TRANSFIELD SERVICES ANNUAL REPORT

Working on tomorrow today ANNUAL REPORT 2011 Challenge | Collaboration | Ingenuity | Integrity All financials are in Australian dollars unless otherwise specified. The financial figures provided in the front section of the report (pages 1 to 38) have been rounded. In some cases, totals and percentages have been calculated from financial figures that have not been rounded, hence some financials and percentages may not add up exactly. Notice of Annual General Meeting Shareholders are advised that the 2012 Annual General Meeting of Transfield Services will be held on Thursday, 1 November at 10.00am (AEDST), at the AGL Theatre, Museum of , 37 Philip Street (Corner Bridge Street), Sydney, New South Wales. CONTENTS 004 Business snapshot 006 Financial highlights 008 Chairman’s report 010 Managing Director and CEO’s report 014 Board of Directors 016 Senior executive team 018 Review of operations 020 and New Zealand 024 Americas 026 Middle East and Asia 028 Sustainable business 034 Corporate governance 039 Financial report 140 Index 141 Corporate directory 142 Office locations

2012 TRANSFIELD SERVICES 3 BUSINESS SNAPSHOT

MIDDLE EAST AND ASIA

• Hydrocarbons • Manufacturing • Power Generation • Facilities Management * • Minerals Processing • Process Industries Our global workforce of 24,000+ • Chemicals • Power

FAST FACT Hofincons supports the employees provides operations, generation of power for more than maintenance and construction 33 million people in India per year. services in the Resources, Energy, 6,734 Contract highlights • The region secured more than $37 million in new Industrial, Infrastructure, contracts and $20 million in renewed contracts. • Transfield Mannai Facilities Management Services now provides an end-to-end offering for the provision of heating, ventilation, Property and Defence sectors. air-conditioning and cooling (HVAC) services. • Successfully completed five shutdowns in the hydrocarbons and minerals processing industries. • Hofincons expanded into operations and maintenance for high capacity power We operate in 20 industries generation facilities and facilities management for malls and retail. providing services to over 200 clients.

* Figure excludes Joint Ventures

OUR NEW LOOK…. To help bring our vision and brand promise to life, we created a new look. It includes a vibrant graphic device and colour palette, complemented by a modern style of photography.

THE GRAPHIC DEVICE The spherical shape (left) represents the industrial nature of our work, the diversity and layers of knowledge within our business and our global presence.

4 TRANSFIELD SERVICES 2012 AMERICAS

• • Chemicals • Minerals Processing • Roads • Hydrocarbons • Transmission and • Power Generation Distribution

FAST FACT We provide operations and maintenance services to 12,000 lane miles across the Americas. 4,161

Contract highlights • Secured more than US$306 million with four US Department of Transportation contracts. • Awarded US$150 million in Resources and Energy contracts with various clients. • Flint Transfield Services joint venture successfully renegotiated, allowing growth in key North American markets. • Acquired control of InserTS in Chile to accelerate growth in Mining and Power.

AUSTRALIA AND NEW ZEALAND

• Hydrocarbons • Telecommunications • Mining • Roads and Rail • Process Industries • Public • Power Generation • Property and • Transmission and Maintenance Distribution • Defence • Water • Social Infrastructure

FAST FACT We’ve reduced the carbon footprint of Sydney’s Lane Cove tunnel by 17,800 tonnes of CO2-emissions per year by improving the ventilation systems.

13,691 (Includes Easternwell)

Contract highlights • Telecommunications business bolstered by $362 million in contracts. • Defence contract wins of $200 million and extensions across three significant contracts. • Awarded $133 million in construction contracts for NBN Co in Victoria. • Rio Tinto and Fortescue Metals contracts to construct two bulk diesel tank farms worth $100 million.

Our brand is at the centre of everything we do and They are: everything we say. Integrity - Do what’s right It reflects our core beliefs and the values that drive Collaboration - Achieve more together our vision ‘To be the knowledge leader in asset Challenge - Drive to succeed management services’. Ingenuity - Create better ways. The device signals a change in the way we see ourselves and will help our clients define what Our commitment to our clients is to leverage our it is about us that differentiates us from our global knowledge and expertise to think differently, competitors. innovate and deliver optimal asset productivity. New values support and guide our behaviours and We are dedicated to listening, understanding and decisions, no matter where we are or what we do. challenging ourselves.

2012 TRANSFIELD SERVICES 5 FINANCIAL HIGHLIGHTS

 Full year statutory Net Profit after Tax of $84.8 million  Operating cash flow of $123 million, up 49 per cent  Cash conversion of 76 per cent  Total FY12 dividend of 14 cents per share  Earnings per share of 15.6 cents  Order book of $11 billion  Revenue of $4.3 billion (including joint ventures)

CASH CONVERSION PIPELINE OF OPPORTUNITIES $30.3 billion up six per cent

Property and FM Property Maintenance Resources and % Defence Energy 15% Social Infrastructure Hydrocarbons 27% Mining 76 Process Industries Infrastructure Services Power Water 58% Telecommunications Road and Rail

6 TRANSFIELD SERVICES 2012 “Global economic conditions are volatile, but we remain confident that with a more efficient business, a healthy balance sheet, strong footholds in growth markets and a new focus on providing higher value services to our clients, we are well placed.”

GROWTH IN REVENUE DIVIDEND PER SHARE (cents per share)

36

27 22 20 16 % 14 14 14 7 12

‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 FY12

GEARING* SHARE BUYBACK

* Net debt / Net debt + Equity

61% 60% 57%

47% 33% 33% 32% 27.8 25% 18% million shares acquired at a ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 FY12 cost of $62 million

2012 TRANSFIELD SERVICES 7 CHAIRMAN’S REPORT

Despite the unprecedented The Company must continue Our Australian infrastructure With the rapid growth in global economic to reduce costs and become and services businesses the unconventional oil and uncertainty and turbulent leaner and more efficient maintained strong positions gas market in the region, markets, your Company has to lift our margins and in the public transport, our Americas resources delivered on its guidance. profitability and to improve water, telecommunications and energy business is We declared a pre- our competitiveness. These and defence industries positioning to capitalise amortisation Net Profit after initiatives are discussed in with turnover of $1.3 billion on increasing demand for Tax (NPAT) of $106 million. more detail in the Managing and won work totalling upstream oilfield services in We delivered strong cash Director and Chief Executive $1.74 billion. In New the Williston shale gas basin conversion of 76 per cent Officer’s report commencing Zealand, we retained and in North Dakota. and an operating cash flow on page 10. won work totalling $270 We acquired a further of $123 million, up 49 per million in the electricity Our focus on long-term 40 per cent in our mining cent on the previous year. and telecommunications operations and maintenance services joint venture In these markets, cash is industries. was proven during the last in Chile, bringing our vital and a true measure of quarter when The Middle East and Asia ownership to 90 per cent. business performance. mining industry experienced region remains profitable We believe the Chilean Your final dividend for the a cooling off in capital despite subdued activity minerals industry will 2012 financial year of nine expenditure. Our strategy and experienced a rebound continue to grow and cents per share is unfranked means we are not dependent in margins and growth we are exploring new and payable on 24 October on the construction of new with approval granted opportunities to exploit 2012, bringing the total plant or the expansion of for a number of major greater leverage. dividend for the year to existing mines. infrastructure projects in the The focus on upstream 14 cents per share. Emirates. Our resources and energy oil and gas services At a macro level, revenue business, with a turnover of In North America, while and greater expansion and margins softened, but $1.5 billion supported by a recessionary economic into minerals services throughout the business strong performance from conditions prevailed, our accelerates the fundamental your management team Easternwell, commissions, roads business enjoyed strategic change we is executing our plan to operates or maintains the another good year, winning embarked on three years further drive down costs hundreds of billions of notable contracts in Canada ago in the Americas. In while expanding into dollars of resources assets and the United States. combination with the higher margin services. The already built, being built or ongoing streamlining and Our Flint Transfield Services reduction of overheads firmly committed to. These cost reduction, we are (FTS) joint venture in and operating costs will be assets have operational lives confident your Company is Canada continued to an important focus of the in excess of 20 years. well positioned for the long perform well and we Board in the coming year. term in the Americas. Our Easternwell energy are exploring further business maintains and opportunities with URS, the This year, we have included services coal seam gas new owner of our partner references to corporate wells that are already Flint. This joint venture governance throughout the commissioned or in use, turned over $300 million for Annual Report. This reflects again mitigating our the year. our continued integration exposure to any slowdown of key principles of in capital expenditure. governance into the fabric of the Company.

8 TRANSFIELD SERVICES 2012 “OUR AUSTRALIAN INFRASTRUCTURE AND SERVICES BUSINESSES MAINTAINED STRONG POSITIONS IN THE PUBLIC TRANSPORT, WATER, TELECOMMUNICATIONS AND DEFENCE SECTORS WITH TURNOVER OF $1.3 BILLION AND WON WORK TOTALLING $1.74 BILLION.”

As our shareholders, Following the end of Managing Director and Despite the tough you are expecting us to the financial year, we Chief Executive Officer, conditions, your Company demonstrate what we are announced the retirement Peter Goode, tendered his is in good shape. We have a doing about issues such as of Luca and Guido resignation at the release sound balance sheet, strong Board diversity. Belgiorno-Nettis from the of the end of year results. cash flow and an $11 billion Transfield Services Board Peter is moving to a new order book. Your Board is committed of Directors effective from position with a UK-based to continuously improving Our strategy remains 30 August 2012. Luca and private equity company. the diversity of the Board focussed on operational Guido have served on the and the employee base Peter has made a significant excellence and growing our Transfield Services Board of the Company. Diversity long-term contribution share of oil and gas and since before the Company’s of background, gender, to setting and executing mining services markets, listing in 2001. age and ethnicity enriches a new strategy for the while enhancing margins in perspectives, enhancing Luca and Guido have made business including the sale our traditional infrastructure the performance of the an immense contribution of our facilities maintenance and services markets. Board and collaboration to the development of business in the US, the and productivity across the the Company. They have sell down of our interests Company. been integral members of in Transfield Services the Board and I take this Infrastructure Fund and The Board is encouraged opportunity to thank them increasing our exposure to by progress made to date both for their contributions the oil and gas industry. I against the objective of and commitment to would like to thank Peter for increasing the participation Transfield Services, which his contribution to Transfield Tony Shepherd AO of women throughout the was founded by their Services and wish him all the Chairman of the Board organisation, with particular late father Franco best for the future. regard to professional roles Belgiorno-Nettis. in the three layers of the Non-Executive Director Company below the role The private company Graeme Hunt who was of the Managing Director representation has been appointed in May 2012, has and Chief Executive Officer. taken by Roy McKelvie, taken the role of interim Increased transparency and the recently appointed Managing Director and Chief improvement in the number Chief Executive Officer of Executive Officer. We are of women in the important Pty. Ltd. pleased to have a person of entry level graduate, With more than 20 years’ Graeme’s experience and apprentice, trainee and expertise in business stature while we cadet roles are positive and financial markets, conduct an international signs of further progress. Roy will complement the search for this role. Transfield Services Board This year, I have also Graeme has held significant skill base. overseen the important executive management process of Board renewal. positions in the resources industry. He knows our business and has a reputation for operational excellence. The transition is underway and there will be no loss of momentum.

2012 TRANSFIELD SERVICES 9 MANAGING DIRECTOR AND CEO’S REPORT

INTRODUCTION The Company’s cash As LNG demand picks up, Transfield Services’ conversion rate was 76 per the outlook for Australia is financial position is strong. While our business cent, up from 70 per cent strong, and the Company, We have a three-year debt environment in 2012 was the previous year. While including Easternwell, is maturity profile with no difficult, we continued this is below our long-term well placed to capitalise major maturities falling to make investments target of 90 per cent, it over the next decade on due until December next demonstrating our demonstrates our focus an expected growth in year. Gearing is well within commitment to and on improving this metric commissioning, operations our target range at progress our strategy to – even as both clients and and maintenance for plant 32 per cent. delivering higher value suppliers aggressively that is already built or services in growth markets. managed their cash during being built. AROUND THE REGIONS a tough 12 months. These include: In partnership with Veolia/ Revenue for the Australia consolidating existing Transfield Services Transdev, we were awarded and New Zealand (ANZ) power generation asset continued to win a high profile $800 million business increased by 9.5 management businesses significant new business contract to operate per cent, (not including into an integrated during the year. and maintain Sydney’s Easternwell). operations maintenance iconic harbour ferry We signed a 10-year EBITDA margins declined and support business service. The joint venture contract with Santos to due to an underperforming in joint venture with successfully transitioned provide operations and contract and the FY11 WorleyParsons into the contract, and we maintenance services in sale of the wind farm commenced operation  the Cooper and Eromanga development business acquiring control of of the service in late July Basins in central Australia. to RAC. We have since InserTS in Chile to this year. invested in more robust accelerate growth in this We are providing a range We also won major contract governance, cost attractive market of services previously contracts with West control and monitoring  delivered by a number of unlocking value in Australia Water systems. different contractors. The our RATCH Australia Corporation, Telstra, contract is progressing A full year of Easternwell Corporation (RAC) and Transpower in New with our team helping boosted our exposure investment, and Zealand. We were awarded Santos and its partners to the resources and  the majority of work in eliminating liabilities deliver gas flow from energy sector. This is Victoria as part of the roll related to Loy Yang Australia’s first onshore complemented by our out of Australia’s National A, Collinsville and shale gas well. long-term contract profile Broadband Network, Townsville power with blue chip clients in and continued to play stations. other essential service a significant role in the industries around the construction of the Ultra- world. Fast Broadband network in New Zealand for our client Chorus.

10 TRANSFIELD SERVICES 2012 The ANZ Infrastructure The first step in this “THE RESOURCES AND business experienced growth was the acquisition revenue and margin during the year of Steier ENERGY BUSINESS IS growth which was Oil Field Service in the supported by organic Williston Basin in North ALSO EXPANDING ITS growth as the business Dakota. This basin is FOOTPRINT INTO THE transitioned into a number currently at the centre of significant multi-year of a boom in onshore GULF OF MEXICO REGION, contracts in water, public unconventional (shale) oil transport and gas, building and gas production. AND CONSISTENT WITH on the Group’s long-term The resources and THIS, WE RELOCATED THE revenue base. energy business is also AMERICAS HEAD OFFICE In the Americas business, expanding its footprint while revenue increased, into the Gulf of Mexico FROM PHILADELPHIA TO EBITDA and margins region, and consistent declined due to less with this, we relocated THE MAJOR OIL AND GAS leverage work in the the Americas head office HUB OF HOUSTON.” second half and a from Philadelphia to the lower level of planned major oil and gas hub of maintenance by FTS’s Houston. clients in Canadian oil In other sectors, we sands. We expect a were awarded our first rebound in leveraged work mining contract and as the four-yearly cycle of gained momentum in the shutdowns and upgrades Rocky Mountains and across the resources and Mid Continent region, energy business begins to particularly with our accelerate again. specialty welding services. We successfully renegotiated terms of our Canadian joint venture, FTS. This makes available greater growth opportunities in key North American markets.

2012 TRANSFIELD SERVICES 11 MANAGING DIRECTOR AND CEO’S REPORT CONTINUED

The Americas SAFETY RISK MANAGEMENT BUSINESS infrastructure business DEVELOPMENT A tragic aspect of the As an international expansion into Western Company’s performance business operating in The business reinvested in Canada continued as the in the year was the death numerous industries, income-producing roles. Government trend to of three employees. One Transfield Services faces We improved business outsourcing continues. occurred in our ANZ a variety of risks that may development capabilities Revenue grew with Rail business and two in affect our performance. and continued focussing the commencement Hofincons. This was deeply These include risks on account management of three new road saddening and totally associated with economic and the up-skilling of key contracts and increased unacceptable. volatility, foreign exchange, operational positions such leveraged work from competition and contract as contract management, existing clients. Strong Transfield Services remains retention, health and contract quality control and operational performance committed to industry safety, operating in foreign asset management skills. also improved margins. leading safety practices countries, recruitment and The business will remain and culture across all In November, a new retention of personnel focussed and disciplined of our businesses and position of Regional and government in setting appropriate will continue driving Director for Western developments. margins for new work. improvements in Australia was created to processes, procedures and The identification and focus on and increase our Proportionately individual behaviours. minimisation of these risks share of the resources consolidated margins in are crucial, particularly sector in that state. the Middle East and Asia These fatalities stand in in volatile economic business grew to 6.8 per contrast to the overall conditions. This year, THE FUTURE cent. This was reflected decline in our Lost Time we have focussed on by strong contract Injury Frequency Rate As large scale resources contract optimisation performance and control (LTIFR) by three per cent and energy projects move and mitigating associated of overheads. year on year to 1.14 injuries towards the operations risks through targeted per million hours worked. and maintenance stage of Hofincons grew in line initiatives. We have also their lifecycles, our robust with expectations and emphasised a ‘live’ focus pipeline of new business expanded into operations to our risk management opportunities is up 6.3 per and maintenance in the so that our operations cent to $30.3 billion. power industry, and see risks as ongoing facilities management challenges that, through Our strategy of moving in the retail industry. We timely action, can be up the value curve and continue to integrate turned into opportunities expanding into higher Hofincons with the rest of for the business margin growth sectors is our business, increasingly delivering clear financial using their capabilities to results. Our order book differentiate our offering in grew to $11 billion with an the rest of our business. additional $2.6 billion in contract extensions and $585 million of contracts at preferred bidder status as at 30 June 2012.

12 TRANSFIELD SERVICES 2012 We will continue to drive He is a highly respected “OUR STRATEGY OF MOVING discipline at all levels of international operator, the business. Transfield with an exceptional track UP THE VALUE CURVE Services’ new Enterprise record in leading, growing Resource Planning (ERP) and developing businesses. AND EXPANDING INTO system has successfully Graeme will continue HIGHER MARGIN GROWTH rolled out on time and on to drive the Company’s budget in the Americas operating performance and SECTORS IS DELIVERING and roll out is underway in accelerate the momentum Australia and New Zealand. of change and execution CLEAR FINANCIAL RESULTS. of strategy across the A key focus for us will be OUR ORDER BOOK GREW Company. broadening our skills to TO $11 BILLION WITH AN provide tailored services. Thank you to the global By taking a smarter, more Transfield Services family ADDITIONAL $2.6 BILLION IN sophisticated approach to for your commitment and asset management, we will contributions throughout CONTRACT EXTENSIONS become a trusted advisor. the year. AND $585 MILLION OF Our market continues To our shareholders, thank CONTRACTS AT PREFERRED to be very competitive you for your continuing – a challenge I know the support during volatile and BIDDER STATUS AS AT Company spirit will rise to. challenging times. 30 JUNE 2012.” I am confident that with a more efficient business, a healthy balance sheet, strong footholds in growth markets and a clearly mapped out strategy, we are well placed. I have now handed over the Peter Goode reins to Graeme Hunt, who MD and CEO has taken on the role of interim Managing Director and Chief Executive Officer while a global search is being conducted for my replacement.

2012 TRANSFIELD SERVICES 13 BOARD OF DIRECTORS

ANTHONY JAGJEET (JEET) DR PETER GOODE GRAEME HUNT GUIDO BELGIORNO- SHEPHERD AO BINDRA Managing Director and Interim Managing Director NETTIS AM Chairman Deputy Chairman Chief Executive Officer and Chief Executive Officer Non-Executive Director

Bachelor of Commerce Master of Business Doctor of Philosophy (PhD) Bachelor of Metallurgy Bachelor of Engineering in Petroleum Engineering Administration (Honours) Master of Business (Civil) Tony was appointed Master of Science (Chemical Bachelor of Science in Administration Master of Business Director and Deputy Mathematics and Computing Engineering) Graduate of London Administration Chairman of Transfield Science Business School’s Senior Services on 6 March 2001 Bachelor of Technology Graduate of Columbia Executive Program Guido was appointed and Chairman in 2005. with Distinction (Chemical Business School’s Executive Director on 14 January He is also the Chair of the Engineering) Management Program Graeme was appointed 1998. He is a member of Nominations Committee. Graduate of London a Director on 7 May 2012 the Human Resources Business School’s Senior Tony has been responsible Peter was appointed and announced as the Committee and Executive Program for development of Managing Director and interim Managing Director the Health, Safety, Chief Executive Officer and Chief Executive Environment and Quality many landmark projects, Jeet was appointed on 30 March 2009. He is Officer of Transfield Committee. Guido’s including the Sydney Director on 24 July 2009 a member of the Health, Services on 29 August involvement in developing Harbour Tunnel and and Deputy Chairman on Safety, Environment 2012. He is a member complex infrastructure CityLink, 22 October 2010. He is also and Quality Committee. of the Health, Safety, projects as part of other build-own-operate- Chair of the Health, Safety, Peter has a strong track Environment and Quality Transfield Holdings in the transfer projects and Environment and Quality record of successful Committee and the Risk, 1990s saw him play a key the redevelopment of Committee. Jeet has more leadership in outsourced Audit and Compliance role in the development Walsh Bay in Sydney. than 35 years’ international services globally over Committee. of an operations and In 2012, Tony was experience in all segments appointed an Officer of more than 30 years at maintenance division of the energy industry. Graeme has more than the Order of Australia companies including which ultimately became Former roles include 37 years’ experience in for services to business, Vetco International and Transfield Services. President of Chevron the metals, mining and particularly infrastructure Schlumberger. Global Manufacturing and bulk transport industries, In 2007, Guido was development, and support Managing Director and Company, industry and including a 34 year career appointed a Member of of the arts and sport. Chief Executive Officer of community boards at BHP Billiton during the Order of Australia Caltex Australia. which he held various for services to the Company, industry and Director of Transfield President level positions. construction industry and community boards Foundation Company, industry and the arts. In 2005, Guido President of Business community boards Director of Expro Company, industry and was presented with the Council of Australia Director of Transocean Group community boards AGSM Distinguished Patron of Infrastructure Limited Member of the Business Director of AGL Limited Alumni Award for Partnerships Australia leadership and innovation Director of Council of Australia Former President of in business, followed by Director of Virgin LyondellBasell Industries Former President and Australian Uranium the University of NSW Australia International Chief Executive Officer Association, Australian Director of Edison Alumni Award in 2008. Airlines International of Vetco International Mining and Metals  Association, and Company, industry and Chairman of AFL club Distinguished Alumnus Former Director of the International community boards GWS Giants of Indian Institute of Ocean Rig Manganese Institute Trustee of Sydney Technology Joint Executive Director Former Deputy Chair Cricket and Sports Distinguished Alumnus of Transfield Holdings of Minerals Council Ground Trust of University of Director of Transfield of Australia, former Director of Migration Washington College of Foundation Director of International Council Australia Engineering Aluminium Institute and Chairman of Novatec Advisor to Bank of Former Chair of Indian World Energy Council Solar Shareholder Tokyo Mitsubishi Institute of Technology Australia Committee Kanpur Foundation Former Chair of Chairman of Australian Former Director of Australian Government’s Chamber Orchestra Sriya Innovations, Inc Renewable Energy Trustee of Art Gallery Former member of Committee of NSW Advisory Board of Hart Inaugural Director of Energy Consulting Transurban Limited

14 TRANSFIELD SERVICES 2012 LUCA BELGIORNO- STEVEN CRANE DOUGLAS SNEDDEN DIANE ROY MCKELVIE NETTIS AM Independent Director Independent Director SMITH-GANDER Non-Executive Director Non-Executive Director Independent Director Bachelor of Commerce Bachelor of Economics and Bachelor of Science in Bachelor of Architecture Accounting Bachelor of Economics Production Engineering Steven was appointed Master of Business Graduate Diploma in Urban Doug was appointed Master of Business Director on 12 February Administration Estate Management 2008. He is the Chair Director on 21 December Administration of the Risk, Audit and 2009 and is Chair of Luca was appointed Diane was appointed Roy was appointed Compliance Committee the Human Resources Director on 2 July 1999. He Director on 22 October Director on 31 August and a member of the Committee and a member is a member of the Risk, 2010. She is a member 2012 and is a member Human Resources of the Risk, Audit and Audit and Compliance of the Human Resources of the Risk, Audit and Committee. Steven has Compliance Committee. Committee. In 2009, Luca Committee and the Health, Compliance Committee more than 30 years’ was appointed a Member Doug has more than Safety, Environment and and the Health, Safety, experience in the financial of the Order of Australia 30 years’ experience Quality Committee. Environment and Quality industry, including as for services to the arts in finance, consulting, Committee. former Chairman and Diane has extensive and the community. Luca strategic management Director of Investa Australian and international Roy has more than won the UTS Chancellor’s and outsourcing, largely Property Group and Chief experience in banking and 20 years’ investment Award for Excellence in gained through a Executive Officer at ABN finance, technology and management and private 2007 for contribution to distinguished international AMRO Australia (now strategic and management equity experience in Sydney’s culture. career at Accenture, most operating as RBS Group). consulting, including executive and non- recently as Managing Company, industry and as a former partner at executive director/ Company, industry and Director of its Australian community boards McKinsey & Company in chairman roles in the community boards business. Washington DC and New retail, business services, Joint Executive Director Chairman of NIB Company, industry and Jersey in the United States, financial services and of Transfield Holdings Holdings Limited community boards and Group Executive IT resources industries. Director of Campus and Operations, Westpac Chairman of Global  Prior to his current role as Living Funds Director of Hillgrove Valve Technology Banking Corporation. Chief Executive Officer of Management Resources Limited Transfield Holdings, Roy Director of Black Dog Company, industry and Director of Transfield was Managing Director Director of APA Group Institute community boards Foundation and Chief Executive Director of Bank of   Director of Perisher Director of St James Director of Wesfarmers Officer of Gresham Private Queensland Limited Blue Ethics Centre Limited Equity Limited where he Director of Taronga   was also a Director of Chairman of Biennale of Director of Accenture Deputy Chairman of Conservation Society Gresham Partners Limited Sydney Australia Foundation NBN Co Limited Australia   and a member of the firm’s Chairman of University Chairman of Odyssey Director of CBH Limited Member of RBS Group Executive Committee. of Technology, Sydney House NSW and CBH Grain Limited (Australia) Advisory Prior to joining Gresham, and University of Commissioner of Council Roy served as Managing Western Sydney Art Tourism Western Director of the investment Former Director of Committees Australia arm of Deutsche Bank AG Foodland Associated Member of Australian Member of Advisory as Asian Head of Deutsche International Cultural Former Director of Board of the UWA Bank Capital Partners in Committee Adelaide Bank Business School Hong Kong. Prior to this, Founder of Former Chairman of he spent over 10 years newDemocracy Basketball Australia with 3i as a Director of Foundation Limited 3i Group plc in Europe where he led over 60 transactions in various industries and jurisdictions.

2012 TRANSFIELD SERVICES 15 SENIOR EXECUTIVE TEAM

TIERNAN O’ROURKE KATE MUNNINGS EION TURNBULL NICHOLAS YATES Chief Financial Officer Chief Risk and Legal Chief Executive Operations Chief Executive Officer and Company Support Infrastructure Australia and Master of Business Secretary New Zealand Administration, University of Doctor of Philosophy (PhD) Technology, Sydney Bachelor of Laws, The in Chemical Engineering, Bachelor of Engineering University of New South Cambridge University (Mechanical), The University Chartered Accountant Wales of Sydney (FCA) Bachelor of Chemical Bachelor of Health Science, Engineering, The University Bachelor of Commerce, University of Technology, of New South Wales Nick has over 25 University College Dublin Sydney years’ experience and Eion has over 35 years’ was appointed to his Tiernan has over 25 Kate has over 19 years’ experience and was current role on 7 April years’ experience and experience and was appointed to his current 2011. His experience was appointed to appointed to her current role on 31 January 2012. spans the construction, his current role on 11 role in January 2006. His experience spans the infrastructure and January 2010. He is Kate is responsible for oil and gas, mining and property industries in responsible for Transfield the global functions process industries. He senior operational and Services’ overall financial of legal, procurement, works with the business strategic leadership strategy and policy enterprise risk to ensure the right roles. as well as financial management, insurance, plans and resources are management reporting, Experience internal audit and brought to bear to either treasury, taxation, compliance/company improve performance Chief Executive funding and investor secretariat. She is also to the target level or Marketing relations. focussed on establishing optimise it. and Business Experience and maintaining Development, strategies designed Experience Transfield Services Qualified Chartered to enhance business Chief Executive Chief Executive Accountant receiving outcomes and protect Health, Safety, Officer, APP his MBA in 1996 shareholder value. Environment and Corporation Chief Financial Quality at Transfield Project roles Officer for Australand Experience Services with Lend Lease Holdings Limited  Company Secretary Deputy Chief Corporation Senior financial, and General Counsel, Executive at Bapco, commercial and Transfield Services Kingdom of Bahrain management roles Partner, Baker & leading a 50 per at AGL Limited, McKenzie cent reduction in Westfield Holdings Partner, Corrs the occurrence of Limited, CSR Limited Chambers Westgarth significant safety and Brambles incidents Australia Limited Solicitor, Clayton Utz Refinery Head, Essar Oil, India General Manager Refining, Caltex Australia at Lytton and Kurnell

16 TRANSFIELD SERVICES 2012 JOE SOFRA* PHILIP WRATT* STEVE MACDONALD ELIZABETH HUNTER STEPHEN PHILLIPS Chief Executive (Interim) President Americas and Chief Executive Marketing Chief Executive Human Chief Information Officer Resources and Energy and Middle East and Asia and Investments Resources Executive General Manager Bachelor of Commerce, Marketing and Business Philip has more than 33 Bachelor of Engineering Master of Business University of the Development years’ experience and (Civil) (Honours), The Administration, RMIT Witwatersrand was appointed to his University of Melbourne University (Johannesburg, South Bachelor of Process Africa) current role on 2 August Bachelor of Business, Engineering (Honours), 2012. Philip works closely Steve has more than 25 Victoria University RMIT University Stephen has more than with the teams in the years’ experience and 20 years’ experience PhD in Engineering, The United States, Canada was appointed Chief Elizabeth has more than and was appointed to University of Melbourne and Chile, managing Executive Marketing and 24 years’ experience his role on 9 March 2011. the strategic direction, Investments on 7 April and was appointed His experience spans Joe has more than relationships and 2011. He joined Transfield Chief Executive business and technology 17 years’ experience providing leadership for Services in 1987, working Human Resources on leadership and delivery and was appointed the business. in a number of senior 20 August 2007. Her interim Chief Executive business development, experience spans a experience in the wealth Resources and Energy Experience project management and range of industries and management, banking Australia and New executive management and life insurance Chief Executive, financial services, health Zealand on 7 August roles across the business. industries with large Middle East, Transfield and semi-government 2012. He is responsible Steve is Transfield companies. Services organisations. She for leading the Services’ nominee is a member of the Vice President and Experience acceleration of growth Director on the RAC Chartered Institute Regional General in this business and (formerly Transfield of Personnel and General Manager IT, Manager, Asia Pacific ongoing service delivery Services Infrastructure Development (UK) and a National Australia and Australia for GE improvement, and Fund) Board, Transfield Director of the Transfield Bank Oil and Gas continues the strategic Services’ nominee Foundation. General Manager of shift towards providing President, Asia Pacific Director on the Technology, MLC high value technical and Middle East for Transfield Worley Power Experience  services Services Board and was General Manager, Vetco Gray Financial services Director of the Federal Regulatory, Westpac Executive Manager, Experience Government’s Australian Health Banking Corporation Asia Pacific for Centre for Renewable  Regional Business Varco/Elmar Services Semi-government Development Director, Energy (ACRE) until Wood Group PSN 30 June 2012. * With the amalgamation of General Manager Experience Development, Uhde Americas and Middle East region reporting lines, former  Shedden Executive General President Americas Larry Manager Business  General Manager Ames left the Company on 2 Development, Asset Services, August 2011. Phil Wratt was Transfield Services  appointed President Executive Manager Chief Executive Americas, Middle East and Non Ferrous Group, Officer, Transfield Asia. Ausmelt Limited Services Infrastructure Fund (now RAC) * Gareth Mann was appointed Chief Executive Chief Executive Resources Officer, Transfield and Energy on 25 October Construction 2011. As of 7 August 2012, Chief Executive Gareth was appointed Chief Officer, Yarra Executive, Transfield Worley Trams, (operated Power Services Pty Ltd. by Transfield Services’ former joint venture company, TransdevTSL)

2012 TRANSFIELD SERVICES 17 REVIEW OF OPERATIONS 18 TRANSFIELD SERVICES 2012 REVIEW OF OPERATIONS 2012 TRANSFIELD SERVICES 19 REVIEW OF OPERATIONS

AUSTRALIA AND NEW ZEALAND

Revenue in the Australia and New Zealand business The ongoing integration of Easternwell will be pivotal increased by 9.5 per cent. This figure does not include in seizing these opportunities and played an important the contribution from Easternwell and reflects the role in Santos’ decision to award the Company a 10-year commencement of several large, multi-year contracts in Construction, Maintenance and Services (CMS) contract the water, public transport and gas sectors. in the Cooper Basin, South Australia. The contract, which commenced in late 2011, consolidates a range of services Profit margins were impacted by the now completed previously provided by a number of different contractors. underperforming contract in New Zealand. In Western Australia, the Company won a Pilbara-based A key development during the year was the formation maintenance and shutdown contract. In addition, the of the resources and energy and infrastructure sub- strategy to build a strong hub of personnel for operations divisions in the Australia and New Zealand region. This is is progressing well and will provide greater capacity a simplified structure now consistent with the Americas to grow and diversify the region’s revenue base. The region. It allows for greater business visibility and a more appointment of a Regional Director has also sharpened focussed and streamlined delivery of our strategy. our focus on winning new business in the state. RESOURCES AND ENERGY The coal seam gas industry in Queensland is set for rapid expansion and the Company has a foothold in With the implementation of a range of initiatives and the market. We have successfully carried out critical key contract wins through the year, the business is upstream work for Queensland Gas Company (QGC) as well positioned to take advantage of opportunities as part of their 191 Wells contract. Through this contract, we Australia’s major resources and energy projects move developed a range of continuous improvement initiatives into the commissioning and operations and maintenance which gives us impressive operating credentials as major phases of their lifecycles. tenders are due for award. During the year, the business also renewed and secured a number of other contracts. It won a new contract with In the case of the Santos BHP Billiton to provide 24/7 electrical cabling reclaim CMS contract, the business and installation services at Olympic Dam and renewed an is now performing electrical instrumentation projects and reliability contract approximately double at Caltex Australia’s Lytton refinery. the volume of work that was originally envisaged The dewatering and electrical services business has a when the contract was strong pipeline of work, with further potential to grow announced 12 months ago. current contracts.

