opinion of the directors there were no significant changes in the state of affairs of the consolidated entity that occurred during the financial year under review. As noted in this report, the underlying strength of the consolidated entity has continued during the financial year.

environmental regulation

During 2007/08 Thiess received a single penalty infringement notice and fine of $1,500 for an exceedance of DTD plant stack emission limits at the Thiess Services Allied Feeds project in NSW.

The Trackstar Alliance, in which Thiess is an alliance partner, was issued an Environmental Protection Order pertaining to high turbidity water in nearby waterways and inadequate erosion and sediment controls at the Caboolture to Beerburrum project.

Two warning notices were received from environmental authorities during the year, one related to a hydrocarbon spill at the Caboolture to Beerburrum project in Queensland and the other related to an exceedance of air overpressure limits from a blast at Mount Owen mine in NSW. Discussions between the project team and authorities concerning an incident involving the release of a potassium permanganate solution following a water treatment plant malfunction at Epping to Chatswood Rail Line project in NSW

is ongoing. No other environmental penalty infringement notices or prosecutions were received during the year.

Thiess has rigorous internal reporting processes in place where operating projects report the nature, severity and remedial actions of all environmental incidents regardless of whether regulations have been breached or not.

HealtH and safety

The health and safety of our employees remained our key priority in 2007/08 with our goal being a work place free of incidents and injuries. Across 245 operational projects and offices, employing 15,000 employees (including joint ventures) across Australia and Asia, 88 per cent were lost time injury free and 53 per cent were recordable injury free over the period.

Our operations in Indonesia have set new safety benchmarks. During the year, Thiess Contractors Indonesia realised over 45 million hours lost time injury free and completed the financial year only marginally above their very challenging injury reduction targets (LTIFR 0.1 and RIFR 1.4). Our Western Australian operations completed the year lost time injury free.

Our commitment to protect people from harm and eliminate workplace injuries and illnesses is paramount. We still have work to do and are committed to continual improvement. Strategic and system enhancements include:

• FurtherdevelopmenttoourHSEreporting system

• DevelopmentofFitforDutyCoreSystem of Work, and

• ImplementationofaWorkingatHeight Core System of Work

We continue our efforts in earnest to learn from all health and safety incidents and to prevent any recurrence. Our strategy of engaging all our people in these endeavours is imperative.

measure per million work-hours

2008 2007

LTIFR 1.3 0.9

LTISR 13.5 22.2

RIFR 9.15 8.8

ALT 9.7 24.0

events subsequent to balanCe date

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial years.

likely develoPments

The consolidated entity will continue to concentrate on the significant opportunities in the Services, Engineering, Infrastructure and Resource sectors, and expansion into international markets including India and the Middle East which will allow continued growth.

direCtors’ benefits

Since the end of the previous financial year no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by directors as disclosed in the accounts) by reason of a contract made by the Company, its controlled entities or a related body corporate with a director or with a firm of which the director is a member, or with an entity in which the director has a substantial financial interest.


DIRECTORS’ REPORT CONTINUED

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To: the directors of Thiess Pty Ltd

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2008 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

Scott Guse Partner

Brisbane 29 August 2008

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Liability limited by a scheme approved under Professional Standards Legislation.

indemnifiCation of offiCers

The Company has agreed under Clause 71.2 of its Constitution to indemnify the current and past Officers of the Company against all liabilities to another person and reasonable legal defence costs that may arise from their position as Officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith.

lead auditor’s indePendenCe deClaration

A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is included on this page.

rounding off

As the Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998, the directors have chosen to round off amounts in the accompanying accounts to the nearest one thousand dollars in accordance with that Class Order, unless otherwise indicated.

Dated at Brisbane this 29 day of August 2008.

Signed in accordance with a resolution of the directors.

MC Albrecht AC Chairman

DK Saxelby Managing Director


Bundamba Advanced Water Treatment Plant, QLD

direCtors’ deClaration

1. In the opinion of the directors of Thiess Pty Ltd:

(a) The financial statements and notes, set out on pages 10 to 49, are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2008 and of their performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and

(ii) complying with Accounting Standards in Australia (including Australian Accounting Interpretations) and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in the Summary of Significant Accounting Policies; and

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

2. There are reasonable grounds to believe that the Company and the controlled entities identified in Note 31 will be able to meet any obligations or liabilities to which they are or may become subject by virtue of the Deed of Cross Guarantee between the Company and those controlled entities pursuant to ASIC Class Order 98/1418.

Dated at Brisbane this 29 day of August 2008.

Signed in accordance with a resolution of the directors.

MC Albrecht AC Chairman

DK Saxelby Managing Director


STATUTORY STATEMENTS

for the year ended 30 June 2008 Consolidated the Company

note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Revenues and income 1 3,508,788 3,288,105 2,370,085 2,234,355Expenses 2 (3,252,074) (3,237,722) (2,161,558) (2,158,906)Finance costs 3 (10,185) (10,875) - -

Share of net profits of associates and joint venture entities

29, 30

35,987

138,061

21,110

117,448

Profit before tax 282,516 177,569 229,637 192,897

Income tax expense 5 (72,680) (54,490) (62,887) (48,944)

Profit for the year 209,836 123,079 166,750 143,953

attributable to:

- Equity holders of the parent entity 209,848 123,079 166,750 143,953

- Minority interest (12) - - -


The income statements are to be read in conjunction with the notes to the financial statements set out on pages 15 to 49.


INCOME STATEMENTS

as at 30 June 2008 Consolidated the Company

note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Current assets

Cash assets 6 499,026 439,486 387,423 335,455

Receivables 7 617,684 565,830 383,417 330,151

Inventories 8 33,068 22,872 26,834 17,196

Derivative financial instruments 9 - 42,500 - 42,500

total Current assets 1,149,778 1,070,688 797,674 725,302

non-Current assets

Receivables 10 5,579 5,867 80,882 42,347

Investments in associates and joint venture entities

11

54,029

79,070

999

40,103

Other financial assets 12 1 1,242 120,624 119,007Property, plant and equipment 13 513,220 454,917 253,469 232,394Intangible assets 14 10,645 2,966 837 2,966

Deferred tax assets 5 81,197 55,690 47,595 16,555

total non-Current assets 664,671 599,752 504,406 453,372

total assets 1,814,449 1,670,440 1,302,080 1,178,674

Current liabilities

Payables 15 847,512 715,239 652,836 527,676

Provisions 16 65,563 60,484 50,387 47,883

Derivative financial instruments 9 61 726 - -

total Current liabilities 913,136 776,449 703,223 575,559

non-Current liabilities

Payables 17 195,981 225,954 51,085 41,353

Provisions 18 69,781 66,350 36,575 37,698

Derivative financial instruments 9 - 23 - -

total non-Current liabilities 265,762 292,327 87,660 79,051

total liabilities 1,178,898 1,068,776 790,883 654,610

net assets 635,551 601,664 511,197 524,064

equity

Contributed equity 19 200,000 200,000 200,000 200,000

Reserves 20 (1,082) 24,876 - 29,617

Retained profits 21 436,633 376,785 311,197 294,447

Total parent entity interest 635,551 601,661 511,197 524,064

Minority interests - 3 - -

total equity 635,551 601,664 511,197 524,064

The balance sheets are to be read in conjunction with the notes to the financial statements set out on pages 15 to 49.


BALANCE SHEETS


note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Cash flows from operating activities

Cash receipts in the course of operations 3,648,374 3,648,008 2,446,325 2,443,481

Cash payments in the course of operations (3,268,717) (3,285,284) (2,231,510) (2,249,041)

Dividends received - - 4,869 12,161

Interest received 15,327 6,550 21,559 11,263

Income taxes paid (83,864) (58,715) (55,445) (37,802)

Finance costs paid (10,185) (10,875) - -

net cash provided by operating activities 33 300,935 299,684 185,798 180,062

Cash flows from investing activities

Payments for property, plant and equipment and intangibles

(342,546)

(445,127)

(173,733)

(265,976)

Proceeds from sale of non-current assets 103,846 222,194 84,120 168,246

Decrease in associates and joint venture entities

108,059

79,630

96,492

70,743

Payments for investments in other corporations and entities

(281)

(2,113)

(1,617)

(2,116)

net cash from/(used) in investing activities (130,922) (145,416) 5,262 (29,103)

Cash flows from financing activities

Loans from/(to) related entities 41,029 14,644 10,908 (5,026)

Dividends paid (150,000) (70,000) (150,000) (70,000)

net cash used in financing activities (108,971) (55,356) (139,092) (75,026)

net increase in cash held 61,042 98,912 51,968 75,933

Cash at the beginning of the financial year 33 439,486 344,892 335,455 259,522

Effects of exchange rate fluctuations on the balances of cash held in foreign currencies

(1,502)

(4,318)

-

-

Cash at the end of the financial year 33 499,026 439,486 387,423 335,455

The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 15 to 49.


