2010/11 PRELIMINARY FINAL REPORT & JUNE QUARTERLY UPDATE TO 30 JUNE 2011 / ISSUED 15 AUGUST 2011

Transcription

1 2010/11 PRELIMINARY FINAL REPORT & JUNE QUARTERLY UPDATE TO 30 JUNE 2011 / ISSUED 15 AUGUST 2011

2 2010/11 APPENDIX 4E & PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2011 ISSUED 15 AUGUST 2011 For more information please contact: David Stewart Chief Executive Officer Peter Gregg Chief Financial Officer Cover: Collinsville Coal Mine, Thiess, Queensland ABN Pacific Highway St Leonards NSW 2065 T F

3 Results for Announcement to the Market Name of Entity LEIGHTON HOLDINGS LIMITED A Revenue - Group, joint ventures and associates Up 4% to 19,376.7 Revenue - joint ventures and associates Down 7% to 3,815.4 Revenue Up 7% to 15,561.3 Profit / (loss) attributable to members of the parent entity Down 167% to (408.8) For a brief explanation of the figures reported above: refer to pages 3 to 28 of this document. Dividends Amount per security Franked amount per security Final dividend nil nil nil Interim dividend (100%) Dividends Amount per security Franked amount per security Final dividend (100%) Interim dividend (100%) Annual General Meeting Details Date 11 November 2011 Time Place 10.00am Grand Ballroom, The Four Seasons Hotel, 199 George Street, Sydney Approximate date the Annual Report will be available Late September 2011 Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

4 Commentary on the Results Total revenue including joint ventures and associates increased by 4% to $19.4 billion. The revenue generating markets for the Group were infrastructure $10.7 billion; resources $7.4 billion; and property $1.3 billion. The Group s work in hand was $46.2 billion. New work won, including variations and extensions to existing contracts, totalled $26.0 billion. The Group result after tax and minority interest for the year was a loss of $408.8 million, down from a profit of $612.0 million in The loss was primarily due to losses and reversals on the Airport Link project in Queensland of $690.0 million (loss at completion $520.0 million) and the Victorian Desalination project of $355.0 million (loss at completion $278.0 million), and operating losses and impairment of the Group s investment in the Habtoor Leighton Group ( HLG ). The impact of the loss was partially offset by a gain on sale of 35% of Leighton India to Welspun during the first half of the year and a gain recognised from the acquisition of a controlling interest in Devine Limited in June. Losses from the Thiess John Holland joint venture on Airport Link project and Thiess Degremont joint venture on Victorian Desalination Project have resulted in Thiess segment loss of $317.5 million (2010: profit $425.0 million). Despite this, Thiess has a record $16.5 billion work in hand at June, and was awarded $8.1 billion in new contracts, variations and extensions during the year. This included the new work on Parki Barwadih Coal Mine in India and the Hunter Valley Expressway in NSW and significant extensions at Mt Owen and Burton Coal Mines in Queensland. Leighton Contractors delivered a record segment profit of $322.5 million (2010: $271.3 million) due to strong performances in construction, contract mining, and telecommunications. Leighton Contractors work in hand was a record $10.8 billion. New work won for the year of $7.3 billion included the award of the New Royal Adelaide Hospital in South Australia and M2 motorway upgrade in Sydney. John Holland reported a segment loss of $255.0 million (2010: profit $180.0 million) due to its share of the loss on the Airport Link project. John Holland continued to win new opportunities with contract awards of $6.0 billion during the year, including Perth City Link Hub and South West Rail Link in Sydney, resulting in a record work in hand of $7.7 billion at 30 June Habtoor Leighton Group, reported as a separate segment for the first time this year, recorded a segment loss of $492.4 million (2010: loss $35.9 million) due to both operating losses within HLG, resulting from write downs of outstanding receivables, and impairments of the Group s investment during the year of $286.9 million (US$300.0 million) following downward revisions to HLG forecast cash flows. Work in hand at 30 June 2011 was $1.8 billion, with contract wins during the year of $0.6 billion including Mafraq Hospital and ADIB Headquarters. Leighton International, excluding results of HLG for the first time this year, recorded a segment profit of $299.0 million (2010: $59.8 million), due to the sale of 35% of Leighton India to Welspun and a strong performance in Leighton Offshore. Leighton International also maintained its work in hand of $1.2 billion. Leighton Asia recorded a segment profit of $69.8 million (2010: $88.2 million), reflecting strong contributions from Hong Kong and Mongolia. Despite adverse movements in exchange rates, Leighton Asia was able to achieve a record work in hand of $6.6 billion with new work won during the year of $2.9 billion, including contract awards for the construction of four separate Metro stations in Hong Kong for MTR and a significant long term extension to contract mining at the UHG Coal Mine in Mongolia. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