20 TRANSFIELD SERVICES 2012 The power generation business is the leading service provider REVENUE OVERVIEW for operations, maintenance and sustaining capital work. This $m $3000 is performed through a wholly-owned subsidiary and in joint Total proportionately A$2.6bn A$2.7bn venture with WorleyParsons. consolidated revenue $2500 A$0.3bn A$0.3bn The long-term outlook for this business is healthy and will $2000 be driven by growth in both renewable and gas fired power generation. Further opportunities will arise as assets are $1500 A$2.3bn A$2.4bn Our share of revenue privatised and owners seek capable operators with a track from joint venture record of success. $1000 operations Revenue from wholly $500 The industrials business continues to build its presence owned entities in segments less affected by industry structural changes. $0 These include power generation, mining, tank and terminal 2011 2012 construction/maintenance opportunities and industrial products and manufacturing businesses. The Company successfully delivered a number of major PROPORTIONATELY CONSOLIDATED shutdowns during the year without a safety incident, REVENUE BY BUSINESS including Shell Clyde, Caltex Lytton and Kurnell, Mobil Altona and Quenos Altona. The long-term outlook for shutdowns 7% will continue to be impacted by the structural decline in Australia’s oil refining industry. Disciplined safety management systems resulted in a 20 per Infrastructure cent reduction in the LTIFR for the resources and energy 20% Services business, with the maintenance and project systems business 44% Property and Facilities achieving 100 per cent injury free. Management Resources and Energy EASTERNWELL Engineering and Easternwell delivered revenue of $243 million and EBITDA of 29% Construction $73 million, in line with the announcement to the market in April. The business won new long-term contracts with Santos, QGC and Chevron.

2012 TRANSFIELD SERVICES 21 AUSTRALIA AND NEW ZEALAND CONTINUED

It has also started providing clients with logistics services The strategy is to expand into other geographies within and camp facilities in remote locations. More opportunities Australia while maintaining a strong focus on safety. are expected to arise as the business rapidly integrates The roads business delivered stable earnings with with the Group. improved cost control and higher margins. Cost efficiencies were achieved through further consolidation INFRASTRUCTURE of the Australian and New Zealand operations. A During the year, the infrastructure business delivered a highlight was securing an eight-year NZ$200 million road strong result, growing both revenue and margins. This maintenance contract with Auckland Transport. was underpinned by organic growth in key sectors as the The Western Power Alliance, FutureGrid part of our business transitioned into a number of significant multi- electrical services business, showed a significant increase year contracts, including the commencement of Sydney in activity compared to that of prior years. Work volumes Ferries, Adelaide Metropolitan Buses, Transpower and also continued to expand in New Zealand where Transfield Auckland Transport. Services is the largest high voltage service provider to the A highlight for the year was securing and transitioning New Zealand transmission asset owner, Transpower. the $800 million Sydney Ferries contract. In a 50/50 joint A key contract with Transpower was renewed for venture with Veolia/Transdev named Harbour City Ferries, NZ$318 million over six years with potential for further the iconic Sydney Harbour ferries are for the first time in work over the same period. We are delivering additional history, operated and maintained by a non-government scope of services compared with the previous contract. organisation. In public transport, the Adelaide Metropolitan Buses contract The water business again delivered strong organic growth, with the South Australian Government commenced. retaining its position as one of the largest providers of This eight-year contract, with a four-year renewal option, outsourced maintenance and operations services to the experienced some transitional problems in the initial months industry in Australia. of operation. Since 1 July when new timetables were Highlights included commencement of the 10-year implemented, on-time performance improved. alliance contract with SA Water in joint venture with Degrémont and Suez Environnement, winning the West Australia Water Corporation contract in a joint venture Of the 100,000 calls with Degrémont and the preferred proponent for the received by SA Water’s Gippsland Water mechanical and electrical maintenance Customer Service Centre contract, a contract we have maintained for more than 90,000 subsequent jobs 15 years. The business will continue to grow its volume were delivered by the of work while adding higher value services across all contract team. The contract industries of the market including municipal, industrial and produced 140 gigalitres irrigation. of drinking water and 88 gigalitres of wastewater, The rail business had a solid year with increased revenue. and treated and produced This was largely driven by the Australian Rail Track 21 gigalitres of reused Corporation Productivity contract with improved margins water. The team also year on year. reduced the LTiFR to the lowest ever recorded for the Adelaide metropolitan area, all during the first year of operations.

22 TRANSFIELD SERVICES 2012 “COST EFFICIENCIES WERE ACHIEVED THROUGH FURTHER CONSOLIDATION OF THE AUSTRALIAN AND NEW ZEALAND OPERATIONS. A HIGHLIGHT WAS SECURING AN EIGHT-YEAR NZ$200 MILLION ROAD MAINTENANCE CONTRACT WITH AUCKLAND TRANSPORT.”

PROPERTY AND FACILITIES MANAGEMENT ENGINEERING AND CONSTRUCTION During the year, the property and facilities management During the year the engineering and construction business delivered revenue growth of 11 per cent and business successfully completed a number of important increased margins. projects while winning significant contracts with NBN Co in Victoria and Rio Tinto and Fortescue Metals in The telecommunications business won two new contracts Western Australia. worth NZ$362 million for Chorus and New Zealand’s UltraFast Broadband Network and renewal work with Key highlights for the year also included securing Telstra worth up to $70 million per annum. the $48 million Toowoomba Waste Water Treatment Plant Construction project in a joint venture with The defence business successfully secured three Monadelphous, successful completion of the $38 million significant contract wins: bulk diesel tank farm for Caltex Australia, $40 million of a three-year $90 million contract with the Department additional capital works from South East Water on the of Defence to provide Comprehensive Maintenance Mount Martha recycled water treatment plant and being Services, including Base Support Services, at Defence awarded the construction of two bulk diesel tank farm Establishment Woomera in South Australia contracts for Rio Tinto and Fortescue Metals. a one-year $70 million extension to a five-year contract The build phase of the Brownhill project in New Zealand is with the Defence Support Group, to continue providing now complete within revised cost estimates. Garrison Support Services to more than 50 sites across The Group’s capability is growing with a strong focus southern Victoria, and on managing risk. This business gives the Company a $40 million extension to provide Garrison Support additional capability to service clients’ needs at the front Services to more than 35 sites in Western Australia. end of the asset lifecycle. The business strengthened its corporate real estate offering with the acquisition of Chesterton International (NSW) Pty Ltd. This acquisition was strategically important as it positions the business at the front end of deals with a full corporate real estate offering, while adding to its client base. This business is now a leading provider of integrated asset management services to the property and infrastructure sectors, spanning program and project delivery, design and technical services, real estate, independent assurance services and consulting and advisory services.

2012 TRANSFIELD SERVICES 23 REVIEW OF OPERATIONS

AMERICAS

Earnings in the Americas region were down as the RESOURCES AND ENERGY resources and energy business positioned itself to Revenue declined due to ongoing softness in traditional expand into upstream hydrocarbon services and adjacent refinery markets. industries with stronger growth and return outlooks. A key focus for the business was to diversify into Infrastructure revenue grew, underpinned by new adjacent sectors and regions to position it for growth, contracts and increased work from existing clients. while continuing to deliver superior safety performance. A major development in the region was the Company’s With this focus, the FTS joint venture is broadening successful renegotiation of the FTS joint venture its business offering and has a strong pipeline of agreement. The new terms meet the Company’s broader opportunities in the oil sands regions. strategy to deliver higher value services to key growth markets, while laying a path for broader growth in key The joint venture is pursuing major work with Suncor, North American markets. Shell, Syncrude, Husky Energy, CNRL, Vale and Teck Metals. The business will leverage its presence in Canada The first step in this growth was the acquisition of Steier to enter the industrial minerals mining market in Canada Oil Field Service in the oil rich Williston Basin in North through turnaround or sustaining project opportunities. Dakota. Diversification initiatives also helped the business win The roll out of the ERP system went ‘live’ in the Americas its first contract in the minerals industry with Kennecott with great success. The ERP system introduces Copper Mine, together with contract wins in the US Gulf efficiencies, generates better and more suitable Coast, Rocky Mountains and the Mid Continent. management information and allows the business to better interact with clients. In the downstream gas industry, strategic initiatives in the US Gulf Coast are ongoing, winning contracts with BP Outsourcing of back office support services and the Texas City, ExxonMobil Baytown, and Ascend Performance conversion of the first phase of the business to SAP also Materials. The west coast refinery maintenance business delivered operational and cost improvements. continues to experience subdued demand.

24 TRANSFIELD SERVICES 2012 In Chile, the InserTS operation had another record year as REVENUE OVERVIEW demand grew, underpinned by continued investment in $m infrastructure by mining and power clients. $1600 $1400 Total proportionately The Company acquired full control of the InserTS A$1.2bn consolidated revenue operation and it is expected to grow further from its $1200 platform of major domestic and international clients in the $1000 A$0.4bn mining and power industries, including BHP, Codelco and $800 A$0.7bn Our share of revenue Endesa. from joint venture $600 A$0.8bn A$0.3bn operations $400 INFRASTRUCTURE Revenue from wholly A$0.4bn owned entities The commencement of three new contracts, including the $200 30-year road Maintenance and Rehabilitation contract in $0 2011 2012* * Excludes the $0.4bn of revenue New Brunswick, Canada together with increased leverage from USM business which was work from existing clients contributed to increased sold in June 2011 revenue. Importantly, strong operational performance also improved margins. PROPORTIONATELY CONSOLIDATED REVENUE BY BUSINESS The roads business is in a strong position, providing road maintenance solutions for 26 projects with 14 clients in Alaska, California, Florida, North Carolina, Texas, Virginia and Washington DC in the USA and in New Brunswick and Ontario in Canada. 22% Infrastructure Following the global financial crisis, the re-emergence of Services the Public Private Partnership is presenting opportunities Resources and to target higher value contracts. Energy The business has been able to deliver a strong result in the current environment and will remain disciplined in setting 78% appropriate margins for new work.

2012 TRANSFIELD SERVICES 25 REVIEW OF OPERATIONS

MIDDLE EAST AND ASIA

Proportionately consolidated margins in the Middle East The Goro Nickel contract in New Caledonia exceeded and Asia business increased to 6.8 per cent, driven by margin performance expectations due to the strong operating performance and control of overheads. continued commissioning work on the Nickel plant. The commissioning work is expected to cease during the Hofincons grew in line with expectations as it expanded first half of 2013. However, operations and maintenance into operations and maintenance in the power industry services will continue to be delivered. and facilities management services in the retail industry. Hofincons continues to integrate into the rest of our Project activity in the United Arab Emirates increased business, increasingly sharing their capabilities to towards the end of the financial year following the differentiate our offering in the rest of our business. Executive Council’s budget approval for large scale infrastructure projects. The business is strengthening its Joint ventures with WorleyParsons in the Philippines and resources to take advantage of the opportunities this will New Caledonia both performed well. present. In the Philippines, the joint venture successfully In Qatar, Transfield Mannai Facilities Management renegotiated terms for its Shell Malampaya contract, Services (TMFMS) formed a joint venture with McMullen allowing services to be delivered in a more efficient Engineering Consultants Ltd, an Irish engineering manner. company specialising in HVAC services. The joint venture, Mannai McMullen Engineering now provides end-to-end service for the provision of HVAC services from design to installation and maintenance. Demand for these services is expected due to the development plans in Doha leading up to the 2022 World Cup. Hofincons’ technology and consulting division is focussing on the Middle East, particularly Qatar and the United Arab Emirates, with demand for their data collection and SAP services also increasing. In addition, the division continues to pursue cross selling opportunities in Australia and the Americas through Transfield Services’ network.

26 TRANSFIELD SERVICES 2012 REVENUE OVERVIEW “THE JOINT VENTURE, MANNAI $m $140 MCMULLEN ENGINEERING Total proportionately consolidated revenue $120 A$116m NOW PROVIDES END-TO-END A$101m $100 SERVICE FOR THE PROVISION A$48m $80 A$47m Our share of revenue OF HVAC SERVICES FROM $60 from joint venture A$68m operations DESIGN TO INSTALLATION AND $40 A$54m Revenue from wholly MAINTENANCE. DEMAND FOR $20 owned entities THESE SERVICES IS EXPECTED $0 2011 2012 DUE TO THE DEVELOPMENT PLANS IN DOHA LEADING UP TO PROPORTIONATELY CONSOLIDATED THE 2022 WORLD CUP.” REVENUE BY BUSINESS

12%

Property and Facilities Management

Resources and Energy

88%

2012 TRANSFIELD SERVICES 27 SUSTAINABLE BUSINESS

MORE THAN JUST GREEN

In recent years, the concept Our business is to sell For example, our increasing of sustainability has services to our clients – and need for science, become strongly identified in the majority of cases, technology, engineering with environmental and those services are based and mathematics green issues. around the specialised and graduates is a critical issue EION TURNBULL sophisticated technical for us looking forwards. Conservation, energy Chief Executive knowledge of our efficiency and Promoting workplace Operations Support worldwide staff. environmental awareness diversity is another priority, are an important part of By attracting a diverse and and for us, it’s much the sustainability picture. technically knowledgeable more than just political But for our Company, the workforce – we have a correctness. concept embraces much competitive advantage. If In a globally interconnected more. we have the right career world, the solutions to opportunities and culture For us, first and foremost, business problems and to retain those highly sustainability is about dilemmas are increasingly sought after specialists people. complex and in some – then our competitive cases, counterintuitive. That may read like a advantage becomes platitude, until you think sustainable over the long Gender and cultural about the product that we term, and something that diversity brings a much market and sell. others will struggle to wider range of ideas match. and experience to those discussions. If we understand and HIGHLIGHTS contribute to the We are making communities we work in, demonstrable progress We launched our second Reconciliation Transfield Services has in many of these areas – a much better chance and discuss them in more Action Plan with a target of recruiting 1,000 of being accepted and detail in the pages that new Indigenous employees over the next five supported in the long term. follow. But this introduction years. gives you a sense of why Expressed in those terms, the sustainability of our sustainability isn’t just the The number of women joining as a result of business is so strongly right thing to do – it makes focussed around our our graduate program, jumped from 23 per good business sense. cent in 2011, to 30 per cent in 2012. people and their stories. Many of our sustainability Our work as part of the Gippsland Water challenges are much less Factory Alliance won Australia’s most concrete than those of companies which produce prestigious environmental award. things - driving energy We launched a major global safety initiative efficiency, reducing carbon emissions and recycling – with the goal of achieving 10 million hours as important and topical as LTI free. those are. The Transfield Services Learning Academy was officially opened at Macquarie Park in Sydney.

28 TRANSFIELD SERVICES 2012 HEALTH AND SAFETY While we have set a target Safety performance LEADERSHIP AND of 10 million, the real goal LEARNING 10 Million Challenge of the challenge is to A tragic aspect of the Company’s performance Trusted advisors, During the year, we eliminate serious injuries from our workplaces. in the year was the death thinking doers launched a major safety of three employees, one in Beyond is the Transfield initiative across all Each injury is a setback, our rail business and two Services Executive Transfield Services’ global but as a result of the in Hofincons. Transfield Leadership Program and operations called the 10 program the level of Services remains committed is aimed at continuing Million Challenge. awareness about the to implementing industry to build our leadership number of our colleagues leading safety practices The goal - to achieve 10 capability across the being injured across the and culture across all of its million hours, or about organisation. The program business has never been businesses and will continue two months, without a LTI allows our top executives higher. This is driving a driving improvements in to any of our people, or to define how they will take real desire for change. processes, procedures and people for whom we are up their role as leaders and With continued efforts, individual behaviours. responsible. make their contribution we are confident our goal to the achievement of the The 10 Million Challenge is will be achieved and that, LTIFR declined by three Transfield Services strategy. the first of its kind in the as a result, many of our per cent year on year to 1.14 injuries per million Company’s history and is colleagues will be spared Beyond is about a way hours worked. designed to engage the the pain and discomfort of of working and a way hearts and minds of our a serious injury. Our safety achievements of leading at Transfield people. Achieving this Services. It is about Achieving our 10 Million include: ambitious target will take becoming trusted advisors Challenge goal will mean 12 years LTI free at all of us looking out for to our clients and being we have doubled our Gippsland Water in each other. seen in the market place current best ever period Victoria. as the thinking doers. It without a LTI. Intergulf General is about building a high Contracting LLC performance workplace awarded the Contractor and creating an engaged Partnership Award for and driven workforce, with Excellence by Abu Dhabi people who are determined National Oil Company to succeed. (ADNOC) for our efforts Our General Manager in reducing injuries. Culture and Executive For the 13th year Learning, Siobhan McHale, running, our North says: “Those who have American resources participated in Beyond and energy business have gained a deeper earned more National understanding about what Petrochemical and things matter to us as Refiners Association’s an organisation and how safety awards than any we expect our leaders to of its direct competitors. operate as we steer the organisation into the future. Our resources and The focus is on giving our energy business leaders a practical toolkit recorded a significant and a common language improvement in its that can be used in the overall safety record with workplace to help them a 20 per cent reduction to deliver on their change in LTIFR year on year. plans.”

2012 TRANSFIELD SERVICES 29 SUSTAINABLE BUSINESS

Effective training is vital Key compliance policies that support the Code of New Learning Academy to successfully embed Business Conduct: The Transfield Services the Code within Transfield Learning Academy was Conflicts of Interest Policy is aimed at protecting Services. We maintain officially opened at the integrity of the Company’s decision-making an ongoing international Macquarie Park in Sydney processes by avoiding ethical, legal, financial or other training program that during the year. conflicts of interest. features in-person, online The Academy hosts and DVD training sessions. Related Party Transactions Policy provides guidance continuing professional and on recognising and reporting related party This year, we revised the leadership development transactions, and where necessary submitting these induction training program programs. It is a global for shareholder approval. to enhance its coverage of facility to complement and the Code and key related Share Trading Policy restricts Directors and augment our Registered policies. Following a pilot designated employees from buying or selling shares Training Organisation and online training program for in designated blackout periods. regional centres. 100 employees earlier in Anti-Bribery and Corruption Policy outlines the The Academy is a place 2012, we are now working Company’s position that we do not tolerate any where our employees can on rolling out a broader form of bribery or corruption. It also outlines the meet others who may online program for staff Company’s position on gifts and hospitality. become valued colleagues, in the Australia and New peers and sponsors Zealand and Middle East Business Partners Policy supports the Company’s throughout their career and and Asia regions. commitment to work with business partners who where management can demonstrate a high standard of business conduct. spend time mentoring our BUSINESS COMMUNITY Political Involvement and Support Policy outlines future leaders. INVESTMENT the Company’s position on participating in dialogue The Learning Academy Transfield Services’ with political and government stakeholders and supports our vision for community engagement on the making of donations to political parties or Transfield Services to be approach focuses on candidates. the knowledge leader building relationships Internal Investigations Policy outlines the Company’s in asset management with key community processes for raising and investigating concerns services. To become the stakeholders, implementing about inappropriate conduct, and is closely aligned leaders in this field we must and supporting local to the Whistleblower Policy which outlines processes be an organisation that projects and initiatives in place to ensure employees can raise genuine values, gathers and shares and investing locally concerns without fear. knowledge. through employment and procurement. Code of Business Conduct learning Report is a first The Code is a reference Transfield Services has guide to ethical and produced its first Local responsible conduct in Economy Investment all Transfield Services report measuring the operations around the contribution we make world. It applies to to communities through Directors, employees as well employment opportunities as contractors, consultants and the procurement of and agents of Transfield goods and services. Services. Our business Our Business Community partners (including clients, Investment Group joint venture partners and developed a measurement subcontractors) are also tool which allowed contract expected to meet the managers to provide valid standards set out in estimations of investments the Code. across a number of variables.

30 TRANSFIELD SERVICES 2012 The measurement tool Our vision for Indigenous contained qualitative open- Participation is not a quick ended and quantitative fix solution but a long- questions in relation to term approach that will employment, procurement, change all facets of our sponsorship/donation and business. We believe that engagement with local reconciliation comes with subcontractors including the development of long- social enterprises and term relationships with Indigenous businesses. Indigenous people and their communities in which Our Chief Executive we work. Infrastructure ANZ, Nicholas Yates, says: “The 2012-2014 aim of this report was Reconciliation Action to test the process and Plan identify current Local Transfield Services’ Economy Investment The launch of second Reconciliation Transfield Services’ performance at the Action Plan (RAP) was second Reconciliation contract level. The report launched on 31 August Action Plan. also highlights future 2012 by the Indigenous strategies for local Employment and Economic community engagement in Development Minister, The our business.” Hon Julie Collins MP. The report was positive The 2012-2014 RAP is our overall across our public commitment to respective industries; 89.6 Australia’s national effort to per cent of employees live ‘closing the gap’ between locally and 81 per cent of Indigenous and non- our procurement is spent in Indigenous on the local community. life expectancy, educational achievement and INDIGENOUS PARTICIPATION employment opportunities. It outlines a three-year Transfield Services is commitment to increase committed to improving Indigenous employment in the imbalance between our Australian business and Indigenous and non- increase engagement with Indigenous people Indigenous communities in Australia. For us, and culture. reconciliation means having a business that Our first RAP was launched is socially inclusive and in 2009 and in the first that recognises the three years we achieved local customary needs approximately 83 per cent of Indigenous people of our targets. The launch and their communities, of our second RAP is a including the importance of significant milestone in our preserving their culture and Indigenous Participation customs. journey.

2012 TRANSFIELD SERVICES 31 SUSTAINABLE BUSINESS

Key targets in our new RAP One-third of the employees DIVERSITY SNAPSHOT: MIDDLE EAST AND ASIA include: rated the benefits of our corporate strategies Transfield Services operates in five countries in the recruiting 1,000 new that drive Indigenous Middle East and Asia region. Indigenous employees Participation, such as our over the next five years We employ about 6,800 people from 26 RAP, as ‘high’ to ‘very high’ nationalities who speak more than 20 languages. evaluation of three and 91 per cent believed that Transfield Services is We have more than 190 contracts in the region. Indigenous communities where we work, dedicated to employing 3.5 per cent of the total workforce is female. to understand the and engaging Indigenous economic, social and people. The majority of our workforce lives away from health benefits our In terms of the Company their home country and family. Indigenous Participation recognising and respecting  program has had on We recruit and train local/country nationals where their cultural needs, over the broader Indigenous possible (e.g. New Caledonia and Philippines) 90 per cent of respondents community, and increasing the local content of our service provision. either ‘agreed’ or ‘strongly We provide services to government, national an education strategy agreed’ that their cultural agencies (including museums), commercial, IT/ that supports Indigenous needs were being met. youth in meeting their BPO, industrial, power, hospitality and blue chip oil Our Indigenous educational goals, and gas clients. Development Manager, increases their potential Jason Lewin, says: “These We are recognised as leaders in safety and have to achieve and provides results have been a positive won five safety awards from clients in different greater opportunities for reflection of our Company’s their future success. areas over the past 12 months. values and how we are Survey’s positive creating a culturally safe results environment for Indigenous people.” A survey of our Indigenous employees found that most are satisfied with their jobs and the support they receive from the Company. In 2011, Transfield Services commissioned an external research provider to measure the views and perspectives of our Indigenous employees. Social Compass conducted Born in Kuwait, Fatima Alhasieh Originally from the Philippines, the survey of 34 Indigenous has been in Qatar since 1982. Farhana (Hannah) Persy is a employees from 15 DIVERSITY Fatima is an Administration Senior Administration Assistant contracts across Australia, The Transfield Services Supervisor with Transfield Mannai with Transfield Mannai Facilities with representation from Facilities Management Services at Management Services at Tornado workforce is about 83.8 all states and territories Tornado Tower in Doha. Tower in Doha. per cent male. We’ve set where Transfield Services ourselves a goal to increase operates. the number of female The survey findings showed employees, with particular an overall positive response regard to professional roles with most employees being in the three layers of the extremely satisfied with Company below the role of their job status and work the MD/CEO – and we are support. making progress. Notable senior appointments have been made in the Americas

32 TRANSFIELD SERVICES 2012 (HSEQ and Legal) and Australia (Finance, IT, The Gippsland Water Factory in Operations) . Victoria, Australia. The number of women joining as a result of our graduate program has jumped from 23 per cent in 2011, to 30 per cent in 2012. And they’re not just going into corporate positions – the number of graduate women taking operational roles has increased from 3.3 per cent last year, to 10 per cent this year. Contract transitions and organisational restructures make it difficult to trace an improvement in year-on-year gender diversity figures, but we are confident that our initiatives are making a meaningful difference In an increasingly complex ENVIRONMENT The Gippsland Water to the level of female world, an organisation that Factory in Victoria One of our biggest participation in our benefits from different represents a world first sustainability achievements organisation. viewpoints at senior in industrial wastewater is our work as part of an management level, or treatment technology, Promoting a diverse alliance on the Gippsland in governance is at an combined with the workplace is not only the Water Factory in northern advantage when making recycling of domestic right thing to do – there Victoria. This project is not business decisions. waste for commercial use is clear evidence that in only making a difference and the generation of many cases, the greater A multi-national today but more importantly power for the factory’s own diversity of input you get business like ours offers ensuring a sustainable consumption. into making a decision, the a great cross section future for generations to better that decision is likely of different peoples, come. We won Australia’s Transfield Services and to be in outcome. races, backgrounds and top environmental award its alliance partners were experience. responsible for the design, Diverse workplaces for this project which recognises our ability engineering, construction, promote collaboration – We won’t be making to deliver innovative commissioning and and long term, they’re more appointments based on wastewater treatment optimisation of the facility. sustainable. tokenism, bias or to fulfil a systems while addressing Separately, we provide quota. We’ll simply appoint Our diversity policy explains serious environmental and maintenance services to the best person for the job, our approach and reasoning water recycling issues. the plant through our based on merit – no matter in more detail. The policy 13-year relationship with who they are. The Gippsland Water can be viewed at Gippsland Water. www.transfieldservices.com Factory Alliance comprises Gippsland Water, Transfield Services, CH2M HILL and Number of females of Board:...... 1 out of 12 (8%) Parsons Brinckerhoff. The Number of direct reports Alliance won the Banksia to the MD/CEO:...... 3 out of 9 (30%) Award, Australia’s most Number of females across prestigious environmental the organisation:...... 4,049 out of 24,982 (16.2%) award in 2011.

2012 TRANSFIELD SERVICES 33 CORPORATE GOVERNANCE

INTRODUCTION Despite this shift in communicating on our Corporate governance is governance, Transfield the system of principles Services continues to and processes governing report against the ASX the exercise and control of Corporate Governance authority within a company. Council’s (CGC) Principles Our governance system and Recommendations aims to: in this Annual Report. ensure appropriate We have complied with accountability all the Principles and Recommendations during  minimise business risks this reporting period. promote ethical conduct, and BOARD AND BOARD COMMITTEES enhance investor confidence. Transfield Services’ Board of Directors Transfield Services (Board) is responsible for continuously monitors overseeing the Company’s governance developments performance and strategic in Australia and direction, with the aim of internationally to ensure protecting and enhancing appropriate and flexible shareholder value. practices are in place to meet industry and market The Board Charter expectations. outlines the Board’s role, responsibilities, and In light of our recognition internal procedures. The that sound governance overarching responsibilities must be embedded across of the Board include: all processes, structures and activities within overseeing the Transfield Services, this Company’s financial Annual Report integrates integrity governance commentary reviewing and approving across its various sections. business strategy This is the first year that we have done this. In the monitoring the future, we aim to continue identification and integrating parts of the management of business stand-alone corporate risks governance statement into ensuring effective legal the rest of the Report. compliance ensuring effective governance, and making key human resources and remuneration strategy decisions. The Board meets as frequently as required, but not less than six times a year.

34 TRANSFIELD SERVICES 2012 Board composition and The Company considers Chairman, Anthony New Directors and senior independence the Chairman to be Shepherd, is continuing executives participate independent in accordance his oversight of the Board in induction initiatives The Directors are profiled with the definition of renewal process to ensure which introduce the on pages 14 and 15 of independence contained in that the composition of Company’s strategy and this Annual Report. The the Board Charter. the Board reflects industry structure, as well as its Directors’ skills, knowledge, and market expectations systems, processes and key perspective and experience The Board Charter, guided of responsible governance. contacts. New Directors are appropriate to ensure by the characteristics of This financial year, Graeme and senior executives are the effective performance independence promoted Hunt was appointed as an also encouraged to attend of Transfield Services and by the ASX CGC Principles Independent Director. In site visits to experience the to address current and and Recommendations, August 2012, the Board Company’s operations first- emerging industry issues. requires all Directors to announced Graeme’s hand. exercise independent and As at 30 June 2012, the appointment as interim informed judgement. A key Board comprised nine Managing Director and Chief Board performance factor in the assessment of Directors – eight non- Executive Officer effective review independence is whether executive directors and 30 September 2012. the Director brings an Board, committee and the Managing Director and enquiring, open and Directors’ terms of Director performance is Chief Executive Officer. The independent mind to appointment and reviewed internally on Non-Executive Directors Board meetings, listens to induction an annual basis, with an are all independent, except the debate on each issue, external review undertaken Luca Belgiorno-Nettis AM Directors are appointed to considers the arguments every three years. In 2011, and Guido Belgiorno-Nettis the Board on the following for and against each the Board commissioned AM, who are Directors terms: decision and ultimately an external consultant of the major shareholder reaches a decision that he the terms of to facilitate the review of Transfield (TSL) Pty or she believes is in the appointment are Board performance. The Limited, which is part of the interests of the Company. agreed as part of such purpose of the review Transfield Holdings Group. To this end, the Charter appointment, although was to identify strengths and opportunities for Since the end of the facilitates Directors having every three years, one- improvement in the financial year, Luca access, where necessary, third of Directors must performance of the Belgiorno-Nettis AM and to independent, external retire and, if applicable, Board. The findings of Guido Belgiorno-Nettis and professional advice at offer themselves for re- the review were presented AM, retired from the Board, the Company’s expense. election to the Board in early and have been replaced by Directors also have access  Directors will not usually 2012, with a number of Roy McKelvie who is the to the Chief Risk and Legal serve more than 10 recommendations being Chief Executive Officer of Officer/Company Secretary, years except in special actioned. The next review is Transfield Holdings. Peter and senior executives for circumstances, as the internal and scheduled for Goode has resigned as information and support to Board may determine late 2012. Managing Director and assist in making informed Chief Executive Officer decisions. Directors are expected to effective 30 September be available to fulfil their As a guide, the Company 2012 and Graeme Hunt, obligations as Directors considers that where appointed in May 2012 as as and when required, a Director’s interest or an independent Director, and relationship exceeds a has been appointed as materiality threshold of directors will comply interim Managing Director 10 per cent of revenue, with the powers and and Chief Executive Officer. it may be deemed duties of directors set material, depending on out in the Company’s the circumstances. The Constitution, Board and Company reviews Directors’ Committee Charters and independence on an the Corporations Act. ongoing basis.

2012 TRANSFIELD SERVICES 35 CORPORATE GOVERNANCE

BOARD COMMITTEES MANAGEMENT The Managing Director and Chief Executive Officer The Board may refer its Delegation of authority then sub-delegates specific functions to four key The Board delegates authority to executives. committees formed to Authority delegated provide support and advice operational authority to the Managing Director and to executives must, in on specific matters. The certain circumstances, be committees regularly Chief Executive Officer subject to limits set out exercised with approval report to the Board and of committees made make recommendations in a delegated authority framework. up of senior executives, to it. Each committee including Strategic has a charter governing The delegated authority Review Committees its function, composition framework is embedded (SRCs) established in the and procedures. Each within the Board-approved Australia and New Zealand committee’s function and risk appetite statement, resources and energy and composition as at 30 June which sets the foundation infrastructure businesses, as 2012 is outlined below. for an appropriate well as the Middle East and risk culture within the Asia, and Americas regions. Company. The Board All significant new business, reviews both the delegated any new joint venture authority framework and and any acquisition and the risk appetite statement investment opportunities on an annual basis. are reviewed and approved by the Group Strategic Review Committee (GSRC), BOARD OF DIRECTORS and where necessary, RISK, AUDIT AND HEALTH, SAFETY, submitted to the Board COMPLIANCE COMMITTEE ENVIRONMENT AND HUMAN RESOURCES for consideration and final (RACC) QUALITY COMMITTEE COMMITTEE NOMINATIONS COMMITTEE approval.

Function Function Function Function The function of the GSRC Monitors the financial Oversees improvement Assists the Board in Ensures the Board is and SRCs is to ensure that reporting process, and in the Company’s health, considering structured appropriately new business is aligned with internal/external audit safety, environment and remuneration policies, and sets and reviews the Company’s strategic functions. Oversees quality performance, the practices and decisions selection, appointment objectives and that key risks management of risks implementation of a and ensuring key talent and performance criteria have been assessed and will and monitors robust management and critical workforces of Directors and senior be managed. compliance with laws framework and the are managed to further management. Oversees and governance development of an injury corporate objectives. the recruitment and Performance evaluation principles. and incident free culture. appointment of of senior executives Directors. The Managing Director Composition Composition Composition Composition and Chief Executive Four Non-Executive Four Non-Executive Four Non-Executive Directors who are Officer evaluates senior Directors (three of Directors (three of Directors (three of members of the Human executives through the whom are independent). whom are independent) whom are independent). Resources Committee, in Performance Development The Committee is and the Managing The Committee is addition to the Chairman Review (PDR) process, chaired by Steve Crane Director and Chief chaired by independent of the Board who chairs which is aimed at ensuring – who is an independent Executive Officer. The Director Douglas the Committee. that accountabilities, Director, who is not the Committee is chaired by Snedden. The Managing responsibilities and Chairman of the Board. independent Director Director and Chief Jeet Bindra. Executive Officer is an performance are aligned attendee by invitation with the future direction and not a member of the of the Company. This Committee. process involves objective setting, a mid-year review, a year-end review, as well as a continuous review of performance and development.