STATEMENTS OF CASH FLOWS


2008 2007 2008 2007

$’000 $’000 $’000 $’000

Net movement in cash flow hedges net of tax (29,536) 29,494 (29,617) 29,622

Net movement in fair value reserve net of tax - (2,914) - (2,914)

Net movement in investment reserve 8,856 486 - -

Net movement in minority interest 9 - - -

Exchange difference on the translation of foreign operations

(5,278)

(10,087)

-

-

net income recognised directly in equity (25,949) 16,979 (29,617) 26,708


total recognised income and expense for the year 183,887 140,058 137,133 170,661

total recognised income and expenses for the year attributable to:

- Equity holders of the parent entity 183,890 140,058 137,133 170,661

- Minority interest (3) - - -

183,887 140,058 137,133 170,661

The statements of recognised income and expense are to be read in conjunction with the notes to the financial statements set out on pages 15 to 49.


STATEMENTS OF RECOGNISED INCOME AND EXPENSE

Collinsville Coal Mine, QLD

summary of signifiCant aCCounting PoliCies

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). The financial statements and notes also comply with International Financial Reporting Standards (IFRS).

The financial report was authorised for issue by the directors on 29 August 2008.

a) Basis of preparation

The financial report is presented in Australian dollars and has been prepared on a historical cost basis, except for derivative financial instruments and available for sale assets that have been measured at fair value.

The following Accounting Standards, amendments and interpretations were available for early adoption but have not been applied by the consolidated entity in these financial statements:

• RevisedAASB3BusinessCombinations; applicable to annual reporting periods beginning on or after 1 July 2009;

• RevisedAASB101Presentation of Financial Statements; applicable to annual reporting periods beginning on or after 1 July 2009;

• RevisedAASB123BorrowingCosts; applicable to annual reporting periods beginning on or after 1 July 2009;

• RevisedAASB127Consolidated and Separate Financial Statements; applicable to annual reporting periods beginning on or after 1 July 2009;

• AASB2008-1Amendmentsto Australian Accounting Standard – Share-based Payment: vesting Conditions and Cancellation; applicable to annual reporting periods beginning on or after 1 July 2009;

• AASB2008-5Amendmentsto Australian Accounting Standards arising from the Annual Improvements Project; applicable to annual reporting periods beginning on or after 1 January 2009;

• AASB2008-6FurtherAmendments to Australian Accounting Standards arising from the Annual Improvements Project; applicable to annual reporting periods beginning on or after 1 July 2009; and

• AASB2008-7Amendmentsto Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly Controlled Entity and Associate; applicable to annual reporting periods beginning on or after 1 January 2009.

The potential impact of these standards has not yet been assessed.

The accounting policies set out below have been applied consistently to all periods presented in the financial report.

The preparation of the financial report requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.


NOTES TO THE FINANCIAL STATEMENTS

Judgements made by management in the application of Australian Accounting Standards that have a significant effect on the financial report and estimates with a significant risk of material adjustment in the next year are as follows:

• Assessmentofprojectsonapercentage of completion basis, in particular with regard to accounting for variations, the timing of profit recognition and the amount of profit recognised;

• Estimationoftheeconomiclife of property, plant and equipment;

• Testingofassetsforimpairment; and

• Determiningthefairvalueofavailable for sale assets.

Note 27 contains detailed analysis of the foreign exchange exposure of the consolidated entity and risks in relation to foreign exchange movements.

Critical accounting judgements in applying the consolidated entity’s accounting policies are as follows:

• Determiningwhetherthesignificant risks and rewards of ownership have transferred in a sale or lease transaction.

b) Basis of consolidation

The financial report includes separate financial statements for Thiess Pty Ltd as an individual entity (“the Company”) and the consolidated entity consisting of Thiess Pty Ltd and its controlled entities. These controlled entities are listed in note 31 to the financial statements.

Results of consolidated entities are included in the consolidated financial statements from the date that control commences until such time that control ceases.

Transactions and balances between entities within the consolidated entity have been eliminated in full.

Minority interests in the results and equity of the entities that are controlled by the Company are shown separately in the consolidated income statement and balance sheet.

c) Revenue recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax.

i. Revenue and profit from construction services is recognised on the basis of the value of work completed. Stage of completion is measured by reference to costs incurred to date as a percentage of estimated total costs for each contract. Profits are not recognised on contracts during the establishment and initial stages and accordingly recognition of profit is deferred during that period. For such contracts the difference between the revenue and the costs is carried forward as either a contract receivable or contract payable. Once the contract result can be reliably estimated, which is not less than 20% complete by cost, the profit earned to that point is immediately recognised. Expected losses are recognised as soon as they become apparent.

ii. Revenue from mining, telecommunications, environmental and utilities services is recognised on an accruals basis.

iii. Interest revenue is recognised as it accrues.

iv. Dividends from controlled entities are recognised when declared. Dividends from other investments are recognised when received.

d) Income tax

Income tax on profit for the period comprises current and deferred tax. Income tax is recognised in

the income statement except to the extent that it relates to items recognised directly in equity, in which case it is charged in equity. Current tax is expected tax payable on the taxable income for the period and any adjustment to tax payable in respect of previous years. The consolidated entity adopts the balance sheet liability method, providing for temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

i. Tax consolidation

The immediate parent, Leighton Holdings Limited, is the head entity in the tax consolidated group comprising all the Australian wholly-owned subsidiaries. The tax consolidated group has entered into a tax funding agreement that requires wholly-owned subsidiaries to make contributions to the head entity for current tax assets and liabilities occurring after implementation of tax consolidation. Under the tax funding agreement, contributions are calculated on a “stand-alone basis” so that the contributions are equivalent to the current tax balances generated by transactions entered into the wholly-owned subsidiaries. The contributions are payable as set-out in the agreement and reflect the timing of the head entity’s obligation to make payments for tax liabilities to relevant authorities.


NOTES CONTINUED

e) Cash assets

Cash assets include cash on hand, cash at bank and funds on deposit. For the purpose of the statement of cash flows, cash includes cash on hand, at bank and short term deposits at call, net of outstanding overdrafts.

All cash assets are held with high credit quality financial institutions.

f) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances GST is considered part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financial activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

g) Foreign currency

i. Presentation currency

The consolidated financial statements are presented in Australian dollars, which is the presentation currency of Thiess Pty Ltd.

ii. Transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Exchange differences arising on settlement or restatement are brought to account in

the income statement except where deferred in equity as qualifying cash flow hedges.

iii. Translation of controlled foreign entities

Assets and liabilities of controlled foreign entities are translated into the presentation currency at the rate of exchange at reporting date and the income statement is translated at the weighted average exchange rates for the period. The resulting exchange differences are taken directly to a separate component of equity.

h) Receivables

Trade receivables include all receivables and the progressive valuation of work completed on construction contracts represented by amounts billed to and from clients less cash received. The valuation of work completed is established after bringing to account a proportion of the estimated contract profits available after recognising all known losses.

Receivables are generally settled within two months of billing. All receivables are stated at amortised cost less impairment losses.

i) Inventories

Raw materials and stores are carried at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on the basis of weighted average and include expenditure incurred in acquiring the inventories and bringing them to their existing condition and location.

j) Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment in value. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Costs may include transfers from equity of any gains/losses on qualifying cash flows and hedges of foreign currency purchases of plant and equipment.

The fair value of plant and equipment recognised as a result of a business combination is based on market values. The market value of plant and equipment and fixtures and fittings is based on the quoted market prices of similar items.

Depreciation and amortisation is calculated so as to write off the net book value of property, plant and equipment over their estimated effective useful lives. The depreciation period and methods for each class of asset for current and prior years are as follows:

• Buildings–straightlinemethod over 40 years;

• Leaseholdimprovements– straight line method over 10 years;

• Majorplantandequipment – the current cumulative number of hours worked typically over 5 to 8 years;

• Otherequipment–straightlinemethod typically over 1 to 5 years; and

• Wastemanagementassets– straight line method typically over 20 years.

Payments made under operating leases are expensed on a straight line basis over the term of the lease.

k) Impairment

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recovered. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. Any impairment is expensed in the reporting period in which it occurs.


NOTES CONTINUED

Where a group of assets working together supports the generation of cash inflows, recoverable amount is assessed in relation to that group of assets.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised.

The consolidated entity has established an allowance for impairment that represents the estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific losses component that relates to individually significant exposures, and a collective loss component that relates to a group of similar assets in respect of losses that have been incurred but not yet identified. The collective loss is based on historical data from payment statistics.

l) Investments and other financial assets

i. Investments in associates and joint venture entities

Interests in associates and joint venture entities are accounted for using the equity accounting principles. The consolidated entity’s share of profits or losses are recognised in the income statement, and the share of movement in reserves is recognised in reserves in the balance sheet.