5 Commentary on the Results continued Leighton Properties produced a segment loss of $99.6 million (2010: loss $73.4 million), reflecting the impact of write-downs of development properties due to subdued recovery of property markets. Leighton Properties will maintain its strategic focus on commercial and residential markets to ensure it is positioned to benefit from the upswing. The Company recorded a tax benefit for the year of $85.2 million. No tax benefit arises in relation to segment losses in HLG. The review by the ATO of the Group s claim under the R&D concession has been resolved and net $76.1 million has been recognised as a benefit in the current year. The Group continues to maintain a strong balance sheet which provides the depth and flexibility necessary to tender large, complex projects, providing working capital, investing in plant and equipment, and pursuing new opportunities. Managing the Group s capital requirements remains a core discipline underpinning future growth and strategic direction. The Group has maintained a strong capital base with shareholders equity of $2.3 billion, gross cash of $1.4 billion and undrawn cash and guarantee facilities of around $1.2 billion. During the year the Group raised $757.9 million in a 1 for 9 rights issue. The debt profile of the Group has continued to be restructured to a longer term maturity, reducing our reliance on short term financial markets, with the Group issuing a further US$350.0 million of Guaranteed Senior Notes during the year. The value of the Group s owned property, plant and equipment now stands at $2.6 billion. The Group has operating and finance lease facilities available to provide additional capacity and flexibility for the financing and risk management of its plant fleet. The value of major plant and equipment under operating leases is $0.9 billion and under finance leases is $0.3 billion. On 29 June Devine Limited became a subsidiary and the Group s balance sheet includes the consolidation of the Devine, Hamilton Harbour and Townsville joint venture assets and liabilities. The gross assets consolidated were $683.1 million with liabilities of $338.9 million. The Group s share of the result for Devine for the year ending 30 June 2011 has been equity accounted. The loss per share of cents compares to earnings per share of cents in As a result of the loss, the directors announced that no final dividend would be paid (85 cents per share fully franked last year). A fully franked interim dividend of 60 cents per share was declared at the half year (65 cents per share fully franked last year). Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

6 Consolidated Income Statement Note Revenue 2 15, ,559.6 Expenses 3 (15,363.2) (13,738.6) Finance costs 4 (159.6) (180.1) Share of profits / (losses) of associates and joint venture entities (529.4) Profit / (loss) before tax (490.9) Income tax benefit / (expense) 85.2 (227.5) Profit / (loss) for the year (405.7) Attributable to: Members of the parent entity (408.8) Minority interest Profit / (loss) for the year (405.7) Dividends per share - Final 6 nil Interim Basic earnings per share (133.1 ) Diluted earnings per share (133.1 ) The consolidated income statement is to be read in conjunction with the notes to the consolidated preliminary final report. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

7 Consolidated Statement of Comprehensive Income Profit / (loss) for the year (405.7) Other comprehensive income: - Foreign exchange translation differences (net of tax) (269.2) (60.0) - Effective portion of changes in fair value of cash flow hedges (net of tax) 3.0 (27.0) - Change in fair value of available-for-sale assets (net of tax) (6.7) (10.2) - Change in value of equity reserves (7.1) 1.2 Net gain / (loss) recognised directly in equity (280.0) (96.0) Total comprehensive income / (expense) for the year (685.7) Attributable to: Members of the parent entity (688.8) Minority interest Total comprehensive income / (expense) for the year (685.7) The consolidated statement of comprehensive income is to be read in conjunction with the notes to the consolidated preliminary final report. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

8 Consolidated Balance Sheet as at 30 June 2011 Note Assets Cash and cash equivalents 8 1, ,313.7 Trade and other receivables 2, ,398.6 Current tax assets Inventories: consumables and development properties Other investments Property, plant and equipment Total current assets 4, ,182.4 Trade and other receivables Inventories: development properties Investments accounted for using the equity method 1, ,783.0 Other investments Deferred tax assets Property, plant and equipment 2, ,030.2 Intangibles Total non-current assets 5, ,583.4 Total assets 9, ,765.8 Liabilities Trade and other payables 4, ,358.7 Current tax liabilities Provisions Interest bearing liabilities Total current liabilities 5, ,198.1 Trade and other payables Provisions Interest bearing liabilities 13 1, ,324.7 Total non-current liabilities 2, ,999.6 Total liabilities 7, ,197.7 Net assets 2, ,568.1 Equity Share capital 14 2, ,232.9 Reserves (305.7) (40.5) Retained earnings ,372.3 Total equity attributable to equity holders of the parent 2, ,564.7 Minority interest Total equity 2, ,568.1 The consolidated balance sheet is to be read in conjunction with the notes to the consolidated preliminary final report. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

9 Consolidated Statement of Changes in Equity Share Capital Reserves Retained Earnings Attributable to Equity Holders Minority Interest Total Equity Total equity at 30 June , , ,339.3 (0.7) 2,338.6 Total comprehensive income - (96.0) Transactions with owners in their capacity as owners: - Contributions of equity Dividends (359.2) (359.2) (359.2) - Share based payments Other Total transactions with owners (359.2) (290.6) 1.0 (289.6) Total equity at 30 June ,232.9 (40.5) 1, , ,568.1 Total comprehensive income - (280.0) (408.8) (688.8) 3.1 (685.7) Transactions with owners in their capacity as owners: - Contributions of equity Dividends (437.3) (437.3) (437.3) - Share based payments Other Total transactions with owners (437.3) Minority - acquisition of controlled entity Total equity at 30 June ,016.2 (305.7) , ,319.9 The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated preliminary final report. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