36 TRANSFIELD SERVICES 2012 Senior executives also The Committee consists presentations at Transfield Services participate in a Short Term of the Managing Director industry forums, maintains a Risk Policy Incentive Plan. Details and Chief Executive Officer, outlining Transfield that aims to make about this plan are set out Chief Financial Officer, Chief Services’ achievements managing risk an integral in the remuneration report Risk and Legal Officer/ and contributing to part of good business on pages 53-55 of this Company Secretary, Group discussions on relevant practice. The Company Annual Report. Corporate Counsel, General industry trends and utilises an enterprise- Manager Investor Relations developments wide risk management The PDR and Short-Term and Group General Manager framework reflecting the Incentive Plan evaluations Annual General Media and Communications. global positioning of the were completed in July/ Meetings, allowing Other attendees are invited Company. This framework August 2012 in accordance Transfield Services to join the Committee encompasses risk, with the processes to outline recent from time to time. The compliance and internal disclosed. developments and Committee works with the audit elements as well strategy, and for Corporate Affairs, Investor as business resilience, a MARKET DISCLOSURE shareholders to Relations and Legal teams specialist area covering comment on Transfield to consider relevant factors security, crisis and Continuous disclosure Services’ management affecting the Company, emergency management and performance. As a listed entity, Transfield such as the performance and business continuity. Shareholders also have Services has a responsibility of the stock market and the opportunity to ask Transfield Services’ to disclose timely and its peer companies, media the external auditor approach to risk accurate material information and analyst coverage of the questions relevant to its management is in about the Company to the Company, and regulatory audit function, and accordance with market, so existing and and legal developments. potential shareholders can internationally recognised Transfield Services make informed investment ISO 31000:2009 Risk SHAREHOLDER website Management, which decisions. COMMUNICATIONS (www.transfieldservices.com), outlines recommended which has a dedicated The Company’s The Continuous Disclosure risk management News Centre and Continuous Disclosure and Communications Policy procedures and processes an Investor Centre, and Communications outlines the major channels to implement within containing copies of ASX Policy sets out obligations through which Transfield an organisation. The announcements, media and guidelines for Services communicates Company promotes releases, annual reports, disclosure of material with shareholders. collaboration between the financial statements, information, pursuant to business by proactively All material information corporate governance the Corporations Act 2001 involving employees in is lodged via ASX statements, investor and ASX Listing Rules, and the identification and announcements, pursuant presentations and outlines the responsibilities mitigation of risks – thereby of the Board, senior to the continuous disclosure webcasts. obligations. Transfield increasing the capability of executives and employees all levels of our organisation relevant to disclosure. Services also keeps the RISK MANAGEMENT market and shareholders to respond to the changing The Policy outlines the fully and promptly informed Management of risk is one business environment. of the core responsibilities role of the Continuous of other developments in The internal audit function of the Board. The Board, Disclosure Committee which the business through: plays a key role in risk through the RACC, requires is responsible for ensuring management by providing half-year and full- that management design that appropriate systems an objective appraisal of year financial results and implement risk and controls are in place the effectiveness of, and materials, including management and internal to communicate, collect, compliance with, business financial accounts, control systems to manage verify and review potentially processes and controls Management Discussion Transfield Services’ material material information. The across Transfield Services. Committee reviews and, and Analysis documents, business risks, and that where necessary, verifies presentation slides and management regularly information, and determines webcasts reports to the Board on whether the risks are being what must be disclosed and analyst or investor managed effectively. when, and whether a draft briefings and announcement should be conferences, featuring forwarded to the Board for presentation slides and review and approval. webcasts

2012 TRANSFIELD SERVICES 37 CORPORATE GOVERNANCE

Reporting on risk FAIR AND ASX GSC RECOMMENDATIONS RECONCILIATION management RESPONSIBLE REMUNERATION The Chief Risk and RECOMMENDATIONS PAGE REFERENCES Legal Officer/Company Transfield Services aims 1.1 34-36 Secretary, as the head to remunerate fairly and 1.2 36-37 of the risk management responsibly by ensuring 1.3 34-37, website function, reports quarterly reward for performance is 2.1 35 to the RACC and the Board competitive in the markets 2.2 35 on the effectiveness of the where the Company 2.3 14-15 Company’s management operates, and aligning 2.4 36 of its material business executive reward with 2.5 35 risks. Material findings shareholders’ interests. 2.6 14-15, 35-36, 42, website The Company’s principles and recommendations 3.1 30, website in relation to Director are communicated to 3.2 32-33, website and senior executive the RACC, which then 3.3 32-33, 9 ensures that management remuneration, and the level 3.4 (women #) effectively responds to the of remuneration, are set 3.5 9, 32-33, website recommendations. The out in the Remuneration 4.1 36 Chairman of the RACC Report on pages 45-63 of 4.2 36 reports key risks and their this Annual Report. 4.3 36 management to the Board. 4.4 14-15, 36, 42, website The Group General 5.1 37 Manager, Compliance and 5.2 37, website Governance, who reports 6.1 37, website to the Chief Risk and Legal 6.2 37, website Officer/Company Secretary, 7.1 12, 37 heads the internal audit 7.2 38 function, separately reports 7.3 38 significant findings to 7.4 12, 37-38, website the RACC on a quarterly 8.1 36 basis, and has independent 8.2 36 access, if required, to the 8.3 48-51 Managing Director and 8.4 42, 45-63 Chief Executive Officer and the Board, via the RACC. The Managing Director and Corporate Governance at transfieldservices.com Chief Executive Officer and The Corporate Governance section of the Company’s the Chief Financial Officer website is a convenient way for shareholders to access provide signed letters to information about governance practices of Transfield the Board, in respect of Services. The section is contained in the Investor Centre, each half-year and full-year clearly visible in the main selection menu. It contains: result that the accounts Company Constitution constitute a true and fair Board and committee charters view and are based on an appropriate and effective Managing Director and Chief Executive Officer and the Chief Financial Officer Delegated Authority system of risk management Statement Summary and internal compliance and control. Code of Business Conduct key compliance policies, and current and past remuneration reports.

Visit www.transfieldservices.com/corpgov

38 TRANSFIELD SERVICES 2012 ANNUAL REPORT – 30 JUNE 2012

TRANSFIELD SERVICES LIMITED ACN 000 484 417

Directors’ report (including remuneration report) 40 Auditor’s independence declaration 65 Consolidated statement of comprehensive income 66 Consolidated statement of financial position 67 Consolidated statement of cash flows 68 Consolidated statement of changes in equity 69 Notes to and forming part of the financial statements 70 Directors’ declaration 136 Independent auditor’s report to the members 137

This financial report comprises the consolidated financial statements and associated notes for the Group consisting of Transfield Services Limited (‘Company’ or ‘parent entity’) and its controlled entities. The separate financial results of the Company as an individual entity are included in Note 42 to the financial statements. The financial report is presented in Australian currency. Transfield Services Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Transfield Services Limited Level 10, 111 Pacific Highway North Sydney, NSW 2060 The financial report was authorised for issue by the Directors on 29 August 2012. A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and activities and in the Directors’ Report. Press releases, financial reports and other information is available on our website at www.transfieldservices.com. For enquiries in relation to our reporting please contact Kevin O’Connor (General Manager, Investor Relations) on 02 9464 1019 or e-mail [email protected].

2012 TRANSFIELD SERVICES 39 DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)

Your Directors present their report on the consolidated entity consisting of Transfield Services Limited (‘the Company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2012 (‘the Group’ or ‘the consolidated entity’).

DIRECTORS The following persons were Directors of Transfield Services Limited during the whole of the financial year and up to the date of this report: •• Anthony Shepherd AO (Chairman) •• Jagjeet Bindra (Deputy Chairman) •• Dr Peter Goode (Managing Director and Chief Executive Officer) •• Guido Belgiorno-Nettis AM •• Luca Belgiorno-Nettis AM •• Steven Crane •• Douglas Snedden •• Diane Smith-Gander Graeme Hunt was appointed as a Director on 7 May 2012. On 16 August 2012, the Company announced the retirement of Luca Belgiorno-Nettis AM and Guido Belgiorno-Nettis AM effective 30 August 2012, and the appointment of Roy McKelvie, effective 31 August 2012.

PRINCIPAL ACTIVITIES During the year the principal continuing activities of the consolidated entity consisted of the provision of operations and maintenance, asset management, project and capital management outsourcing and infrastructure development services. Transfield Services operates in Australia and New Zealand, the Americas (comprising the USA, Canada and Chile), and the Middle East and Asia (comprising the United Arab Emirates, Qatar, New Caledonia, Malaysia, the Philippines and India) and its business units include resources and energy, infrastructure services and property and facilities management sectors. The Group also holds a 20 per cent ownership interest in RATCH Australia Corporation Limited (‘RAC’) which invests in infrastructure assets.

DIVIDENDS Dividends paid to members during the financial year were as follows:

2012 2011 $’000 $’000 Final ordinary dividend for the previous financial year paid on 26 October 2011 (2011: 20 October 2010) 49,207 37,282 Interim ordinary dividend paid on 24 April 2012 (2011: 20 April 2011) 26,846 27,485 76,053 64,767

Cents Cents Final ordinary dividend (for the previous financial period) 9.00 9.00 Interim ordinary dividend 5.00 5.00

Since the end of the financial year the Directors have recommended the payment of a final ordinary dividend of 9.0 cents per fully paid share, being an estimated $46,415,207 to be paid on 24 October 2012 to shareholders on record at 19 September 2012.

REVIEW OF OPERATIONS Throughout this document non-IFRS financial indicators are included to assist with understanding the Group’s performance. The primary non-IFRS information is proportionally consolidated financial information and net profit after tax, pre-amortisation (‘NPAT pre-amortisation’). Management believe proportionally consolidated information is a more accurate reflection of operational results due to the magnitude of joint venture arrangements in place. Proportionally consolidated results reflect the Group’s entitlement to the joint venture revenues and earnings. Management deems NPAT pre-amortisation an appropriate measure of underlying cash NPAT after adjusting for amortisation of acquired intangibles. A reconciliation of non-IFRS to IFRS information is included where these metrics are used. Other than the Remuneration Report, the Directors’ Report has not been subject to review or audit by the Group’s external auditors.

40 TRANSFIELD SERVICES 2012 A summary of consolidated revenues and results by segment is set out below:

UNALLOCATED 2012 AND $’000 ANZ EASTERNWELL AMERICAS ME&A ELIMINATIONS RAC GROUP Proportionately Consolidated Revenue 2,744,824 267,015 748,546 100,861 (2,366) - 3,858,880 Less: Share of joint venture revenue (330,905) (23,683) (313,792) (47,110) - - (715,490) Statutory Revenue 2,413,919 243,332 434,754 53,751 (2,366) - 3,143,390

Proportionately Consolidated EBITDA 117,019 77,070 33,010 6,897 (8,096) 9,984 235,884 Less: share of joint ventures EBITDA (22,915) (7,680) (22,159) (8,570) - - (61,324) EBITDA from operations excluding joint ventures 94,104 69,390 10,851 (1,673) (8,096) 9,984 174,560 Add: share of net profits of joint ventures 20,439 3,702 14,121 5,977 - - 44,239 Reported EBITDA 114,543 73,092 24,972 4,304 (8,096) 9,984 218,799 Depreciation (29,641) (16,645) (8,925) (559) (14,706) - (70,476) Amortisation of acquired intangibles (4,813) (12,086) (3,930) (445) - - (21,274) EBIT 80,089 44,361 12,117 3,300 (22,802) 9,984 127,049 Net operating finance costs (37,794) Tax on operating items (4,231) Non-controlling interest (259) Net profit after tax (attributable to owners of the Company) 84,765 Add: amortisation of acquired intangibles 21,274 Net profit after tax (pre-amortisation) 106,039

2012 2011 EARNINGS / (LOSS) PER SHARE CENTS CENTS

Basic and diluted earnings / (loss) per share from continuing operations 15.6 8.8 Basic and diluted earnings / (loss) per share from discontinued operations - (12.8) Basic and diluted earnings / (loss) per share 15.6 (4.0)

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS RATCH AUSTRALIA CORPORATION LIMITED (‘RAC’) On 2 May 2011, the Group announced that it had entered into an agreement to dispose of 23.8% of the total securities of RAC for a consideration of $92,698,000 in convertible notes, which comprised $85,061,000 in principal payments with interest accruing. The convertible notes were recognised in assets classified as held for sale at 30 June 2011. In accordance with the terms of the disposal agreement, the Group received $42,308,000 on 5 January 2012 in consideration for the first tranche of the convertible notes, and a further $42,753,000 on 29 June 2012 in consideration for the final tranche of the convertible notes. At 30 June 2012, the investment in RAC was recorded at fair value and reclassified to an available-for-sale financial asset. A net gain of $9,876,000 has been recognised.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR Except as set out in Note 35 to the financial statements, no significant matters have arisen between statement of financial position date and the date of this report that have significantly affected, or may significantly affect: •• the consolidated entity’s operations in future financial years; or •• the results of those operations in future financial years; or •• the consolidated entity’s state of affairs in future financial years.

2012 TRANSFIELD SERVICES 41 DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Despite initial optimism that there would be a general economic improvement in the current year, the climate has, in fact, continued to weaken and we now anticipate continued challenges in the medium term. Australia’s economy has continuing strong demand in the resources sector set against rising unemployment expectations in much of the rest of the domestic economy. Aside from macro-economic conditions, the key risk to earnings remains extreme weather. At the NPAT level, the Group’s exposure to movements in the US$ foreign exchange rate is minimal due to natural hedges. The Group’s strategy of expanding into growth sectors is delivering financial results. Revenue synergies from the Easternwell acquisition are being realised as the integration of that business within the broader ANZ segment continues. Our business units are aligned to growth sectors and a strong focus has been placed on our organisational structure to drive efficiencies. The collective challenges will require a focus on cost reduction strategies to protect margins as well as increased attentiveness towards higher value service offerings which leverage off the fully integrated business created from the strategic alignment process undertaken in recent years. Underpinned by a portfolio of contracts with quality clients, measured risk and an exposure to the longer term operating expenditure cycle of major resource and energy projects, the Group can expect longer term earnings growth. The Company is targeting net profit after tax (pre-amortisation) of between $125,000,000 and $135,000,000 which, on a normalised basis, compared to the financial year ended 30 June 2012, would represent growth of between flat and 5%. This target range is based on a US dollar to foreign exchange rate of $1.05 and is subject to no extreme wet weather events and no deterioration in economic conditions, including those affecting the resources sector of Australia. This target range is expected to be derived from underlying operational earnings and does not rely on any significant one-off income or expense items.

SIGNIFICANT ENVIRONMENTAL REGULATIONS In Australia, the Group is subject to the reporting requirements of the National Greenhouse and Energy Reporting Act 2007, which requires the Group to report its annual greenhouse gas emissions, energy production and energy consumption. The Company is registered with the Clean Energy Regulator and has submitted reports for the periods ended 30 June 2009, 2010 and 2011. The Group has implemented systems and processes for the collection and calculation of the data to enable it to continue to prepare and submit reports annually. The National Greenhouse & Energy Reporting Act 2007 requires the Group to report carbon emissions to the Federal Government in respect of assets over which it has operational control. Importantly, under the Clean Energy Act 2011 the financial liability for carbon permits is able to be passed onto the asset owner pursuant to a liability transfer certificate application. The Group has successfully negotiated with its clients to execute liability transfer certificate applications for all client assets over which it has operational control under the Act. In 2011 the Group registered for participation in the Energy Efficiency Opportunities Program under the requirements of theEnergy Efficiency Opportunities Act 2006 based on energy use in the 2009-10 years. The Group’s planned approach to ensuring compliance with the Act was endorsed by the Department of Resources, Energy and Tourism in May 2012. The Group is implementing systems and processes to ensure compliance with the next steps in the Energy Efficiency Opportunities Act 2006 reporting cycle. The Group is in compliance with all other relevant significant environmental legislation.

MEETINGS OF DIRECTORS

BOARD SUB- BOARD EXTRAORDINARY COMMITTEE MEETINGS BOARD MEETINGS MEETINGS RACC HSEQC HRC NOMC* No of meetings held 8 7 5 4 4 5 0

No of meetings attended by Anthony Shepherd AO 8 7 5 2~ 1~ - - Dr Peter Goode 8 7 4 4# 4 5# - Jagjeet Bindra 8 5 - - 4 - - Guido Belgiorno-Nettis AM 7 4 - - 4 4 - Luca Belgiorno-Nettis AM 8 7 - 4 - - - Steven Crane 8 7 2 4 - 5 - Diane Smith-Gander 8 6 - - 4 5 - Doug Snedden 8 6 2 4 - 5 - Graeme Hunt (appointed 7 May 2012) 1 1 - 1 1 - -

RACC: Risk, Audit and HSEQC: Health, Safety, Environment and HRC: Human Resources NOMC: Nomination Compliance Committee Quality Committee Committee Committee

~ Attended as guest as this Director is not a member of this committee # Dr Goode attended these meetings by invitation in his capacity as Chief Executive Officer * The activities of the Nominations Committee have been undertaken by the full Board

42 TRANSFIELD SERVICES 2012 INFORMATION ON DIRECTORS Details of the Directors’ responsibilities and shareholding as at 30 June 2012 are set out below:

PARTICULARS OF DIRECTORS’ INTERESTS IN SHARES AND PERFORMANCE AWARDS OF TRANSFIELD SERVICES LIMITED INDIRECT INTEREST IN TRANSFIELD ORDINARY SHARES SERVICES LIMITED INCLUDES SHARES THROUGH THAT ARE HELD BY A PERFORMANCE TRANSFIELD (TSL) DIRECTOR SPECIAL RESPONSIBILITIES RELATED PARTY AWARDS PTY LTD

Anthony Shepherd AO Chairman of the Board of Directors and Chair of the 154,483 - - Nomination Committee. Dr Peter Goode Member of the Health, Safety, Environment and Quality 611,111 701,056 MTIs Committee and attends the Risk, Audit and Compliance 410,200 LTIs Committee, Human Resources Committee and Nomination - Committee by invitation. Jagjeet Bindra Deputy Chairman of the Board of Directors, Chair of the 56,541 - - Health, Safety, Environment and Quality Committee and has North American advisory responsibilities to the Board. Guido Belgiorno-Nettis AM Member of the Health, Safety, Environment and Quality 498,992 - 57,849,887 shares Committee, the Human Resources Committee and held by Transfield Nomination Committee. (TSL) Pty Ltd Luca Belgiorno-Nettis AM Member of the Risk, Audit and Compliance Committee. 2,170,585 - 57,849,887 shares held by Transfield (TSL) Pty Ltd Steven Crane Chair of the Risk, Audit and Compliance Committee, the 141,778 - - Human Resources Committee and the Nomination Committee. Graeme Hunt Member of the Risk, Audit and Compliance Committee and - - - the Health, Safety, Environment and Quality Committee. Diane Smith-Gander Member of the Health, Safety, Environment and Quality 24,668 - - Committee, member of the Human Resources Committee and the Nomination Committee. Douglas Snedden Chair of the Human Resources Committee and member of 84,525 - - the Risk, Audit and Compliance Committee and the Nomination Committee.

2012 TRANSFIELD SERVICES 43 DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)

DIRECTORSHIPS OF OTHER LISTED COMPANIES HELD IN THE LAST THREE YEARS

Anthony Shepherd •• ConnectEast Group (ASX) – appointed 28 September 2004 – 2 November 2011 •• Transfield Services Infrastructure Fund (ASX) – 12 June 2007 – 15 February 2010

Jagjeet Bindra •• Transocean Limited (NYSE; SIX Swiss Exchange) – appointed 13 May 2011 •• Edison International (NYSE) – appointed 22 April 2010 •• Larsen & Toubro Limited (Bombay Stock Exchange) – 31 December 2008 – 24 August 2012 •• LyondellBasell Industries NV (NYSE) – appointed 5 May 2011

Dr Peter Goode •• Transfield Services Infrastructure Fund (ASX) – 1 April 2009 – 5 July 2011 (now known as RATCH Australia Corporation Limited (‘RAC’))

Steven Crane •• APA Group (ASX) – appointed 1 January 2011 •• Bank of Queensland Limited (ASX) – appointed 11 December 2008 •• APA Ethane Limited (ASX) as responsible entity for Ethane Pipeline Income Fund (EPX) – 10 July 2008 – 24 June 2011 •• NIB Holdings Limited (ASX) – appointed 14 September 2010

Graeme Hunt •• AGL Energy Limited (ASX) – appointed 1 September 2012

Diane Smith-Gander •• Wesfarmers Limited (ASX) – appointed 1 January 2011

Douglas Snedden •• Hillgrove Resources Limited (ASX) – appointed 1 January 2012

CHIEF RISK AND LEGAL OFFICER / COMPANY SECRETARY Kate Munnings (LLB and Bachelor of Health Science) was appointed Chief Counsel and Company Secretary to Transfield Services Limited in January 2006. Kate leads the group responsible for Transfield Services’ legal, company secretarial, risk management, global insurance and internal audit functions. Kate has 20 years of experience working with and advising companies in the engineering, construction and services sectors in relation to their corporate, contractual and other commercial requirements. Eve Roberts (LLB and Bachelor of Arts (Communication)) was appointed as Joint Company Secretary on 28 June 2011. Eve supports Kate Munnings in advising the Board on governance matters and leading the ongoing implementation of the compliance programme across Australia, New Zealand, Americas and the Middle East. Eve has over 10 years’ experience in legal, compliance and governance roles at major Australian companies.

The Remuneration Report is presented as part of the Directors’ Report on pages 45-63.

44 TRANSFIELD SERVICES 2012 DIRECTORS’ REPORT REMUNERATION REPORT – UNAUDITED

EXECUTIVE SUMMARY This Executive Summary outlines the Company’s remuneration principles, discloses the actual remuneration derived by Senior Executives in the 2012 financial year (‘FY 2012’) and summarises the key remuneration initiatives undertaken by the Company during the year. It should be read together with the full Remuneration Report on pages 46-63, which provides disclosure of the remuneration structure of the Company in accordance with statutory obligations. The Company’s remuneration objective is to attract, retain and motivate executives to focus on the business objectives for the short and long-term success of the Company. This objective is achieved by aligning remuneration with annual operating performance and longer term shareholder returns. Consequently, we have structured our executive remuneration so that there is a significant proportion of remuneration which is only earned if Board established targets for annual operating performance and longer term shareholder returns are achieved. REMUNERATION OUTCOMES The table below sets out the value Senior Executives derived from the various components of their remuneration in FY 2012, from an individual perspective.

FIXED REMUNERATION (INCLUDING NON-MONETARY SUPERANNUATION) STI MTI LTI BENEFITS TOTAL $ Dr Peter Goode 1,847,330 - - - 10,442 1,857,772 Larry Ames 618,592 - - - 33,807 652,399 Elizabeth Hunter 527,886 - - - 8,420 536,306 Steve MacDonald 626,513 - - - 31,550 658,063 Gareth Mann (from 1 November 2011) 413,342 - - - 18,918 432,260 Kate Munnings 588,188 - 26,769 - 11,521 626,478 Tiernan O’Rourke 824,017 - 10,579 - 13,279 847,875 Philip Wratt 616,680 - - - 145,210 761,890 Nicholas Yates 626,307 - - - 7,284 633,591

Total current Senior Executives 6,688,855 - 37,348 - 280,431 7,006,634

There were no payments made to Senior Executives under the short-term incentive (‘STI’) plan for FY 2012 as the Group did not meet the threshold performance required to trigger payment under the plan. Half of the 2010 financial year (‘FY 2010’) STIs that were deferred into performance rights under the medium-term incentive (‘MTI’) plan were eligible for performance testing during the period. These vested during the period based on the 2011 financial year (‘FY 2011’) results and shares were transferred to the relevant executives. The value of these shares is included in the table above, calculated using the closing price of the Company’s shares on the vesting date for the relevant Senior Executives. Performance rights under the long-term incentive (‘LTI’) plan that were eligible for performance testing in FY 2012 were forfeited due to the Company not meeting the earnings per share growth hurdle and relative total shareholder return of greater than 50th percentile against the comparator group. For remuneration values that are in accordance with statutory and accounting standards, please refer to Table 12 on page 60 of the Remuneration Report. REMUNERATION INITIATIVES AND FUTURE DEVELOPMENTS During the year, the Company reviewed its remuneration structure and operation having regard to the Company’s strategy, stakeholder feedback and regulatory developments. The changes arising from the review are focused on governance improvement, increasing effectiveness and keeping pace with external developments. These are noted in the various sections of this report and are summarised below: •• Introduction of Board discretion to ‘claw-back’ unvested and/or unpaid incentive remuneration in exceptional circumstances to supplement the STI deferral in terms of managing risk. •• Governance introduced to manage the engagement of remuneration consultants to provide advice to the Board and its Human Resources (HR) Committee. •• Shareholder approval of equity grants to the Managing Director and CEO (‘MD/CEO’) to be sought for the annual grant. •• Changes to the operation of the STI plan for 2013 financial year (‘FY 2013’) to improve its effectiveness including clarity on the reward opportunity for target and stretch performance and broader impact of safety performance on STI outcomes. •• Amendments to the LTI plan for FY 2013 including a change to the long-term return measure from return on funds employed to return on capital employed, change in the relative total shareholder return (‘TSR’) comparator group to a group comprising companies that are competitors for clients, talent and/or investor capital and relative TSR percentile performance required to trigger vesting will be greater than the 50th percentile. The HR Committee commits to reviewing the Company’s remuneration structure for alignment with shareholder expectations and ability to attract, retain and motivate and, where appropriate, making adjustments to these.

TERMINOLOGY In this report, the term ‘Senior Executives’ refers to all executives who meet the definition of key management personnel of the Group (being those persons with authority and responsibility for planning, directing and controlling the activities of the Group) including the MD/CEO. The term ‘Non-Executive Directors’ or ‘NEDs’ is used to refer to the non-executive Directors of the Company. ‘STI’ refers to short-term incentives. ‘MTI’ refers to medium-term incentives. ‘LTI’ refers to long-term incentives. 2012 TRANSFIELD SERVICES 45 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

The Directors of the Company present the Remuneration Report prepared in accordance with section 300A of the Corporations Act 2001 for the Company and the consolidated entity for the year ended 30 June 2012. The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001. This Remuneration Report forms part of the Directors’ Report. The Remuneration Report sets out the remuneration information pertaining to the Company’s Directors and Senior Executives who are the key management personnel (‘KMP’) of the consolidated entity for the purposes of the Corporations Act 2001 and AASB124: Related Party Disclosures. They are listed in Table 1 below.

Table 1 – Directors and Senior Executives

NON-EXECUTIVE DIRECTORS BOARD ROLE HR COMMITTEE ROLE Anthony Shepherd AO Chair Not applicable Jagjeet Bindra Deputy Chair Not applicable Guido Belgiorno-Nettis AM Director Member Luca Belgiorno-Nettis AM Director Not applicable Steven Crane Director Member Graeme Hunt Director (from 7 May 2012) Not applicable Diane Smith-Gander Director Member Douglas Snedden Director Chair

SENIOR EXECUTIVES Dr Peter Goode Managing Director and Chief Executive Officer Larry Ames1 Chief Executive – Americas Elizabeth Hunter Chief Executive – Human Resources Bruce James Chief Executive – Resources & Energy ANZ (until 31 October 2011) Steve MacDonald Chief Executive – Marketing & Investments Gareth Mann2 Chief Executive – Resources & Energy ANZ (from 1 November 2011) Kate Munnings Chief Risk and Legal Officer and Company Secretary Tiernan O’Rourke Chief Financial Officer Philip Wratt Chief Executive – Middle East and Asia and Regional Director WA (from 1 November 2011) Nicholas Yates Chief Executive – Infrastructure ANZ

1. Mr Ames ceased to be a key management personnel on 1 August 2012. 2. Mr Mann ceased to be a key management personnel on 7 August 2012.

Details on the Non-Executive Directors’ remuneration are set out on page 49. Details on the remuneration structure and outcomes for Senior Executives are set out on pages 49-63.

46 TRANSFIELD SERVICES 2012 A. REMUNERATION GOVERNANCE FRAMEWORK Board responsibility The Board’s key responsibility is overseeing financial integrity, business strategy, the management of business risks, legal compliance and governance and human resources and remuneration strategy. In relation to remuneration, the Board sets and approves remuneration structures, and ensures that they are equitable and aligned to the interests of the Company and its shareholders. The Board approves all Non-Executive Directors, MD/CEO and Senior Executive remuneration.

HR Committee The purpose of the Board’s HR Committee is to: •• ensure that the Company’s HR policies comply with relevant laws, reflect current governance and mitigate operational, financial and reputation risks; •• assist the Board to consider remuneration issues more efficiently and fully, and to provide recommendations on remuneration policies, practices and decisions to the Board for approval including remuneration for NEDs and Senior Executives; and •• assist the Board to ensure key talent and critical workforces are managed to support and achieve corporate objectives and to provide recommendations to the Board for approval. The Board authorises the HR Committee to perform activities within the scope of its responsibilities including engaging independent advisors as it deems necessary, requiring the attendance of company officers at meetings and having unrestricted access to management, employees and information it considers relevant. The HR Committee may make any recommendations to the Board within its remit but it does not have delegated power to make binding decisions on behalf of the Board. The members of the Committee during the year are noted in Table 1 on page 46. The HR Committee met six times during the financial year. Further details regarding attendances are set out on page 42. The MD/CEO, the Chief Executive – Human Resources and other members of senior management attend meetings of the HR Committee, as appropriate, to provide information necessary for the HR Committee to undertake its responsibilities. Individual executives do not attend or participate in discussions where recommendations regarding their own circumstances are determined.

Remuneration Consultants External remuneration consultants may be engaged by the Board and the HR Committee to provide advice or information. Any advice or recommendations provided by external consultants are used as a guide. They do not substitute for the Board and HR Committee decision making process. The Board’s governance in relation to engagement of remuneration consultants include: •• The HR Committee approves the scope and the engagement of the remuneration consultant; •• The remuneration consultant’s advice is provided directly to the Chair or a member of the HR Committee; and •• The Chair of the HR Committee may authorise management to liaise with the remuneration consultant to facilitate the engagement including briefing and providing information. In reviewing remuneration and the remuneration structure during the year, the Board engaged a consultant to provide advice on market data and practices but did not engage the consultant to provide any recommendation on the amount or the structure of the remuneration. The engagement of the consultant during the year was in accordance with the Company’s governance process set out above.

2012 TRANSFIELD SERVICES 47 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

B. NON-EXECUTIVE DIRECTORS’ REMUNERATION POLICY AND COMPONENTS Table 2 – Key principles underpinning the remuneration policy for Non-Executive Directors and remuneration components

PRINCIPLE OUTCOMES

Aggregate Board and The current aggregate fee pool for Non-Executive Directors (‘NEDs’) of $2,000,000 was approved by shareholders at the Annual Committee fees are General Meeting held on 21 October 2010. Fee pools are inclusive of superannuation contributions. approved by The total Board and Committee fees paid to NEDs during the year was $1,426,301 which is $573,699 below the current aggregate fee shareholders pool of $2,000,000.

Remuneration is To preserve independence and impartiality, no element of NED remuneration is “at risk”. NEDs are remunerated by way of fixed fees structured to preserve in the form of cash and superannuation in accordance with Recommendation 8.2 of the ASX Corporate Governance Principles and independence whilst Recommendations. creating alignment The NEDs do not participate in any equity arrangements (e.g. share acquisition via fee sacrifice) following changes to employee share scheme taxation legislation in May 2009 which impacted the efficiency of this share acquisition mechanism. In April 2010, the Board adopted a policy under which all NEDs are expected to acquire and hold shares in the Company with a value (based on cost) equal to one year’s Directors base fees in order to align their interests with shareholders generally. Directors have a period of up to five years from the later of the adoption of the policy and their appointment date to achieve the minimum shareholding target. The NEDs’ current shareholdings are set out on page 43. Under the Company’s shareholding policy, NEDs are prohibited from using the Company’s securities as collateral in any financial transaction, including margin loan arrangements. This is consistent with the policy for Senior Executives (see page 59) and other select employees.

Fees are set by Board and Committee fees are set by reference to a number of relevant considerations including: reference to key • the responsibilities and risks attached to the role of NEDs; considerations and • the time commitment expected of NEDs; reviewed periodically • the fees paid by peer companies to NEDs; and • references external market data, as appropriate. The Chair’s fees are determined independently of other NEDs based on comparative roles in the external market. The Chair is not present at any discussions relating to determination of his own remuneration. The Board periodically reviews its approach to NED remuneration to ensure it remains in line with general industry practice and best practice principles of corporate governance and relies on independent expert advice, as required. Board and Committee fees are reviewed annually for 1 January adjustment. Based on an external benchmark of fees against comparable companies, there were no changes to Board and Committee fees following the review during FY 2012. Current fees are as follows:

BOARD FEES PER ANNUM COMMITTEE FEES PER ANNUM

• $372,320 for Chair1 Risk, Audit & Compliance Committee: • $182,000 for Deputy Chair • $20,000 for the Chair of the Committee • $140,400 for Board member • $13,000 for the members of the Committee Human Resources Committee and Health, Safety, Environment and Quality Committee: • $15,600 for the Chairs of the Committees • $10,400 for the members of the Committees

1. The Chair of the Board does not receive additional fees for service on Board Committee.

The above fees are inclusive of superannuation contributions made on behalf of Australian-based NEDs and satisfy the Company’s statutory superannuation obligations. Board fees are not paid to the executive Director (Dr Peter Goode) as the responsibilities of Board membership are considered in determining the remuneration provided as part of his normal employment conditions.

Other fees/benefits NEDs are entitled to be reimbursed for all business related expenses, including travel, as may be incurred in the discharge of their duties.

No retirement benefits The Board resolved in 2004 to remove retirement allowances for NEDs appointed after 30 June 2004. In February 2006, the Board further resolved to cease accruing retirement benefits for any Directors with retirement allowances with effect from 1 July 2006. Directors’ entitlements up to 30 June 2006 under the previous arrangements are preserved and the value maintained through indexation of amounts previously accrued. The accrued entitlement is paid on retirement of the Director.

48 TRANSFIELD SERVICES 2012 Table 3 – Non-Executive Director Remuneration for FY 2012 and FY 2011

SHORT TERM BENEFITS POST EMPLOYMENT BENEFITS

CASH SALARY NON-MONETARY SUPERANNUATION RETIREMENT NAME AND FEES $ BENEFITS1 $ BENEFITS $2 TOTAL $

Anthony Shepherd AO 2012 357,128 5,861 15,199 3,726 381,914 2011 357,128 5,713 15,199 6,920 384,960 Jagjeet Bindra 2012 3 203,507 - - - 203,507 2011 4 179,217 - - - 179,217 Guido Belgiorno-Nettis AM 2012 161,203 - - - 161,203 2011 163,251 - - - 163,251 Luca Belgiorno-Nettis AM 2012 153,403 - - - 153,403 2011 152,103 - - - 152,103 Steven Crane 2012 156,700 - 14,103 - 170,803 2011 155,166 - 13,921 - 169,087 Graeme Hunt (from 7 May 2012) 2012 23,179 - 2,086 - 25,265 Diane Smith-Gander 2012 147,893 - 13,310 - 161,203 2011 102,873 - 9,259 - 112,132 Douglas Snedden 2012 155,049 - 13,954 - 169,003 2011 152,379 - 13,714 - 166,093 Total Non-Executive Directors 2012 1,358,062 5,861 58,652 3,726 1,426,301 2011 1,262,117 5,713 52,093 6,920 1,326,843 Total for each category 2012 1,363,923 62,378 1,426,301 2011 1,267,830 59,013 1,326,843

1 Provision of car-parking. 2 Retirement benefits ceased to be accrued in 2006; the disclosed amount relates to the indexation of amounts previously accrued. 3 USD amounts translated into AUD at the average annual AUD:USD exchange rate of 1.0316. The increased remuneration disclosed for FY 2012 includes a payment of US$5,490 in relation to foreign exchange reconciliation of FY 2011 fees. 4 USD amounts translated into AUD at the average annual AUD:USD exchange rate of 0.9886.