The company’s investment in associates and joint venture entities is accounted for at cost.

ii. Other investments

Available for sale assets are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the asset. After initial recognition available for sale assets are measured at fair value. Changes in fair value are recognised in the fair value reserve. The fair value of available for sale financial assets is determined by reference to their quoted market price for listed entities and internal valuations for unlisted entities.

When the asset is sold, collected, disposed or impaired, the cumulative gain or loss previously recorded in equity is included in the income statement.

m) Derivative financial instruments

Derivatives are initially recognised at fair value on the date the derivative contract is entered and are subsequently remeasured to fair value. The method of recognition depends on whether the derivative is designated as a hedging instrument. The consolidated entity has designated hedges of highly probable transactions as cash flow hedges.

i. Hedging

The consolidated entity documents at inception the relationship between the hedging instrument and the hedging item as well as the risk management objective. At each reporting date the consolidated entity assesses whether the derivatives have been, and will continue to be, highly effective in offsetting the changes in fair values or cash flows of the hedged items.

The effective portion of changes in the fair value of cash flow hedges is recognised in equity in the hedging reserve. The gain or loss on the ineffective portion is recognised immediately in the income statement.

When a hedging instrument expires or is sold or terminated amounts accumulated in equity are transferred to the income statement in the periods when the hedged item affects profit or loss. When the forecast transaction results in the recognition of a non-financial asset or liability, the gains or losses previously deferred in equity are included in the measurement of the initial cost or carrying amount of the asset or liability.

The fair value of forward exchange contracts is determined using forward exchange market rates at balance sheet date.

n) Intangibles

i. Goodwill

Goodwill represents the excess purchase consideration over the fair value of the identifiable net assets acquired of controlled entities and businesses at the date of acquisition. Goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.

The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash generating units that are expected to benefit from the synergies of the combination.


NOTES CONTINUED

ii. Software

Costs incurred in acquiring software and developing systems that will contribute to future period financial benefits are capitalised. Amortisation is calculated on the straight line method typically over 1-5 years.

o) Payables

Liabilities are recognised for amounts to be paid in the future for goods and services received which represents amortised cost. Trade accounts payable are generally to be settled within two months.

p) Employee entitlements

i. Annual leave

The provision for employee entitlements to annual leave represents that amount which the consolidated entity has a present obligation to pay resulting from employee’s services provided up to the balance date. The provisions have been calculated using the remuneration rates the consolidated entity expects to pay at each reporting date and includes related on-costs.

ii. Long service leave

The provision for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made by the employer resulting from employee’s services provided up to the balance date. Liabilities for employee entitlements which are not expected to be settled within twelve months are discounted using the rates attaching to national government securities at balance date, which most closely match the terms of maturity of the related liabilities. In determining the liabilities for employee entitlements consideration has been given to future wage and salary

increases and the consolidated entities experience with staff departures. Related on-costs have also been included in the liability.

q) Restoration provisions

Provision for restoration represents restoration obligations in respect of landfills. The provisions are best estimates of the expenditure required to settle the restoration at reporting date. The amount for future restoration costs is capitalised as a waste management asset.

r) Capital management

The consolidated entity is 100% owned by Leighton Holdings Limited, a publicly listed entity. Management of capital takes into account the operational requirements and future plans of the consolidated entity. Surplus capital is distributed by way of dividends to Leighton Holdings Limited.

s) Rounding of amounts

As the company is of a kind referred to in Class Order 98/100 issued by ASIC, the directors have chosen to round off amounts in the financial report to the nearest thousand dollars, unless otherwise stated.


NOTES CONTINUED

Consolidated the Company

note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

1 revenues

Construction, mining, telecommunications, environmental and utilities services contracts

3,407,249

3,234,728

2,273,443

2,191,641

Other operating revenues 21,708 31,894 8,421 8,393

revenues from external customers 3,428,957 3,266,622 2,281,864 2,200,034

Dividends:- Controlled entities - - - 10,213

- Associates - - 4,869 1,948Interest:- Controlled entities - - 7,949 4,972

- Associates 59 56 59 55

- Other related entities 13,450 6,090 13,450 6,090

- Other entities 1,818 404 101 146

Net gains on disposal of property, plant and equipment

21,635

7,561

18,924

3,525

Net gains on disposal of other financial assets 42,869 7,372 42,869 7,372

other income 79,831 21,483 88,221 34,321

total revenues and income 3,508,788 3,288,105 2,370,085 2,234,355

The consolidated entity’s share of revenues from associates and joint venture entities is excluded from Revenues noted above and from the Income Statement in accordance with Australian Accounting Standards. The delivery of major projects by the consolidated entity is increasingly in the form of associates and joint ventures. Details of the consolidated entity’s share of associates and joint ventures’ revenues is provided as additional information below.

Revenues from external customers 3,428,957 3,266,622 2,281,864 2,200,034

Revenues from associates and joint ventures 29, 30 1,130,748 1,517,780 757,809 1,177,598

Total revenue from external customers, associates and joint ventures

4,559,705

4,784,402

3,039,673

3,377,632

Other income 79,831 21,483 88,221 34,321

Revenues from external customers, associates and joint ventures

4,639,536

4,805,885

3,127,894

3,411,953

2 expenses

Materials 917,029 969,868 630,109 635,028

Subcontractors 335,128 433,509 288,729 373,748

Plant 639,951 589,662 404,047 366,501

Labour * 903,578 819,108 565,160 532,905

Insurance 14,372 14,344 13,401 13,750

Depreciation and amortisation 225,175 213,045 132,460 131,105

Operating lease payments 167,008 144,295 83,840 57,087

Professional fees 5,523 4,135 4,501 3,112

Technical advice 44,310 49,756 39,311 45,670

total expenses 3,252,074 3,237,722 2,161,558 2,158,906

* Includes $67,601,562 (2007: $49,492,650) in contributions to defined contribution superannuation plans paid by the consolidated entity and $51,408,810 (2007: $37,380,099) by the Company.


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

3 Profit before income tax expense

Profit before income tax expense includes the following specific expenses:

Finance costs:

- Interest - related entities 10,185 10,875 - -

Depreciation of:- Buildings 115 137 60 83

- Plant and equipment 217,229 205,190 130,202 128,109

Total depreciation 217,344 205,327 130,262 128,192

Amortisation of:- Waste management assets 3,330 3,085 - -

- Intangibles 2,791 2,913 2,198 2,913

- Leasehold improvements 1,710 1,720 - -

Total amortisation 7,831 7,718 2,198 2,913

Gross amount charged to provisions:

- Employee entitlements 105,297 95,536 69,796 62,362

Operating lease rental expense:- Minimum lease payments 167,008 144,295 83,840 57,087

Net foreign exchange loss/(gain) 815 1,715 (93) 502


NOTES CONTINUED


2008 2007 2008 2007$’000 $’000 $’000 $’000

4 auditors remunerationAudit services:Auditors of the company – KPMG

Australia

- Audit and review of financial reports 393 360 367 335

- Other regulatory services 54 46 54 46

Overseas

- Audit and review of financial reports 192 178 - -

639 584 421 381

Other services:Auditors of the company – KPMG

Australia

- Taxation services 1 1 - -

- Other assurance services 61 89 61 65

Overseas

- Taxation services 4 73 - -

66 163 61 65

Leighton Holdings Limited engaged KPMG to provide taxation services on behalf of Thiess Pty Ltd. The fees associated with this work have been paid by Leighton Holdings Limited and as such have not been disclosed above.