10 Consolidated Statement of Cash Flows Note Cash flows from operating activities Cash receipts in the course of operations (including GST) 17, ,219.3 Cash payments in the course of operations (including GST) (15,340.6) (14,232.6) Cash flows from operating activities 1, ,986.7 Dividends received Interest received Finance costs paid (128.4) (173.3) Income taxes paid (274.2) (94.9) Net cash from operating activities 11 1, ,739.5 Cash flows from investing activities Payments for plant and equipment (1,378.5) (895.1) Proceeds from sale of property, plant and equipment Payments for investments in controlled entities and businesses (8.7) (0.9) Cash acquired from acquisition of investments in controlled entities and businesses Proceeds from sale of investments in controlled entities and businesses Cash disposed from sale of investments in controlled entities and businesses (108.5) - Payments for other investments - (105.8) Proceeds from sale of other investments Loans to associates (300.6) (87.2) Net cash from investing activities (1,600.7) (913.5) Cash flows from financing activities Proceeds from share issues Proceeds from borrowings Repayment of borrowings (207.6) (377.5) Repayment of finance leases (62.3) (49.8) Distributions to minority interest (0.3) - Dividends paid (437.3) (359.2) Net cash from financing activities (168.1) Net increase / (decrease) in cash held Net cash at the beginning of the year 1, Effects of exchange rate fluctuations on cash held (92.1) (10.0) Net cash at reporting date 8 1, ,313.7 The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated preliminary final report. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

11 Notes to the Consolidated Preliminary Final Report 1. BASIS OF PREPARATION The consolidated preliminary final 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 at reporting date. (the Company ) is a company domiciled in Australia. The consolidated preliminary final report of the Company comprises the Company and its controlled entities (the Consolidated Entity or Group ) and the Consolidated Entity s interest in associates and jointly controlled entities. The Company is a company of the kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all financial information presented in Australian dollars has been rounded off to the nearest hundred thousand dollars, unless otherwise stated. The consolidated preliminary final report is based on the Group s financial statements which are in the process of being audited and have been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act The financial statements also comply with International Financial Reporting Standards adopted by the International Accounting Standards Board. The accounting policies adopted are consistent with those of the previous financial year. The Company does not expect that there will be any modification or qualification to the audit opinion on the financial statements. The consolidated preliminary final report was authorised for issue by the directors on 15 August REVENUE Note Construction contracting services 9, ,659.5 Mining contracting services 5, ,861.4 Property development revenue Other services revenue 1, Revenue from external customers 15, ,541.8 Interest - Related parties Other parties Unwinding of discounts on non-current receivables - Related parties Other parties Dividends / distributions Other revenue Total revenue 5 15, ,559.6 Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

12 Notes continued 3. EXPENSES Note Materials (4,369.9) (3,552.5) Subcontractors (3,777.2) (3,258.7) Plant costs (1,166.2) (1,354.3) Personnel costs (4,100.8) (3,492.9) Depreciation of property, plant and equipment 4 (865.6) (824.0) Amortisation of intangibles 4 (0.6) - Net gain / (loss) on sale of assets Net gain on acquisition of controlled entities Impairments 4 (301.1) (16.3) Property development and property joint ventures write-downs (80.1) (38.9) Property development - cost of goods sold (78.1) (220.9) Foreign exchange gains / (losses) 2.8 (7.3) Operating lease payments - plant and equipment (324.8) (379.0) Operating lease payments - other (84.7) (78.3) Professional and management fees (245.5) (201.3) Other expenses (394.6) (344.7) Total expenses (15,363.2) (13,738.6) Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

13 Notes continued 4. ITEMS INCLUDED IN PROFIT / (LOSS) BEFORE TAX Note Finance costs Interest - Related parties (4.2) (2.5) - Other parties (108.2) (135.5) Finance charge for finance leases (10.3) (9.4) Facility fees (26.0) (26.8) Impact of discounting - Related parties (9.3) (5.4) Interest rate swap close out transferred from equity (1.6) (0.5) Total finance costs (159.6) (180.1) Depreciation of property, plant and equipment - Buildings (3.0) (3.0) - Plant and equipment (847.6) (804.8) - Leasehold land, buildings and improvements (13.1) (13.7) - Waste management assets (1.9) (2.5) Total depreciation of property, plant and equipment (865.6) (824.0) Amortisation - Intangibles (0.6) - Net gain / (loss) on sale of assets - Controlled entities Other investments Land and buildings 0.2 (0.7) - Plant and equipment Total gain / (loss) on sale of assets Net gain on acquisition of controlled entities - Controlled entities Impairments - Investments in infrastructure toll road companies (4.0) (16.3) - Investments accounted for using the equity method (296.4) - - Goodwill (0.7) - Total impairments (301.1) (16.3) Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