C. SENIOR EXECUTIVE REMUNERATION POLICY AND STRUCTURE The Company’s remuneration strategy supports the HR objectives of attracting, motivating and retaining our people through: •• a competitive program that helps us to attract, motivate and retain a high quality workforce; •• fixed remuneration that are competitive with the external job market in which we compete for talent and reflective of the internal value of each role; •• ‘at-risk’ remuneration commensurate with the contribution level and driven by individual, business and overall group performance; and •• remuneration mix that reflects the decision-making horizon and control of the individual roles.

2012 TRANSFIELD SERVICES 49 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

Clawback Policy Effective from 1 July 2012, the Board will have the discretion to reduce or cancel unpaid, unvested and/or deferred incentive payments, including but not limited to short-term incentives, medium-term incentives and long-term incentives, where information or events come to light since the initial award was made which undermines materially the Group’s performance, financial soundness and reputation. In exercising its discretion, the Board will have regard to matters of procedural fairness. The Board reserves the right to pursue available legal recourse as appropriate. The content of the Senior Executive Remuneration discussion is set out below:

DISCUSSION PAGE REFERENCE 1. Relationship between policy and performance Page 50 2. MD/CEO’s remuneration Page 51 3. Fixed remuneration Page 53 4. Short-term incentive (“at risk” component) Page 53 5. Medium-term incentive (“at risk” component) Page 55 6. Long-term incentive (variable “at risk” component) Page 56 7. Shareholding policies Page 59 8. Service agreements Page 59 9. Statutory tables Page 60

C1. RELATIONSHIP BETWEEN REMUNERATION POLICY AND CORPORATE PERFORMANCE Remuneration is linked to performance by: •• Requiring a significant proportion of remuneration to vary with short-term and long-term performance; •• A gateway financial performance to be achieved by the Company before any STI determination for Senior Executives is made; •• Setting clear expectations on target and stretch performance required for STI payments and objectives are set to ensure quality results; and •• Assessment of long-term performance through multiple measures to provide a complete picture of company performance in terms of increasing shareholder value. The remuneration for Senior Executives varies with performance of the Company as measured by both short-term and long-term measures. Chart 1 on page 50 illustrates the alignment of the level of STI payments to the earnings of the Company. In previous years, EBITA was the primary earnings measure but as outlined in Section C4 on page 53, the key STI earnings measures will be NPAT and EBIT for FY 2013 and onwards. The performance of these three measures (excluding significant items) is shown in Chart 1 over the last five years. Refer to Section C4 on page 53 for discussion of the FY 2012 STI outcomes.

Chart 1: Key management personnel short term incentive outcomes Chart 2: Long-term incentive vesting outcomes relative to Earnings Per Share and Return on Capital Employed 250 70 100 20.0 60 200 50 80 18.0

150 11.8 12.3 12.4 40 60 12.0 11.5 30 8.8 100 40 8.0 20 27.64 17.10 15.6 Earnings $mil 50 20 4.0 10 STI % of Target Paid % of Target STI 0 - 0 0.0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 -4.00 % on Capital Employed Return Year and EPS Vested Awards % of LTI -20 -15.34 -40 Year

Cash STI % of Target EBITA Operating NPAT EBIT EPS % of LTI Awards Vested ROCE %

In terms of long-term performance, Chart 2 compares LTI vesting outcomes and the LTI metric of earnings per share for the current and previous four years. Chart 2 also shows return on capital employed (‘ROCE’) performance over the same period. As outlined in Section C6 on page 56, ROCE will replace return on funds employed (‘ROFE’) as the LTI return measure from FY 2013 onwards. Chart 3 on the next page shows the Company’s relative total shareholder return performance compared to the LTI comparator group comprising companies in the ASX 200 index (excluding Energy and Materials sectors) over the three year period to 30 June 2012. Refer to Section C6 on page 56 for discussion of the FY 2012 LTI vesting outcomes.

50 TRANSFIELD SERVICES 2012 Chart 3: Total Shareholder Return - TSE vs LTI Comparator Group

200.0

180.0

160.0

140.0

120.0

100.0

80.0 Total ShareholderReturn %

60.0

40.0

20.0 TSE ASX 200 (excl Energy and Materials)

0.0 ov -11 5-Jul-11 8-Jul-11 -12 -May 5-Oct-11 3-Apr-12 6-Apr-12 1-Jun-11 6-Jun-11 5-Jun-12 9-Jun-11 8-Jun-12 2-Jan-12 5-Jan-12 3-Feb-12 8-Feb-12 5-Mar-12 8-Mar-12 2-Dec-11 7-Dec-11 3-Aug-11 8-Aug-11 1-Sep-11 6-Sep-11 9-Sep-11 3-Nov-11 8-Nov-11 13-Jul-11 18-Jul-11 21-Jul-11 26-Jul-11 29-Jul-11 2-May-12 7-May-12 10-Oct-11 13-Oct-11 18-Oct-11 21-Oct-11 26-Oct-11 31-Oct-11 11-Apr-12 16-Apr-12 19-Apr-12 24-Apr-12 27-Apr-12 14-Jun-11 13-Jun-12 17-Jun-11 18-Jun-12 22-Jun-11 21-Jun-12 27-Jun-11 26-Jun-12 30-Jun-11 29-Jun-12 10-Jan-12 13-Jan-12 18-Jan-12 23-Jan-12 26-Jan-12 31-Jan-12 13-Feb-12 16-Feb-12 21-Feb-12 24-Feb-12 29-Feb-12 13-Mar-12 16-Mar-12 21-Mar-12 26-Mar-12 29-Mar-12 21-Nov-11 24-Nov-11 29-Nov-11 12-Dec-11 15-Dec-11 20-Dec-11 23-Dec-11 28-Dec-11 11-Aug-11 16-Aug-11 19-Aug-11 24-Aug-11 29-Aug-11 14-Sep-11 19-Sep-11 22-Sep-11 27-Sep-11 30-Sep-11 11-Nov-11 16-N 31-May-12 10-May-12 15-May-12 18-May-12 23-May-12 28

Table 4 below summarises details of the Company’s earnings (net profit after tax and earnings per share) and the consequences of that performance on shareholder value for the financial year and previous four financial years in the form of dividends, changes in share price, and return on capital employed (in accordance with the requirements of the Corporations Act 2001). Table 4 – Five-year Company performance

2008 2009 2010 2011 2012 Net profit / (loss) after tax ($’000) 82,376 (54,490)1 73,5562 (19,275)3 85,024 Net profit (excluding significant items)5 ($’000) 82,173 93,433 95,951 100,123 85,024 Earnings per share (cents) 27.64 (15.34)1 17.102,4 (4.0)3 15.6 Operating earnings per share (cents) 27.64 32.5 23.2 20.3 15.6 Dividends per share paid (cents) 36.00 22.75 12.25 14.00 14.00 Change in share price ($3.68) ($5.13) $0.82 $0.24 ($1.53) Return on capital employed 11.8% 12.3% 11.5% 12.4% 8.8%

1. Includes an impairment loss $148,443,000 post tax. 2. Includes $22,900,000 equity accounted share of losses associated with RAC capital structure review. 3. Includes $119,857,000 (net of tax) of significant items. 4. Restated due to capital raising in FY 2011. For LTI purposes, the EPS benchmarks and hurdles were not restated for the capital raising. 5. Net profit (excluding significant items) is a non-IFRS financial indicator and has not been subject to review or audit by the Group’s external auditors.

C2. MD/CEO’S REMUNERATION FY 2012 Total Incentive Outcomes Table 5 – MD/CEO’s total incentive opportunity for FY 2012 and the outcome achieved

TOTAL INCENTIVE TOTAL INCENTIVE COMPONENTS OPPORTUNITY FY 2012 TOTAL INCENTIVE OUTCOME SUMMARY

Based on annual objectives and One-third of 200% of Nil. These components of the MD/CEO’s Total Incentives were forfeited as the Group did not payable in cash TFR achieve the gateway earnings performance required to trigger annual incentive payment. Had the gateway hurdle been achieved, the MD/CEO would have been based on the specific Based on annual objectives and One-third of 200% of objectives for FY 2012. The specific objectives included earnings targets as measured by deferred into MTI TFR Group NPAT and EBITDA, safety improvement in the total recordable injury frequency rate and objectives in line with executing the corporate strategy.

LTI equity participation One-third of 200% of Allocated 410,200 LTI performance rights on 30 September 2011 which have performance TFR measures which are assessed three-years from grant date in 2015. Refer to Section C6 on page 56 for LTI details.

Total 200% of TFR

2012 TRANSFIELD SERVICES 51 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

MD/CEO Remuneration Structure The MD/CEO’s remuneration structure is specified in his service agreement and is summarised in Table 6 below. The structure is biased towards variable “at risk” remuneration with two-thirds of the target total remuneration being subject to annual and long-term performance objectives. Table 6 – MD/CEO Remuneration Components

AS % OF TOTAL REMUNERATION REMUNERATION COMPONENTS REMUNERATION OUTCOMES (AT TARGET)

Fixed remuneration Total Fixed Remuneration (‘TFR’) comprises base salary and superannuation. 33.3

Variable ‘at risk’ performance- For financial year 2012 and onwards^, total incentive is structured as follows: 66.7 based remuneration Total Incentive (based on target PROPORTION OF TOTAL INCENTIVE HOW IS IT DELIVERED? outcome) equal to 200 per cent of One-third (1/3) Outcome assessed based on annual objectives TFR* and delivered in cash. *If the MD/CEO out-performs on the One third (1/3) Outcome assessed based on annual objectives annual target objectives, he will be eligible for an additional Total Incentive and delivered through participation in the MTI equal to 30 per cent of his TFR such that plan consistent with Senior Executives (refer his Total Incentive is equal to 230 per Section C5) with further MTI outcome assessed cent of TFR. If payable, these are based one-year and two-year earnings allocated as cash and MTI allocation. performance. One- third (1/3) Equity delivered through participation in the LTI plan (consistent with Senior Executives) with outcome assessed based on long-term measures and hurdles. The MD/CEO’s FY 2013 annual objectives are consistent with the performance objectives set out the STI Plan (refer Section C4) and the terms of LTI performance rights are set out LTI Plan (refer Section C6). Annual equity grants to the MD/CEO will be subject to shareholder approval at the annual general meeting.

Total Remuneration (at target) Total Remuneration (at target) reflects the remuneration outcome assuming that the target financial 100 and strategic objectives are met.

^ In prior financial earsy (that is, FY 2010 and FY 2011), the MD/CEO’s Total Incentive was assessed based on annual objectives and the outcomes were delivered: •• one-third in cash; and •• two-thirds as specific MD/CEO medium-term incentive equity award which were subject to further performance hurdles. See below for discussion on the assessment of these performance hurdles.

The change in the structure of the MD/CEO’s remuneration for FY 2012 and onwards is consistent with the terms of his service agreement which was disclosed at the time of his appointment in March 2009.

MD/CEO Total Fixed Remuneration The Board recently benchmarked the MD/CEO’s remuneration against a selected list of companies. These companies are of similar size to Transfield Services Limited (as measured by market capitalisation, total assets or total revenue) from the predominant sectors in which the Group competes for talent, with a specific emphasis on those companies providing services to the energy, resources, utilities and infrastructure sector (referred to as ‘Core Comparator Group’). The Board will take the market relativity of the MD/CEO’s remuneration into account (amongst other factors) in relation to any fixed remuneration review and adjustment for the MD/CEO on 1 September 2012.

Earned Total Incentive deferred into MD/CEO Medium-term Incentive For FY 2010 and FY 2011, two-thirds of the MD/CEO’s earned Total Incentive outcome was deferred into medium-term incentives specific to the MD/ CEO (‘MD/CEO MTI’). The MD/CEO MTIs are performance rights, being rights to acquire shares for nil consideration under the terms of the Transhare Executive Performance Award Plan (‘TEPAP’). The TEPAP is the overall plan that delivers the Company’s LTI plan. The MD/CEO’s MTI contain long-term incentive (‘LTI’) elements as they are subject to meeting performance hurdles over a performance period of up to three years. However, one of the key differences of this arrangement to the general practice surrounding LTI grants, is that these were allocated from the earned component of the Total Incentive opportunity and the deferred incentive are further tested against hurdles prior to the MD/CEO deriving any actual shares. The performance measures which applied to these MD/CEO MTIs were: •• 25 per cent based on earnings per share growth; •• 25 per cent based on relative total shareholder return; •• 25 per cent based on return on funds employed; and •• 25 per cent based on margin improvement.

52 TRANSFIELD SERVICES 2012 The hurdles for these performance measures are consistent with the hurdles set under the LTI Plan for Senior Executives (refer to Section C6). Subject to achieving the above additional performance measures, these MD/CEO MTI performance rights will be available for vesting after two years in respect of half of the MTI Awards granted and after three years for the remaining half. The first half of the MD/CEO MTI Awards granted in October 2010 will be eligible for assessment against the relevant hurdles in October 2012 with the balance eligible for assessment against hurdles in October 2013. The MD/CEO MTI Awards granted in September 2011 will first be eligible for assessment in September 2013 (first half) and September 2014 (balance). Full details of the MD/CEO’s remuneration for FY 2012 can be found on page 60.

C3. OTHER SENIOR EXECUTIVE FIXED REMUNERATION The terms of employment of all Senior Executives contain a fixed remuneration component. Depending on the country in which the executive is employed, the fixed remuneration component is structured as a total employment cost package (which includes company superannuation contributions and benefits, including fringe benefits tax) or as a salary plus benefits package. Fixed remuneration for Senior Executives is set to reflect the roles and responsibilities undertaken by the individual and having regard to the market for comparable roles. The Company also uses a job evaluation methodology to manage internal pay relativities and seek advice from remuneration consultants as required. The Board recently benchmarked Senior Executive remuneration against comparable roles in the Core Comparator Group (used in benchmarking the MD/CEO remuneration) and also roles with comparable level of responsibilities in significantly larger and smaller organisations that operate and compete in similar sectors. Based on the benchmarking analysis, the Board believes that fixed remuneration and total remuneration are fair and responsible and sufficiently competitive to attract and retain Senior Executives. The Board will take the relativity and positioning of current Senior Executive remuneration (amongst other factors) into account in relation to any annual fixed remuneration review for Senior Executives. Fixed remuneration is reviewed annually and adjusted on 1 September.

C4. SHORT-TERM INCENTIVE (STI) FY 2012 STI Outcomes For FY 2012, the gateway for payment of any STI for all Senior Executives was Group earnings before interest, tax, depreciation and amortisation (‘EBITDA’). The threshold required to trigger STI payments was not achieved. Consequently, there were no payments to Senior Executives under the STI plan for FY 2012. Therefore, each Senior Executive forfeited 100% of the maximum potential of STI award during FY 2012. If the gateway hurdle for STI payments had been met, each Senior Executive would have been assessed having regard to their specific financial and non-financial performance objectives. Financial performance objectives for Senior Executives accounted for up to 70% of the overall weighting. These included: •• Group NPAT target and EBITDA targets for the underlying businesses; •• Margins/profitability target for the Group and underlying businesses; •• Cash flow targets for the Group and underlying businesses; and •• Group return on capital employed. Non-financial performance objectives include personal strategic objectives in areas such as safety, people management and development and business strategy initiatives. These accounted for up to 30% of the STI weighting.

STI Changes for FY 2013 During the year, the Company reviewed the operation of its STI plan and implemented changes for FY 2013 to improve the effectiveness of the plan; these include the following: •• The STI is to be split into two components to provide clarity on the reward structure – Part A of the STI is to reflect the component of STI available for target Group and/or operational business performance and Part B reflects the component of STI available for outperformance of the Group’s financial targets. •• As part of the leadership team, Senior Executives remain accountable for the overall Group performance and therefore the gateway to access any STI will be Group related. For participants below Senior Executive levels, their Part A gateways will be connected to their area of responsibility to increase the line of sight and accountability for their performance. •• Safety performance which has been a compulsory performance objective in prior years will have a broader impact on the payment of STI to reinforce our commitment to our vision of “no injuries to anyone, any time”. •• Key earnings performance measure will be net operating profit after tax (‘NPAT’) for Group function roles and earnings before interest and taxation (‘EBIT’) for operational roles.

2012 TRANSFIELD SERVICES 53 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

Table 7 – Summary of STI Plan for FY 2013

What is the STI Plan and The STI Plan is a variable “at risk” remuneration component and earned only if performance objectives are achieved. The purpose what is its purpose? of the STI is to support and reward behaviours and outcomes in the organisation to deliver on the annual objectives set under the Company’s Performance Pillars.

Who participates in the Executives and selected individuals who can materially impact the financial and operational performance of the Company, a region STI Plan? or a business unit.

What percentage of fixed Senior Executives have target STI reward of 40 – 75 per cent of total fixed remuneration. remuneration does the The target STI is split between 2 components: Part A and Part B. For Senior Executives, 40% of their STI is tied to Part A and 60% is STI Plan represent? tied to Part B. For example, if a Senior Executive has a target STI opportunity of $100,000, 40% of that target (ie $40,000) is the Part A STI and assessed based on Part A criteria and the balance of 60% or $60,000 is the Part B STI and assessed based on Part B criteria.

Are both target and Yes. If financial performance exceeds targets, the STI Plan will deliver higher rewards to executives. Part A reflects the component stretch performance of the STI available for target business performance and Part B reflects the component of STI available for outperformance of the conditions imposed? Group’s financial targets and operates similar to a profit share. Under Part A, Senior Executives can earn between 0% and 120% of the Part A STI component if target business performance is achieved with final assessment based on the Senior Executive’s performance against individual objectives. Under Part B, stretch performance as measured by outperformance of the Group NPAT may result in a multiplier effect on Part B STI from 0% to 200% (Part B multiplier). The maximum STI opportunity is available for outperformance at or above 115% of the Group NPAT target. Performance against individual objectives will also impact on the final outcome.

Are there gateways to the The payment of any Part A STI for Senior Executives is subject to the Group meeting an earnings gateway. In addition, Senior payment of STI? Executives overseeing regional operations must meet the earnings gateway for their respective regions to trigger Part A STI. Group earnings are assessed using NPAT. Regional operations earnings are assessed using EBIT. The gateway level of earnings is set by reference to the Group or region achieving the targets set under the Board-approved budgets. For FY 2013, Part B STI is triggered for payment if the Group outperforms the Board-approved targets.

Assessment of The Board (through the HR Committee) has oversight of the assessment of STI outcomes and approves all outcomes in relation to performance for STI Senior Executives following audit clearance of the annual financial statements each year. outcomes If the financial gateways are met, the Senior Executives are assessed for their Part A and/or Part B STI based on their performance in achieving their individual performance objectives (refer below) as follows: (a) Part A STI outcome = Part A STI ($) x STI assessment (%) Part A STI ($) is the dollar value of the component of the STI related to Part A assessment. The MD/CEO recommends (for the HR Committee’s review and the Board’s approval) the STI assessment percentage within the assessment range (0% to 120%) for the Senior Executive’s overall performance against individual objectives. (b) Part B = Part B STI ($) x Part B multiplier (%) x STI assessment range (%) Part B STI ($) is the dollar value of the component of the STI related to Part B assessment. The Part B multiplier can range from 0 to 200% based on the level of outperformance of the Group NPAT target (as outlined above). Individual performance is based on the STI assessment range (0% to 120%) recommended in Part A above. Impact of safety performance Target safety performance is set annually for the Company and the underlying businesses. For STI purposes, safety performance is measured by the total recordable injury frequency rate (‘TRIFR’), which includes loss-time and medically treated injuries. TRIFR is used as it is a reliable indicator of the effectiveness of controls in place to prevent people being seriously injured. If a participant’s business or area does not achieve the target safety performance, the individual’s Part A and Part B STI outcomes will be reduced proportionately down to nil where the target TRIFR is missed by 50%. If the target safety performance is achieved, there will be no modification to the STI outcomes.

54 TRANSFIELD SERVICES 2012 What are the performance Individual performance objectives are set within the framework of the Company’s Performance Pillars of Perform, Grow, Develop objectives and how are and Innovate. This framework ensures that all objectives are in alignment with the corporate strategy and reflect the performance they set? required within the scope of each Senior Executive’s responsibilities and accountabilities. The objectives and targets for Senior Executives are set by the Board following the completion of the annual budgeting and planning process. Financial objectives for FY 2013 include: • Earnings targets: Group NPAT is used as a measure for Group function roles as it captures the whole performance of the Group including management of interest and tax. For underlying businesses, EBIT is used to assess the underlying operation performance in terms of what the businesses can control. • For Senior Executives with operational and financial accountability: Return on capital employed targets to measure the efficiency with which a business uses it capital base and over the long-term is linked to growing shareholder value when the return on capital equals or exceeds the cost of funding that capital. Cash conversion is used as a measure to ensure a strong focus on the generation of cash for the Group. Margin/profitability targets ensure the focus on improving margins to support long-term sustainable performance. Non-financial objectives for FY 2013 include: • Objectives in relation to people management and development including measurable targets on diversity, talent management and success planning. • Individual objectives related to the execution of the corporate strategy.

In what form is the STI Subject to the STI deferral below, STI is generally paid in cash following the release of audited financial results and the STI review. delivered? The Company adopts the policy of STI deferral to be prudent that outcomes of business activities are adequately assessed in the short-term and mitigate the risk that substantial annual incentives are paid based on unsustainable short-term decision-making. The deferral of STI applies where STI outcomes exceed a set threshold (currently set at $100,000) and up to 20 per cent of the total outcome is delivered in the form of medium-term incentives (see section C5 below).

What if a Senior Executive Where a Senior Executive ceases employment with the Company (other than due to redundancy) before STI measures are ceases employment? assessable, then the Senior Executive is generally not entitled to receive any STI outcome. Where a Senior Executive ceases employment due to redundancy, the STI entitlement is tested in the ordinary course at the end of the performance year. In such circumstances, the Board may determine that the Senior Executive is entitled to a pro-rata proportion of their STI entitlement.

C5. MEDIUM-TERM INCENTIVE FY 2012 MTI outcomes MTI awards were first granted in October 2010 following the FY 2010 STI performance year where up to 20% of Senior Executives’ STI outcomes were deferred into the MTI plan. The first tranche (ie 50%) of the 2010 MTI Awards vested in October 2011 (one year from grant date) as the Group’s underlying earnings for FY 2011 exceeded the FY 2010 earnings benchmark. Table 16 sets out the value of MTI Awards that vested to Senior Executives. The second tranche (ie 50% of the 2010 MTI Awards will be assessed against the vesting conditions in September 2012) (two years from the grant date). The MTI awards granted in September 2011 following the FY 2011 STI performance year will be eligible for vesting in respect of the first tranche in September 2012 (one year from the grant date). The second tranche will be assessed in September 2013 (two years from the grant date).

2012 TRANSFIELD SERVICES 55 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

The following summarises the operation of the MTI plan which has not changed from prior years. Table 8 – Summary of MTI Plan

What is the purpose of the The MTI is a variable “at risk” remuneration component with a one- to two-year horizon. It is primarily used to deliver the deferred MTI Plan? component of STI outcomes for executive-level STI participants. Thus, the purpose of the MTI Plan is to encourage executives to focus on the medium term impact of their short-term decisions by placing at-risk a proportion of earned STI outcome.

Who participates in the MTI STI participants who achieve a minimum STI outcome of A$100,000 (MTI threshold). There were no STI payments made to Senior Plan? Executives for FY 2012 and consequently, no STI deferral and MTI allocations to Senior Executives are expected in September 2012. The MTI plan is also used to allocate equity to employees who otherwise do not participate in the Company’s equity incentive plans and is used to reward and recognise high performance and potential in the organisation.

How is reward delivered Senior Executives and other eligible employees are granted performance rights under the TranShare Executive Performance under the MTI Plan? Award Plan (TEPAP). The number of performance rights granted from the MTI allocation is calculated based on the market value of the Company’s shares around the time the MTI grants are approved by the HR Committee. The performance rights are offered at no cost to the Senior Executive. Each performance right is an entitlement to receive a fully-paid ordinary share in the Company on terms and conditions determined by the Board, including vesting conditions linked to continued service and performance. If these are satisfied, the performance rights vest and shares will be delivered to the Senior Executive. Subject to achieving the vesting conditions: • 50 per cent of MTI rights granted (Tranche 1) will vest one year from grant; and • The other 50 per cent of MTI rights granted (Tranche 2) will vest two years from the grant. Shares for the vested performance rights are generally sourced from on-market purchases acquired through a trust.

What rights are attached to The performance rights do not carry voting or dividend rights, however shares delivered upon vesting of performance rights will the Performance Rights? carry the same rights as other ordinary shares. Senior Executives are prohibited from hedging their unvested MTI awards (further discussed at page 59).

What are the performance Participants in the MTI Plan will not derive any value from their MTI awards unless Company earnings (from the STI performance hurdles? year) is maintained or improved in the next one to two years and the participants remain employed with the Group at the time of vesting.

What if a Senior Executive Where a Senior Executive ceases employment (other than due to redundancy or retirement), the unvested rights will immediately ceases employment? lapse on exit. Where redundancy or retirement applies, a pro-rata (based on service period) of the unvested rights may be retained and vest in the ordinary course.

What happens in the event In the event of a change of control, unvested MTI awards will vest. of a change of control?

C6. LONG- TERM INCENTIVE FY 2012 LTI outcomes During the year, the following LTI awards were eligible for vesting and the assessment against performance hurdles are shown in the table below: Table 9 – FY 2012 LTI outcomes

PERFORMANCE PERFORMANCE MINIMUM HURDLE LEVEL OF PERFORMANCE VESTING TRIGGERED (% OF RIGHTS GRANTED IN PERIOD REQUIRED FOR VESTING ACHIEVED TOTAL PERFORMANCE RIGHTS) August 2007 1 July 2006 to 30 June 2011* EPS compound growth of at least Minimum hurdle not achieved Nil 10% pa 31 August 2007 to Relative TSR ranking of at least Minimum hurdle not achieved Nil 30 May 2012 50th percentile February 2008 1 July 2007 to 30 June 2011 EPS compound growth of at least Minimum hurdle not achieved Nil 10% pa 28 February 2008 to Relative TSR ranking of at least Minimum hurdle not achieved Nil 27 November 2011 50th percentile August 2008 1 July 2007 to 30 June 2011 EPS compound growth of at least Minimum hurdle not achieved Nil 10% pa 31 August 2008 to Relative TSR ranking of at least Minimum hurdle not achieved Nil 30 May 2012 50th percentile

* Re-test over a four-year period.

56 TRANSFIELD SERVICES 2012 LTI Changes for FY 2013 During FY 2012, the Board reviewed the LTI performance measures. In the absence of a simple and effective measure of shareholder value creation, the Board believes the current practice of using multiple long-term measures provides a more complete picture of company performance. This approach avoids focussing management on a single performance measure and hence diversifies risk. From the review, the following changes will be introduced for the annual grants in September 2012: •• The long-term return measure will change from return on funds employed (‘ROFE’) to return on capital employed (‘ROCE’) to better assess the efficiency with which the Company utilises its capital base which is inclusive of both debt and equity. ROFE applied to LTI awards granted in 2009 to 2011. •• The comparator group for the external market measure of relative total shareholder return (‘TSR’) will change from the broad constituency of the companies in the S&P/ASX 200 Index (excluding Materials and Energy) to a group comprising primarily companies in the S&P/ASX 200 Industrial sectors of Capital Goods, Commercial & Professional Services, Materials, Energy Equipment & Services and Transportation Road & Rail. Companies in these sectors have been selected as they are exposed to the general market conditions that apply to Transfield and are our competitors for clients, talent and/or investor capital. •• The vesting for the relative TSR will also change such that TSR ranking of greater than 50th percentile is required to trigger any vesting of LTI awards. Prior to this change, if the Company’s TSR ranking was equal to the 50th percentile, vesting could be triggered for the relative TSR tranche of the LTI. •• The weighting across the LTI measures will be 30% on both EPS and relative TSR and 40% on ROCE. Table 10 - Summary of LTI Plan for September 2011 Awards (prior to changes noted above)

What is the purpose of The LTI Plan is a variable “at risk” remuneration component based on the longer term performance of the Group. the LTI Plan? The purpose of the LTI Plan is to align Senior Executive reward with shareholder value, by tying this component of Senior Executive remuneration to the achievement of performance conditions which underpin sustainable long-term growth.

Who participates in the Participation is limited to roles that have accountability for strategy formation and alignment. Broadly, these are the first two levels in LTI Plan? the organisation below the MD/CEO.

What is the value of the The size of grants under the LTI plan is set as a percentage of total fixed remuneration; it ranges from 30 to 60 per cent of total fixed LTI opportunity? remuneration for Senior Executives. Participants in the LTI plan will not derive any shares from their LTI grants unless hurdles set for the performance measures are achieved and they complete a minimum service period.

How is reward delivered Senior Executives and other eligible executives are granted performance rights annually under the TranShare Executive Performance under the LTI Plan? Award Plan (‘TEPAP’). The number of performance rights granted from the LTI allocation is calculated based on the market value of the Company’s shares around the time the LTI grants are approved by the HR Committee. The allocation price for the September 2011 LTI award was at the price of $3.02 per share, being the share price around the time the LTI grants were approved in late August 2011. The performance rights are offered at no cost to the Senior Executive. Each performance right is an entitlement to receive a fully-paid ordinary share in the Company on terms and conditions determined by the Board, including vesting conditions linked to service and performance over a three year period. If these conditions are satisfied, the performance rights vest and shares will be delivered to the Senior Executive upon exercise. Shares for the vested performance rights are generally sourced from on-market purchases acquired through a trust.

What rights are The performance rights do not carry voting or dividend rights, however shares delivered upon vesting of performance rights will carry attached to the the same rights as other ordinary shares. Senior Executives are prohibited from hedging their unvested performance rights (further Performance Rights? discussed at page 59).

What are the The performance measures and hurdles applicable to each grant of LTI awards are set by the Board having regard to the long-term performance measures business plan. These hurdles are subject to a minimum three year performance period, which reflects the business cycle for the and hurdles and why Company based on the average contract duration. A minimum three year LTI performance period also provides a balance between were they chosen? setting a sufficient performance period to assess and measure performance against hurdles set in the LTI and recognising that the longer the period, the harder it is to set appropriate hurdles. The Board determined that multiple measures were the best approach to provide a more complete assessment of performance and minimised the risk of management focussing on a single outcome. From 2009, performance rights were granted with three sets of independent performance hurdles, being: • An earnings measure of earnings per share (‘EPS’) growth to assess whether there is sustainable growth and therefore, increase in shareholder value; • A return measure as shareholder value is achieved when businesses are operated efficiently and effectively. This is currently measured via return on funds employed (‘ROFE’) but going forward will be assessed based on return on capital employed (‘ROCE’) in terms of how efficiently the Company utilises its capital base. • An external measure based on relative total shareholder return (‘TSR’) to assess whether the Company achieves above average total shareholder return relative to the performance of an appropriate peer group of companies. Between 2006 and 2009, performance rights were granted with two sets of independent hurdles, being EPS and relative TSR performance hurdles.

2012 TRANSFIELD SERVICES 57 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

i. Earnings per share The EPS measure applies to 40% of the total number of LTI awards granted (EPS tranche) in September 2011. (EPS) The EPS hurdle relates to the Company achieving a minimum average compound basic EPS growth per annum over a three-year financial period. For awards made prior to 2011, re-test of the EPS performance over a four year financial period was available if awards did not vest in the initial three-year period. The following vesting schedule applies to the EPS tranche granted in September 2011:

TSE’S EPS COMPOUND % OF EPS TRANCHE % OF TOTAL LTI AWARDS ANNUAL GROWTH THAT VESTS THAT VEST < 3% Nil Nil 3% < 5% 40% < 70% 16% < 28% 5% < 7% 70% < 100% 28% < 40% 7% or more 100% 40%

The compound annual growth in EPS is based on the underlying FY 2011 EPS of 20.3 cents (based on operating net profit after tax of $100.1m) rather than the reported loss of 4 cents per share which included non-recurring items. The performance profile for maximum 40% vesting of the total LTI award delivers up to 22.5% EPS growth over three years. ii. Return on funds The return measure applies to 30% of the total number of LTI awards granted (ROFE tranche) in September 2011. employed (ROFE) ROFE is calculated by dividing the Company’s earnings before interest, tax, depreciation and amortisation (EBITDA) by funds employed, consisting of working capital, property plant and equipment and guarantees, calculated on an average basis over the performance period. The ROFE hurdle relates to the Company achieving a minimum return over a three-year financial period. The following vesting schedule applies to the ROFE tranche granted in September 2011:

TSE’S AVERAGE % OF ROFE TRANCHE % OF TOTAL LTI AWARDS ROFE THAT VESTS THAT VEST < 25% Nil Nil 25% < 30% 50% < 100% 15% < 30% 30% or more 100% 3%

As discussed above, the return measure will change from ROFE to ROCE for LTI awards granted from September 2012 and onwards. iii. Relative total The external relative measure applies to 30% of the total number of LTI awards granted (TSR tranche) in September 2011. shareholder return TSR represents the change in the capital value of the Company’s share price over a period, plus reinvested dividends, expressed as a (TSR) percentage of the base value. The compound growth in the Company’s TSR over the performance measurement period is compared with the TSR performance of all other companies in the S&P / ASX 200 Industrials Index which is the S&P / ASX 200 Index after excluding the Energy and Materials sectors. As discussed above, for the annual grants in September 2012, the comparator group will comprise primarily companies in the S&P/ ASX 200 Industrials Index sectors of Capital Goods, Commercial and Professional Services, Materials, Energy Equipment and Services, and Transportation Road and Rail. The following vesting schedule applies to the TSR tranche granted in September 2011:

% OF TSR RELATED LTI AWARDS THAT TSR RANKING VEST % OF TOTAL LTI AWARDS THAT VESTS < 50th percentile Nil Nil =/> 50th percentile < 75 percentile* 30% < 100% 9% < 30% 75th percentile or more 100% 30%

* Proportional vesting of awards will apply for performance between 50th and 75th percentile. For annual grants from September 2012, vesting will only be triggered if the TSR ranking is above 50th percentile. The performance period for the September 2011 LTI grant commences from the date the LTI was approved (ie late August 2011) up to the third anniversary of the grant date. TSR performance is measured three years after the grant date. There is no further re-test of performance for awards granted from September 2011 and onwards.