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

5 income tax expense

Recognised in the income statement:

Current tax) 94,878 73,172 86,096 59,947

Deferred tax (12,814) (23,758) (18,347) (5,199)

(Over)/under provided in prior years (9,384) 5,076 (4,862) (5,804)

Income tax expense 72,680 54,490 62,887 48,944

reconciliation between tax expense and pre-tax net profitProfit before income tax 282,516 177,569 229,637 192,897

Income tax using the domestic corporate tax rate of 30% (2007:30%)

84,755

53,271

68,891

57,869

Tax effect of amounts which are not deductible / (taxable) in calculating taxable income:

- Depreciation and amortisation 1,197 505 439 25

- Tax losses not recognised 78 528 - -

- Sundry items 503 1,232 (120) 502

- Income not subject to tax/rebatable dividends (4,463) (6,184) (1,461) (3,648)

- Overseas tax differential (6) 62 - -

Current period income tax 82,064 49,414 67,749 54,748

(Over)/under provision in prior years:

- Research and development allowance (6,078) (7,620) (4,884) (6,061)

- Overseas tax differential (3,288) 11,263 - -

- Sundry (18) 1,433 22 257

income tax expense 72,680 54,490 62,887 48,944


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

5 income tax expense (continued)

deferred income tax assets

Balance comprises temporary differences attributable to:

Amounts recognised in profit or loss:

- Employee benefits 50,181 44,231 36,412 32,463

- Property, plant and equipment 62,746 61,469 45,107 34,991

- Joint venture temporary differences 3,484 332 3,133 -

- Tax losses carried forward - 1,908 - -

- Sundry 9,658 6,740 3,149 1,760

126,069 114,680 87,801 69,214

Amounts recognised directly in equity:

- Joint venture cash flow hedges - 57 - 57

- 57 - 57

total deferred tax assets 126,069 114,737 87,801 69,271

Set off of tax (44,872) (59,047) (40,206) (52,716)

net deferred tax assets 81,197 55,690 47,595 16,555

Movements:

Opening balance 1 July 114,737 95,170 69,271 56,301

Recognised in the income statement 11,389 19,513 18,587 12,915

Recognised in equity (57) 54 (57) 55

126,069 114,737 87,801 69,271


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

5 income tax expense (continued)

deferred income tax liabilities

Balance comprises temporary differences attributable to:

Amounts recognised in profit or loss:

- Profit recognition variance 41,163 14,071 38,780 9,197

- Joint venture temporary differences - 29,665 - 29,665

- Sundry 3,709 2,561 1,426 1,104

44,872 46,297 40,206 39,966

Amounts recognised directly in equity:- Cash flow hedges - 12,750 - 12,750

- 12,750 - 12,750

total deferred tax liabilities 44,872 59,047 40,206 52,716

Set off of tax (44,872) (59,047) (40,206) (52,716)

net deferred tax liabilities - - - -

Movements:

Opening balance 1 July 59,047 51,812 52,716 33,499

Recognised in the income statement (1,425) (4,245) 240 7,716

Recognised in equity (12,750) 11,480 (12,750) 11,501

44,872 59,047 40,206 52,716


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

6 Current assets – cash assets

Deposits 34,723 1,635 - -

Cash at bank and on hand 464,303 437,851 387,423 335,455

499,026 439,486 387,423 335,455

7 Current assets – receivables

Trade debtors receivable 350,297 320,031 245,381 169,713

Other receivables 141,257 96,644 42,492 27,407

Prepayments 8,153 4,137 2,495 -

Income tax prepaid 40,166 31,347 - -

Related entities:

- Immediate parent entity 77,811 113,671 77,811 113,671

- Controlled entities - - 15,238 19,360

617,684 565,830 383,417 330,151

Contract valuations

Progressive value of work completed at year end

11,422,343

10,005,258

8,479,994

7,305,724

Progressive billingsNet contract receivables 323,791 280,540 223,754 137,036

Retentions held by clients - 1,857 - -

net contract debtors receivable from clients 323,791 282,397 223,754 137,036

Cash received to date 11,098,552 9,722,861 8,256,240 7,168,688

total progressive value 11,422,343 10,005,258 8,479,994 7,305,724

Amounts due from customers

- Trade debtors receivable 350,297 320,031 245,381 169,713

Amounts due to customers

- Trade creditors (26,506) (37,634) (21,627) (32,677)

net contract debtors receivable from clients 323,791 282,397 223,754 137,036


NOTES CONTINUED


note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

8 Current assets – inventories

Raw materials and spares - at cost 33,068 22,872 26,834 17,196

9 derivative financial instruments

Current assets

Other cash flow hedges - 42,500 - 42,500Current liabilities Forward foreign exchange contracts:- Cash flow hedges 61 726 - -

Non-current liabilities Forward foreign exchange contracts:- Cash flow hedges - 23 - -

10 non-current assets – receivables

Related entities


- Associates 809 838 809 838

- Other related entities 4,770 5,029 - -

5,579 5,867 80,882 42,347

11 non-current assets – investments in associates and joint venture entities

Associates 29 53,030 38,967 - -

Joint venture entities

- Accounted for using the equity method 30 999 40,103 - -

- Profit distributions receivable - - 999 40,103

54,029 79,070 999 40,103


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

12 non-current assets – other financial assets

available for sale financial assetsCarrying amount at the beginning of the year

1

35,521

1

35,521

Additions - 1,613 - 1,613

Disposals - (32,971) - (32,971)

Revaluation through equity - (4,162) - (4,162)

Total available for sale financial assets 1 1 1 1

other financial assets

Controlled entities - - 118,541 117,206

Other entities - 1,241 - -

Shares in associates - - 2,082 1,800

- 1,241 120,623 119,006

total other financial assets 1 1,242 120,624 119,007

13 non-current assets – property, plant and equipment

land

Cost 1,688 3,285 1,628 3,225

buildings

Cost 3,029 4,737 1,604 3,312

Accumulated depreciation (738) (797) (256) (369)

2,291 3,940 1,348 2,943

leasehold improvements

Cost 11,991 11,095 - -

Accumulated amortisation (5,163) (3,667) - -

6,828 7,428 - -

Waste management assets

Cost 49,438 48,808 - -

Accumulated amortisation (27,144) (23,814) - -

22,294 24,994 - -

Plant and equipment

Cost 1,223,351 1,071,878 728,477 653,570

Accumulated depreciation (743,232) (656,608) (477,984) (427,344)

480,119 415,270 250,493 226,226

total property, plant and equipment 513,220 454,917 253,469 232,394


NOTES CONTINUED

13 non-current assets – property, plant and equipment (continued)

reconciliation of property, plant and equipment carrying values

Consolidated

land buildings leasehold improvements

Waste management

assets

Plant and equipment

total property, plant and

equipment$’000 $’000 $’000 $’000 $’000 $’000

Carrying amount at the beginning of the financial year

3,285

3,940

7,428

24,994

415,270

454,917

Additions 24 38 1,810 630 318,936 321,438

Additions through business combinations

-

-

-

-

10,639

10,639

Disposals (1,621) (1,572) - - (36,147) (39,340)

Depreciation/amortisation expense

-

(115)

(1,710)

(3,330)

(217,229)

(222,384)

Net foreign currency translation

-

-

(700)

-

(11,350)

(12,050)

Carrying amount at the end of the financial year

1,688

2,291

6,828

22,294

480,119

513,220

the Company

land buildings Plant and equipment

total property, plant and

equipment$’000 $’000 $’000 $’000

Carrying amount at the beginning of the financial year

3,225

2,943

226,226

232,394

Additions 24 38 173,602 173,664

Disposals (1,621) (1,573) (19,133) (22,327)

Depreciation expense - (60) (130,202) (130,262)

Carrying amount at the end of the financial year

1,628

1,348

250,493

253,469


NOTES CONTINUED

13 non-current assets – property, plant and equipment (continued)

sale and leaseback During the period the consolidated entity entered into numerous sale and leaseback transactions for plant and equipment. All sale and leaseback transactions were at fair value and resulted in operating leases being established.


2008 2007 2008 2007

$’000 $’000 $’000 $’000

Cost 31,664 187,057 15,137 128,482

Accumulated depreciation (1,141) (19,488) (727) (5,614)

Carrying amount 30,523 167,569 14,410 122,868

Proceeds 30,995 167,741 14,468 123,115

Profit recognised in the income statement 472 172 58 247

14 non-current assets – intangible assets


goodwill

software & Contracts

goodwill

software & Contracts

$’000 $’000 $’000 $’000

year ended 30 June 2007

Opening net book amount - 5,802 - 5,802

Additions - 77 - 77

Amortisation and impairment charge - (2,913) - (2,913)

Closing net book amount - 2,966 - 2,966

year ended 30 June 2008

Opening net book amount - 2,966 - 2,966

Additions 9,055 1,415 - 69

Amortisation and impairment charge - (2,791) - (2,198)

Closing net book amount 9,055 1,590 - 837

at 30 June 2008

Cost 9,055 20,990 - 19,575

Accumulated amortisation and impairment - (19,400) - (18,738)

Net book amount 9,055 1,590 - 837

The amortisation and impairment charge is recognised in the expense line item in the income statement.


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

15 Current liabilities – payables

Trade creditors and accruals 646,084 562,102 454,337 400,515

Related entities

- Immediate parent entity 99,921 83,094 91,945 71,831


- Associates 10,731 15,731 - -

- Joint venture entities 90,776 54,312 90,398 54,312

847,512 715,239 652,836 527,676

16 Current liabilities – provisions

Employee entitlements 65,563 60,484 50,387 47,883

17 non-current liabilities – payables

Trade creditors and accruals 75,519 102,580 51,085 41,353

Related entities

- Immediate parent entity 1,140 1,290 - -

- Other related entities 119,322 122,084 - -

195,981 225,954 51,085 41,353

18 non-current liabilities – provisions

Restoration

Balance at beginning of financial year 5,186 4,315 - -

Change in estimate - 871 - -

Balance at end of year 5,186 5,186 - -

Employee entitlements 64,595 61,164 36,575 37,698

69,781 66,350 36,575 37,698

19 Contributed equity

issued and paid-up share capital

200,000,000 (2007:200,000,000) ordinary shares, fully paid

200,000

200,000

200,000

200,000

ordinary shares

Balance at beginning of year 200,000 200,000 200,000 200,000

Balance at end of year 200,000 200,000 200,000 200,000

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after creditors and are fully entitled to any proceeds of liquidation.