14 Notes continued 5. SEGMENT INFORMATION Thiess Leighton Contractors John Holland Habtoor Leighton Group Leighton Int l Leighton Asia Leighton Properties Corporate Eliminations Total June 2011 Revenue Segment revenue before 6, , , , (14.6) 19,347.0 interest Interest revenue Segment revenue 6, , , , (14.6) 19,376.7 Inter-segment revenue (14.6) - Segment joint venture and 1, ,815.4 associate revenue External revenue 4, , , ,561.3 Result Segment result before interest (316.8) (243.8) (176.7) (88.3) (30.2) and impairments Interest - (39.9) (11.2) (28.8) (12.6) (15.3) (11.3) (40.5) - (159.6) Segment result before (316.8) (255.0) (205.5) (99.6) (8.2) - (189.8) impairments Impairments (0.7) (4.0) - (286.9) (9.5) - (301.1) Segment result (317.5) (255.0) (492.4) (99.6) (17.7) - (490.9) Income tax (expense) / benefit 85.2 Profit / (loss) for the year (405.7) Other Share of profit / (loss) of (486.3) (155.7) (0.4) (529.4) associates and joint venture entities Depreciation (367.3) (304.9) (83.4) - (6.5) (98.7) (0.4) (4.4) - (865.6) Other material non-cash expenses (0.7) (4.6) - (286.9) - - (80.1) (9.5) - (381.8) Assets and liabilities Reportable segment assets 1, , , ,664.0 Investments accounted for ,003.6 using the equity method Capital expenditure ,601.5 Reportable segment liabilities 1, , , ,344.1 Non-current assets Revenue Geographical information Australia / Pacific 2, , , ,187.5 Asia , ,372.1 Total 3, , , ,559.6 Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

15 Notes continued 5. SEGMENT INFORMATION CONTINUED Thiess Leighton Contractors John Holland Habtoor Leighton Group Leighton Int l Leighton Asia Leighton Properties Corporate Eliminations Total June 2010 Revenue Segment revenue before 6, , , , , (73.1) 18,627.1 interest Interest revenue Segment revenue 6, , , , , (73.1) 18,642.1 Inter-segment revenue (73.1) - Segment joint venture and 1, , ,082.5 associate revenue External revenue 5, , , ,559.6 Result Segment result before interest (1.1) (64.6) (1.6) - 1,039.0 and impairments Interest - (36.4) - (34.8) (26.3) (9.7) (8.8) (64.1) - (180.1) Segment result before (35.9) (73.4) (65.7) impairments Impairments - (9.6) (6.7) - (16.3) Segment result (35.9) (73.4) (72.4) Income tax (expense) / benefit (227.5) Profit / (loss) for the year Other Share of profit / (loss) of (5.2) associates and joint venture entities Depreciation (442.1) (213.3) (80.6) - (9.8) (75.6) - (2.6) - (824.0) Other material non-cash expenses - (9.6) (38.9) (6.7) - (55.2) Assets and liabilities Reportable segment assets 1, , , , ,930.9 Investments accounted for , ,783.0 using the equity method Capital expenditure ,321.2 Reportable segment liabilities 1, , ,362.8 Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

16 Notes continued 5. SEGMENT INFORMATION CONTINUED Description of segments Operating segments have been identified based on separate financial information that is regularly reviewed by the Leighton CEO, the Chief Operating Decision Maker ( CODM ). The Leighton Group is structured on a decentralised basis comprising the following main operating companies and a corporate head office: Thiess Leighton Contractors John Holland Habtoor Leighton Group ( HLG ) Leighton International Leighton Asia Leighton Properties The performance of each operating company forms the primary basis for all management reporting to the CODM. HLG has been disclosed as a separate segment to Leighton International since 1 July 2010 as its performance is reported separately to the CODM. Accordingly, segment data for the prior period presented for comparative purposes has been restated to reflect the newly reportable segment as a separate segment in accordance with AASB 8 Operating Segments. The types of services from which segments derive revenue, are included in note 2: Revenue. The Group s share of revenue from joint ventures is included in the revenue reported for each applicable operating company. Performance is measured based on segment result. Information regarding the results of each reportable segment, as reported to the CODM, is included on pages 13 to 14. The corporate segment represents the corporate head office and includes transactions relating to Group finance, taxation, treasury, corporate secretarial and certain strategic investments. Plant and equipment leased under operating lease facilities of $0.9 billion (2010: $1.2 billion) is included in segment assets with a corresponding amount in segment liabilities. Other than this, differences in the reporting for management and financial accounting are individually and in total, not material. These differences are contained in the results of the corporate segment and include: Interest capitalised on property developments held indirectly through joint ventures and associates; and Adjustments for tax on earnings from equity accounted investments, as earnings from equity accounted investments are reported on a pre-tax basis in the applicable operating company. Geographical segments In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the customer and the location of the service provided. Segment assets are based on the geographical location of the assets. Major customers No revenue from transactions with a single external customer amount to 10% or more of the Group s revenue. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

17 Notes continued 6. DIVIDENDS Cents per share 2011 final dividend No final dividend has been declared by the Company in respect of the year ended 30 June 2011 nil nil Dividends recognised in the reporting period to 30 June interim ordinary dividend 100% franked paid on 31 March final ordinary dividend 100% franked paid on 30 September Dividends recognised in the reporting period to 30 June interim ordinary dividend 100% franked paid on 31 March final ordinary dividend 100% franked paid on 30 September NET TANGIBLE ASSET BACKING June 2011 June 2010 Net tangible asset backing per ordinary share $6.43 $ CASH AND CASH EQUIVALENTS Funds on deposit* Cash at bank and on hand Total cash and cash equivalents 1, ,313.7 * Funds on deposit include US$96.1 million (30 June 2010: nil), equivalent to $89.8 million (30 June 2010: nil), which has been pledged as security against borrowings by Habtoor Leighton Group ( HLG ) under a US$136.1 million loan facility, equivalent to $127.2 million. A letter of credit has been pledged as security against the remaining US$40.0 million, equivalent to $37.4 million. In addition US$46.3 million (30 June 2010: nil), equivalent to $43.3 million (30 June 2010: nil), has also been pledged as security against borrowings by HLG under a second US$136.1 million loan facility, equivalent to $127.2 million. Subsequent to the reporting date a further US$10.9 million, equivalent to $10.2 million, has been pledged as security against the second facility. The cash security is expected to be released within the next 12 months. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