What if a Senior Where a Senior Executive ceases employment (other than due to redundancy or retirement), those awards will lapse on exit. Executive ceases Where redundancy or retirement applies, a pro-rata (based on service period) of the unvested awards may be retained and vest in the employment? ordinary course.

What happens in the Prior to a takeover or change of control of the Company, the Board may exercise its discretion (having regard to relevant executive event of a change of and Company performance) and determine that part or all unvested awards vest. control?

58 TRANSFIELD SERVICES 2012 C7. SHAREHOLDING POLICIES Minimum shareholding guideline Under the Company’s minimum shareholding guideline introduced on 19 August 2010, Senior Executives are encouraged to acquire and maintain a shareholding in the Company equal in value (based on share acquisition cost) to 50 per cent (for the MD/CEO) and 30 per cent (for other Senior Executives) of their individual total fixed remuneration. The timeframe to achieve this is over a five year period from the later of the date of adoption of this policy and the appointment of the Senior Executive. The shareholding includes all the Company shares the Senior Executive and/or close members of the family of the Senior Executive holds; or has control over or has a benefit in (eg superannuation, beneficiary of a trust). This is a guideline with which Senior Executives are encouraged to comply.

Hedging and Margin Lending Policies The Company also has a policy on the use of financial products by employees, including Senior Executives, to limit the risk attaching to equity instruments (commonly referred to as “hedging”) where those instruments are granted to them as part of their remuneration. Under this policy, Company securities must not be hedged prior to vesting (ie prior to the relevant performance and/or service conditions being met). In addition, the Company has a policy that prohibits Non-Executive Directors and Senior Executives from using the Company’s securities as collateral in any financial transaction, including margin loan arrangements. The Company treats compliance with these policies as a serious issue, and takes appropriate measures to ensure the policy is adhered to. Any employees found to have breached this policy will be subject to appropriate sanctions.

C8. SERVICE AGREEMENTS The remuneration and other terms of employment for the MD/CEO and Senior Executives are formalised in Service Agreements. Each of these agreements include the provision of STIs, other benefits including executive health management, householder insurance, salary continuance insurance and participation, when eligible, in the Company’s LTI Plan (as discussed previously).The material terms of the Service Agreements with Senior Executives are set out below. Table 11 – Summary of Service Agreements

NOTICE PERIOD TERMINATION BENEFIT REQUIRED (AMOUNT OF ANNUAL FOR THE SALARY) ON EARLY CONTINUOUS EMPLOYEE TO TERMINATION BY THE A RESTRICTIVE AGREEMENT TERMINATE THE COMPANY, OTHER THAN COVENANT NAME POSITION COMMENCING CONTRACT FOR GROSS MISCONDUCT APPLIES OF: Dr Peter Goode Managing Director and Chief Executive 30 March 2009 6 months 1 year 1 year Officer Larry Ames Chief Executive – Americas 4 January 2010 90 days 1 year 2 years Elizabeth Hunter Chief Executive – Human Resources 20 August 2007 3 months 1 year 6 months Steve MacDonald Chief Executive – Marketing & Investments 1 April 2007 6 months 1 year 1 year Gareth Mann Chief Executive – Resources & Energy ANZ 16 August 2010 3 months 6 months* 6 months (since 1 November 2011) Kate Munnings Chief Risk and Legal Officer / Company 1 January 2006 3 months 1 year 6 months Secretary Tiernan O’Rourke Chief Financial Officer 11 January 2010 6 months 1 year 6 months Philip Wratt Chief Executive – Middle East and Asia 11 January 2010 6 months 1 year 6 months Nicholas Yates Chief Executive – Infrastructure ANZ 14 September 2009 3 months 6 months 6 months

* In the case of termination due to redundancy, an additional 3 months’ annual salary is payable.

2012 TRANSFIELD SERVICES 59 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

C9. STATUTORY TABLES Table 12 below sets out details of remuneration provided to Senior Executives (calculated in accordance with applicable Accounting Standards). The table includes remuneration associated with LTI performance rights granted as part of the Senior Executives’ LTI payments. The value reflected is an accounting value and reflects the expense to the Company of the executives’ incentive arrangements. This value is not necessarily the same as the value to be derived by the executive. Table 12 – Details of Remuneration

POST EMPLOYMENT LONG TERM SHARE BASED SHORT TERM BENEFITS BENEFITS BENEFITS PAYMENTS CASH NON- LONG SALARY AND CASH- MONETARY SUPERANNUATION SERVICE PERFORMANCE NAME FEES $ BASED STI $ BENEFITS $ $ LEAVE $ RIGHTS $ TOTAL $

Dr Peter Goode 2012 1,831,555 - 10,442 15,775 22,363 699,182 2,579,317 2011 1,771,296 508,230 7,199 15,199 14,145 569,259 2,885,328 Larry Ames 2012 1 598,558 - 33,807 20,034 - 132,195 784,594 2011 2 606,919 151,487 31,082 17,108 - 84,306 890,902 Elizabeth Hunter 2012 512,111 - 8,420 15,775 9,407 124,170 669,883 2011 495,228 102,715 9,152 15,199 6,708 104,014 733,016 Bruce James (until 31 October 2011) 2012 306,006 - 6,316 - 2,943 176,046 491,311 2011 918,019 117,430 18,222 - 19,160 510,383 1,583,214 Steve MacDonald 2012 610,738 - 31,550 15,775 12,807 95,829 766,699 2011 618,826 273,431 19,387 15,199 14,427 53,935 995,205 Gareth Mann (from 1 November 2011) 2012 402,825 - 18,918 10,517 2,225 60,552 495,037 Kate Munnings 2012 547,671 3 - 11,521 40,517 29,726 167,970 797,405 2011 537,287 100,000 9,126 25,000 11,885 169,829 853,127 Tiernan O’Rourke 2012 799,017 - 13,279 25,000 6,935 182,372 1,026,603 2011 775,016 336,000 10,458 25,000 3,556 135,885 1,285,915 Philip Wratt 2012 606,163 - 145,210 4 10,517 6,035 71,619 839,544 2011 550,011 171,336 134,577 - 2,258 52,088 910,270 Nicholas Yates 2012 573,304 - 7,284 53,003 57,955 111,382 802,928 2011 442,006 102,694 7,000 36,135 15,609 88,942 692,386 Total for each component 2012 6,787,948 - 286,747 206,913 150,396 1,821,317 9,253,321 2011 6,714,608 1,863,323 246,203 148,840 87,748 1,768,641 10,829,363 Total for each category 2012 7,074,695 206,913 150,396 1,821,317 9,253,321 2011 8,824,134 148,840 87,748 1,768,641 10,829,363

1 USD amounts translated into AUD at the average annual AUD:USD exchange rate of 1.0316. 2 USD amounts translated into AUD at the average annual AUD:USD exchange rate of 0.9886. 3 Includes an overpayment of $6,675 which is recouped in FY 2013. 4 Includes expatriate benefits and one-off repatration allowance.

60 TRANSFIELD SERVICES 2012 Table 13 – Details of remuneration: fixed and at-risk remuneration as a percentage of actual remuneration

PERFORMANCE RELATED REMUNERATION FIXED CASH-BASED PERFORMANCE REMUNERATION STI1 RIGHTS TOTAL TOTAL NAME % % % % (100%) Dr Peter Goode 73% 0% 27% 27% 100% Larry Ames 82% 0% 18% 18% 100% Elizabeth Hunter 80% 0% 20% 20% 100% Bruce James 63% 0% 37% 37% 100% Steve MacDonald 87% 0% 13% 13% 100% Gareth Mann 87% 0% 13% 13% 100% Kate Munnings 79% 0% 21% 21% 100% Tiernan O’Rourke 82% 0% 18% 18% 100% Philip Wratt 91% 0% 9% 9% 100% Nicholas Yates 86% 0% 14% 14% 100%

1. Senior Executives forfeited 100% of the maximum STI potential for FY 2012.

Table 14 – Remuneration subject to vesting

REMUNERATION SUBJECT TO VESTING - MTI & LTI1

NAME FY 2012/13 FY 2013/14 FY 2014/15 Dr Peter Goode 591,310 237,391 34,990 Larry Ames 144,646 68,114 10,134 Elizabeth Hunter 96,837 44,331 7,199 Bruce James 354,829 146,755 22,817 Steve MacDonald 105,177 50,874 7,822 Gareth Mann 100,418 49,826 7,899 Kate Munnings 116,330 49,633 7,933 Tiernan O’Rourke 191,277 91,211 14,049 Philip Wratt 79,689 36,072 5,126 Nicholas Yates 98,437 59,923 12,198

1. Remuneration amounts disclosed in the above table refer to the maximum value of MTI and LTI performance rights, where relevant. These amounts have been determined at grant date using an appropriate pricing model and amortised in accordance with AASB 2 “Share Based Payment”. The minimum value that may vest is $nil.

Table 15 – Analysis of movements in performance rights

GRANTED IN VALUE OF RIGHTS LAPSED /FORFEITED NAME YEAR $1 EXERCISED IN YEAR $2 IN YEAR $3 Dr Peter Goode $986,588 - - Larry Ames $173,067 - - Elizabeth Hunter $108,285 - - Bruce James $360,033 $18,063 - Steve MacDonald $131,359 - - Gareth Mann $133,727 - - Kate Munnings $133,546 $26,769 $13,068 Tiernan O’Rourke $259,544 $10,579 - Philip Wratt $101,746 - - Nicholas Yates $198,217 - $7,805

1. Refer to Table 16 for details on performance rights granted as compensation during the year and commentary on the assessed fair value. 2. Value based on closing share price on exercise date. 3. Value based on closing share price on lapse/forfeit date.

2012 TRANSFIELD SERVICES 61 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED

Table 16 – Details of performance rights granted as compensation during the year

FAIR VALUE TOTAL GRANT NUMBER PER RIGHT AT VALUE AT FIRST DATE NAME SERIES DATE GRANTED GRANT DATE1 GRANT DATE EXERCISABLE EXPIRY DATE Dr Peter Goode 2011 MD MTI 30-Sep-11 168,300 $1.69 $284,427 30-Sep-13 30-Sep-13 2011 MD MTI 30-Sep-11 84,150 $1.64 $138,006 30-Sep-14 30-Sep-14 2011 MD MTI 30-Sep-11 84,150 $0.45 $37,868 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 287,140 $1.64 $470,910 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 123,060 $0.45 $55,377 30-Sep-14 30-Sep-14 Larry Ames 2011 LTI 30-Sep-11 83,160 $1.64 $136,382 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 35,640 $0.45 $16,038 30-Sep-14 30-Sep-14 2011 MTI 30-Sep-11 5,950 $1.78 $10,591 30-Sep-12 30-Sep-13 2011 MTI 30-Sep-11 5,950 $1.69 $10,056 30-Sep-12 30-Sep-13 Elizabeth Hunter 2011 LTI 30-Sep-11 59,080 $1.64 $96,891 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 25,320 $0.45 $11,394 30-Sep-14 30-Sep-14 Bruce James 2011 LTI 30-Sep-11 187,250 $1.64 $307,090 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 80,250 $0.45 $36,113 30-Sep-14 30-Sep-14 2011 MTI 30-Sep-11 4,850 $1.78 $8,633 30-Sep-12 30-Sep-13 2011 MTI 30-Sep-11 4,850 $1.69 $8,197 30-Sep-12 30-Sep-13 Steve MacDonald 2011 LTI 30-Sep-11 64,190 $1.64 $105,272 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 27,510 $0.45 $12,380 30-Sep-14 30-Sep-14 2011 MTI 30-Sep-11 3,950 $1.78 $7,031 30-Sep-12 30-Sep-13 2011 MTI 30-Sep-11 3,950 $1.69 $6,676 30-Sep-12 30-Sep-13 Gareth Mann 2011 LTI 30-Sep-11 64,820 $1.64 $106,305 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 27,780 $0.45 $12,501 30-Sep-14 30-Sep-14 2011 MTI 30-Sep-11 4,300 $1.78 $7,654 30-Sep-12 30-Sep-13 2011 MTI 30-Sep-11 4,300 $1.69 $7,267 30-Sep-12 30-Sep-13 Kate Munnings 2011 LTI 30-Sep-11 65,100 $1.64 $106,764 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 27,900 $0.45 $12,555 30-Sep-14 30-Sep-14 2011 MTI 30-Sep-11 4,100 $1.78 $7,298 30-Sep-12 30-Sep-13 2011 MTI 30-Sep-11 4,100 $1.69 $6,929 30-Sep-12 30-Sep-13 Tiernan O’Rourke 2011 LTI 30-Sep-11 115,290 $1.64 $189,076 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 49,410 $0.45 $22,235 30-Sep-14 30-Sep-14 2011 MTI 30-Sep-11 13,900 $1.78 $24,742 30-Sep-12 30-Sep-13 2011 MTI 30-Sep-11 13,900 $1.69 $23,491 30-Sep-12 30-Sep-13 Philip Wratt 2011 LTI 30-Sep-11 42,070 $1.64 $68,995 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 18,030 $0.45 $8,114 30-Sep-14 30-Sep-14 2011 MTI 30-Sep-11 7,100 $1.78 $12,638 30-Sep-12 30-Sep-13 2011 MTI 30-Sep-11 7,100 $1.69 $11,999 30-Sep-12 30-Sep-13 Nicholas Yates 2011 LTI 30-Sep-11 100,100 $1.64 $164,164 30-Sep-14 30-Sep-14 2011 LTI 30-Sep-11 42,900 $0.45 $19,305 30-Sep-14 30-Sep-14 2011 MTI 30-Sep-11 4,250 $1.78 $7,565 30-Sep-12 30-Sep-13 2011 MTI 30-Sep-11 4,250 $1.69 $7,183 30-Sep-12 30-Sep-13

1. The basis of the assessed fair value at grant date is set out on page 126 in the Notes to the Financial Statements.

62 TRANSFIELD SERVICES 2012 Table 17 – Analysis of performance rights granted as compensation

NUMBER % VESTED IN % FORFEITED IN FIRST DATE NAME GRANT DATE GRANTED1 CURRENT YEAR CURRENT YEAR2 EXERCISABLE Dr Peter Goode 06-Oct-10 243,732 0% 0% 06-Oct-12 06-Oct-10 120,724 0% 0% 06-Oct-13 30-Sep-11 168,300 0% 0% 30-Sep-13 30-Sep-11 578,500 0% 0% 30-Sep-14 Larry Ames 06-Oct-10 99,763 0% 0% 06-Oct-13 30-Sep-11 11,900 0% 0% 30-Sep-12 30-Sep-11 118,800 0% 0% 30-Sep-14 Elizabeth Hunter 31-Aug-08 8,950 0% 100% 31-Aug-11 26-Sep-09 34,900 0% 0% 26-Sep-12 06-Oct-10 61,934 0% 0% 06-Oct-13 30-Sep-11 84,400 0% 0% 30-Sep-14 Bruce James 31-Aug-08 46,600 0% 100% 31-Aug-11 26-Sep-09 181,900 0% 0% 26-Sep-12 06-Oct-10 212,932 0% 0% 06-Oct-13 06-Oct-10 8,942 100% 0% 06-Oct-11 06-Oct-10 8,941 0% 0% 06-Oct-12 30-Sep-11 9,700 0% 0% 30-Sep-12 30-Sep-11 267,500 0% 0% 30-Sep-14 Steve MacDonald 06-Oct-10 71,299 0% 0% 06-Oct-13 30-Sep-11 7,900 0% 0% 30-Sep-12 30-Sep-11 91,700 0% 0% 30-Sep-14 Gareth Mann 06-Oct-10 65,257 0% 0% 06-Oct-13 30-Sep-11 8,600 0% 0% 30-Sep-12 30-Sep-11 92,600 0% 0% 30-Sep-14 Kate Munnings 28-Feb-08 7,200 0% 100% 28-Feb-11 31-Aug-08 11,650 0% 100% 31-Aug-11 26-Sep-09 54,600 0% 0% 26-Sep-12 06-Oct-10 64,283 0% 0% 06-Oct-13 06-Oct-10 3,943 100% 0% 06-Oct-11 06-Oct-10 3,943 0% 0% 06-Oct-12 30-Sep-11 8,200 0% 0% 30-Sep-12 30-Sep-11 93,000 0% 0% 30-Sep-14 Tiernan O’Rourke 06-Oct-10 115,609 0% 0% 06-Oct-13 06-Oct-10 5,237 100% 0% 06-Oct-11 06-Oct-10 5,237 0% 0% 06-Oct-12 30-Sep-11 27,800 0% 0% 30-Sep-12 30-Sep-11 164,700 0% 0% 30-Sep-14 Philip Wratt 06-Oct-10 49,849 0% 0% 06-Oct-13 30-Sep-11 14,200 0% 0% 30-Sep-12 30-Sep-11 60,100 0% 0% 30-Sep-14 Nicholas Yates 28-Feb-08 4,300 0% 100% 28-Feb-11 31-Aug-08 7,000 0% 100% 31-Aug-11 26-Sep-09 27,300 0% 0% 26-Sep-12 06-Oct-10 36,707 0% 0% 06-Oct-13 30-Sep-11 8,500 0% 0% 30-Sep-12 30-Sep-11 143,000 0% 0% 30-Sep-14

1. Represents the number of performance rights granted and outstanding at the start of the year. 2. The % forfeited in the year represents the reduction from the maximum number of performance rights available to vest due to performance criteria not being achieved.

No terms of equity-settled share-based payment transactions (including performance rights granted as compensation to key management personnel) have been altered or modified by the Company during the reporting period or the prior period. The Remuneration Report ends here. The Directors’ Report continues on page 64. 2012 TRANSFIELD SERVICES 63 DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)

INSURANCE OF OFFICERS During the financial year, the Company paid a premium for Directors’ and Officers’ Liability insurance. The policy covers the Directors and Secretary of the Company and its controlled entities, and the general managers of each of the divisions of the consolidated entity. The Directors have not included details of the nature of the liabilities covered and the amount of the premium paid in respect of the Directors’ and Officers’ Liability insurance policy as such disclosure is prohibited under the terms of the contract.

PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to a court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of a court under section 237 of the Corporations Act 2001.

NON-AUDIT SERVICES During the year KPMG, the Company’s auditor, has performed certain other services in addition to their statutory duties. Details of the amounts paid or payable to the auditor for audit and non-audit services (comprising other assurance services) provided during the year are set out in Note 34. The Board of Directors has considered the non-audit services provided during the year by the auditor and, in accordance with the advice received from the Risk, Audit and Compliance Committee is satisfied that the provision of those non-audit services, as set out in Note 34, during the year by the auditor is compatible with, and did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: •• all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Risk, Audit and Compliance Committee to ensure they do not impact the integrity and objectivity of the auditor; and •• the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

ROUNDING OF AMOUNTS The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

This report is made in accordance with a resolution of the Directors.

Anthony Shepherd Dr Peter Goode Chairman Managing Director and Chief Executive Officer at Sydney 29 August 2012

64 TRANSFIELD SERVICES 2012 AUDITOR’S INDEPENDENCE DECLARATION

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Transfield Services Limited I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2012 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

S J Marshall Partner

Sydney 29 August 2012

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

2012 TRANSFIELD SERVICES 65 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED 2012 2011 NOTE $’000 $’000 Continuing operations Revenue from ordinary activities 5 3,143,390 2,760,755 Share of net profits of associates and joint ventures accounted for using the equity method 30,31 55,223 23,990 Subcontractors, raw materials and consumables (1,282,361) (1,165,153) Employee benefits expense (1,503,447) (1,268,100) Depreciation and amortisation 6 (91,750) (64,430) Other expenses (194,006) (195,764) Net finance costs (37,794) (40,448) Finance costs 6 (42,101) (44,463) Finance income 4,307 4,015

Profit before income tax 89,255 50,850 Income tax expense 7(a) (4,231) (6,901)

Profit from continuing operations after income tax 85,024 43,949 Loss from discontinued operation (net of income tax) 41(b) - (63,224)

Profit / (loss) for the year 85,024 (19,275)

Other comprehensive income Cumulative reserve amounts reclassified to the income statement in the year: - Foreign currency translation reserve on sale of USM - 50,301 - Cash flow hedge reserve on reclassification of investment in RAC 11,359 4,968 96,383 35,994 Other comprehensive income items: - Exchange differences on translation of foreign operations (15,837) (60,206) - Changes in fair value of cash flow hedge (4,169) (478) - Share of changes in fair value of cash flow hedge (equity accounted investment) (8,265) 3,806 - Income tax expense on other comprehensive income 1,611 250 Total comprehensive income / (loss) for the year 69,723 (20,634)

Profit / (loss) attributable to: Owners of the Company 84,765 (19,734) Non-controlling interest 259 459 Profit / (loss) for the year 85,024 (19,275)

Total comprehensive income / (loss) attributable to: Owners of the Company 69,464 (21,093) Non-controlling interest 259 459 Total comprehensive income / (loss) for the year 69,723 (20,634)

Earnings per share attributable to ordinary equity holders of the parent Basic and diluted earnings / (loss) per share from continuing operations – cents 33 15.6 8.8 Basic and diluted loss per share from discontinued operations – cents 33 - (12.8) Basic and diluted earnings / (loss) per share – cents 33 15.6 (4.0)

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

66 TRANSFIELD SERVICES 2012 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

CONSOLIDATED 2012 2011 NOTE $’000 $’000 Current assets Cash and cash equivalents 8 78,936 265,717 Trade and other receivables 9 536,823 510,932 Income tax receivable 16,454 6,983 Inventories 10 159,829 82,677 Prepayments and other current assets 11 23,874 23,405 815,916 889,714 Assets classified as held for sale 39 - 92,698 Total current assets 815,916 982,412

Non-current assets Prepayments and other non-current assets 11 40,781 21,564 Investments accounted for using the equity method 12 135,833 187,811 Other financial assets 13 95,500 - Property, plant and equipment 14 467,500 309,424 Deferred tax assets 15 16,105 22,076 Intangible assets 16 814,587 744,457 Total non-current assets 1,570,306 1,285,332

Total assets 2,386,222 2,267,744

Current liabilities Trade and other payables 17 577,963 506,559 Loans and borrowings 18 19,183 65,004 Provision for employee benefits 19 98,572 75,485 Derivatives 20 1,834 85 Other provisions 21 26,817 3,348 Total current liabilities 724,369 650,481

Non-current liabilities Loans and borrowings 18 556,775 450,727 Deferred tax liabilities 22 4,972 6,902 Provision for employee benefits 19 19,305 20,533 Derivatives 20 3,354 942 Other provisions 21 15,804 13,346 Total non-current liabilities 600,210 492,450

Total liabilities 1,324,579 1,142,931 Net assets 1,061,643 1,124,813

Equity Contributed equity 23 1,150,431 1,210,848 Reserves 24(a) (85,369) (73,595) Accumulated losses 24(b) (4,898) (13,610) Total equity attributable to equity holders of the Company 1,060,164 1,123,643 Non-controlling interest 25 1,479 1,170 Total equity 1,061,643 1,124,813

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

2012 TRANSFIELD SERVICES 67 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED 2012 2011 NOTE $’000 $’000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 3,352,926 3,295,526 Payments to suppliers, subcontractors and employees (inclusive of goods and services tax) (3,244,175) (3,206,868) 108,751 88,658 Dividends, distributions and net cash contributions from associates and joint ventures 57,179 51,833 Finance income 4,307 4,015 Finance costs (36,798) (33,998) Income taxes paid (10,737) (28,302) Net cash inflow from operating activities 32 122,702 82,206

Cash flows from investing activities Payments for property, plant and equipment and other intangibles (225,783) (73,142) Proceeds from sale of property, plant and equipment 9,950 6,654 Receipts from loan notes 85,061 - Investment and loans in JVs and associates (27,741) - Proceeds from the sale of businesses, net of transaction costs 3,066 257,140 Payments for acquisition of subsidiaries, net of cash acquired 29 (48,752) (553,059) Net cash outflow from investing activities (204,199) (362,407)

Cash flows from financing activities Proceeds from borrowings (net of financing costs) 630,562 1,554,160 Repayment of borrowings (593,750) (1,412,020) Share buy back (59,478) - Proceeds from shares issued in the period (net of issue costs) - 363,418 Dividends paid (inclusive of payments to non-controlling interest holders) (76,974) (65,125) Net cash (outflow) / inflow from financing activities (99,640) 440,433

Net (decrease) / increase in cash held (181,137) 160,232 Cash at the beginning of the financial year 265,717 112,716 Net foreign exchange differences in opening cash (5,644) (7,231) Cash and cash equivalents at the end of the reporting period 8 78,936 265,717

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

68 TRANSFIELD SERVICES 2012 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012

TOTAL FOREIGN HEDGING HEDGING SHARE ATTRIBUTABLE CURRENCY RESERVE RESERVE BASED TO ORDINARY NON- CONTRIBUTED TRANSLATION (INTEREST (FOREIGN PAYMENTS OTHER RETAINED EQUITY CONTROLLING TOTAL ($’000) EQUITY RESERVE RATES) EXCHANGE) RESERVE RESERVES EARNINGS HOLDERS INTEREST EQUITY Balance at 1 July 2011 1,210,848 (83,569) (4,980) (58) 14,751 261 (13,610) 1,123,643 1,170 1,124,813 Profit / (loss) for the ------84,765 84,765 259 85,024 year Exchange differences on - (15,837) - - - - - (15,837) - (15,837) translation of foreign operations Changes in fair value of - - 701 (165) - - - 536 - 536 cash flows hedges, net of tax Total comprehensive - (15,837) 701 (165) - - 84,765 69,464 259 69,723 income for the period Contributions of equity, ------net of transaction costs and taxes Share buy backs (59,478) ------(59,478) - (59,478) Dividends paid (Note 26) ------(76,053) (76,053) (723) (76,776) Other transactions with ------773 773 non-controlling interest Employee share scheme (939) - - - 3,527 - - 2,588 - 2,588 transactions Total contributions by (60,417) - - - 3,527 - (76,053) (132,943) 50 (132,893) and distributions to owners Balance at 30 June 2012 1,150,431 (99,406) (4,279) (223) 18,278 261 (4,898) 1,060,164 1,479 1,061,643

Balance at 1 July 2010 808,048 (73,664) (13,584) - 10,832 261 70,891 802,784 1,258 804,042 Profit / (loss) for the ------(19,734) (19,734) 459 (19,275) year Exchange differences on - (60,206) - - - - - (60,206) - (60,206) translation of foreign operations Reclassification of - 50,301 4,968 - - - - 55,269 - 55,269 reserves to the income statement Changes in fair value of - - 3,636 (58) - - - 3,578 - 3,578 cash flows hedges, net of tax Total comprehensive - (9,905) 8,604 (58) - - (19,734) (21,093) 459 (20,634) income for the period Contributions of equity, 402,965 ------402,965 - 402,965 net of transaction costs and taxes Dividends paid (Note 26) ------(64,767) (64,767) - (64,767) Other transactions with ------(547) (547) non-controlling interest Employee share scheme (165) - - - 3,919 - - 3,754 - 3,754 transactions Total contributions by 402,800 - - - 3,919 - (64,767) 341,952 (547) 341,405 and distributions to owners Balance at 30 June 2011 1,210,848 (83,569) (4,980) (58) 14,751 261 (13,610) 1,123,643 1,170 1,124,813

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

2012 TRANSFIELD SERVICES 69 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

PAGE NOTES NUMBER Note 1 Summary of significant accounting policies 71 Note 2 Financial, capital and other risk management 79 Note 3 Critical accounting estimates and judgements 85 Note 4 Operating segments 86 Note 5 Revenue 90 Note 6 Expenses 91 Note 7 Income taxes 91 Note 8 Cash and cash equivalents 93 Note 9 Trade and other receivables 94 Note 10 Inventories 94 Note 11 Prepayments and other assets 94 Note 12 Investments accounted for using the equity method 94 Note 13 Other financial assets 95 Note 14 Property, plant and equipment 95 Note 15 Deferred tax assets 96 Note 16 Intangible assets 97 Note 17 Trade and other payables 99 Note 18 Loans and borrowings 99 Note 19 Provision for employee benefits 100 Note 20 Derivatives 100 Note 21 Other provisions 101 Note 22 Deferred tax liabilities 103 Note 23 Contributed equity 104 Note 24 Reserves and retained profits 106 Note 25 Non-controlling interest 107 Note 26 Dividends 108 Note 27 Related party transactions 108 Note 28 Key management personnel 112 Note 29 Business combinations 114 Note 30 Investment in associate 118 Note 31 Interests in joint ventures and partnerships 119 Note 32 Reconciliation of operating profit after income tax to net cash inflow from operating activities 121 Note 33 Earnings / (loss) per share 122 Note 34 Remuneration of auditors 123 Note 35 Events occurring after statement of financial position date 123 Note 36 Contingent liabilities 123 Note 37 Commitments for expenditure 124 Note 38 Share-based payments 125 Note 39 Assets classified as held for sale 128 Note 40 Deed of cross guarantee 128 Note 41 Discontinued operations 130 Note 42 Parent entity financial information 131

70 TRANSFIELD SERVICES 2012 NOTE 1. SUMMARY OF SIGNIFICANT with non-controlling interests as transactions with parties external to the Group. Disposals to non-controlling interests result in gains and losses for ACCOUNTING POLICIES the Group that are recorded in the statement of comprehensive income. Purchases from non-controlling interests may result in goodwill; being the The principal accounting policies adopted in the preparation of this difference between any consideration paid and the relevant share general purpose financial report are set out below. These policies have acquired of the carrying value of identifiable net assets of the subsidiary. been consistently applied to all the periods presented, unless otherwise stated. The financial report includes financial statements for the Investments in subsidiaries are accounted for at cost in the separate consolidated entity consisting of Transfield Services Limited (‘the financial statements of the Company, including the summarised Company’ or ‘the parent entity’). The Company and its controlled statement of financial position. entities together comprise ‘the Group’ or ‘the consolidated entity’, which are all for profit entities. Associates Associates are all entities over which the Group has significant influence Presentation of financial statements but not control or joint control, generally accompanying a shareholding The Group presents all owner related changes in equity in the of between 20 per cent and 50 per cent of the voting rights. consolidated statement of changes in equity and all non-owner related Investments in associates are accounted for in the parent entity’s changes in equity in the consolidated statement of comprehensive summarised statement of financial position using the cost method and income. in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost. (A) BASIS OF PREPARATION OF THE FINANCIAL REPORT The Group’s share of post-acquisition profits or losses from its associates are recognised in the statement of comprehensive income, This general purpose financial report has been prepared in accordance and its share of post-acquisition movements in reserves is recognised in with Australian Accounting Standards, other authoritative reserves. The cumulative post-acquisition movements are adjusted pronouncements of the Australian Accounting Standards Board against the carrying amount of the investment. Dividends and including Interpretations and the Corporations Act 2001. distributions receivable from associates are recognised in the parent entity’s statement of comprehensive income, while in the consolidated Compliance with International Financial Reporting Standards financial statements they reduce the carrying amount of the investment. (‘IFRS’) The financial report complies with IFRS as issued by the International When the Group’s share of losses in an associate equals or exceeds its Accounting Standards Board (‘IASB’). interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred Critical accounting estimates obligations or made payments on behalf of the associate. The preparation of financial statements in conformity with Australian Unrealised gains on transactions between the Group and its associates Accounting Standards requires the use of certain critical accounting are eliminated to the extent of the Group’s interest in the associates. estimates. It also requires management to exercise its judgement in the Unrealised losses are also eliminated unless the transaction provides process of applying the Group’s accounting policies. The areas involving a evidence of an impairment of the asset transferred. Accounting policies higher degree of judgement or complexity, or areas where assumptions and of associates have been changed where necessary to ensure estimates are significant to the financial statements are disclosed in Note 3. consistency with the policies adopted by the Group.