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

20 reserves

Hedging reserve – cash flow hedges - 29,536 - 29,617

Foreign currency translation reserve (21,082) (15,804) - -

Investment reserve 20,000 11,144 - -

(1,082) 24,876 - 29,617

Hedging reserve – cash flow hedges

Balance 1 July 29,536 42 29,617 (5)

Revaluation joint venture - gross - (184) - (183)

Deferred tax - 55 - 55

Revaluation - gross - 42,267 - 42,500

Deferred tax - (12,680) - (12,750)

Transfer to net profit - gross (42,192) 51 (42,309) -

Deferred tax 12,656 (15) 12,692 -

- 29,536 - 29,617

fair value reserve

Balance 1 July - 2,914 - 2,914

Revaluation - gross - - - -

Deferred tax - - - -

Transfer to net profit - gross - (4,162) - (4,162)

Deferred tax - 1,248 - 1,248

- - - -

foreign currency translation reserve

Balance 1 July (15,804) (5,717) - -

Translation adjustment on overseas controlled entities financial statements

(5,278)

(10,087)

-

-

(21,082) (15,804) - -

investment reserve

Balance 1 July 11,144 10,658 - -

Revaluation 8,856 486 - -

20,000 11,144 - -

fair value reserveChanges in the fair value of investments, such as equities classified as available for sale financial assets, are taken to the fair value reserve. Amounts are recognised in profit and loss when the associated assets are sold or impaired.

Hedging reserveThe hedging reserve is used to record gains and losses on a hedging instrument in a cash flow hedge that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.

foreign currency translation reserveExchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve. The reserve is recognised in profit and loss when the net investment is disposed of.

investment reserveThe investment reserve is used to record post acquisition increases in reserves of associates.


NOTES CONTINUED


note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

21 retained profits

Balance at beginning of year 376,785 323,706 294,447 220,494

Net profit for the year 209,848 123,079 166,750 143,953

Dividends paid (150,000) (70,000) (150,000) (70,000)

Balance at end of year 436,633 376,785 311,197 294,447

22 dividends

Interim ordinary dividends 150,000 70,000 150,000 70,000

23 employee entitlements

Aggregate employee entitlements

- Current 16 65,563 60,484 50,387 47,883

- Non-current 18 64,595 61,164 36,575 37,698

130,158 121,648 86,962 85,581

Number of employees at year end 13,658 11,642 5,267 4,552


NOTES CONTINUED


2008 2007 2008 2007

$’000 $’000 $’000 $’000

24 Commitments

Capital expenditure commitments

Capital expenditure contracted for but not provided for are as follows:

Property, plant and equipment payable:

- Within one year 82,782 215,983 22,185 145,442

investments payable

- Within one year - 130,000 - 130,000

Joint venture commitments

Property, plant and equipment payable:

- Within one year 651 4,107 326 3,182

operating leases

The consolidated entity leases plant and equipment used in contract mining, civil engineering activities and property for the purposes of office accommodation under operating leases. The average lease term is three to ten years.

Cancellable operating lease commitments

Future operating lease rentals of property, plant and equipment payable:

- Within one year 178,405 168,663 89,566 78,030

- Later than one year and not later than five years

413,859

499,331

246,868

204,195

- Later than five years 45,556 82,645 35,932 49,560

637,820 750,639 372,366 331,785

25 bank guarantees, insurance bonds and letters of credit

Contingent liability under indemnities given on behalf of controlled entities and joint ventures in respect of:

- Bank guarantees 335,820 220,056 280,069 178,614

- Insurance bonds 43,780 64,429 21,281 35,792

- Letters of credit 611 281,638 611 281,579


NOTES CONTINUED

26 business combinationsDuring the year to 30 June 2008 the consolidated entity made the following acquisitions.

a) southWest energyOn 3 September 2007 the consolidated entity acquired selected assets and liabilities of SouthWest Energy for consideration of $4.94 million, including acquisition costs.

At the date of acquisition, SouthWest Energy was involved in electrical field maintenance services. As a result of the combination it was decided the business activity would continue after the acquisition.

It is impractical to determine the net profit or loss before tax that SouthWest Energy contributed to the consolidated net profit for the year. This is because the acquired business is not segregated and was integrated into an existing operating unit. For the same reason, it is impractical to determine the consolidated net profit before tax and revenue if the combination had taken place on 1 July 2007.

b) mini PickersOn 3 September 2007 the consolidated entity acquired selected assets and liabilities of Mini Pickers for consideration of $4.73 million, including acquisition costs.

At the date of acquisition, Mini Pickers was involved in equipment and labour hire services. As a result of the combination it was decided the business activity would continue after the acquisition.

In the year to 30 June 2008, Mini Pickers contributed a net loss before tax of $0.18 million to the consolidated net profit for the year. If the combination had taken place at 1 July 2007, management estimates that consolidated net profit before tax and revenue would have been $282.48 million and $3,509.35 million respectively.

c) Champ ConstructionsOn 1 October 2007 the consolidated entity acquired selected assets and liabilities of Champ Constructions for consideration of $5.69 million.

At the date of acquisition, Champ Constructions was involved in gas and electrical construction services. As a result of the combination it was decided the business activity would continue after the acquisition.

In the year to 30 June 2008, Champ Constructions contributed net profit before tax of $0.11 million to the consolidated net profit for the year. If the combination had taken place at 1 July 2007, management estimates that consolidated net profit before tax and revenue would have been $282.55 million and $3,511.33 million respectively.

d) ozboreOn 7 April 2008 the consolidated entity acquired selected assets and liabilities of Ozbore for consideration of $5.29 million.

At the date of acquisition, Ozbore was involved in underground drilling and telecommunications services. As a result of the combination it was decided the business activity would continue after the acquisition.

In the year to 30 June 2008, Ozbore contributed net profit before tax of $0.14 million to the consolidated net profit before tax for the year. If the combination had taken place at 1 July 2007, management estimates that consolidated net profit before tax and revenue would have been $282.97 million and $3,515.44 million respectively.


NOTES CONTINUED

26 business combinations (continued)

These acquisitions had the following effect on the consolidated entity’s assets and liabilities at their respective acquisition dates:

recognised values on acquisition

$’000

assets

Cash 26

Inventories 40

Property, plant and equipment 10,639

Intangibles 1,347

liabilities

Employee entitlements 452

Net identifiable assets and liabilities 11,600

Goodwill on acquisition 9,055

20,655

Purchase consideration

Cash paid 20,480

Direct costs relating to acquisitions 175

20,655

Cash outflow on acquisitions

Net cash acquired with acquisition 26

Cash paid (20,655)

Net consolidated cash outflow (20,629)

The amounts recognised at acquisition dates for each class of acquiree’s assets and liabilities were the same as the carrying amounts of those items in the accounts of the acquiree’s immediately before acquisition.

The goodwill is mainly attributable to acquiring skilled workforces, high profitability of trading in relevant markets and the synergies expected to be achieved from integrating the acquisitions into the consolidated entity’s existing businesses.


NOTES CONTINUED

27 financial risk managementMarket, liquidity and credit risk (including foreign currency, commodity and interest rate risk) arise in the normal course of the consolidated entity’s business. The overall financial risk management strategy is to seek to ensure the consolidated entity and the Company are able to fund its business plans. These risks are managed under Board approved directives as well as treasury policies set by Leighton Holdings Limited.

Risk management policies are established to identify and analyse the risks faced by the consolidated entity and the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to the limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the consolidated entity and the Company’s activities. The aim is to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The consolidated entity and the Company’s financial instruments, other than derivatives, consist primarily of interest-bearing debt, cash and short term deposits. Other financial instruments include trade receivables and trade payables which arise directly from operations.

a) Credit riskCredit risk arises from cash assets, derivative financial instruments and deposits with banks and financial institutions as well as credit exposure to customers, including outstanding receivables and committed transactions. It represents the potential financial loss if counterparties fail to perform as contracted. Management has credit policies in place and the exposure to credit risk is monitored on an ongoing basis. The consolidated entity and the Company minimises credit risk by undertaking transactions with a large number of customers and counterparties in various countries. Concentration of credit risk on trade and term debtors exists in respect of the contracting business. As at reporting date, 16% of the consolidated entity’s trade debtors was owed by a customer in the Asian segment and 9% by a customer in the Australian segment.