18 Notes continued 9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Associates Ownership Interest Name of entity Principal activity 2011 % 2010 % Al Habtoor Leighton LLC Construction Devine Limited (refer to note 10) Development - 49 Dunsborough Lakes Village Syndicate Development Macmahon Holdings Limited Construction, Contract Mining Metro Trains Melbourne Pty Limited Services Oriental Pathways (Agra) Pvt Limited Investment - 49 Oriental Pathways (Indore) Pvt Limited Investment - 49 Sedgman Limited Construction, Contract Mining Al Habtoor Leighton LLC During the year the carrying value of the Group s investment in Al Habtoor Leighton LLC ( HLG ) decreased from $1,144.4 million to $474.9 million (equivalent to US$972.8 million and US$508.2 million). The decrease was due to foreign exchange revaluation of $226.9 million, operating losses of $155.7 million and an impairment of $286.9 million. The impairment was due to a downward revision to forecast cash flow, reflecting HLG s current performance and prevailing market conditions in the Middle East and Africa region ( MEA ). The recoverable amount was determined using a value in use calculation. The key assumptions used in the value in use calculation: Discount rate: 16.0% (June 2010: 14.2%) Growth rate: 3.0% (June 2010: 3.0%) for cash flows beyond five years. This rate does not exceed the expected long-term average growth rate for the MEA region. Legacy project receivables: The economic downturn in the Gulf region continues to delay payment from clients, particularly for projects in progress at the time the Group invested in HLG. It is assumed 45% of the remaining unprovided legacy project receivables will be collected within 24 months. Borrowings: Borrowings obtained to fund working capital will be progressively repaid during the forecast period. Forecast cash flow: The calculation uses five year cash flow projections based on forecasts provided by HLG s management, risk adjusted downward by the Group. Cash flows beyond five years are extrapolated using the estimated growth rate. The Group has also provided interest free loans of US$117.6 million (30 June 2010: US$32.4 million) equivalent to $109.9 million (30 June 2010: $38.1 million) maturing on 5 September 2012 and interest bearing loans of US$244.9 million (30 June 2010: US$nil) equivalent to $228.9 million (30 June 2010: $nil) maturing on 5 September These loans are included in non-current trade and other receivables. Subsequent to reporting date, the Group provided a further interest bearing loan of US$40.8 million equivalent to $38.1 million. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

19 Notes continued 9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD CONTINUED Joint Ventures Ownership Interest Name of entity Principal activity 2011 % 2010 % 400 George Street Partnership Development APM Group (Aust) Pty Ltd & Broad Construction Services Construction 45 - (NSW/VIC) Pty Ltd APN No.19 Pty Ltd And Leighton Properties (VIC) Pty Ltd Development Aspire Schools (Qld) Pty Limited Construction, Services Aspire Schools Financing (Qld) Pty Limited Investment Aspire Schools Financing Services (Qld) Pty Limited Construction Aspire Schools Holdings (Qld) Pty Limited Investment Auckland Road Maintenance Construction Bac Devco Pty Limited Development Bankstown Airport Development Pty Limited Development - 50 Bayview Project Noosa Partnership Development BJB Joint Venture Services Brisbane Motorway Services Pty Limited Services China State Leighton Joint Venture Construction City West Property Holding Trust (Section 63 Trust) Development City West Property Holdings Pty Limited Development City West Property Investment (No.1) Trust Development City West Property Investment (No.2) Trust Development City West Property Investment (No.3) Trust Development City West Property Investment (No.4) Trust Development City West Property Investment (No.5) Trust Development City West Property Investment (No.6) Trust Development City West Property Investments (No.1) Pty Limited Development City West Property Investments (No.2) Pty Limited Development City West Property Investments (No.3) Pty Limited Development City West Property Investments (No.4) Pty Limited Development City West Property Investments (No.5) Pty Limited Development City West Property Investments (No.6) Pty Limited Development Cockatoo Iron Ore Contract Mining Cockatoo Mining Pty Ltd Contract Mining Coleman Rail Pty Ltd & John Holland Pty Ltd Construction 50 - Coleman Rail Pty Ltd & John Holland Pty Ltd & York Civil Pty Ltd Construction Coleman Rail Pty Ltd & John Holland Pty Ltd & York Civil Pty Ltd (Tracksure Rail Upgrade) Construction Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