(B) PRINCIPLES OF CONSOLIDATION Joint venture entities and partnerships Subsidiaries The interest in a joint venture entity or partnership is accounted for in the consolidated financial statements using the equity method and is The consolidated financial statements incorporate the assets and carried at cost in the separate financial statements of the Company. liabilities of the Group as at 30 June 2012 and the results of all Under the equity method, the interest in the joint venture or partnership subsidiaries for the year then ended. is initially measured at cost. The subsequent share of the profits or Subsidiaries are those entities (including special purpose entities) over losses of the joint venture entity or partnership is recognised in the which the Group has the power to govern the financial and operating statement of comprehensive income, and the share of movements in policies, generally accompanying a shareholding which provides the reserves is recognised in reserves in the statement of financial position. Group with more than one half of the voting rights. The existence and Profits or losses on transactions establishing the joint venture entity or effect of potential voting rights that are currently exercisable or partnership and transactions with the joint venture entity or partnership convertible are considered when assessing whether the Group controls are eliminated to the extent of the Group’s ownership interest until such another entity. time as they are realised by the joint venture entity or partnership on Subsidiaries are consolidated from the date that the Group acquires consumption or sale, unless they relate to an unrealised loss that provides control. They are de-consolidated from the date that control ceases. The evidence of the impairment of an asset transferred. Profits or losses on Group uses the acquisition method to account for business the sale of a controlling interest to joint venture entities are accounted for combinations (refer Note 1(h)). under the requirements of AASB127 Consolidated and Separate Financial Statements with any resulting gain or loss recognised in full in profit or Intercompany transactions, balances and unrealised gains on loss when the risks and rewards of ownership have been transferred. transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an Joint venture operations impairment of the asset transferred. Accounting policies of subsidiaries Where the Group conducts business through alliance contracts with have been changed where necessary to ensure consistency with the other service providers, the Group’s assets, liabilities, income and policies adopted by the Group. expenses relating to the activity are recognised in the records of the Non-controlling interests in the results and equity of subsidiaries are trading subsidiary company and no further consolidation procedures shown separately in the consolidated statement of comprehensive are performed. income, statement of changes in equity and the statement of financial position respectively. The Group applies a policy of treating transactions

2012 TRANSFIELD SERVICES 71 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1. SUMMARY OF SIGNIFICANT On consolidation, exchange differences arising from the translation of any net investment in foreign entities are taken to shareholder’s equity. ACCOUNTING POLICIES (CONTINUED) When a foreign operation is sold or borrowings repaid, a proportionate share of such exchange differences is recognised in the statement of (C) SEGMENT REPORTING comprehensive income as part of the gain or loss on sale or repayment. The Group determines and presents operating segments based on the Goodwill and fair value adjustments arising on the acquisition of a information that internally is provided to the Managing Director and foreign entity are treated as assets and liabilities of the foreign entity Chief Executive Officer, who is the Group’s chief operating decision and translated at the closing rate at the date of that statement of maker. financial position. An operating segment is a component of the Group that engages in (E) INCOME TAX business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of The income tax expense or benefit for the period is the tax payable or the Group’s other components. All operating segments are regularly refundable on the current period’s taxable income based on the reviewed by the Group’s Managing Director and Chief Executive Officer applicable income tax rate for each jurisdiction adjusted by changes in to make decisions about resources to be allocated to the segment and deferred tax assets and liabilities attributable to temporary differences assess its performance and for which discrete financial information is and to unused tax losses. available. Deferred income tax is provided in full, using the liability method, on Segment results that are reported to the Managing Director and Chief temporary differences arising between the tax bases of assets and Executive Officer include items directly attributable to a segment as liabilities and their carrying amounts in the consolidated financial well as those that can be allocated on a reasonable basis. statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction Refer to Note 4 for further details of reported information relating to other than a business combination that at the time of the transaction operating segments. affects neither accounting nor taxable profit or loss. Deferred income (D) FOREIGN CURRENCY TRANSACTIONS tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply Functional and presentation currency when the related deferred income tax asset is realised or the deferred Items included in the financial statements of each of the Group’s entities income tax liability is settled. are measured using the currency of the primary economic environment Deferred tax assets are recognised for deductible temporary differences in which the entity operates (‘the functional currency’). The and unused tax losses only if it is probable that future taxable amounts consolidated financial statements are presented in Australian dollars, will be available to utilise those temporary differences and losses. which is Transfield Services Limited’s functional and presentation currency. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when Transactions and balances the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally Foreign currency transactions are translated into the functional currency enforceable right to offset and intends either to settle on a net basis, or using the exchange rates prevailing at the approximate dates of the to realise the asset and settle the liability simultaneously. transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end Deferred tax liabilities and assets are not recognised for temporary exchange rates of monetary assets and liabilities denominated in differences between the carrying amount and tax bases of investments foreign currencies are recognised in the statement of comprehensive in controlled entities where the parent entity is able to control the income, except when deferred in equity as qualifying cash flow hedges timing of the reversal of the temporary differences and it is probable and qualifying net investment hedges. that the differences will not reverse in the foreseeable future. Translation differences on non-monetary financial assets and liabilities Current and deferred tax balances attributable to amounts recognised are reported as part of the fair value gain or loss. Translation differences directly in equity are also recognised directly in equity. on non-monetary financial assets and liabilities such as equities held at fair value through comprehensive income are recognised in (F) TAX CONSOLIDATION LEGISLATION comprehensive income as part of the fair value gain or loss. The head entity, Transfield Services Limited, and the controlled entities in the Australian tax consolidated group continue to account for their Group companies own current and deferred tax amounts. These tax amounts are The results and financial position of all the Group entities (none of measured as if each entity in the tax consolidated group continues to which has the currency of a hyperinflationary economy) that have a be a stand-alone taxpayer in its own right. functional currency different from the presentation currency are translated into the presentation currency as follows: In addition to its own current and deferred tax amounts, Transfield Services Limited also recognises the current tax liabilities (or assets) and •• assets and liabilities for each statement of financial position the deferred tax assets arising from unused tax losses and unused tax presented are translated at the closing rate at the date of that credits assumed from controlled entities in the tax consolidated group. statement of financial position; Assets or liabilities arising under tax funding agreements with the •• income and expenses for each statement of comprehensive income tax-consolidated entities are recognised as amounts receivable from or are translated at average exchange rates (unless this is not a payable to other entities in the Group. Details about the tax funding reasonable approximation of the cumulative effect of the rates agreement are disclosed in Note 7(e). prevailing on the transaction dates, in which case income and expenses are translated at the approximate dates of the A similar regime operates in the United States. The Group’s wholly transactions); and owned subsidiaries have adopted the equivalent arrangement in that jurisdiction. •• all resulting exchange differences are recognised as other comprehensive income.

72 TRANSFIELD SERVICES 2012 (G) LEASES (I) IMPAIRMENT OF ASSETS Leases of property, plant and equipment where the Group has Goodwill and intangible assets that have an indefinite useful life are not substantially all the risks and rewards of ownership are classified as subject to amortisation and are tested annually for impairment, or more finance leases. Finance leases are capitalised at the lease’s inception at frequently if events or changes in circumstances indicate that they might the lower of the fair value of the leased property and the present value be impaired. Assets that are subject to amortisation are reviewed for of the minimum lease payments. The corresponding rental obligations, impairment whenever events or changes in circumstances indicate that the net of finance charges, are included in loans and borrowings. carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its Each lease payment is allocated between the liability and finance charges recoverable amount. The recoverable amount is the higher of an asset’s fair so as to achieve a constant rate on the finance balance outstanding. The value less costs to sell and value in use. In assessing value in use, the interest element of the finance cost is charged to the statement of estimated future cash flows are discounted to their present value using a comprehensive income over the lease period so as to produce a constant pre-tax discount rate that reflects current market assessments of the time periodic rate of interest on the remaining balance of the liability for each value of money and the risks specific to the asset. For the purpose of period. The property, plant and equipment acquired under finance leases assessing impairment, assets are grouped at the lowest levels for which are depreciated over the shorter of the asset’s useful life or the lease term there are separately identifiable cash flows (cash generating units). where there is no certainty that ownership of the asset will transfer. For the purposes of goodwill impairment testing, cash generating units Leases in which a significant portion of the risks and rewards of to which goodwill has been allocated are aggregated so that the level at ownership are retained by the lessor are classified as operating leases. which impairment is tested reflects the lowest level at which goodwill is Payments made under operating leases (net of any incentives received monitored for internal reporting purposes. from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Lease income from At each reporting date, the Group reviews non-financial assets other operating leases is recognised in income on a straight-line basis over the than goodwill that have been previously impaired for indications that lease term. the conditions that resulted in the impairment have reversed.

(H) BUSINESS COMBINATIONS Impairment policies in respect of financial assets are set out in Note 1(k) and Note 1(o). Business combinations are accounted for using the acquisition method. For every business combination the Group identifies the acquirer, which (J) REVENUE RECOGNITION is the combining entity that obtains control of the combining entities or The Group recognises revenue when the amount of revenue can be businesses. Control is the power to govern the financial and operating reliably measured, it is probable that future economic benefits will flow policies of an entity so as to obtain benefit from its activities. In to the entity and specific criteria have been met for each of the Group’s assessing control, the Group takes into consideration potential voting activities as described below. The amount of revenue is not considered rights that currently are exercisable. The acquisition date is the date on to be reliably measurable until all material contingencies relating to the which control is transferred to the acquirer. Judgement is applied in sale or service have been resolved. The Group bases its estimates on determining the acquisition date and determining whether control is historical results, taking into consideration the type of customer, the transferred from one party to another. type of transaction and the specifics of each arrangement. Goodwill arising in a business combination is measured at the fair value Amounts disclosed as revenue are net of returns, trade allowances and of the consideration transferred including the recognised amount of any duties and taxes paid. Revenue is recognised for the major business non-controlling interest in the acquiree, less the net recognised amount activities as follows: (generally fair value) of the identifiable assets acquired and liabilities assumed, as measured at the acquisition date. Operations and facilities management maintenance services Consideration transferred includes the fair values of the assets transferred, revenue liabilities incurred by the Group to the previous owners of the acquiree, and Service revenue is recognised when the service is completed in equity interests issued by the Group. Consideration transferred also includes accordance with the terms of the contract, unless the contract is the fair value of any contingent consideration and share-based payment long-term or where service activity within a contract period is awards of the acquiree that are replaced mandatorily in the business expected to vary significantly year on year, in which case revenue is combination. If a business combination results in the termination of recognised in accordance with the percentage of completion method previously existing relationships between the Group and the acquiree, then or when a significant act is executed; the lower of the termination amount as contained in the agreement, and the value of the off-market element, is deducted from the consideration Asset and project management revenue transferred and recognised in other expenses. Asset and project management revenue is recognised when the services When share-based payment awards exchanged (replacement awards) for are rendered and in accordance with individual contracts as appropriate; awards held by the acquiree’s employees (acquiree’s awards) relate to past Construction revenue services, then a part of the market-based measure of the awards replaced is included in the consideration transferred. If they require future services, Construction revenue relates to contracts for the construction of assets then the difference between the amount included in consideration on behalf of third parties. Construction revenue is recognised based on transferred and the market-based measure of the replacement awards is the percentage of completion method when recovery of the treated as a post-combination compensation cost. consideration is probable, there is no continuing ownership interest with the assets and the amount of revenue can be measured reliably; A contingent liability of the acquiree is only assumed in a business combination if such a liability represents a present obligation and arises Drilling and related services revenue from a past event and its fair value can be measured reliably. Drilling and related services revenue is recognised when the service The Group measures any non-monetary interest at its proportionate is completed in accordance with the terms of the drilling contract, interest in the identifiable net assets of the acquiree. unless the contract is long-term or where service activity within a contract period is expected to vary significantly year on year in Transaction costs that the Group incurs in connection with the business which case revenue is recognised in accordance with the percentage combination are expensed as incurred. of completion method or when a significant act is executed;

2012 TRANSFIELD SERVICES 73 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1. SUMMARY OF SIGNIFICANT Where progress billings exceed the aggregate costs incurred plus profits less losses, the resulting work in progress is included in current ACCOUNTING POLICIES (CONTINUED) liabilities. Infrastructure development revenue Contract costs include all costs directly related to specific contracts, costs that are specifically chargeable to the client under the terms of Infrastructure development revenue relates to a range of activities the contract and an allocation of overhead expenses incurred in from sale of infrastructure development equity opportunities to sale connection with the Group’s general maintenance activities. of completed infrastructure assets and also includes revenues from the contracted development of infrastructure assets on behalf of (M) CASH AND CASH EQUIVALENTS third parties. Infrastructure development revenue is recognised when the significant risks and rewards of ownership have been transferred In the consolidated statement of cash flows, cash and cash equivalents to the buyer, recovery of the consideration is probable, there is no includes cash on hand, deposits held at call with banks, other short- continuing equity involvement with the assets and the amount of term, highly liquid investments with original maturities of three months revenue can be measured reliably; and or less and bank overdrafts. Bank overdrafts are shown within short- term borrowings in current liabilities in the consolidated statement of Key performance indicator (KPI) revenue financial position. The Group derives KPI revenue from certain contracts when contract (N) DISCONTINUED OPERATIONS AND NON- performance hurdles are met. These hurdles are typically safety and CURRENT ASSETS HELD FOR SALE performance related. KPI revenue is only recognised when it is probable that the economic benefits associated with the transaction A discontinued operation is a component of the entity that has been will flow to the entity. The Group’s policy is to recognise KPI income disposed of or is classified as held for sale and that represents a on a pro-rata basis to the extent that the Group is capable of separate major line of business or geographical area of operations, is achieving the desired outcomes under the terms of the contract and part of a single co-ordinated plan to dispose of such a line of business the value of the KPI revenue can be reliably estimated. When an or area of operations, or is a subsidiary acquired exclusively with a view uncertainty arises about the collectibility of an amount already to resale. The results of discontinued operations are presented recognised as revenue, the uncollectible amount, or the amount in separately on the face of the statement of comprehensive income. respect of which recovery has ceased to be probable, is recognised Non-current assets that are expected to be recovered primarily through as an adjustment to the amount of revenue originally recognised. sale rather than continuing use, are classified as held for sale. (K) TRADE RECEIVABLES Immediately before classification as held for sale the assets are re-measured in accordance with the Group’s accounting policies. All trade debtors are recognised initially at fair value and subsequently Thereafter the assets are measured at the lower of their carrying value measured at amortised cost, using the effective interest rate method, and fair value less cost to sell. less provision for impairment. (O) INVESTMENTS AND OTHER FINANCIAL ASSETS Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. Classification Recoverability of trade debtors is reviewed on an ongoing basis. Debts The Group classifies its financial assets as loans and receivables and which are known to be uncollectible are written off. A provision for available-for-sale financial assets. The classification depends on the impairment is raised when there is objective evidence that the Group purpose for which the investments were acquired. Management will not be able to collect all amounts due according to the original determines the classification of its investments at initial recognition. terms of the receivables. The amount of the provision is recognised in the statement of comprehensive income within other expenses. Loans and receivables When a trade receivable for which an impairment allowance had been Loans and receivables are non-derivative financial assets with fixed or recognised becomes uncollectible in a subsequent period, it is written determinable payments that are not quoted in an active market. They off against the provision. Subsequent recoveries of amounts previously arise when the Group provides money, goods or services directly to a written off are credited against other expenses in the statement of debtor with no intention of selling the receivable. They are included in comprehensive income. current assets, except for those with maturities greater than 12 months after the statement of financial position date, which are classified as (L) INVENTORIES non-current assets. Loans and receivables are included in receivables in the statement of financial position. Consumables and stores Recognition and derecognition Consumables and stores are stated at the lower of cost (assigned on the first-in-first-out basis) and net realisable value and charged to specific Regular purchases and sales of financial assets are recognised on contracts when used. Net realisable value is the estimated selling price trade‑date being the date on which the Group commits to purchase or in the ordinary course of business less estimated costs of completion sell the asset. Investments are initially recognised at fair value plus and the estimated costs necessary to make the sale. transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss Work in progress are initially recognised at fair value and transaction costs are expensed Work in progress in respect of standard contracts represents unbilled in the statement of comprehensive income. Financial assets are contract expenditure on maintenance projects at the period end and is derecognised when the rights to receive cash flows from the financial stated at the lower of cost and net realisable value. assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Work in progress in respect of long-term maintenance contracts is stated at the aggregate of contract costs incurred to date plus Subsequent measurement recognised profit less recognised losses and less progress billings. Loans and receivables are carried at amortised cost using the effective interest rate method.

74 TRANSFIELD SERVICES 2012 Impairment When a hedging instrument expires or is sold or terminated, or when a The Group assesses at each statement of financial position date, hedge no longer meets the criteria for hedge accounting, any whether there is objective evidence that a financial asset or group of cumulative gain or loss existing in equity at that time remains in equity financial assets is impaired and, if evidence of impairment exists, and is recognised when the forecast transaction is ultimately recognised recognises an impairment loss in the statement of comprehensive in the statement of comprehensive income. When a forecast transaction income. is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of Available-for-sale financial assets comprehensive income. Available-for-sale financial assets, principally comprising equity (Q) FAIR VALUE ESTIMATION securities, are non-derivatives that are either designated in this category or not classified in any other categories. They are included in non- The fair value of financial assets and financial liabilities must be current assets unless management intends to dispose of the investment estimated for recognition and measurement and for disclosure within 12 months of balance date. These financial assets are measured purposes. at fair value with gains and losses recognised in reserves. The fair value of financial instruments that are not traded in an active Where there is no traded market value, the fair value of the financial market (for example, over-the-counter derivatives) is determined using assets is based on the present value of expected net cash inflows. valuation techniques. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of (P) DERIVATIVES forward exchange contracts is determined using forward exchange Derivatives are initially recognised at fair value on the date a derivative market rates at the statement of financial position date. contract is entered into and are subsequently remeasured to their fair The carrying value less impairment provision of trade receivables and value. The method of recognising the resulting gain or loss depends on payables are assumed to approximate their fair values due to their whether the derivative is designated as a hedging instrument, and if so, short-term nature. The fair value of financial liabilities for disclosure the nature of the item being hedged. purposes is estimated by discounting the future contractual cash flows The Group designates certain derivatives as either: at the current market interest rate that is available to the Group for similar financial instruments. •• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges), or Fair values of financial assets and liabilities carried at fair value are analysed by valuation, defined as follows: •• hedges of probable forecast transactions (cash flow hedges). Level 1: quoted prices (unadjusted) in active markets for identical assets The Group documents at the inception of the transaction the or liabilities relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various Level 2: inputs other than quoted process included within Level 1 that hedge transactions. The Group also documents its assessment, both at are observable for the asset or liability either directly (as prices) or hedge inception and on an ongoing basis, of whether the derivatives indirectly (derived from prices) that are used in hedging transactions have been and will continue to be Level 3: inputs for the asset or liability that are not based on observable effective in offsetting changes in fair values or cash flows of hedged market data (unobservable inputs) items. (R) PROPERTY, PLANT AND EQUIPMENT The full fair value of a hedging derivative is classified as a current asset or liability when the remaining maturity of the hedged item is less than Land and buildings are shown at cost, less depreciation for buildings. All 12 months. other property, plant and equipment is stated at cost less accumulated depreciation. Cost includes expenditure that is directly attributable to Gains and losses arising on derivative financial instruments that are not the acquisition of the items. Cost may also include transfers from equity designated as hedges are recognised in the statement of of any gains/losses on qualifying cash flow hedges of foreign currency comprehensive income. purchases of property, plant and equipment as well as finance costs Cash flow hedge capitalised on qualifying assets. The effective portion of changes in the fair value of derivatives that are Subsequent costs are included in the asset’s carrying amount or designated and qualify as cash flow hedges is recognised in equity in recognised as a separate asset, as appropriate, only when it is probable the hedging reserve. The gain or loss relating to the ineffective portion that future economic benefits associated with the item will flow to the is recognised immediately in the statement of comprehensive income Group and the cost of the item can be measured reliably. All repair and within other income or other expense. maintenance expenses are charged to the statement of comprehensive income during the period in which they are incurred. Amounts accumulated in equity are recycled in the statement of comprehensive income in the periods when the hedged item will affect Land is not depreciated. Where the passage of time is the most profit or loss (for instance when the forecast sale that is hedged takes appropriate reflection of the pattern of consumption of the future place). The gain or loss relating to the effective portion of interest rate economic benefits of these assets, depreciation on other assets is swaps hedging variable rate borrowings is recognised in the statement of calculated using the straight-line method to allocate their cost, net of comprehensive income within finance costs. The gain or loss relating to their residual values, over their estimated useful lives. The Group’s the effective portion of forward foreign exchange contracts hedging estimated useful lives are as follows: transactions is recognised in the statement of comprehensive income within revenue. However, when the forecast transaction that is hedged - buildings 25 - 40 years results in the recognition of a non-financial asset (for example, inventory) - leasehold improvements remaining lease term or a non-financial liability, the gains and losses previously deferred in - plant and equipment 3 - 20 years equity are transferred from equity and included in the measurement in the initial cost or carrying amount of the asset or liability.

2012 TRANSFIELD SERVICES 75 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1. SUMMARY OF SIGNIFICANT Goodwill is allocated to cash-generating units (CGU’s) for the purpose of impairment testing. Each of those CGU’s represents the lowest level ACCOUNTING POLICIES (CONTINUED) within the Group at which goodwill is monitored for internal management purposes. Where the expected pattern of consumption of future economic benefits is most accurately reflected by the completion of increased units of Brand names, trademarks and licences production and the total units of production over the asset’s life can be Brand names, trademarks and licences acquired as part of business determined reliably, the cost is allocated based on the proportional combinations have a finite useful life and are carried at cost less completion of the total units of production over the asset’s life. accumulated amortisation and impairment losses. Amortisation is The asset’s residual values and useful lives are reviewed, and adjusted if calculated using the straight-line method over their estimated useful appropriate, at each statement of financial position date. lives of 10-22 years.

An assets’ carrying amount is written down immediately to its Contract intangibles recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount – (refer Note 1(i)). Contract intangibles acquired as part of business combinations have a finite useful life and are carried at cost less accumulated amortisation Gains and losses on disposals are determined by comparing proceeds and impairment losses. Amortisation is calculated using the straight-line with carrying amount. These are included in the consolidated statement method over their estimated useful lives of 3-15 years. of comprehensive income. Customer relationships Capital work in progress Customer relationships acquired as part of business combinations have Expenditure on development activities or other knowledge to a plan or a finite useful life and are carried at cost less accumulated amortisation design of the production of new or substantially improved products or and impairment losses. Amortisation is calculated using the straight-line services before the start of commercial production or use is capitalised method over their estimated useful lives of 6-22 years. if the product or service is technically and commercially feasible and adequate resources are available to complete development. The Supplier/contractor databases expenditure capitalised comprises all directly attributable costs, Supplier/contractor databases acquired as part of business including costs of materials, services, direct labour, finance costs combinations have a finite useful life and are carried at cost less incurred and an appropriate proportion of overheads. Such assets are accumulated amortisation and impairment losses. Amortisation is included in capital work in progress until completed at which time they calculated using the straight-line method over their estimated useful are transferred into plant and equipment and depreciated in accordance lives of 15-22 years. with the policies set out above. Vendor network Capital work in progress includes only those costs directly attributable to the development phase and are only recognised following completion of Vendor networks acquired as part of business combinations have a technical feasibility and where the Group has an intention and ability to finite useful life and are carried at cost less accumulated amortisation use the asset. Other development expenditure is recognised in the and impairment losses. Amortisation is calculated using the straight-line statement of comprehensive income as an expense as incurred. method over their estimated useful lives of 15-22 years.

Computer software Acquired technology and software Costs incurred in developing products or systems and costs incurred in Technology and developed software acquired in business combinations acquiring software and licenses that will contribute to future period have a finite useful life and are carried at cost less accumulated financial benefits through revenue generation and/or cost reduction are amortisation and impairment losses. Amortisation is calculated using capitalised to software and systems. Costs capitalised include external the straight-line method over their estimated useful lives of 5-10 years. direct costs of materials and service, direct payroll and payroll related costs of employees’ time spent on the project. Amortisation is (U) PRE-CONTRACT COSTS calculated on a straight line basis over periods generally ranging from 3 Pre-contract costs are costs incurred in relation to securing a contract. years for application software to 10 years for licences and other items. These costs include costs incurred prior to and during the contract bidding process as well as costs incurred upon set-up and mobilisation (S) LEASEHOLD IMPROVEMENTS of a contract upon award. Pre-contract costs are capitalised in other The cost of improvements to or on leasehold properties is amortised assets in the statement of financial position when there is a reasonable over the unexpired period of the lease, or the estimated useful life of expectation that the cost will be recovered. These costs are recognised the improvements to the consolidated entity. over the life of the contract. Where a contract award is subsequently unsuccessful, the previously capitalised costs are immediately expensed (T) INTANGIBLE ASSETS in the statement of comprehensive income in other expenses. Goodwill (V) TRADE AND OTHER PAYABLES Goodwill represents the excess of the cost of an acquisition over the fair Trade and other payables represent liabilities for unpaid goods and value of the Group’s share of the net identifiable assets of the acquired services provided to the Group prior to the end of the financial period. subsidiary at the date of acquisition. Goodwill on acquisition of The amounts are unsecured and are usually paid within 30-60 days of subsidiaries is included in intangible assets. Goodwill acquired in business recognition. combinations is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or changes in circumstances (W) SHORT-TERM AND LONG-TERM LOANS AND indicate that it might be impaired, and is carried at cost less accumulated BORROWINGS impairment losses. An impairment loss is recognised for the amount by Loans and borrowings are initially recognised at fair value, net of which the asset’s carrying value exceeds its recoverable amount. The transaction costs incurred. Loans and borrowings are subsequently recoverable amount is the higher of an asset’s fair value less costs to sell measured at amortised cost. Any difference between the proceeds (net and value in use. Gains and losses on the disposal of an entity include the of transaction costs) and the redemption amount is recognised in the carrying amount of goodwill relating to the entity sold. statement of comprehensive income over the period of the borrowings using the effective interest rate method. Fees paid on the establishment 76 TRANSFIELD SERVICES 2012 of loan facilities, which are not an incremental cost relating to the actual Equity-based compensation benefits draw-down of the facility, are recognised as capitalised costs and Equity-based compensation benefits are provided to employees amortised on a straight line basis over the term of the facility. through the TranShare Executive Performance Awards Plan, the Loans and borrowings are removed from the statement of financial Transfield Services Executive Options Scheme and the Deferred position when the obligation specified in the contract is discharged, Retention Incentive Scheme. cancelled or expired. The difference between the carrying amount of a (i) Performance Awards granted after 7 November 2002 and financial liability that has been extinguished or transferred to another vested after 1 January 2005 party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or other The fair value of Performance Awards granted under the expenses. Transfield Services Executive Options Scheme or the TranShare Executive Performance Awards Plan are recognised as an Loans and borrowings are classified as current liabilities unless the employee benefit expense with a corresponding increase in Group has an unconditional right to defer settlement of the liability for equity. The fair value is measured at grant date and recognised at least 12 months after the statement of financial position date. over the period during which the employees become unconditionally entitled to the Performance Awards. (X) EMPLOYEE BENEFITS (ii) Shares under the Deferred Retention Incentive Scheme Annual leave, sick leave and Directors’ retirement benefits Shares acquired under the Deferred Retention Incentive Liabilities for annual leave, accumulating sick leave expected to be Scheme are held by the TranShare PlanTrust and included in settled within 12 months and, in accordance with the Group’s treasury shares as a reduction in equity until they are allocated remuneration policy, Directors’ retirement benefits (including non- to individual employees. The expense is recognised and the monetary benefits) are recognised in provision for employee benefits in liability is accrued over the vesting period. respect of employees’ or Directors’ services up to the reporting date and are measured at the amounts expected to be paid when the The fair value at grant date of Performance Awards is independently liabilities are settled. Liabilities for non-accumulating sick leave are determined using a binomial and Monte Carlo model that takes into recognised when the leave is taken and measured at the rates paid or account the exercise price, the term of Performance Award, the vesting payable. and performance criteria, the impact of dilution, the non-tradable nature of the Performance Award, the share price at grant date and Long service leave expected price volatility of the underlying share, the expected dividend The liability for long service leave is recognised in the provision for yield and the risk-free interest rate for the term of the Performance employee benefits and measured at the present value of the expected Award. future payments to be made in respect of services provided by The fair value of the Performance Awards granted excludes the impact of employees up to the reporting date. Consideration is given to expected any non-market vesting conditions (for example, profitability and sales future wage and salary levels, experience of employee departures and growth targets). Non-market vesting conditions are included in periods of service. Expected future payments are discounted using assumptions about the number of Performance Awards that are expected market yields at the reporting date of national government bonds with to become exercisable. At each statement of financial position date, the terms to maturity and currency that match, as closely as possible, the entity revises its estimate of the number of Performance Awards that are estimated future cash outflows. expected to become exercisable. The employee benefit expense Short-term incentive plans recognised each period takes into account the most recent estimate. Short-term employee benefit obligations are measured on an Upon the exercise of Performance Awards, the balance of the share- undiscounted basis and are expensed as the related service is provided. based payments reserve relating to those Performance Awards is A liability is recognised for the amount expected to be paid under transferred to share capital. short-term cash bonus if the Group has a present legal or constructive The difference between the market value of shares issued to employees obligation to pay this amount as a result of past service provided by the and the employee’s consideration under the employee share scheme is employee, and the obligation can be estimated reliably. recognised as an employee benefit expense with a corresponding increase in equity when the employee becomes entitled to the shares. Superannuation Contributions to defined contribution superannuation funds are charged (Y) PROVISIONS as an expense as the contributions are paid or become payable. Provisions for legal claims, lease ‘make-good’ and service warranties are Employee benefit on-costs recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of Employee benefit on-costs, including payroll tax, are recognised and resources will be required to settle the obligation, and the amount has included in provision for employee benefits and are measured at been reliably estimated. Provisions are not recognised for future amounts expected to be paid when the liabilities are settled, discounted operating losses. to net present value. Where there are a number of similar obligations, the likelihood that an Termination benefits outflow will be required on settlement is determined by considering the Liabilities for termination benefits, not in connection with the class of obligations as a whole. A provision is recognised even if the acquisition of any entity or operation, are recognised when a detailed likelihood of an outflow with respect to any one item included in the plan for the termination has been developed and a valid expectation same class of obligations may be small. has been raised with those employees affected that terminations will be Provisions are measured at the present value of management’s best carried out. The liabilities for termination benefits are recognised in estimate of the expenditure required to settle the present obligation at the other payables unless the amount or timing of the payments is statement of financial position date. The discount rate used to determine uncertain, in which case they are recognised as provisions. the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

2012 TRANSFIELD SERVICES 77 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1. SUMMARY OF SIGNIFICANT (AD) DIVIDENDS ACCOUNTING POLICIES (CONTINUED) Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, (Z) ONEROUS CONTRACTS on or before the end of the year but not distributed at statement of financial position date. A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are less than the unavoidable (AE) EARNINGS / (LOSS) PER SHARE costs of meeting the obligations under that contract, and only after any impairment losses to assets dedicated to that contract have been Basic earnings / (loss) per share recognised. Basic earnings / (loss) per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs The provision recognised is based on the excess of the estimated cash of servicing equity other than ordinary shares, by the weighted average flows to meet the unavoidable costs under the contract over the number of ordinary shares outstanding during the year, adjusted for estimated cash flows to be received in relation to the contract, having bonus elements in ordinary shares issued during the year. regard to the risks of the activities relating to the contract. The net estimated cash flows are discounted at the statement of financial Diluted earnings / (loss) per share position date using market yields of national government guaranteed bonds with terms to maturity and currency that match, as closely as Diluted earnings / (loss) per share adjusts the figures used in the possible, the expected future payment, where the effect of discounting determination of basic earnings / (loss) per share to take into account is material. the post income tax effect of interest and financing costs associated with dilutive potential ordinary shares and the weighted average (AA) FINANCE COSTS number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Finance costs are recognised as an expense in the period in which they are incurred (except where they are incurred in the cost of qualifying (AF) FINANCIAL INSTRUMENT TRANSACTION assets – refer Note 1(r)) and include: COSTS •• interest on bank overdraft and short-term and long-term Transaction costs that are directly attributable to the acquisition or issue borrowings; of a financial asset or liability are included in the value of the financial asset or liability on initial recognition. •• amortisation of discounts or premium relating to borrowings; •• amortisation of ancillary costs incurred in connection with the (AG) GOODS AND SERVICES TAX (GST) arrangement of borrowings; and Revenues, expenses and assets are recognised net of the amount of •• finance lease charges. associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of Finance costs incurred for the construction of qualifying assets are acquisition of the asset or as part of the expense. capitalised during the period of time that is required to complete and prepare the asset for its intended use. The capitalisation rate used to Receivables and payables are stated inclusive of the amount of GST determine the amount of finance costs to be capitalised is the weighted receivable or payable. The net amount of GST recoverable from, or average interest rate applicable to the Group’s outstanding borrowings payable to, the taxation authority on the date of the statement of during the year. financial position is included with other receivables or payables in the statement of financial position. (AB) GOVERNMENT GRANTS Cash flows are presented on a gross basis. The GST components of cash Government grants are recognised initially as deferred income when flows arising from investing or financing activities, which are there is reasonable assurance that they will be received and that the recoverable from, or payable to the taxation authority, are presented as Group will comply with the conditions attached. Grants that operating cash flow. compensate the Group for expenses are recognised in the statement of comprehensive income as other income in the same period as the (AH) ROUNDING OF AMOUNTS expense that they compensate is recognised. Grants that compensate The Company is of a kind referred to in Class order 98/0100 issued by the Group for the cost of an asset are recognised in the statement of the Australian Securities and Investments Commission relating to the comprehensive income on a systematic basis over the useful life of the ‘rounding off’ of amounts in the financial report. Amounts in the asset. financial report have been rounded in accordance with that Class Order to the nearest thousand dollars or, in certain cases, the nearest dollar. (AC) CONTRIBUTED EQUITY Ordinary shares (AI) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS Ordinary shares are classified as equity. Certain new accounting standards and interpretations have been Incremental costs directly attributable to the issue of new shares, published that are not mandatory for the 30 June 2012 reporting Options or Performance Awards are shown in equity as a deduction, net period. The Group’s assessment of the impact of these new standards of tax, from the proceeds. and interpretations is set out below. Treasury shares AASB 9 Financial Instruments, AASB 2010-7 Amendments to Australian Any amounts of unvested shares held by the TranShare Plan Trust are Accounting Standards arising from AASB 9 and AASB 2009-11 controlled by the Group until they vest and are recorded as a reduction Amendments to Australian Accounting Standards arising from AASB 9 in equity. (amendments effective from December 2009 and December 2010)

78 TRANSFIELD SERVICES 2012 The amendments add requirements for the classification and NOTE 2. FINANCIAL, CAPITAL AND measurement of financial liabilities that are generally consistent with the requirements of AASB 139 as well as requirements in relation to the OTHER RISK MANAGEMENT derecognition of financial assets and liabilities consistent with AASB The Board of Directors is responsible for the establishment and 139. The changes to AASB 9 also simplify the measurement model and supervision of the Group’s financial and capital risk management structure. establish two primary measurement categories for financial assets, This includes approving the level of risk which the Group is prepared to amortised cost and fair value. These changes are not expected to have a accept in conducting its business and approving all material policies for material impact on the Group. the management of business risks and overseeing the management of AASB 10 Consolidated Financial Statements (effective 1 January 2013) these risks. The ultimate objective of financial and capital risk management within the Group is to contribute to the creation of AASB 10 provides new criteria for determining when an investee entity shareholder value. In order to achieve this objective, the Group applies the needs to be consolidated. Control is determined based on whether the following principles in managing its capital resources, position and risks. investor is exposed to variable returns from the investee and has the ability to affect those returns through exercising its power. The Group FINANCIAL RISK MANAGEMENT has numerous joint venture arrangements from which it derives variable returns. These will be considered in due course however no material The Group’s activities expose it to a variety of financial risks, including changes are expected as a result of application of the revised AASB 10. foreign currency risk, credit risk, liquidity risk, interest rate risk and country risk. The Group’s overall risk management program focuses on AASB 11 Joint Arrangements (effective 1 January 2013) the volatility of financial markets and seeks to minimise potential Under IFRS 11 a joint arrangement is accounted for under the equity adverse effects of market volatility on the financial performance of the accounting method unless the parties have rights to and obligations for Group. From time to time the Group uses derivative financial the underlying assets and liabilities in which case the arrangement is instruments such as foreign exchange contracts and interest rate swaps considered a joint operation and partial consolidation is applied. It is to hedge certain risk exposures. current Group policy to apply equity accounting to its joint ventures and Financial risk is managed by a central treasury department (Group while an extensive review will take place as part of the transition to the Treasury) under policies approved by the Board of Directors. Group new standard, the impact on the Group’s financial statements has not Treasury identifies, evaluates and hedges financial risks in close yet been determined. co-operation with the Group’s operating units. Group Treasury provides AASB 128 Investment in Associates and Joint Ventures (2011) (Effective 1 written principles for overall risk management, endorsed by the Board, January 2013) covering areas such as mitigating foreign currency, interest rate and credit risks, use of derivative financial instruments and investing excess liquidity. Limited amendments have been made to AASB 128 including the application of IFRS 5 Non-current assets held for sale and discontinued It is the Group’s policy that no speculative trading in financial operations to interests in associates and joint ventures and how to instruments shall be undertaken. account for changes in interests in joint ventures and associates. Whilst the Group has material investments in associates and joint ventures, (A) FOREIGN CURRENCY RISK changing the interests in these is infrequent and no material changes to Foreign currency risk arises when future commercial transactions and the Group’s financial statements as a result of these changes are recognised assets and liabilities are denominated in a currency that is anticipated. not the local entity’s functional currency. AASB 12 Disclosure of Interest in Other Entities (Effective 1 January The Group operates in global markets and hence a proportion of the 2013) Group’s revenues, expenditures and cash flows are generated, and AASB 12 contains disclosure requirements for entities that hold interest assets and liabilities are located in foreign markets and currencies. in subsidiaries, joint arrangements, associate and/or unconsolidated Therefore the Group is exposed to foreign currency risk. structured entities. The Group does not expect a material change in the Forward foreign exchange rate contracts, transacted by Group Treasury, level of disclosure of joint venture interests as a result of this standard. are used to manage the Group’s foreign currency risk. In addition, where AASB 13 Fair value measurement (Effective 1 January 2013) economically viable, the Group attempts to match revenues and expenditures, as well as assets and liabilities in each foreign currency to AASB 13 explains how to measure fair value when required to by other reduce foreign currency risk. accounting standards. It does not introduce new fair value measurements or eliminate the practicability exceptions to fair value Translation risk that currently exist in certain standards. No material changes to the The financial statements of each of the Group’s foreign subsidiaries are Group’s financial statements are anticipated as a result of this standard. prepared in local currency. For the purposes of preparing the Group’s AASB 2001-9 Amendments to Australian Accounting consolidated financial information, each foreign subsidiary’s financial Standards – Presentation of items of Other Comprehensive Income statements are translated into Australian dollars using the applicable (Effective 1 July 2013) foreign exchange rates as at and for the period ended on the statement of financial position date. A translation risk therefore exists on This amendment changes the presentation of other comprehensive translating the financial results and position of the foreign subsidiaries income. No material disclosure changes are expected as a result of this into Australian dollars for the purposes of presenting consolidated amendment. Group financial information. Volatility in foreign exchange rates can therefore impact the Group’s net profit, net assets and the foreign (AJ) PRESENTATION OF COMPARATIVE currency translation reserve. INFORMATION The Group’s investments in its United States and New Zealand Where applicable, comparative information has been restated or domiciled subsidiaries are hedged by United States dollar and New repositioned to align with current year presentation. Zealand dollar bank loans, which mitigate the translation risk arising from the subsidiaries net assets. The Group’s investments in other subsidiaries are not hedged.