The consolidated entity’s policy is to provide guarantees to wholly owned subsidiaries (refer Note 32) and as part of its operating activities (refer Notes 25 and 28).

The consolidated entity does not hold collateral, nor does it securitise trade and other receivables. Credit risk is limited to the carrying value of the consolidated entity’s financial assets.

The ageing of financial assets at balance date was as follows:

impairment gross

2008 2007 2008 2007

$’000 $’000 $’000 $’000ConsolidatedPast due 0-30 days 5 52 12,623 17,532

Past due 31-60 days 13 89 1,883 17,218

Past due 61-90 days 465 427 13,896 17,201

483 568 28,402 51,951

the Company

Past due 0-30 days - - 3,869 7,282

Past due 31-60 days - - 431 15,706

Past due 61-90 days - - 11,756 14,799

- - 16,056 37,787

All other financial assets were not past due.

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

Consolidated

2008 2007

$’000 $’000

Balance 1 July 568 216

Impairment (85) 352

Balance 30 June 483 568


NOTES CONTINUED

27 financial risk management (continued)

b) liquidity riskPrudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The consolidated entity aims at maintaining flexibility in funding to meet ongoing operational requirements, tender expenditure and small to medium opportunistic projects and investments by keeping committed credit facilities available.

The following table analyses the contractual maturities of the consolidated entity’s financial liabilities into the relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed are the contractual, undiscounted cash flows comprising principal and interest repayments and excluding the impact of netting arrangements.

average interest rate

Contractual cash flows

less than 1 year

1 - 2 years

2 - 5 years

% $’000 $’000 $’000 $’000

2008 Consolidated

Trade creditors - 627,844 627,844 - -

Related entities 8.59 154,434 11,378 10,238 132,818

Forward contract used for hedging - 61 61 - -

782,339 639,283 10,238 132,818

2008 the Company

Trade creditors - 435,553 435,553 - -

Related entities 7.25 16,156 16,156 - -

451,709 451,709 - -

2007 Consolidated

Trade creditors - 541,509 541,509 - -

Related entities 5.00 169,398 12,499 11,209 145,690

Forward contract used for hedging - 750 727 23 -

711,657 554,735 11,232 145,690

2007 the Company

Trade creditors - 378,374 378,374 - -

Related entities 5.53 1,018 1,018 - -

379,392 379,392 - -

Cash flows associated with derivatives that are classified as cash flow hedges are expected to occur and impact profit in the same period they mature.


NOTES CONTINUED


c) foreign currency riskForeign currency risk arises from commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the entity’s functional currency. The consolidated entity is exposed to foreign currency risk principally through specific project revenue and expenditure and plant and equipment purchase commitments denominated in foreign currencies.

To manage this risk members of the consolidated entity enter into forward exchange contracts classified as cash flow hedges and states them at fair value. Changes in fair value of cash flows hedges are recorded in equity to the extent that the hedge is deemed effective and until the hedged transaction occurs. Any ineffective portion is immediately recorded in the income statement.

Exposure to foreign currency risk at balance date, based on notional amounts was:

usd idr JPy euro

$’000 $’000 $’000 $’000

2008 Consolidated

Trade receivables - 1,278 - -

Forward exchange contracts 216 - - -

216 1,278 - -

2007 Consolidated

Trade receivables - 1,030 - -

Forward exchange contracts 14,021 - 669 1,722

14,021 1,030 669 1,722

The Company’s foreign currency risk exposure is nil (2007:$1,722,000).

The following significant exchange rates applied during the year:

average rate spot rate

2008 2007 2008 2007

USD 0.89 0.84 0.95 0.85

EURO 0.63 0.63 0.61 0.63

JPY 103.18 103.00 101.07 104.69

IDR 8,365 7,372 8,716 7,696

The following table summaries the sensitivity of financial instruments held at balance date to movements in the exchange rates. This analysis assumes that all other variables remain constant.

increase/(decrease) impact on equity impact on profit

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Consolidated

AUD / USD +10% - (772) (21) (501)

AUD / USD -10% - 943 24 612

AUD / EURO +10% - (157) - -

AUD / EURO -10% - 192 - -

AUD / JPY +10% - (61) - -

AUD / JPY -10% - 74 - -

USD / IDR +10% - - (116) (103)

USD / IDR -10% - - 142 126

For the Company, a 10% increase in the strength of the AUD against EURO had a nil (2007: ($157,000)) impact on profit and loss. A 10% decrease in the strength of the AUD against EURO had a nil (2007:$192,000) impact on profit and loss.


NOTES CONTINUED


d) interest rate riskInterest rate risk is the risk the consolidated entity’s financial position will be adversely affected by movements in interest rates. Interest rate risk on cash and short-term deposits is not considered to be a material risk due to the short term nature of these financial instruments. The consolidated entity interest rate risk arises on long term debt and adopts a policy of ensuring that the majority of its exposure to changes in interest rates on borrowing is on a floating rate basis.

The financial instruments exposed to interest rate risk are as follows:Consolidated the Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Cash assets* 499,026 439,486 387,423 335,455

Financial and other assets 78,620 114,509 158,693 156,019

Interest-bearing liabilities 119,322 122,084 - -

The following table summaries the sensitivity of fair value of financial instruments held at reporting date and the effect of a movement in interest rates with all other variables held constant.

impact on profit increase/(decrease) Consolidated the Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

100bp increase (369) (11) 1,601 1,584

100bp decrease 369 11 (1,601) (1,584)

* Sensitivity based on cash holdings throughout the year.

e) fair value

The carrying amounts of financial assets and liabilities in the consolidated entity’s and the Company’s balance sheet approximate fair values.


NOTES CONTINUED

28 other contingent liabilities and assets

The Company, together with other members of the Leighton Group, has indemnified various banks for all monies owing from time to time by the Leighton Group of companies, in respect of various credit agreements entered into with these banks.

The total amounts of bank bills, guarantees, loans and letters of credit advanced to other companies within the Leighton Group amount to $3,572,785,000 (2007: $2,108,619,000).

The consolidated entity has the normal contractor’s liability in relation to construction contracts. This liability may include litigation by or against the consolidated entity and/or joint venture arrangements in which the consolidated entity has an interest. It is not possible to estimate the financial effect of these claims should they be successful. The directors are of the opinion, based on legal advice, that no provision is required. In the directors’ opinion, disclosure of any further information about the claims would be prejudicial to the interests of the consolidated entity.

The Company is called upon to give in the ordinary course of business guarantees and indemnities in respect of the performance by controlled entities of their contractual and financial obligations.

The consolidated entity has entered into various joint venture arrangements under which the consolidated entity is jointly and severally liable for the liabilities of the joint ventures.

Under the terms of the Class Order described in Note 32, the Company has entered into approved deeds of indemnity for the cross-guarantee of liabilities with participating Australian subsidiary companies.

No claims or losses are anticipated in respect of contingent liabilities.

29 investments – associates

ownership interest Consolidated

name Principal activities Country of incorporation

reporting date

2008 %

2007 %

Sedgman Ltd Design Australia 30 June 36 38

Promet Engineers Pty Ltd Design Australia 30 June 50 50

Silcar Pty Ltd Maintenance Services Australia 30 June 50 50

Thiess Kentz Pty Ltd Engineers & Constructors Australia 30 June 50 50

Thiess Leighton India Pvt Ltd

Engineers & Constructors India 31 March 50 -

There were no post reporting date events which would materially affect the financial position or performance of any associate and there were no dissimilar accounting policies used by associates.