20 Notes continued 9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD CONTINUED Joint Ventures continued Ownership Interest Name of entity Principal activity 2011 % 2010 % Conneq Infrastructure Services (Australia) Pty Ltd and John Services Holland Pty Ltd Copperstring Pty Ltd Construction 50 - Cotter Googong Bulk Transfer Joint Venture Construction Deep Blue Consortium Pty Ltd Development - 50 Degremont Thiess Services Joint Venture Services Erskineville Residential Project Development 50 - Fallingwater Trust Development 15 - Folkestone/Leighton JV Pty Limited Development Gammon - Leighton Joint Venture Construction 50 - Gateway Motorway Services Pty Limited Services Hamilton Harbour Developments Pty Ltd Development - 50 Hamilton Harbour Unit Trust (Devine Hamilton Unit Trust) Development - 50 Hassall Street Pty Ltd Development Hassall Street Trust Development Hazell Brothers John Holland Joint Venture Construction Holland York Joint Venture Construction Hoxton Park Airport Development Pty Limited Development - 50 HPAL Freehold Pty Limited Development HYLC Joint Venture Construction 50 - Infocus Infrastructure Management Pty Limited Services James Fielding Developments Pty Limited and Development - 50 Leighton Properties Pty Limited Partnership JM Joint Venture Construction JM JV SIA Joint Venture Construction John Holland Abigroup Contractors Joint Venture (Bulk Water) Construction John Holland Abigroup Contractors Joint Venture Construction (Coffs Infrastructure) John Holland BRW Joint Venture Construction John Holland Coleman Rail Joint Venture Construction John Holland Colin Joss Joint Venture Construction John Holland Downer EDI Engineering Power Joint Venture Construction John Holland Downer EDI Joint Venture Construction John Holland Fairbrother Joint Venture Construction John Holland Fulton Hogan Joint Venture Construction Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

21 Notes continued 9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD CONTINUED Joint Ventures continued Ownership Interest Name of entity Principal activity 2011 % 2010 % John Holland Laing O'Rourke Joint Venture Construction John Holland Macmahon Joint Venture (Bell Bay) Construction John Holland Macmahon Joint Venture (Roe and Tonkin Highways) Construction John Holland Macmahon Joint Venture (Ross River Dam) Construction John Holland McConnell Dowell Joint Venture Construction John Holland Pty Ltd & Leed Engineering and Construction Pty Ltd Construction 40 - & Macmahon Contractors Pty Ltd John Holland Pty Ltd & UGL Infrastructure Pty Ltd Construction 50 - John Holland Tenix Alliance Joint Venture Construction John Holland Thames Water Joint Venture Construction John Holland United Group Infrastructure Joint Venture Construction John Holland Veolia Water Australia Joint Venture (Blue Water) Construction John Holland Veolia Water Australia Joint Venture (Gold Coast Construction Desalination Plant) Kentz E & C Pty Ltd Construction Kurunjang Development Trust Development 50 - Leighton Abigroup Joint Venture Construction Leighton Able Joint Venture Construction Leighton BMD JV Construction Leighton China State John Holland Joint Venture (City Of Dreams) Construction Leighton China State Joint Venture (Wynn Resort) Construction Leighton China State Van Oord Joint Venture Construction Leighton Construction India (Private) Limited Construction Leighton Contractors & Baulderstone Hornibrook Bilfinger Berger Construction Joint Venture Leighton Hsin Chong Joint Venture Construction Leighton Kumagai Joint Venture (MetroRail) Construction Leighton Kumagai Joint Venture (Route 9 - Eagle s Nest Tunnel) Construction Leighton Kumagai Joint Venture Construction (Wanchai East & North Point Trunk Sewerage) Leighton Monnis Infrastructure JV LLC Construction Leighton Offshore Middle East Construction - 73 Leighton Oriental Structural Engineers Joint Venture - In050A Construction - 50 Leighton Oriental Structural Engineers Joint Venture - In050B Construction - 50 Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

22 Notes continued 9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD CONTINUED Joint Ventures continued Ownership Interest Name of entity Principal activity 2011 % 2010 % Leighton Welspun Contractors Private Ltd Construction 65 - (formerly Leighton Contractors (India) Private Ltd) Link 200 Joint Venture Construction Link 200 Station Joint Venture Construction Link 200 Tunnel Joint Venture Construction Macmahon Leighton Joint Venture Construction Majwe Mining (Proprietary) Limited Contract Mining 60 - Manukau Motorway Extension Construction Moonamang Joint Venture Pty Ltd Construction - 90 Mulba Mia Leighton Broad Joint Venture Construction Ngarda Civil and Mining Pty Limited Contract Mining Ngarda Civil and Mining Pty Limited and Construction Leighton Contractors Pty Limited Northern Gateway Alliance Construction Norton Street Investments Pty Ltd Development Promet Engineers Pty Limited Construction Rail Link Joint Venture Construction Riverina Estate Developments Trust Development 50 - Roche Thiess Linfox Joint Venture Contract Mining SA Health Partnership Holding Nominees Pty Ltd Investment 20 - SA Health Partnership Nominees Pty Ltd Investment 20 - Silcar Pty Limited Services Southern Gateway Alliance (Mandurah) Construction Taiwan Track Partners Joint Venture Construction Thiess Alstom Joint Venture Construction Thiess Black and Veatch Joint Venture Construction Thiess Decmil Kentz Joint Venture Construction Thiess Degremont Joint Venture Construction Thiess Degremont Nacap Joint Venture Construction Thiess Downer EDI Works Joint Venture Construction Thiess Hochtief Joint Venture Construction Thiess Sedgman Joint Venture Construction Thiess Services Arkwood Joint Venture Services Thiess Services Middle East LLC Services Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