2012 TRANSFIELD SERVICES 79 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 2. FINANCIAL, CAPITAL AND OTHER RISK MANAGEMENT (CONTINUED)

The Group’s exposure to foreign currency risk in respect of cash at bank or on deposit at 30 June was limited to:

2012 2011 $’000 $’000

United States dollars 1,779 1,818 Chinese yen - 4 United Arab Emirates dirham 1,375 1,558 Canadian dollars 339 29 New Zealand dollars 121 119 3,614 3,528

The Group’s exposure to foreign currency risk in respect of trade and other receivables at 30 June was:

United States dollars 101 1,307

The Group’s exposure to foreign currency risk in respect of trade and other payables at 30 June was:

United States dollars 429 - Canadian dollars 115 - 544 -

The Group’s exposure to foreign currency risk in respect of loans and borrowings at 30 June 2012 was $Nil (2011: $Nil).

(B) CREDIT RISK Credit risk arises from cash and deposits, derivative financial instruments and committed debt funding and bonding facilities with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. Counterparties to cash and deposits, derivative financial instruments and committed debt funding and bonding facilities are limited to high credit quality financial institutions, predominantly banks with a minimum independent rating of ‘A’. The Group limits the amount of credit exposure to any one financial institution through its use of a consortium of banks. The Group’s maximum exposure to credit risk in respect of financial assets at 30 June was:

2012 2011 $’000 $’000

Cash and cash equivalents 78,936 265,717 Trade and other receivables (current before provision for impairment of receivables) 544,505 515,266 Income tax receivable 16,454 6,983 639,895 787,966

80 TRANSFIELD SERVICES 2012 The Group aims to develop long-term relationships with its customers and has no significant concentrations of credit risk within the wholly owned group. Most significant customers are government bodies, multinational corporations and large domestic businesses with established credit histories and thus are perceived as low credit risk. The Group conducts checks for credit worthiness on new customers using independent agencies and industry references. The Group also operates through a significant number of joint ventures globally, most of which have either a single or a dominant customer. The credit management policies of the Group and the respective joint venture partners are applied to those customers. The majority of the Group’s receivables are in the form of contracted agreements with customers. In general, the terms and conditions of these contracts require settlement of invoices between 14 and 60 days from invoice date. On occasion, the terms and conditions may differ as a result of the varied nature and timing of certain operations and maintenance services. Impairment losses are mainly attributed to dispute resolutions as opposed to default of payments. The Group’s maximum exposure to credit risk for trade and other receivables by geographic region at 30 June was:

2012 2011 $’000 $’000

Australia and New Zealand 428,983 416,079 Americas 97,354 80,625 Middle East and Asia 18,168 18,562 544,505 515,266

The Group’s maximum exposure to credit risk for trade and other receivables by type of counterparty at 30 June was:

2012 2011 $’000 $’000 Trade debtors 507,854 499,821 Other debtors 36,651 15,445 544,505 515,266

The ageing of the Group’s trade and other receivables was:

2012 2011

TOTAL TOTAL (BEFORE PAST DUE (BEFORE IMPAIRED / PAST DUE BUT PROVISION FOR IMPAIRED / BUT NOT PROVISION FOR NOT DUE PROVIDED NOT IMPAIRED IMPAIRMENT) NOT DUE PROVIDED IMPAIRED IMPAIRMENT) $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Not due 449,786 - - 449,786 399,648 - - 399,648 1-30 days overdue - 779 32,755 33,534 - 102 39,082 39,184 31-60 days overdue - - 18,990 18,990 - 288 13,140 13,428 61-90 days overdue - 1,443 12,659 14,102 - 1,331 5,344 6,675 91-120 days overdue - 1,314 5,694 7,008 - 580 3,988 4,568 > 121 days overdue - 4,146 16,939 21,085 - 2,033 49,730 51,763 Total trade and other 449,786 7,682 87,037 544,505 399,648 4,334 111,284 515,266 receivables

Trade receivables have been aged according to their original due date in the above ageing analysis, including where certain long outstanding trade receivables have been renegotiated as a result of the extended nature of certain Group service provisions. No collateral has been obtained for any amounts that have been identified as overdue or impaired.

2012 TRANSFIELD SERVICES 81 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 2. FINANCIAL, CAPITAL AND OTHER RISK MANAGEMENT (CONTINUED)

(C) LIQUIDITY RISK Liquidity risk is the risk of not being able to meet current or future financial obligations as and when they become due and payable. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed debt facilities. Group Treasury aims to maintain funding flexibility by keeping committed debt facilities and credit lines available for the business. At the statement of financial position date the Group had sufficient headroom from its debt facilities to meet its financial obligations.

Liquidity risk, maturities, weighted average interest rate, contractual cash flows and fair values

TOTAL INTEREST 1 YEAR 1 YEAR TO 5 MORE THAN CONTRACTUAL FAIR VALUE RATE OR LESS YEARS 5 YEARS CASH FLOW1 (LEVEL 2) % $’000 $’000 $’000 $’000 $’000

Consolidated 2012 Trade and other payables - 577,963 - - 577,963 577,963 Derivatives – interest rate swap - 9,416 18,900 - 28,316 4,833 Derivatives – forward exchange contracts - 355 - - 355 355 587,734 18,900 - 606,634 583,151

Loans and borrowings Cash advances2 1,904 357,802 - 359,706 359,706 Mandatory Convertible Note 8.38 4,244 - - 4,244 4,244 United States Private Placement 5.99 9,942 48,881 178,319 237,142 166,051 Finance lease liabilities 6.78 17,179 23,140 15,432 55,751 45,957 Total loans and borrowings 33,269 429,823 193,751 656,843 575,958

Total financial liabilities 621,003 448,723 193,751 1,263,477 1,159,109

Consolidated 2011 Trade and other payables - 506,559 - - 506,559 506,559 Derivatives – interest rate swap - 11,003 8,188 - 19,191 942 Derivatives – forward exchange contracts - 85 - - 85 85 517,647 8,188 - 525,835 507,586

Loans and borrowings Cash advances - 323,374 - 323,374 323,374 Mandatory Convertible Note 8.38 7,706 4,190 - 11,896 12,692 United States Private Placement 5.99 61,709 46,720 118,872 227,301 188,406 Finance lease liabilities 8.12 6,548 16,430 2,789 25,767 21,241 Total loans and borrowings 75,963 390,714 121,661 588,338 545,713

Total financial liabilities 593,610 398,902 121,661 1,114,173 1,053,299

1 Total contractual cash flows are undiscounted and include contractual interest payments. Carrying values in the statement of financial position exclude interest obligations. 2 Where interest rates are variable and /or there are no fixed repayments, contractual cash flows and fair values are the same as the carrying value.

82 TRANSFIELD SERVICES 2012 (D) INTEREST RATE RISK The Group’s interest-rate risk primarily arises from its floating interest rate debt obligations. The Group manages its long-term cash flow interest-rate risk by using floating-to-fixed interest rate swaps. For interest rate swaps, the Group agrees with banks or financial institutions to convert borrowings from floating rates to fixed rates at specified intervals (quarterly or semi-annually) calculated by reference to agreed notional principal amounts. The Group evaluates a variety of factors before entering into interest rate swaps that include (but are not limited to) market conditions and forecast borrowing requirements. To the extent possible, the Group attempts to hedge its interest rate risks with effective cash flow hedges. The effect of this is that the change in fair value relating to effective interest rate swaps is recognised in equity through the hedge reserve, whilst the change in fair value relating to ineffective interest rate swaps is recognised in the statement of comprehensive income. As at 30 June 2012 the Group had a combination of United States Dollar, Chilean Pesos and Australian Dollar interest rate swaps in place (refer Note 20).

CAPITAL RISK MANAGEMENT The Group’s objective when managing capital is to safeguard its ability to continue as a going concern so that it can continue to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce its cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt. Capital is managed in order to maintain a strong financial position and ensure that the Group’s funding needs can be optimised at all times in a cost-efficient means to support the goal of maximising shareholder wealth. To date, the Group has chosen not to acquire a credit rating from an internationally accredited agency as there is no immediate benefit from doing so. In order to ensure good credit quality and an appropriate capital structure, the Group monitors and estimates its financial position with measurements such as debt and equity ratios and gearing.

CONSOLIDATED

2012 2011 NOTE $’000 $’000

Total borrowings 18 575,958 515,731 Less: cash and cash equivalents 8 (78,936) (265,717) Net debt 497,022 250,014 Less: unamortised debt costs (9,786) (14,126) 487,236 235,888 Total equity 1,061,643 1,124,813 Total capital 1,548,879 1,360,701

(E) COUNTRY RISK The Group is exposed to country risk by the very nature of running a global business. Country risk is the risk that political, legal, security or economic developments in a single country could adversely impact performance. The country risk exposure is defined as the sum of the equity of all subsidiaries, associates and joint ventures in cross-jurisdictional transactions such as loans, guarantees and trading accounts. Country risk is continually monitored by the Risk Group under the Chief Risk and Legal Officer / Company Secretary.

SENSITIVITY ANALYSIS The sensitivity analysis has been prepared on the assumption that the Group’s significant risk exposures are limited to foreign currency risk on the external debt arrangements attached to overseas acquisitions as well as the impact of interest rate movements.

Foreign exchange sensitivity At 30 June 2012 the Group had no borrowings drawn in a currency that is not the functional currency of the borrower with the exception of Inversiones Transfield Services (Chile) Holdings Limitada which had borrowings in AUD but has been swapped into the functional currency.

2012 TRANSFIELD SERVICES 83 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 2. FINANCIAL, CAPITAL AND OTHER RISK MANAGEMENT (CONTINUED)

Interest rate sensitivity The table below shows the Group’s sensitivity to interest rates on its floating rate Australian dollar, United States dollar and New Zealand dollar borrowings, being the currencies from which the Group has historically issued debt and held investments. The Group has considered volatility in interest rates during the 2012 financial year and the historic low interest rates prevailing in the United States at 30 June 2012 and considers a one per cent upward and downward movement to be a reasonable benchmark for interest rate sensitivity over the next 12 months.

2012 CONSOLIDATED

NET PROFIT (AFTER TAX) EQUITY BASIS POINTS $’000 $’000

Bank borrowings +100 (907) (907) Bank borrowings -100 907 907

2011 CONSOLIDATED

NET PROFIT (AFTER TAX) EQUITY BASIS POINTS $’000 $’000

Bank borrowings +100 (1,949) (1,949) Bank borrowings -100 1,949 1,949

A change in interest rates will impact the carrying value of the Group’s interest rate swaps. The table below shows the impact to the Group’s net profit and equity given assumed changes in interest rates.

2012 CONSOLIDATED

NET PROFIT (AFTER TAX) EQUITY BASIS POINTS $’000 $’000

Interest rate hedges +100 - 5,454 Interest rate hedges -100 - (4,825)

2011 CONSOLIDATED

NET PROFIT (AFTER TAX) EQUITY BASIS POINTS $’000 $’000

Interest rate hedges +100 - 2,062 Interest rate hedges -100 - (4,822)

An applicable tax rate of 30 per cent (2011: 38 per cent) has been adopted which approximates the weighted average effective marginal tax.

84 TRANSFIELD SERVICES 2012 NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the consolidated entity and that are believed to be reasonable under the circumstances.

(A) CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Estimated impairment of goodwill, other intangible assets and equity accounted investments The recoverable amounts of cash-generating units and equity accounted investments have been determined based on the higher of fair value less costs to sell and value-in-use. These calculations require the use of assumptions relating to future cashflows, discount rates and growth rates. Refer to Note 16 for details of these assumptions in relation to goodwill.

Income taxes The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the consolidated entity’s provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain and on which professional judgement, based on relevant tax law, is exercised. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Rehabilitation and ‘make-good’ costs The Group recognises provisions for estimated resources required to rehabilitate and ‘make-good’ leasehold properties, in which it operates under contracts with third parties. The timeframe may vary between 2-30 years and the terminal liability requires management estimates of future costs based on current and future considerations, including environmental considerations. The Group records these provisions using discounted cash flows and reassesses them annually. Refer to Note 21 for further details of these provisions.

Fair value of financial instruments - RATCH Australia Corporation Limited (‘RAC’) valuation Although the Group owns 20 per cent of the legal ownership interest in RAC, less than 20 per cent of the voting rights are available to the Group for use in RAC decisions. As such, in 2012, the Group reclassified its 20 per cent ownership interest in RAC from an investment in associate to an available- for-sale financial asset, and the investment was recorded at its fair value. The initial fair value measurement has been determined in conjunction with an independent expert using the discounted cash flow method, which estimates the value of the investment by discounting expected future cash flows to their present value. A net fair value gain resulted as detailed in Note 5.

Workers’ compensation provisions The Group is self-insured for workers’ compensation in certain states in Australia and manages the risks associated with this through the use of actuarial techniques and engaging external experts, however these estimates by their nature are complex and are revised annually. These estimates require the use of assumptions relating to future cash flows, discount rates and other economic factors.

(B) CRITICAL JUDGEMENTS IN APPLYING THE ENTITY’S ACCOUNTING POLICES Revenue recognition The Group engages in performance-related contracts with its customers. Under the terms of these contracts the Group is entitled to receive Key Performance Indicator (KPI) income. The Group applies judgement around expectations of meeting the hurdles of each KPI.

Pre-contract costs The Group capitalises pre-contract costs when there is a reasonable expectation that the cost will be recovered. The reasonableness of success is made with reference to factors which include judgement, such as preferred bidder status, number of remaining bidders and quality of existing customer relationships.

2012 TRANSFIELD SERVICES 85 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 4. OPERATING SEGMENTS

(A) ACCOUNTING POLICIES AND IDENTIFICATION OF SEGMENTS Segment information is prepared in conformity with the accounting policies of the Group as disclosed in Note 1 to the consolidated financial statements and the accounting standard, AASB 8 Operating Segments. The Group is managed primarily on a geographic regional basis. The six primary segments are: •• Australia and New Zealand (‘ANZ’); •• Easternwell; •• Americas; •• Middle East and Asia (‘MEA’); •• Unallocated corporate costs and inter-segment eliminations; and •• An investment in RAC. Each geographical region derives revenue from its principal activities in the following segments: •• Resources & energy (formerly resources & industrials) •• Infrastructure services; and •• Property & facilities management. Information regarding the results of each reportable segment is included on the following page. The primary measure of performance (Segment result) is segment earnings before interest, tax, depreciation and amortisation (as adjusted for significant items in 2011) (‘Reported EBITDA’) as included in the internal management reports that are reviewed by the Group’s Managing Director and Chief Executive Officer on a monthly basis. Proportionately consolidated revenue, proportionately consolidated EBITDA and Earnings Before Interest and Tax (‘EBIT’) (all of which include adjustments for significant items in 2011) are other additional segment measures which are also included in the internal management reports and regularly reviewed by the Group’s Managing Director and Chief Executive Officer.

86 TRANSFIELD SERVICES 2012 (A) OPERATING SEGMENT RESULTS

UNALLOCATED 2012 AND $’000 ANZ EASTERNWELL AMERICAS MEA ELIMINATIONS RAC GROUP Proportionately Consolidated 2,744,824 267,015 748,546 100,861 (2,366) - 3,858,880 Revenue Less: Share of joint venture revenue (330,905) (23,683) (313,792) (47,110) - - (715,490) Statutory Revenue 2,413,919 243,332 434,754 53,751 (2,366) - 3,143,390

Proportionately Consolidated EBITDA 117,019 77,070 33,010 6,897 (8,096) 9,984 235,884 Less: share of joint ventures EBITDA (22,915) (7,680) (22,159) (8,570) - - (61,324) EBITDA from operations excluding 94,104 69,390 10,851 (1,673) (8,096) 9,984 174,560 joint ventures Add: share of net profits of joint 20,439 3,702 14,121 5,977 - - 44,239 ventures Reported EBITDA 114,543 73,092 24,972 4,304 (8,096) 9,984 218,799 Depreciation (29,641) (16,645) (8,925) (559) (14,706) - (70,476) Amortisation of acquired intangibles (4,813) (12,086) (3,930) (445) - - (21,274) EBIT 80,089 44,361 12,117 3,300 (22,802) 9,984 127,049 Net operating finance costs (37,794) Tax on operating items (4,231) Non-controlling interest (259) Net profit after tax (attributable to 84,765 owners of the Company)

Balance Sheet Investments accounted for using the 57,925 48,741 20,968 8,199 - - 135,833 equity method Property, plant and equipment 104,257 202,146 55,176 2,130 103,791 - 467,500 Intangible assets 209,625 421,833 176,033 7,096 - - 814,587 Other assets 508,174 56,968 134,405 19,237 138,023 - 856,807 Segment assets 879,981 729,688 386,582 36,662 241,814 - 2,274,727 Cash and cash equivalents 78,936 Tax assets 32,559 Consolidated assets 2,386,222

Segment liabilities 564,455 27,858 76,607 10,573 64,156 - 743,649 Tax liabilities 4,972 Loans and borrowings 575,958 Consolidated liabilities 1,324,579

Other segment information Capital expenditure3 49,701 69,063 39,556 367 64,516 - 223,203

Operating earnings per share 15.6cps

• ANZ segment results include $19,556,000 earned on the sale of an operations and maintenance business to a joint venture entity. During the year, the segment has incurred $23,290,000 of significant non-core expenditure including redundancies, restructure and contract costs. • Easternwell segment revenue includes $12,242,000 representing inter-segment revenues associated with the integration of the Easternwell business within the broader Group. • Easternwell EBITDA has also benefitted from the utilisation of acquisition provisions which absorbed transition, performance remediation and other integration costs that arose during its first full financial year of operation. These provision movements are detailed in Note 21. • The fair valuation gain on the RAC investment is reflected in the Unallocated and Eliminations segment above.

3 Includes assets acquired through finance leases.

2012 TRANSFIELD SERVICES 87 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 4. OPERATING SEGMENTS (CONTINUED)

(B) OPERATING SEGMENT RESULTS

UNALLOCATED 2011 AND $’000 ANZ EASTERNWELL4 AMERICAS MEA ELIMINATIONS RAC 5 GROUP

Proportionately Consolidated Revenue 2,519,236 109,461 1,229,354 115,974 - - 3,974,025 Less: Share of joint venture revenue (315,418) (10,489) (391,860) (47,874) - - (765,641) Statutory Revenue 2,203,818 98,972 837,494 68,100 - - 3,208,384

Proportionately Consolidated EBITDA6 145,942 32,619 59,814 6,410 (9,080) 15,956 251,661 Less: share of joint ventures EBITDA (25,937) (4,969) (29,992) (6,804) - - (67,702) EBITDA from operations excluding joint 120,005 27,650 29,822 (394) (9,080) 15,956 183,959 ventures Add: share of net profits of joint ventures 22,747 2,273 18,424 4,929 - - 48,373 Reported EBITDA 142,752 29,923 48,246 4,535 (9,080) 15,956 232,332 Depreciation (24,667) (7,691) (5,604) (575) (14,653) - (53,190) Amortisation of acquired intangibles (4,944) (5,000) (17,664) (445) - - (28,053) EBIT 113,141 17,232 24,978 3,515 (23,733) 15,956 151,089 Net operating finance costs (39,130) Tax on operating items (11,377) Non-controlling interest (459) Operating net profit after tax 100,123 Significant items7 (119,857) Net profit after tax (attributable to (19,734) owners of the Company)

Balance Sheet Investments accounted for using the 32,952 45,379 34,798 9,199 - 65,483 187,811 equity method Property, plant and equipment 81,764 152,375 16,836 2,471 55,978 - 309,424 Intangible assets 204,384 426,232 106,299 7,542 - - 744,457 Assets classified as held for sale - - - - 92,698 - 92,698 Other assets 432,668 48,473 104,921 21,890 30,626 - 638,578 Segment assets 751,768 672,459 262,854 41,102 179,302 65,483 1,972,968 Cash and cash equivalents 265,717 Tax assets 29,059 Consolidated assets 2,267,744

Segment liabilities 459,914 42,359 80,006 14,041 23,978 - 620,298 Tax liabilities 6,902 Loans and borrowings 515,731 Consolidated liabilities 1,142,931

Other segment information Capital expenditure8 26,528 18,503 13,599 599 13,913 - 73,142

Operating earnings per share 20.3cps

4 Purchased on 22 December 2010 and consolidated from this date. 5 Includes $959,000 of allocated overheads from the Company. 6 Proportionately consolidated EBITDA includes the equity accounted share of profits from RAC. 7 Significant items include restructuring, acquisition and transaction costs and loss on disposal of the USM business. 8 Includes assets acquired through finance leases.

88 TRANSFIELD SERVICES 2012 (C) RECONCILIATION OF JOINT VENTURE TO SHARE OF NET PROFITS

2012 2011 $’000 $’000

Share of joint venture EBITDA 61,324 66,268 Depreciation (5,296) (3,477) Amortisation - (19) Net operating finance costs (3,008) (3,513) Tax on operating items (8,781) (10,886) Share of net profits of joint ventures using the equity method 44,239 48,373

(D) RECONCILIATION TO PRIMARY FINANCIAL STATEMENTS

2012 2011 $’000 $’000 (i) Revenue Segment revenue 3,143,390 3,208,384 Less: revenue from discontinued operations - (450,306) Add: Net gain from reclassification of investment in RAC - 2,677 Revenue from continuing operations 3,143,390 2,760,755

(ii) Share of net profits of associates and joint ventures accounted for using the equity method Segment share of joint venture results 44,239 48,373 Segment share of RAC results (before overhead allocated from Transfield Services) 9,984 15,956 Add: corporate overheads 1,000 959 Less: share of RAC transaction costs - (2,718) Less: share of Loy Yang A fair value assessment recognised in RAC - (38,580) Less: Normalisation adjustment for RAC share of profit - - Share of net profits of associates and joint ventures accounted for using the equity method 55,223 23,990

(iii) Depreciation Segment depreciation 70,476 53,190 Less: depreciation relating to discontinued operations - (3,058) Depreciation relating to continuing operations 70,476 50,132

(iv) Amortisation Segment amortisation 21,274 28,053 Less: amortisation relating to discontinued operations - (13,755) Amortisation relating to continuing operations 21,274 14,298

(v) Finance costs Net operating finance costs 37,794 39,130 Less: finance costs relating to discontinued operations - (327) Add: significant finance costs - 1,645 Net Finance costs 37,794 40,448

(vi) Income tax Tax expense relating to operating activities 4,231 11,377 Add: tax credit/(expense) relating to discontinued operations - 1,267 Less: tax on significant items - (5,743) Income tax expense from continuing operations 4,231 6,901

2012 TRANSFIELD SERVICES 89 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 4. OPERATING SEGMENTS (CONTINUED)

(E) PROPORTIONATELY CONSOLIDATED REVENUE BY INDUSTRY GROUP

2012 $’000 ANZ EASTERNWELL AMERICAS MEA GROUP Resources & energy 609,128 267,015 582,270 88,613 1,547,026 Infrastructure services 1,328,154 - 166,276 - 1,494,430 Property & facilities management 807,542 - - 12,248 819,790 Total proportionately consolidated revenue 2,744,824 267,015 748,546 100,861 3,861,246

2011 $’000 ANZ EASTERNWELL AMERICAS MEA GROUP Resources & energy 609,637 109,461 645,838 105,230 1,470,166 Infrastructure services 1,182,789 - 133,775 - 1,316,564 Property & facilities management 726,810 - 449,741 10,744 1,187,295 Total proportionately consolidated revenue 2,519,236 109,461 1,229,354 115,974 3,974,025

(F) INFORMATION ABOUT MAJOR CUSTOMERS The Group aims to develop long-term relationships with its customers and has no significant concentrations of credit risk within the wholly owned group. The Group’s customers are generally large companies or government authorities with established credit histories. The Group conducts checks for credit worthiness on new customers using independent agencies and industry references. The Group also operates through a significant number of joint ventures globally, most of which have either a single or a dominant customer. The credit management policies of Transfield Services and the respective joint venture partner are applied to those customers.

NOTE 5. REVENUE

2012 2011 $’000 $’000

Operating revenue Revenue in ordinary course of business 3,106,856 2,746,032

Other income Gain on sale of operations and maintenance business 19,556 - Fair valuation gain on RAC investment 9,876 - Net gain on recognition of convertible securities in RAC as a financial asset - 2,677 Gain on partial disposal of investment in RAC - 441 Advisory and other fees 1,018 6,318 Profit on sale of property, plant and equipment 1,838 680 Realised and unrealised foreign exchange gain 660 - Other 3,586 4,607 36,534 14,723

3,143,390 2,760,755

Refer to Note 4 Operating Segments for further detail of segment revenues. Net fair valuation gain on RAC investment is comprised of a gross gain of $17,913,000, offset by attributable costs and provisions of $8,037,000.

90 TRANSFIELD SERVICES 2012 NOTE 6. EXPENSES

2012 2011 $’000 $’000 Profit from continuing operations before income tax includes the following specific expenses: Depreciation: - Property, plant and equipment 66,686 49,336 - Pre-contract costs 3,790 796 70,476 50,132 Amortisation: - Intangible assets 21,274 14,298 Total depreciation and amortisation 91,750 64,430

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

Finance costs: - Interest paid / payable 34,943 38,758 - Amortisation of establishment fees 7,158 5,705 42,101 44,463 Other charges against assets: - Impairment of trade receivables 3,040 1,907 Net loss on disposal of property, plant and equipment - 440 Restructure and redundancy costs 8,723 10,489 Significant contract related costs 19,840 - Easternwell acquisition costs - 5,195 Superannuation contributions 66,149 53,029 Foreign exchange losses - 386 Rental expense relating to operating leases: - Minimum lease payments 65,236 57,153

NOTE 7. INCOME TAXES

2012 2011 $’000 $’000 (A) INCOME TAX EXPENSE / (BENEFIT) - attributable to continuing operations 4,231 6,901 - attributable to discontinued operations (Note 41) - (53) Total income tax expense 4,231 6,848

Current tax (1,333) (14,958) Deferred tax 7,082 20,975 Adjustments for current tax of prior periods (1,518) 831 4,231 6,848

(B) MOVEMENTS IN DEFERRED TAX Deferred income tax expense/(benefit) included in income tax expense comprises: (Increase) / decrease in deferred tax assets (Note 15) (44,939) 13,557 Increase in deferred tax liabilities (Note 22) 52,021 7,418 7,082 20,975

2012 TRANSFIELD SERVICES 91 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 7. INCOME TAXES (CONTINUED)

2012 2011 $’000 $’000 (C) NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX Profit from continuing operations before income tax expense 89,255 50,850 Profit / (loss) from discontinued operations before income tax expense (Note 41) - (63,277) Profit / (loss) before income tax expense 89,255 (12,427)

Income tax calculated at 30% (2011: 30%) 26,777 (3,728) Tax effects of amounts which are not taxable / deductible in calculating taxable income: Non-taxable income (5,945) (4,391) Non-deductible capital loss 847 1,955 Dividends received 1,235 (595) Tax losses (brought to account) / written off (4,178) 8,472 Share of net profits of associates and joint venture entities and partnerships (5,171) 3,001 Taxable trust distributions net of tax deferrals - 1,645 Research and development expenditure (1,200) (1,500) Other 469 1,350 12,834 6,209 Income tax expense adjusted for other non-taxable items: Differences in overseas tax rates and (benefits) / deductions on overseas income and expenses (7,990) (2,503) Withholding and other taxes 905 2,311 Adjustments for current tax of prior periods (1,518) 831 Income tax expense 4,231 6,848

(D) UNRECOGNISED TEMPORARY DIFFERENCES A deferred tax liability has not been recognised in respect of temporary differences arising as a result of the translation of the financial statements of the consolidated entity’s subsidiaries. The deferred tax liability will only arise in the event of a disposal of a subsidiary, and no such disposal is expected in the foreseeable future.

(E) TAX CONSOLIDATION LEGISLATION The Company and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003. The accounting policy in relation to this legislation is set out in Note 1(f). On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement, which, in the opinion of the Directors, limits the joint and several liability of the wholly owned entities in the case of a default by the head entity, Transfield Services Limited. The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate the head entity for any current tax payable assumed and are compensated by the Company for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to the Company under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of the financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. A similar regime operates in the United States. The Group’s United States domiciled wholly owned subsidiaries have adopted the equivalent arrangement in that jurisdiction.

92 TRANSFIELD SERVICES 2012 NOTE 8. CURRENT ASSETS – CASH AND CASH EQUIVALENTS

2012 2011 $’000 $’000 Cash at bank and on hand 66,526 252,333 Cash on deposit – at call 689 2,144 67,215 254,477 Restricted cash 11,721 11,240 78,936 265,717

Fair value The fair value is considered to be the same as the carrying value.

Deposits at call Floating interest rates on deposits were from 0.00 per cent to 3.45per cent (2011: 0.05 per cent to 4.67 per cent) per annum.

Cash at bank Floating interest rates on cash at bank were from 0.00 per cent to 3.07 per cent (2011: 0.00 per cent to 4.42 per cent) per annum.

Restricted cash Restricted cash is cash held in escrow relating to the sale of USM.

NOTE 9. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES

2012 2011 $’000 $’000

Trade and other receivables 526,864 512,923 Less: Provision for impairment of receivables (7,682) (4,334) 519,182 508,589 Loans to associates and joint ventures 17,641 2,343 536,823 510,932

Risk management Information on financial risk management policies is included in Note 2. Fair value Due to the short-term nature of current trade and other receivables, the fair value approximates the carrying value. Impaired trade and other receivables The Group has recognised a loss of $3,040,000 (2011: $1,907,000) in respect of impaired trade receivables during the year ended 30 June 2012. The loss has been included in other expenses in the statement of comprehensive income. Credit and recovery risk associated with trade receivables has been provided for in the statement of financial position. Each debt is analysed on a case by case basis in assessing recoverability of the receivable.

2012 TRANSFIELD SERVICES 93 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 9. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES (CONTINUED)

Movements in the provision for impaired receivables are as follows:

2012 2011 $’000 $’000

At 1 July 4,334 4,427 Increase in provision* 4,742 1,544 Acquired through business combination 14 1,547 Provision utilised/reversed (1,473) (1,539) Provision disposed on sale of subsidiary - (1,095) Foreign currency exchange differences 65 (550) At 30 June 7,682 4,334

* These items are included in other expenses in the statement of comprehensive income. NOTE 10. CURRENT ASSETS – INVENTORIES

2012 2011 $’000 $’000

Raw materials 21,744 6,927 Work in progress 138,085 75,750 159,829 82,677

Inventories recognised as an expense during the year ended 30 June 2012 amounted to $227,298,000 (2011: $229,115,000).

NOTE 11. CURRENT AND NON-CURRENT ASSETS – PREPAYMENTS AND OTHER ASSETS

2012 2011

CURRENT NON-CURRENT CURRENT NON-CURRENT $’000 $’000 $’000 $’000

Insurance and other prepayments 7,774 3,977 12,078 7,422 Establishment fees 4,170 5,616 5,801 8,325 Tender and security deposits 112 3,408 3,007 775 Pre-contract costs 11,818 27,780 2,519 5,042 23,874 40,781 23,405 21,564

NOTE 12. NON-CURRENT ASSETS – INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

2012 2011 $’000 $’000

Investments in associate 30 - 65,483 Equity interest in joint ventures and partnerships 31 135,833 122,328 135,833 187,811

94 TRANSFIELD SERVICES 2012 NOTE 13. NON-CURRENT ASSETS – OTHER FINANCIAL ASSETS

2012 2011 $’000 $’000 RATCH Australia Corporation Limited (RAC) 95,200 - Other investments 300 - 95,500 -

On 30 June 2012, the Group reclassified its 20 per cent ownership interest in RAC to an available-for-sale financial asset. Details of the change are included in Note 30. The investment in RAC comprises unquoted equity shares and loan receivables, and as such is classified as level 3 financial assets within the fair value hierarchy (see Note 1(q)). The table above presents the fair value of the investment in RAC as determined by an independent third party valuer. Refer to Note 1 for further information about the methods used and assumptions applied in determining the fair value.