NOTES CONTINUED

29 investments – associates (continued)

summarised financial information of associates

Consolidated

2008 2007

$’000 $’000

share of associates profits

Profit before tax 23,597 29,472

Income tax expense (8,720) (8,859)

Profit for the year 14,877 20,613

share of associates

Assets 160,470 141,089

Liabilities 107,440 102,122

Revenue 372,939 340,182

Costs 358,062 319,569

fair value of listed investments in associates

Sedgman Ltd 173,348 208,407

30 investments - joint venture entities

ownership interest Consolidated

name Principal activities reporting date

2008 %

2007 %

Roche Thiess Linfox Joint venture

Contract mining/mobile plant/earthmoving

30 June

44

44

Thiess Hochtief Joint venture Design & construction railway 30 June 50 50

Thiess Alstom Joint venture Design & construction railway 30 June 50 50

Thiess John Holland Joint venture

Design & construction road/ Design & construction tunnel

30 June

50

50

Thiess Sedgman Joint venture

Design & construction coal handling plant

30 June

50

50

Thiess United Group Joint venture

Design & construction railway

30 June

50

50

Thiess Black & veatch Joint venture

Design & construction water treatment plants

30 June

50

50


NOTES CONTINUED

30 investments - joint venture entities (continued)

Consolidated

2008 2007

$’000 $’000

results of joint venture entities

The Company’s and consolidated entity’s share of the joint venture entities results consist of:

Revenues 757,809 1,177,598

Expenses (736,699) (1,060,150)


Income tax expense - -

Profit accounted for using the equity method 21,110 117,448

balance sheet

The Company’s and consolidated entity’s share of the joint venture entities assets and liabilities consist of:

Current assets 175,757 319,522

Non-current assets 15,442 20,567

Total assets 191,199 340,089

Current liabilities 179,488 286,749

Non-current liabilities 10,712 13,237

Total liabilities 190,200 299,986

Net assets accounted for using the equity method 999 40,103

share of post acquisition retained profits attributable to joint venture entities

Share of joint ventures’ retained profits at beginning of the year - -

Share of net profits of the joint venture entities 21,110 117,448

Distributions from joint venture entities (21,110) (117,448)

Share of joint ventures entities retained profits at the end of the year

-

-

movements in carrying amounts of joint venture entities

Carrying amount at the beginning of the year 40,103 6,026

Contributions to the joint venture entities 535,590 377,690

Share of joint venture entities net profit 21,110 117,448

Drawings from the joint venture entities (595,804) (461,061)

Carrying amount at end of year 999 40,103

During the year funds were advanced from the joint venture entities amounting to $90,776,000 (2007: $54,312,000). Refer note 15.


NOTES CONTINUED

31 thiess Pty ltd and controlled entities

All controlled entities carry on business in the country of incorporation except where noted.

Place of incorporation interest held

note 2008 2007% %

Thiess Pty Ltd Queensland

Controlled entities

Thiess Investments Pty Ltd 3 Queensland 100 100

Thiess Services Pty Ltd 3 Queensland 100 100

Subsidiary Company:

Thiess Services Limited 1 New Zealand 100 100

Thiess Southland Pty Ltd 4 New South Wales 100 100

Thiess Contractors (Malaysia) Sdn Bhd 1 Malaysia 100 100

Ausindo Holdings Pte Ltd 1 Singapore 100 100

Subsidiary Company:

PT Thiess Contractors Indonesia 1 Indonesia(owned 99% by Ausindo Holdings Pte Ltd and 1% by Thiess Pty Ltd)

Thiess Contractors (PNG) Ltd 1 Papua New Guinea 100 100

Thiess NZ Limited 1 New Zealand 100 100

Thiess SA Pty Ltd 4 victoria 100 100

Thiess Q Pty Ltd 4 Queensland 100 100

Hunter valley Earthmoving Co Pty Ltd 3 New South Wales 100 100

BOS Australia Pty Ltd 4 Western Australia 100 100

Thiess NC 1 New Caledonia 100 100

Thiess Mauritius Pty Ltd 1 Mauritius 100 100

Subsidiary Company:

Thiess Minecs India Pvt Ltd 1 India 90 90Thiess Infraco Pty Ltd (formerly Quantum Explosives Pty Ltd)

4Queensland 100 100

Swan Water Services Pty Ltd 3 New South Wales 100 100

Thiess Infraco (Bayside) Pty Ltd 2 victoria 100 100

Thiess Infraco (Swanston) Pty Ltd 2 victoria 100 100

Thiess India Pvt Ltd 1 India 100 100

(owned 99% by Thiess Pty Ltd and

1% by Thiess Mauritius Pty Ltd)

Notes:1. These overseas controlled entities are audited by other member firms of KPMG International.2. These corporations are small proprietary companies as defined by the Corporations Act 2001 and are not required

to be audited for statutory purposes.3. These corporations (Thiess Pty Ltd (TPL) Class Order companies) have the benefit of an ASIC Class Order

98/1418.4. These corporations are parties to the Deed of Cross Guarantee but do not have the benefit of ASIC Class Order

98/1418 at 30 June 2008 as they are small proprietary companies.


NOTES CONTINUED

32 deed of cross guarantee

Pursuant to ASIC Class Order 98/1418 dated 13 August 1998, relief was granted to the Thiess Pty Ltd (TPL) Class Order Companies (refer Note 31) from the Corporations Act 2001 requirements for preparation, audit and publication of financial statements. As a condition of the Class Order the Company and each of the TPL Class Order Companies are party to a Deed of Cross Guarantee dated 17 May 2000. The effect of the Deed is that the Company guarantees to each creditor payment in full any debt of a TPL Class Order Company in the event of its winding up under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The TPL Class Order Companies have also given similar guarantees in the event that the Company or other TPL Class Order Companies party to the Deed of Cross Guarantee are wound up.

A consolidated income statement and consolidated balance sheet comprising the Company and controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2008 are set out below:

income statement

2008 2007

$’000 $’000


Income tax expense (71,047) (58,313)

Profit for the year 197,061 135,786

Retained profits at beginning of year 346,298 280,512

Dividends provided for or paid (150,000) (70,000)

retained profits at end of year 393,359 346,298


NOTES CONTINUED

32 deed of cross guarantee (continued)

2008 2007

$’000 $’000

balance sheet

assets

Cash assets 457,550 425,154

Receivables 476,212 409,176

Inventories 32,497 22,872

Derivative financial instruments - 42,500

total current assets 966,259 899,702

Receivables 22,387 3,651

Investments accounted for using the equity method 23,109 59,418

Other financial assets 44,046 42,710

Property, plant and equipment 411,447 340,451

Intangible assets 10,645 2,966

Deferred tax assets 65,967 66,788

total non-current assets 577,601 515,984

total assets 1,543,860 1,415,686

liabilities

Payables 757,935 641,861

Provisions 63,957 58,902

Derivative financial instruments 61 726

total current liabilities 821,953 701,489

Payables 73,463 48,930

Provisions 55,080 53,399

Deferred tax liabilities 5 36,014

Derivative financial instruments - 23

total non-current liabilities 128,548 138,366

total liabilities 950,501 839,855

net assets 593,359 575,831

equity

Contributed equity 200,000 200,000

Reserves - 29,533

Retained profits 393,359 346,298

total equity 593,359 575,831


NOTES CONTINUED

33 notes to the statements of cashflowsFor the purposes of the statements of cash flows, cash includes cash on hand and at bank and short-term deposits at call. Cash as at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the statements of financial position as follows:


note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

(i) reconciliation of cash

Cash 6 464,303 437,851 387,423 335,455

Deposits 6 34,723 1,635 - -

499,026 439,486 387,423 335,455

(ii) reconciliation of operating profit from ordinary activities after income tax to net cash provided by operating activities

Profit after tax 209,836 123,079 166,750 143,953

Add/(less) non-cash items:

Depreciation 217,344 205,327 130,262 128,192

Amortisation/impairment 7,831 7,718 2,198 2,913

Derivative financial instruments 61 631 - -

Amounts set aside to provisions 105,297 95,536 69,796 62,362

Share of associates net profit (14,877) (20,613) - -

Share of joint venture entities’ net profit (21,110) (117,448) (21,110) (117,448)

(Profit)/loss on sale of non-current assets (64,504) (14,933) (61,793) (10,897)

Net cash provided by operating activities before change in assets and liabilities

439,878

279,297

286,103

209,075

Change in assets and liabilities:

(Increase)/decrease in receivables (86,984) 75,170 (90,753) (5,236)

(Increase)/decrease in inventories (10,196) (9,111) (9,638) (7,898)

(Increase)/decrease in prepayments (4,188) (837) (2,495) 996

Increase/(decrease) in provisions (95,258) (83,384) (68,415) (57,494)

Increase/(decrease) in taxes payable (11,184) (4,225) 7,442 11,142

Increase/(decrease) in accounts payable 68,867 42,774 63,554 29,477

Net cash provided by operating activities 300,935 299,684 185,798 180,062

(iii) financing facilities

The Company and the consolidated entity are subject to a group treasury facility and all financing arrangements are dealt with at the immediate parent entity level.


NOTES CONTINUED

34 related parties

directors

The directors who held office as directors of Thiess Pty Ltd during the year ended 30 June 2008 were:

Mr Martin C Albrecht AC (Chairman) Mr David K Saxelby (Managing Director) Mr Donald J Argent Mr Robert J Flew The Hon Roslyn J Kelly AO Mr Wallace M King AO Mr Graeme E McOrist Mr Wayne G Osborn Mr William J Wild (Appointed 15 February 2008)

No director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors’ interests subsisting at year end.

Wholly-owned group

Details of interests in controlled entities are set out in Note 31.