23 Notes continued 9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD CONTINUED Joint Ventures continued Ownership Interest Name of entity Principal activity 2011 % 2010 % Thiess United Group Joint Venture Construction Townsville City Project Pty Ltd Development - 50 Townsville City Project Trust Development - 50 TSDI Pty Ltd Services Ubique Finance Pty Ltd Construction 50 - Veolia Water - Leighton - John Holland Joint Venture Construction 40 - Viridian Noosa Pty Limited (in receivership) Development Viridian Noosa Resort Management Pty Ltd (deregistered 13th July 2011) Development Viridian Noosa Trust (in receivership) Development VR Pakenham Trust Development 50 - Wedgewood Road Hallam No.1 Pty Ltd Development Wedgewood Road Hallam Trust Development Westlink (Services) Pty Limited Services Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

24 Notes continued 10. ACQUISITION AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES Acquisitions During the year to 30 June 2011 the Consolidated Entity made the following acquisitions: Devine Limited On 29 June 2011 Leighton Residential Investments Pty Ltd, a controlled entity of the Company, acquired 2,500,000 additional shares in Devine Limited ( Devine ), a company listed on the Australian Securities Exchange, at $0.23 per share which increased the Group s interest to 50.06%. The decision to acquire a controlling interest in Devine followed a review of the Group s property interests. The increased shareholding provides stronger flexibility and certainty to the Group s strategy and position in property. The decision also supports Devine s strategy to grow the business through joint ventures and commercial relationships with other strategic partners that will be assured by the increased shareholding. As a result of this purchase the Group has gained a controlling interest in Devine as well as the Hamilton Harbour and Townsville joint ventures between Devine and Leighton Properties. The acquisition has been accounted for under the requirements of Accounting Standard AASB 3 Business Combinations as follows: the purchase consideration paid for Devine was determined as $149.1 million (comprising: cash paid of $0.6 million; the market value of non-controlling interest of $74.5 million; and, the market value of the Group s previously held equity interest of 49.66% of $74.0 million); and the fair value of the identifiable net assets of Devine acquired by the Group was $344.2 million. The fair value of the identifiable net assets was determined using the assistance of independent valuation experts. The fair value of the identifiable net assets of Devine of $344.2 million exceeded the total purchase consideration resulting in a gain on acquisition of a controlled entity of $195.1 million. In accordance with AASB 3, the Group revalued its previously held equity interest in Devine resulting in a loss of $94.1 million. The net gain on the acquisition recognised in profit and loss was $101.0 million (Refer note 4: Items included in profit before tax). Due to the date of the acquisition there was no contribution by Devine to the Group s operating profit and loss. Devine s contribution for the year is recorded in share of profits of associates. For comparative purposes the total reported profit of Devine for the year ended 30 June 2010 was $8.2 million. Other acquisitions During the year the Group also acquired Delron Cleaning Pty Limited on 1 July 2010 for $8.1 million including acquisition costs, and Moonamang Joint Venture Pty Limited on 10 June 2011 for one hundred dollars including acquisition costs. Disposals Leighton Contractors (India) Private Limited On 24 December 2010 the Group sold 35% of Leighton Contractors (India) Private Limited ( Leighton India ) to Welspun Infra Projects Private Limited ( Welspun ) and entered into a joint venture arrangement with Welspun to pursue opportunities in the Indian construction market. As the Group no longer controls Leighton India the transaction has been recorded as a disposal of a controlled entity and the acquisition of an interest in a joint venture entity. The disposal has been accounted for under the requirements of Accounting Standard AASB 127 Consolidated and Separate Financial Statements as follows: the total consideration received was US$298.8 million (comprising: cash consideration of US$104.6 million (of which US$95.7m has been received to date) and non-cash consideration of US$194.2 million (fair value of the 65% retained interest based on the cash consideration)) less the carrying value of Leighton India s net assets of US$39.4 million, resulting in a gain before tax of US$259.4 million. (Refer to note 4: Items included in profit before tax). Leighton India s contribution since 31 December 2010 is recorded in share of profits of joint ventures entities. Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

25 Notes continued 11. RECONCILIATION OF PROFIT / (LOSS) FOR THE YEAR TO NET CASH FROM OPERATING ACTIVITIES Profit / (loss) for the year (405.7) Adjustments for non-cash items: - Depreciation of property, plant and equipment Amortisation of intangibles Net (gain) / loss on sale of assets (322.2) (30.5) - Net (gain) on acquisition of a controlled entity (101.0) - - Impairment of investments in infrastructure toll road companies Impairment of investments accounted for using the equity method Impairment of goodwill Property development and property joint venture write-downs Net amounts set aside to provisions Share of profits of associates (7.7) - Foreign exchange losses (4.6) Share based payments Net changes in assets / liabilities: - Decrease / (increase) in receivables (190.2) Decrease / (increase) in joint ventures (2.2) (108.3) - Decrease / (increase) in inventories (62.9) Increase / (decrease) in payables 1, Increase / (decrease) in provisions (379.9) (324.7) - Current and deferred income tax movement (345.9) Net cash from operating activities 1, ,739.5 Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