Thiess Pty Ltd is part of the Leighton Holdings Limited consolidated entity and as such enters into various transactions with other companies in the consolidated entity and related parties. These transactions give rise to various intercompany receivables (refer Note 7 & 10) and borrowings (refer Note 15 & 17). Interest payable to and receivable from related corporations is detailed in Notes 1 and 3.All related party transactions are at normal commercial terms and conditions. The immediate parent entity, Leighton Holdings Limited, is required from time to time to guarantee and indemnify to third parties the performance of companies within the Group. The Company and other members of the Leighton consolidated entity are also required from time to time to guarantee and indemnify to third parties the performance of companies within the Group (refer Note 32).

other related parties

The following entities are considered to be related parties.

(i) Hochtief Australia Limited’s interest in the shareholding of Leighton Holdings Limited is 54.99% (2007:54.99%).

(ii) Associates (with the consolidated entity’s % interest shown)

Sedgman Ltd 36%

Silcar Pty Ltd 50%

Promet Engineers Pty Ltd 50%

Thiess Kentz Pty Ltd 50%

Thiess Leighton India Pvt Ltd 50%

These associates have been equity accounted (refer Note 29).

(iii) Joint venture entities (with the consolidated entity’s % interest shown)

Roche/Thiess/Linfox 44%

Thiess Hochtief 50%

Thiess Alstom 50%

Thiess John Holland 50%

Thiess Sedgman 50%

Thiess United Group 50%

Thiess Black & veatch 50%

These joint venture entities have been equity accounted (refer Note 30).


NOTES CONTINUED

34 related parties (continued)

ultimate parent entity:

The immediate parent entity of Thiess Pty Ltd is Leighton Holdings Limited.The ultimate Australian parent entity of Thiess Pty Ltd is Hochtief Australia Limited.The ultimate parent entity is Hochtief AG incorporated in Germany.

key management personnel

transactions with key management personnel

In addition to their salaries, the consolidated entity also provides non-cash benefits to key management personnel and contributes to a post-employment superannuation fund on their behalf.


2008 2007 2008 2007

$’000 $’000 $’000 $’000

key management personnel compensation

Short term employee benefits 11,007 10,512 9,120 8,967

Other long term benefits 1,002 1,848 739 1,547

Post-employment benefits 1,250 1,923 1,069 1,769

Share based payments* 599 - 599 -

Termination benefits 1,066 6,200 1,066 6,200

14,924 20,483 12,593 18,483*Share based payments relate to the issue of options in Leighton Holdings Limited.


NOTES CONTINUED

Independent auditor’s report to the members of Thiess Pty Ltd

We have audited the accompanying financial report of Thiess Pty Ltd (the Company), which comprises the balance sheets as at 30 June 2008, and the income statements, statements of recognised income and expense and cash flow statements for the year ended on that date, a summary of significant accounting policies and other explanatory notes 1 to 34 and the directors’ declaration of the Group comprising the Company and the entities they controlled at year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In the Summary of Significant Accounting Policies, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australia Accounting Interpretations), a view which is consistent with our understanding of the Company’s and the Group’s financial position, and of their performance.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion In our opinion:

(a) the financial report of Thiess Pty Ltd is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2008 and of their

performance for the ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the

Corporations Regulations 2001. (b) the financial report also complies with International Financial Reporting Standards as disclosed in the Statement of

Significant Accounting Policies.

KPMG

Scott Guse Partner

Brisbane 29 August 2008

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Liability limited by a scheme approved under Professional Standards Legislation.


AUDIT REPORT

ric burattoBE (Civil) (Hons), FIEAust

General Manager WA/NT

david saxelbyBE (Civil)

Managing Director

dennis WalshBE (Elec & Comms), FIRSE, FIEAust

Manager Thiess Rail

marcus geislerFAICD

General Manager Western Region Thiess Services

Chris forsterlingBE (Civil), FIEAust, CP Eng

Country Manager India

bob brownlee

General Manager Southern Region Thiess Services

Paul grabhamBSc C.Eng MIET

General Manager Major Projects

david mcadamBE (Chem 1st Class Hons), MBA (Exec) FAICD, FIEAust

General Manager Queensland

Peter king

General Manager Eastern Region Thiess Services

leigh ainsworth

Chief Executive Thiess Services

don argentBCom, CPA, FCIS, FAICD

Director Finance & Administration

Paul CassanoBE (Mining) (Hons), MBA (Exec), MAusIMM

Executive General Manager Resources Development

greg millerBE (Civil) (Hons), Grad. Dip. Bus., MIE, FAIM, MAICD

Executive General Manager Process

bruce kenny

Executive General Manager Plant

mark lynchBSc, LLB (Hons), LLM

Executive General Manager Infrastructure & Investments

bruce munroBE (Civil)

Chief Executive Asia Operations

sue netterfieldBSc(Psych) (Hons), MBA

Executive General Manager Strategic Communication

nev PowerBE (Mech), MBA, FIEAust, FIMMAust, CP Eng

Chief Executive Australian Operations

ian sampsonBComm, LlB., GAICD

Executive General Manager People and Sustainability

ian WadeBE (Civil), FIEAust, CP Eng

Executive General Manager Business Services

tony damianiBE (Civil)

Acting General Manager vIC/SA/Tas/NZ

brendan donohueBE (Civil) (Hons), MEng Sci (Structural)

General Manager NSW/ACT

michael rosengrenBE (Mining) (Hons), BA (Oxon), MSc, FAusIMM

General Manager Australian Mining

dale smartDip Eng (Civil)

General Manager Defence & International Thiess Services

roy olsenBE (Civil)

President Director Thiess Indonesia

management


MANAGEMENT

7 London Circuit, ACT

FRONT COVER: Dragline at South Walker Creek, QLD

Managing director’s overview

Directors’ report

Statutory statements

Income statements

Statements of cash flows

Balance sheets

Statements of recognised income and expense

Notes to the financial statements

Audit report

Management

2

5

9

10

11

12

13

15

50

51

CONTENTS

DIRECTORY

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Thiess Corporate OfficeLevel 5, 179 Grey Street South Bank QLD 4101 Tel: (+61 7) 3002 9000 Fax: (+61 7) 3002 9009

QueenslandLevel 7, 189 Grey Street South Bank QLD 4101 Tel: (+61 7) 3121 8500 Fax: (+61 7) 3121 8710

New South Wales/ Australian Capital Territory Level 5, 26 College Street Sydney NSW 2000 Tel: (+61 2) 9332 9444 Fax: (+61 2) 9331 4264

Thiess ProcessLevel 4, 179 Grey Street South Bank QLD 4101 Tel: (+61 7) 3002 9000 Fax: (+61 7) 3002 9448

Victoria/South Australia/ Tasmania/New ZealandLevel 9, 417 St Kilda Road Melbourne VIC 3004 Tel: (+61 3) 9864 8888 Fax: (+61 3) 9864 8811

Western Australia/Northern TerritoryThe Forrest Centre Level 19, 221 St Georges Terrace Perth WA 6000 Tel: (+61 8) 9214 4200 Fax: (+61 8) 9214 4244

Australian MiningLevel 7, 189 Grey Street South Bank QLD 4101 Tel: (+61 7) 3121 8500 Fax: (+61 7) 3121 8710

MackayLevel 1, Wellington House Cnr Wellington & Victoria Streets Mackay QLD 4740 Tel: (+61 7) 4944 4500 Fax:(+61 7) 4944 4550

South Australia129 Greenhill Road Unley SA 5061 Tel: (+61 8) 8274 5200 Fax: (+61 8) 8271 6228

Thiess Services Corporate OfficeThe Precinct 2 Level 1, 10 Browning Street West End QLD 4101 Tel: (+61 7) 3169 8300 Fax: (+61 7) 3846 0678

Eastern RegionThe Precinct 2 Level 1, 10 Browning Street West End QLD 4101 Tel: (+61 7) 3169 8400 Fax: (+61 7) 3846 3870

Southern Region/New ZealandLevel 4 15-17 Park Street South Melbourne VIC 3205 Tel: (+61 3) 9684 3333 Fax: (+61 3) 9684 3344

Western Region4 Aitken Way Kewdale WA 6105 Tel: (+61 8) 9441 3000 Fax: (+61 8) 9441 3090

PT Thiess Contractors IndonesiaRatu Prabu 2 J1.T.B Simatupang Kav.1B Jakarta 12560 Indonesia Tel: (+62 21) 2754 9999 Fax: (+62 21) 2754 9800

Thiess India Pvt Ltd5B, RDB Boulevard, Block EP & GP, Sector V, Salt Lake, Kolkata, 700 091 West Bengal, India Tel: (+91 33) 4010 5300

THIESS PTY LTDGENERAL PURPOSE FINANCIAL REPORT YEAR ENDED 30 JUNE 2008

Thiess Pty Ltd and its controlled entities A.B.N. 87 010 221 486

www.thiess.com.au

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