26 Notes continued 12. LIQUIDITY BALANCE SHEET Previously, the Consolidated Entity s balance sheet was presented using the liquidity format with current and non-current information disclosed in the notes. To provide more relevant information to users upfront, the Consolidated Entity s balance sheet is now presented in a current and non-current format as at 30 June For comparative information purposes, a liquidity balance sheet is included below. Note Assets Cash and cash equivalents 8 1, ,313.7 Trade and other receivables 2, ,451.9 Current tax assets Inventories: consumables and development property 1, Investments accounted for using the equity method 1, ,783.0 Other investments Deferred tax assets Property, plant and equipment 2, ,033.9 Intangibles Total assets 9, ,765.8 Liabilities Trade and other payables 5, ,791.7 Current tax liabilities Provisions Interest bearing liabilities 13 1, ,478.9 Interest bearing liabilities - limited recourse Total liabilities 7, ,197.7 Net assets 2, ,568.1 Equity Share capital 14 2, ,232.9 Reserves (305.7) (40.5) Retained earnings ,372.3 Total equity attributable to equity holders of the parent 2, ,564.7 Minority interest Total equity 2, ,568.1 Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

27 Notes continued 13. INTEREST BEARING LIABILITIES Current Interest bearing loans Finance lease liabilities Interest bearing liabilities - limited recourse loans Interest bearing liabilities - limited recourse Leighton Finance International Notes Total current liabilities Non-current Interest bearing loans 1, ,070.2 Finance lease liabilities Interest bearing liabilities - limited recourse loans Total non-current liabilities 1, ,324.7 Total interest bearing liabilities 1, ,670.3 Interest Bearing Loans Syndicated Loans On 10 October 2008, Leighton Finance Limited, a wholly owned subsidiary of the Company, entered into a syndicated bank facility for $520.0 million, maturing on 10 October On 8 December 2010, the syndicated bank facility was Amended and Restated to $600.0 million, maturing on 8 December Amount outstanding as at 30 June 2011: $nil (30 June 2010: $nil). On 14 September 2007 LMENA No.1 Pty Limited, a wholly owned subsidiary of the Company, entered into a syndicated bank loan for US$434.0 million loan maturing on 30 September 2012 to finance its investment in Al Habtoor Engineering Enterprises LLC. The loan was recourse only to the investment in Al Habtoor Leighton LLC. On 31 March 2010, the facility was Amended and Restated. The Amended and Restated facility is for US$368.2 million and is guaranteed by the Group. Amount outstanding as at 30 June 2011: US$331.6 million (30 June 2010: US$366.3 million) equivalent to $309.9 million (30 June 2010: $431.0 million). Repayment instalments totalling US$33.6 million (30 June 2010: US$36.0 million) equivalent to $31.4 million (30 June 2010: $42.4 million) are due within 12 months of the reporting date. Guaranteed Senior Notes On 15 October 2008, Leighton Finance Limited, a wholly owned subsidiary of the Company, issued a total of US$280.0 million Guaranteed Senior Notes in three series: Series A Notes: US$111.0 million Guaranteed Senior Notes at the rate of 6.91% maturing on 15 October 2013 Series B Notes: US$90.0 million Guaranteed Senior Notes at the rate of 7.19% maturing on 15 October 2015 Series C Notes: US$79.0 million Guaranteed Senior Notes at the rate of 7.66% maturing on 15 October 2018 Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June

28 Notes continued 13. INTEREST BEARING LIABILITIES CONTINUED Interest on the above notes will be paid semi-annually on the 15 th day of April and October in each year. Amount outstanding as at 30 June 2011: US$280.0 million (30 June 2010: US$280.0 million) equivalent to $260.3 million (30 June 2010: $329.4 million). On 21 July 2010, Leighton Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, issued a total of US$350.0 million Guaranteed Senior Notes in three series: Series A Notes: US$90.0 million Guaranteed Senior Notes at the rate of 4.51% maturing on 21 July 2015 Series B Notes: US$145.0 million Guaranteed Senior Notes at the rate of 5.22 % maturing on 21 July 2017 Series C Notes: US$115.0 million Guaranteed Senior Notes at the rate of 5.78 % maturing on 21 July 2020 Interest on the above notes will be paid semi-annually on the 21 st day of January and July in each year. Amount outstanding as at 30 June 2011: US$350.0 million (30 June 2010: US$nil) equivalent to $325.6 million (30 June 2010: nil). Medium Term Notes Leighton Finance Limited, a wholly owned subsidiary of the Company, issued a total of $280.0 million Medium Term Notes on the following dates: 28 July 2009: $230.0 million 12 August 2009: $50.0 million The Notes bear interest at the rate of 9.5% and mature on 28 July Other unsecured loans Other unsecured loans outstanding as at 30 June 2011: $45.1 million (30 June 2010: $115.5 million). Other unsecured loans expected to be settled more than 12 months after reporting date: $7.8 million (30 June 2010: $71.6 million). Finance Lease Liabilities The Group has leased mining plant and equipment in Indonesia and Australia under finance leases that expire within five years of the reporting date. Limited Recourse Loans The Group has limited recourse property development loans secured against certain property development assets of the Group. Amount outstanding as at 30 June 2011: $261.7 million (30 June 2010: $62.0 million). Leighton Finance International Notes On 16 May 2006, Leighton Finance International Limited (the Issuer ), a wholly owned subsidiary of the Company, issued US$110.0 million of 5-Year Fixed-Rate Guaranteed Notes ( Leighton Finance International Notes ). On 16 May 2011, the Leighton Finance International Notes were repaid to Noteholders in full. Amount outstanding as at 30 June 2011: US$nil (30 June 2010: US$110.0 million) equivalent to $nil million (30 June 2010: $129.4 million). Appendix 4E and Consolidated Preliminary Final Report for the Year Ended 30 June