NOTE 14. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT

LAND AND LEASEHOLD PLANT AND LEASED PLANT & CAPITAL WORK IN IMPROVEMENTS EQUIPMENT EQUIPMENT PROGRESS TOTAL $’000 $’000 $’000 $’000 $’000 Year ended 30 June 2012 At 1 July 2011 17,084 241,961 9,579 40,800 309,424 Exchange differences 137 529 (39) 301 928 Additions 5,310 93,825 29,088 94,980 223,203 Transfers 7,645 (8,826) 12,773 (11,592) - Business combinations 1,160 7,536 47 - 8,743 Disposals (1,172) (5,807) (1,090) (43) (8,112) Depreciation (4,567) (51,869) (10,250) - (66,686) At 30 June 2012 25,597 277,349 40,108 124,446 467,500

At 30 June 2012 Cost 42,806 525,082 59,013 124,446 751,347 Accumulated depreciation (17,209) (247,733) (18,905) - (283,847) 25,597 277,349 40,108 124,446 467,500

The Group capitalised $8,157,000 in finance costs during the year (2011: $1,484,000). At 30 June 2012, there are no secured items of property, plant and equipment other than items under finance lease.

LAND AND LEASEHOLD PLANT AND LEASED PLANT & CAPITAL WORK IN IMPROVEMENTS EQUIPMENT EQUIPMENT PROGRESS TOTAL $’000 $’000 $’000 $’000 $’000 Year ended 30 June 2011 At 1 July 2010 12,482 113,074 22,978 25,531 174,065 Exchange differences (807) (4,205) (514) (1,319) (6,845) Additions 1,706 45,552 10,718 15,166 73,142 Transfers / reclassifications in / (out) - 17,299 (8,625) (8,674) - Additions through business combinations 7,686 122,812 - 11,480 141,978 Disposals and write-offs (1,438) (7,947) (8,957) (1,384) (19,726) Depreciation (2,545) (44,624) (6,021) - (53,190) At 30 June 2011 17,084 241,961 9,579 40,800 309,424

At 30 June 2011 Cost 26,403 463,232 17,241 40,800 547,676 Accumulated depreciation (9,319) (221,271) (7,662) - (238,252) 17,084 241,961 9,579 40,800 309,424

2012 TRANSFIELD SERVICES 95 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 15. NON-CURRENT ASSETS – DEFERRED TAX ASSETS

2012 2011 $’000 $’000

Gross deferred tax assets 128,259 82,083 Set off deferred tax liabilities within common jurisdictions (112,154) (60,007) Net deferred tax assets 16,105 22,076 Gross deferred tax assets comprises temporary differences attributable to: Doubtful debts 2,006 1,258 Employee benefits 34,686 28,411 Rental obligations 2,151 1,273 Creditors/deferred income 31,648 19,037 Share-based payments 5,483 3,557 Partnership Income 1,767 1,651 Tax losses 42,013 13,350 Other 6,894 7,733 Amounts recognised directly in equity Capital raising costs - 6,091 Derivatives 1,611 (278) 128,259 82,083

Gross deferred tax assets to be recovered after more than 12 months 46,062 48,706 Gross deferred tax assets to be recovered within 12 months 82,197 33,377 128,259 82,083

CREDITORS/ CAPITAL SHARE PARTNER- MOVEMENTS IN DOUBTFUL EMPLOYEE RENTAL DEFERRED RAISING BASED TAX SHIP GROSS DEFERRED DEBTS BENEFITS OBLIGATIONS INCOME COSTS DERIVATIVES PAYMENTS LOSSES OTHER INCOME TOTAL TAX ASSETS $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 July 2011 1,258 28,411 1,273 19,037 6,091 (278) 3,557 13,350 7,733 1,651 82,083 Reclassification of ------16,685 - - 16,685 deferred tax asset (Note 22) (Charged) / credited to 743 6,278 874 12,646 (6,091) 1,892 1,889 10,938 (1,031) 116 28,254 the statement of comprehensive income Effect of changes in 5 (3) 4 (35) - (3) 37 1,040 192 - 1,237 foreign exchange rates At 30 June 2012 2,006 34,686 2,151 31,648 - 1,611 5,483 42,013 6,894 1,767 128,259

At 1 July 2010 1,275 33,931 1,394 16,491 2,625 312 2,974 21,619 20,848 - 101,469 Reclassification 239 (2,179) - (1,006) - - - 373 427 1,076 (1,070) Revised 1 July 2010 1,514 31,752 1,394 15,485 2,625 312 2,974 21,992 21,275 1,076 100,399 (Charged) / credited to (217) (2,783) (71) 4,034 (869) (526) 826 (2,680) (11,846) 575 (13,557) the statement of comprehensive income Capital raising costs - - - - 4,343 - - - - - 4,343 Acquisition of 206 1,027 - 256 - - - - 62 - 1,551 subsidiary Disposal of subsidiary (82) (530) - (168) (8) - (61) - (235) - (1,084) Effect of changes in (163) (1,055) (50) (570) - (64) (182) (5,962) (1,523) - (9,569) foreign exchange rates At 30 June 2011 1,258 28,411 1,273 19,037 6,091 (278) 3,557 13,350 7,733 1,651 82,083

96 TRANSFIELD SERVICES 2012 NOTE 16. NON-CURRENT ASSETS – INTANGIBLE ASSETS

CUSTOMER/ CONTRACT TRADEMARKS CUSTOMER SUPPLIER GOODWILL INTANGIBLES AND BRANDS RELATIONSHIPS DATABASES OTHER TOTAL 2012 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost 650,107 69,876 28,167 141,986 1,572 3,171 894,879 Accumulated amortisation and - (33,073) (6,745) (39,361) (522) (591) (80,292) impairment At 30 June 2012 650,107 36,803 21,422 102,625 1,050 2,580 814,587

Year ended 30 June 2011

At 1 July 2011 566,264 29,883 21,556 125,578 1,141 35 744,457 Exchange differences 3,457 494 100 797 (17) 3 4,834 Additions9 80,386 14,659 1,542 (12,597) - 2,580 86,570 Disposal (net accumulated ------amortisation and impairment) Amortisation charge - (8,233) (1,776) (11,153) (74) (38) (21,274) At 30 June 2012 650,107 36,803 21,422 102,625 1,050 2,580 814,587

CUSTOMER/ CONTRACT TRADEMARKS CUSTOMER SUPPLIER GOODWILL INTANGIBLES AND BRANDS RELATIONSHIPS DATABASES OTHER TOTAL 2011 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost 566,264 55,041 26,231 153,786 1,568 590 803,480 Accumulated amortisation and - (25,158) (4,675) (28,208) (427) (555) (59,023) impairment At 30 June 2011 566,264 29,883 21,556 125,578 1,141 35 744,457

Year ended 30 June 2011

At 1 July 2010 443,461 19,661 29,101 152,568 28,644 1,190 674,625 Exchange differences (44,410) (1,255) (4,488) (27,325) (3,961) (38) (81,477) Additions 310,733 18,100 6,300 96,100 - - 431,233 Disposal (net accumulated (143,520) (1,530) (7,615) (79,325) (20,669) (958) (253,617) amortisation and impairment) Amortisation charge - (5,093) (1,742) (16,440) (2,873) (159) (26,307) At 30 June 2011 566,264 29,883 21,556 125,578 1,141 35 744,457

Amortisation expenses of $21,274,000 (2011: $26,307,000) are included in depreciation and amortisation in the statement of comprehensive income.

9 Includes finalisation of provisional acquisition accounting, refer to Note 29.

2012 TRANSFIELD SERVICES 97 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 16. NON-CURRENT ASSETS – INTANGIBLE ASSETS (CONTINUED)

IMPAIRMENT TESTING FOR CASH GENERATING UNITS CONTAINING GOODWILL For the purpose of impairment testing, goodwill is allocated to the Group’s operating business units and geographic locations that represent the lowest level within the Group at which goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill allocated to the Group’s business units are as follows:

2012 2011 $’000 $’000 Australia Easternwell 346,918 310,733 Australia other10 90,125 81,643 437,043 392,376 Americas United States11 83,681 70,626 Chile 24,873 - 108,554 70,626

New Zealand 99,156 97,908 Middle East & Asia12 5,354 5,354

Total carrying value 650,107 566,264

The recoverable amounts of all the cash generating units (‘CGUs’) are based on value in use. The Group engaged an independent valuer to assist in determining the fair value less costs to sell of the Easternwell CGU. This valuation confirmed that the recoverable value based on fair value less costs to sell exceeded the Group’s carrying value for the CGU. As the Group’s determination of value in use exceeded the fair value less costs to sell, the Group has used the value in use to assess goodwill for impairment.

10 Australian CGUs consisting of resources and energy, infrastructure, project management, consultancy and facilities management (services) have been aggregated as goodwill is individually insignificant in proportion to the Group’s total goodwill. 11 Consists of United States resources and energy and transportation infrastructure services whose goodwill is individually insignificant in proportion to the Group’s total goodwill. 12 Consists of Middle East & Asia’s resources and energy and transportation infrastructure services whose goodwill is individually insignificant in proportion to the Group’s total goodwill.

KEY ASSUMPTIONS USED FOR VALUE IN USE CALCULATIONS Value in use was determined by discounting the future cash flows generated from the continuing use of the units. Cash flows were projected based on actual operating results, the Board approved budget and five year business plan. Cash flows for a further five-year period were extrapolated using a declining growth rate such that the long term terminal growth rate was determined at three per cent, which does not exceed the long-term average growth rate for the industry and economy. A ten year forecast period correctly reflects the growth structure to maturity. Assumptions used to determine future cash flows, such as gross margin are based on management’s best estimate of the CGU’s performance, taking into account past performance. The discount rates used reflect specific risks relating to the relevant CGUs and countries in which they operate. The following key assumptions were used to determine the value in use:

CASH GENERATING UNIT GROWTH RATE 13 DISCOUNT RATE14 PRE-TAX DISCOUNT RATE POST-TAX

2012 2011 2012 2011 2012 2011 % % % % % % Easternwell 4.2 4.2 15.1 17.9 11.5 13.5 Australia other 4.2 2.0-4.2 14.2-14.6 11.4-14.9 11.0 11.2 United States 4.3-4.6 4.3-4.6 15.4 15.7-17.3 11.5 11.7 New Zealand 3.0 3.0 14.5 14.5 11.2 11.2 Middle East & Asia 4.2 4.0 14.2-22.1 14.2-22.9 11.2 14.2

13 The average growth rate represents the average rate used to extrapolate cash flows beyond the one-year budget period and the five-year business plan that were approved by the Board. 14 In calculating the value in use for each CGU, the Group has applied post-tax discount rates to discount post-tax cash flows.

98 TRANSFIELD SERVICES 2012 NOTE 17. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES

2012 2011 $’000 $’000 Trade payables 417,880 351,385 Other payables 160,083 155,174 577,963 506,559

Risk management Information on financial risk management policies is included in Note 2.

Fair value Due to the short term nature of current trade and other payables, the fair value approximates the carrying value.

NOTE 18. CURRENT AND NON-CURRENT LIABILITIES – LOANS AND BORROWINGS

2012 2011

CURRENT NON-CURRENT CURRENT NON-CURRENT $’000 $’000 $’000 $’000 Unsecured Cash advances and bridge facility 1,904 357,802 - 323,374 United States Private Placement - 166,051 52,047 107,173 Mandatory Convertible Note 4,244 - 7,706 4,190 Secured Lease liabilities 13,035 32,922 5,251 15,990 19,183 556,775 65,004 450,727

Risk management and fair values Information on financial risk management policies and fair values is included in Note 2.

2012 2011 TERMS OF THE FACILITIES $’000 $’000 Unrestricted access was available at statement of financial position date to the following: Bank and loan facilities Used 530,001 494,491 Unused 479,552 407,877 Total facilities 1,009,553 902,368

Cash advances

Syndicated debt facility As at 30 June 2012, the Group has an unsecured multi-currency debt facility totalling $740,136,000 with a syndication of 14 banks. The tranche maturing in December 2012 was refinanced in March 2012 with the maturity extended to March 2016. The facility is comprised of a number of tranches: •• A$84,000,000, US$100,000,000, NZ$63,000,000 and CLP5,634,000,000 maturing in December 2013; •• A$250,000,000 maturing in December 2014; and •• A$150,000,000 and US$100,000,000 maturing in March 2016. Bank overdraft and money market lines As at 30 June 2012, these facilities total A$22,090,000 across the Group and are used for the day-to-day working capital requirements of the business.

2012 TRANSFIELD SERVICES 99 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 18. CURRENT AND NON-CURRENT LIABILITIES – LOANS AND BORROWINGS (CONTINUED)

Bilateral Facilities As at 30 June 2012 the Group has Bilateral Facilities totalling $88,969,000. The facilities are comprised of. •• A$21,000,000 maturing in March 2016; •• US$25,000,000 maturing in March 2013; •• C$25,000,000 maturing in March 2013; and •• CLP10,240,000 maturing in June 2015.

United States Private Placement (USPP) As at 30 June 2012, the Group had US$170,000,000 of long-term senior unsecured notes (Senior Notes) to institutional investors in the US private placement (USPP) debt market. The Issue was completed on 29 December 2009 at a weighted average coupon rate of 5.99 per cent. US$20,000,000 at an all-in rate of 5.00 per cent was issued for 5 years, US$50,000,000 at an all-in rate of 5.77 per cent was issued for 7 years and US$100,000,000 at an all-in interest rate of 6.29 per cent was issued for 10 years.

CONSOLIDATED

2012 2011 SECURITY $’000 $’000 Total secured liabilities (current and non-current) are:

Lease liabilities 45,957 21,241

Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default.

NOTE 19. CURRENT AND NON-CURRENT LIABILITIES – PROVISION FOR EMPLOYEE BENEFITS

2012 2011

CURRENT NON-CURRENT CURRENT NON-CURRENT $’000 $’000 $’000 $’000

Annual leave 62,902 6,125 48,207 6,023 Long service leave 24,047 12,948 18,928 14,278 Other employee related provisions 11,623 232 8,350 232 98,572 19,305 75,485 20,533

Risk Management Information on financial risk management policies is included in Note 2.

NOTE 20. CURRENT AND NON-CURRENT LIABILITIES – DERIVATIVES

2012 2011

CURRENT NON-CURRENT CURRENT NON-CURRENT $’000 $’000 $’000 $’000 Interest rate swap contracts 1,479 3,354 - 942 Forward exchange contracts 355 - 85 - 1,834 3,354 85 942

100 TRANSFIELD SERVICES 2012 INSTRUMENTS USED BY THE GROUP AND FAIR VALUES The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to interest and foreign exchange rates in accordance with the Group’s financial risk management policies (refer to Note 2).

Cash flow hedges It is policy to protect the Group’s loans from exposure to increasing interest rates. Accordingly, the Group has entered into an interest rate swap contract under which it receives interest at variable rates to pay interest at fixed rates. The contract is settled on a net basis and the net amount receivable or payable at the reporting date is separately disclosed on the face of the statement of financial position. The contract requires settlement of net interest receivable or payable every three months. The settlement dates coincide with the dates on which interest is payable on the underlying debt. As at 30 June 2012, there was one interest rate swap in place with a face value of US$50,000,000 (2011: US$50,000,000) at 0.695% per cent (net settled) maturing in December 2012 and AUD interest rate swaps in place over $AUD 200,000,000 (2011: $AUD 200,000,000) at an average net settled rate of 5.34% maturing in December 2012 and December 2013, and $AUD 120,000,000 of forward starting swaps commencing in December 2012 at an average net settled rate of 3.68% maturing in December 2015 and December 2016 . The variable rate is US$ LIBOR and AUD$ BBSY based on 90 day rollovers. The Group has a non-deliverable cross currency swap in place for CLP 9,215,000,000 at a rate of 7.89% to hedge its net asset in Chile. The following table details the notional principal amounts and remaining terms of interest rate swap contracts outstanding as at reporting date for both the USD and AUD interest rate swaps:

AVERAGE CONTRACTED NOTIONAL PRINCIPAL FIXED INTEREST RATE AMOUNT

2012 2011 2012 2011 % % $’000 $’000

USD Outstanding floating for fixed contracts Less than 1 year 0.695 - 48,838 - 1 to 5 years - 0.695 - 46,830

AUD Outstanding floating for fixed contracts Less than 1 year 5.33 - 150,000 - 1 to 5 years 4.18 5.34 170,000 200,000

AUD/CLP Outstanding floating for fixed contracts Less than 1 year - - - - 1 to 5 years 7.89 - 18,000 -

The gain or loss from re-measuring the hedging instruments at fair value is deferred in equity in the hedging reserve, to the extent that the hedge is effective, and re-classified into profit and loss when the hedging interest expense or income is recognised. Any ineffective portion is recognised in the statement of comprehensive income immediately. In the year ended 30 June 2012 there was no impact to comprehensive income (2011: $Nil)

NOTE 21. CURRENT AND NON-CURRENT LIABILITIES – OTHER PROVISIONS

2012 2011

CURRENT NON-CURRENT CURRENT NON-CURRENT $’000 $’000 $’000 $’000 Lease ‘make-good’ provision 2,191 5,579 1,189 3,230 Provision for onerous contracts 99 60 59 340 Warranty provision 2,681 4,980 2,100 - Other 21,846 5,185 - 9,776 26,817 15,804 3,348 13,346

2012 TRANSFIELD SERVICES 101 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 21. CURRENT AND NON-CURRENT LIABILITIES – OTHER PROVISIONS (CONTINUED)

MOVEMENTS IN PROVISIONS Movements in each class of provision during the financial year, other than employee benefits, are set out below:

LEASE ONEROUS ‘MAKE-GOOD’ CONTRACTS WARRANTY OTHER TOTAL $’000 $’000 $’000 $’000 $’000 2012 At 1 July 2011 4,419 399 2,100 9,776 16,694 Effects of changes in exchange rates 71 (47) - 16 40 Provision created and finance costs 4,444 111 7,661 30,857 43,073 Provision utilised/reversed (1,164) (304) (2,100) (13,618) (17,186) At 30 June 2012 7,770 159 7,661 27,031 42,621

2011 At 1 July 2010 4,647 1,113 1,323 625 7,708 Provision incurred and finance costs 1,165 - 2,100 17,000 20,265 Provision utilised (1,393) (714) (1,323) (7,849) (11,279) At 30 June 2011 4,419 399 2,100 9,776 16,694

Make-good Provision is made for estimated ‘make-good’ expenses for the Group’s operating leases, namely lease premises. Reasonable estimates based on historical data have been used to calculate terminal value, which has been subjected to discounted cash flows. Management reassesses this provision semi-annually. Payments are expected to be made at the end of the remaining lease term typically between 1 and 10 years.

Warranty Provision is made for estimated warranty claims against the Group for claims incurred but not received principally for insurance and workers’ compensation. Management estimates the provision based on historical claims and recent trends.

Onerous contracts Provision is made for onerous contracts where the expected benefits to be derived from the contract are less than the unavoidable costs of meeting the obligations under that contract.

Other Other provisions include provisions created upon acquisition of businesses acquired by the Group and include any contingent consideration payable. These amounts are initially recognised at fair value at acquisition date and may be reversed if it is determined, they are no longer required.

102 TRANSFIELD SERVICES 2012 NOTE 22. NON-CURRENT LIABILITIES – DEFERRED TAX LIABILITIES

2012 2011 $’000 $’000

Gross deferred tax liabilities 117,126 66,909 Set off deferred tax assets within common jurisdictions (112,154) (60,007) Net deferred tax liabilities 4,972 6,902

Gross deferred tax liabilities comprise temporary differences attributable to: Inventories and work in progress 37,053 23,902 Plant and equipment 11,316 8,111 Receivables and other assets 20,133 4,681 Intangible assets 45,302 30,215 Derivatives 66 - Other 3,256 - Gross deferred tax liabilities 117,126 66,909

Gross deferred tax liabilities to be settled after more than 12 months 55,260 38,326 Gross deferred tax liabilities to be settled within 12 months 61,866 28,583 117,126 66,909

INVENTORIES RECEIVABLES AND WORK IN PLANT AND AND OTHER INTANGIBLE DERIVATIVES/ PROGRESS EQUIPMENT ASSETS ASSETS OTHER TOTAL MOVEMENTS $’000 $’000 $’000 $’000 $’000 $’000 At 1 July 2011 23,902 8,111 4,681 30,215 - 66,909 Reclassification of deferred tax asset (Note 15) - - - 16,685 - 16,685 Charged / (credited) to the statement of 13,506 3,249 15,466 (207) 3,322 35,336 comprehensive income Effect of changes in foreign exchange rates (355) (44) (14) (1,391) - (1,804) At 30 June 2012 37,053 11,316 20,133 45,302 3,322 117,126

At 30 June 2010 13,862 5,321 1,155 51,123 2,212 73,673 Reclassification 102 (655) 1,912 (217) (2,212) (1,070) Revised 1 July 2010 13,964 4,666 3,067 50,906 - 72,603 Charged / (credited) to the statement of 10,975 (609) 1,401 (4,349) - 7,418 comprehensive income Acquisition of subsidiary - 5,626 580 8,255 - 14,461 Disposal of subsidiary - (931) - (15,499) - (16,430) Effect of changes in foreign exchange rates (1,037) (641) (367) (9,098) - (11,143) At 30 June 2011 23,902 8,111 4,681 30,215 - 66,909

2012 TRANSFIELD SERVICES 103 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 23. CONTRIBUTED EQUITY

2012 2011 $’000 $’000 Ordinary shares – fully paid 1,151,535 1,211,013 Shares held by equity compensation plans (Treasury shares) (1,104) (165) 1,150,431 1,210,848

MOVEMENTS IN ORDINARY SHARE CAPITAL:

NUMBER OF NUMBER SHARES OF SHARES ACQUIRED ON PRICE DATE DETAILS ISSUED MARKET $ $’000 At 1 July 2010 414,278,904 2,022,928 - 808,048 1 October 2010 Share purchase plan 27,071,325 3.13 84,733 22 December 2010 Shares issued to vendors of the Easternwell group 10,263,947 3.35 34,384 23 December 2010 Institutional entitlement offer 65,327,271 3.00 195,982 Transaction costs (net of taxes) - - (10,120) 21 January 2011 Retail entitlement offer 32,774,510 3.00 98,324 Transaction costs (net of taxes) (338) At 30 June 2011 549,715,957 2,022,928 1,211,013

October 2011 On market buy-back (987,748) 2.14 (2,116) November 2011 On market buy-back (1,286,570) 2.25 (2,897) December 2011 On market buy-back (1,600,256) 2.23 (3,563) January 2012 On market buy-back (1,254,348) 2.17 (2,720) February 2012 On market buy-back (1,331,012) 2.29 (3,051) March 2012 On market buy-back (8,080,947) 2.44 (19,700) April 2012 On market buy-back (4,366,515) 2.30 (10,029) May 2012 On market buy-back (4,894,676) 2.13 (10,402) June 2012 On market buy-back (2,648,947) 1.89 (5,000) At 30 June 2012 523,264,938 2,022,928 1,151,535

The number of shares purchased each month through the on market buy-back comprises the total amount purchased, settled and cancelled in the month.

SHARE BUY-BACK On 5 October 2011, the Company announced its intention to return funds to shareholders through an on-market buy-back of up to 10 per cent of its lowest number of shares on issue over the last 12 months, in accordance with the ASX Listing Rules. The buy-back achieves the Company’s key objectives of ensuring an efficient capital structure, maintaining prudent levels of gearing and having sufficient balance sheet flexibility to continue pursuing current growth initiatives. The earliest date that the share buy-back could commence was 20 October 2011 and continues at the date of this report.

ORDINARY SHARES Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.

EMPLOYEE SHARE PLANS AND SCHEMES Information relating to the Company’s employee share plans and schemes is set out in Note 38.

104 TRANSFIELD SERVICES 2012 ACQUISITION OF SHARES ON MARKET It is the Company’s intention to settle the vesting of employee Options and Performance Awards by way of on-market acquisition of the requisite number of shares. Consequently, at the date of granting of Performance Awards, a corresponding deferred tax asset is recognised which represents the temporary difference which will crystallise when the underlying shares are acquired on market. Following the introduction of the TranShare Plan Trust, the Company has the ability to purchase shares in advance of vesting.

SHARES HELD BY EQUITY COMPENSATION PLANS (TREASURY SHARES) Treasury shares are shares in Transfield Services Limited held by TranShare Plan Trust for the purpose of awarding shares under the TranShare deferred retention incentive scheme, Transhare Executive Performance Award Plan (TEPAP) and to facilitate the employee share plan (TranShare Plan) (refer note 38).

MOVEMENTS IN TREASURY SHARES:

NUMBER OF SHARES DATE DETAILS ACQUIRED $’000 At 1 July 2010 5,009 - 5 October 2010 Acquisition of shares on market 20,000 73 17 November 2010 Acquisition of shares on market 145,150 503 30 November 2010 Acquisition of shares on market 30,400 106 Various dates Shares transferred to employees (162,037) (517) Various dates Shares recovered from employees on resignation 8,613 - At 30 June 2011 47,135 165

August 2011 Shares transferred to employees (3,700) (12) September 2011 Acquisition of shares on market 90,000 170 October - November 2011 Shares transferred to employees (91,181) (242) February - June 2012 Shares transferred to employees (29,527) (56) June 2012 Acquisition of shares on market 581,000 1,080 At 30 June 2012 593,727 1,105

2012 TRANSFIELD SERVICES 105 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 24. RESERVES AND RETAINED PROFITS

2012 2011 $’000 $’000

(A) RESERVES Share-based payments reserve 18,278 14,751 Foreign currency translation reserve (99,406) (83,569) Hedging reserve – cash flow hedges (4,502) (5,038) Share capital contribution reserve 108 108 Statutory reserve 153 153 (85,369) (73,595) Movements: Share-based payments reserve At 1 July 14,751 10,832 Value of Performance Awards granted 3,838 4,607 Acquisitions of shares on market / Options exercised (311) (688) At 30 June 18,278 14,751

Foreign currency translation reserve At 1 July (83,569) (73,664) Net exchange differences on translation of foreign controlled entities (15,837) (60,206) Reclassification of cumulative foreign currency translation reserve on sale of USM - 50,301 At 30 June (99,406) (83,569)

Hedging reserve - cash flow hedges Interest rate swaps At 1 July (4,980) (13,584) Revaluation (gross) (3,897) (478) Deferred tax at 30% 1,504 250 Share of hedging reserve RAC (8,265) 3,864 Reclassification of hedge reserve on RAC 11,359 4,968 At 30 June (4,279) (4,980)

Foreign currency swaps At 1 July (58) - Revaluation (gross) (272) (83) Deferred tax at 30% 107 25 At 30 June (223) (58)

Share capital contribution reserve At 1 July 108 108 Movement for the year - - At 30 June 108 108

Statutory reserve At 1 July 153 153 Movement for the year - - At 30 June 153 153

106 TRANSFIELD SERVICES 2012 2012 2011 $’000 $’000

(B) RETAINED PROFITS (Accumulated losses) / retained profits at the beginning of the financial year (13,610) 70,891 Net profit / (loss) attributable to owners of Transfield Services Limited 84,765 (19,734) Less: Dividends paid (76,053) (64,767) Accumulated losses at the end of the financial year (4,898) (13,610)

NATURE AND PURPOSE OF RESERVES Share-based payments reserve The share-based payments reserve is used to recognise the fair value of Options and Performance Awards granted but not exercised. The share-based payments reserve is tax-effected as a result of the intention to acquire shares to fulfil vested Awards on market (refer to Note 38).

Foreign currency translation reserve Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as described in Note 1(d). The reserve is recognised in profit and loss when the net investment is disposed.

Hedging reserve – cash flow hedges The hedging reserve is used to record gains or losses on a hedging instrument that is designated and qualifies for recognition as a cash flow hedge, as described in Note 1(p). Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.

Share capital contribution reserve The share capital contribution reserve is used to recognise the post-acquisition capital contributions by the vendors to equity of subsidiaries.

Statutory reserve The statutory reserve is a requirement of Abu Dhabi law to maintain a percentage of profits in reserves.

NOTE 25. NON-CONTROLLING INTEREST

2012 2011 $’000 $’000 At 1 July 1,170 1,258 Profit attributable to non-controlling interest holders 259 459 Other transactions with non-controlling interests (723) (358) Acquisition of subsidiary 773 (189) At 30 June 1,479 1,170

2012 TRANSFIELD SERVICES 107 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 26. DIVIDENDS

2012 2011 $’000 $’000 Ordinary shares – fully franked at 30 per cent 2011 final dividend of 9.0 cents per fully paid share (2010: 9.0 cents) 49,207 37,282 2012 interim dividend of 5.0 cents per fully paid share (2011: 5.0 cents) 26,846 27,485 Total dividends provided for or paid 76,053 64,767

Since the end of the financial year the Directors have resolved to pay an unfranked final dividend of 9.0 cents per fully paid ordinary share. The dividend will be paid on 24 October 2012 to all shareholders on record at 19 September 2012. Based on the number of shares on issue at the date of this report, the aggregate amount of the proposed dividend expected to be paid, but not recognised as a liability, is estimated to be $46,415,207 (2011: $49,474,000).

Franking credits Franking credits available for subsequent financial years based on a tax rate of 30 per cent 3,931 11,995 (2011: 30 per cent)

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: •• franking credits / debits that will arise from the payment/refund of current tax liabilities; •• franking debits that will arise from payment of dividends recognised as a liability at the reporting date; •• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and •• franking credits that may be prevented from being distributed in subsequent financial years. The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of controlled entities were paid as dividends. The dividend recommended by the Directors since year end, but not recognised as a liability at year end, will have nil impact on the franking account (2011: $5,301,000), as the 2012 final dividend declared on 29 August 2012 will not be franked. The historic full franking of dividends has caused the franking credit balance to deplete over time such that the Group expects to pay dividends in future periods at less than a fully franked level.

NOTE 27. RELATED PARTY TRANSACTIONS

(A) PARENT ENTITY The parent entity within the Group is Transfield Services Limited.

(B) CONTROLLED ENTITIES Interests in controlled entities are set out in Note 42.

(C) KEY MANAGEMENT PERSONNEL Disclosures relating to key management personnel are set out in Note 28.

(D) REMUNERATION AND RETIREMENT BENEFITS Disclosures relating to remuneration and retirement benefits are set out in the Remuneration Report on pages 45-63.

108 TRANSFIELD SERVICES 2012 (E) DIRECTORS AND DIRECTOR-RELATED ENTITIES The following Directors of the Company were Directors and shareholders of Transfield Holdings Pty Limited and Transfield (TSL) Pty Limited companies, which are related parties and beneficial owners of the shareholding in Transfield Services Limited: •• Guido Belgiorno-Nettis AM, and •• Luca Belgiorno-Nettis AM Luca Belgiorno-Nettis and Guido Belgiorno-Nettis each own a 42.65% beneficial interest in Transfield Pty Limited and Transfield Pty Limited has a 100% beneficial interest in Transfield (TSL) Pty Limited. They are also joint Executive Directors of Transfield Holdings Pty Limited. This means they each indirectly control 57,849,887 (2011: 57,849,887) shares in Transfield Services Limited. The following agreements were in existence during the year: •• Trademark licence between Transfield Pty Limited (a related company of Transfield Holdings Pty Limited and Transfield Services Limited) dated 29 September 2008 and various consequential sub-licence arrangements; and •• Art Rental Agreement dated 18 June 2009 between Transfield Corporate Pty Limited and Transfield Services (Australia) Pty Limited. Dr Peter Goode was a Director of RAC, an investment of Transfield Services Limited, until 5 July 2011. Kate Munnings and Tiernan O’Rourke acted as alternate Directors to Dr Peter Goode until 5 July 2011. Dr Peter Goode was not paid for serving on the Board of RAC. A Transitional Services Agreement (‘TSA’) exists between RAC and Transfield Services (Australia) Pty Limited, a subsidiary of Transfield Services Limited. The wholly owned power stations within RAC are operated and maintained by Transfield Services (Australia) Pty Limited. The wholly owned wind farms within RAC are operated and maintained by Transfield Worley Power Services Pty Limited, a joint venture entity. These agreements are on normal commercial terms.

(F) LOANS TO EXECUTIVES AND EXECUTIVE-RELATED ENTITIES There were no loans to executives during the year ended 30 June 2012.

(G) TRANSACTIONS OF DIRECTORS AND DIRECTOR-RELATED ENTITIES CONCERNING SHARES OR PERFORMANCE AWARDS Aggregate numbers of company shares, share options and performance awards of Transfield Services Limited acquired or disposed of by the Directors or their Director-related entities:

2012 2011 NUMBER NUMBER

Acquisitions Ordinary shares 55,000 615,853

Aggregate acquisition of ordinary shares includes: Acquired by normal on-market means and participation in 2:9 accelerated non-renounceable entitlement offer - 615,853 Disposals Ordinary shares - -

Aggregate numbers of shares and performance awards of Transfield Services Limited held directly, indirectly or beneficially by Directors of the Company or the consolidated entity or their Director-related entities at statement of financial position date: Ordinary shares 119,442,457 119,387,457

Performance Awards over ordinary shares 336,600 364,456

2012 TRANSFIELD SERVICES 109 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 27. RELATED PARTY TRANSACTIONS (CONTINUED)

(H) TRANSACTIONS WITH DIRECTORS AND DIRECTOR-RELATED ENTITIES Aggregate amounts of transactions with Directors and their Director-related entities recognised as income or (expenses):

2012 2011 $’000 $’000

Director related entities of Anthony Shepherd, Dr Peter Goode (RAC) Management services fee 2,245 7,102 Operations and maintenance services fee 26,879 31,279 Success, advisory, development and major works fees - 20,000 Cash distribution received 6,207 15,581

Director related entities of Guido and Luca Belgiorno-Nettis Corporate services provided by Transfield Corporate Pty Limited* - (331) Information technology services provided to Transfield Corporate Pty Limited - - - (331)

The unpaid amounts at 30 June owing (to) / by Director related entities are: RAC 9,590 22,157 Transfield Corporate Pty Limited 114 (4) 9,704 22,153

* Inclusive of Director’s fees, trademark registration fee reimbursements and other corporate costs.

Directors and director related entities that are shareholders have received dividends and had the right to participate in the rights offer on the same terms and conditions that apply to other shareholders. Dividends 8,617 8,574

(I) OTHER RELATED PARTIES Aggregate amounts included in the determination of operating profit before income tax resulted from transactions with each class of other related parties. As set out in Note 4, the ANZ segment results include $19,556,000 earned on the sale of operations and maintenance business to a joint venture entity. This sale enables the expansion of an existing joint venture arrangement to capitalise on existing market opportunities within Australia and overseas. Transactions with joint venture entities, partnerships and associates were made on normal commercial terms and conditions and at market rates, except that there are no fixed terms for the repayment of loans between the parties.

2012 2011 $’000 $’000

Conversion of loan to joint ventures and partnerships from equity investment - (1,145) Repayments of borrowings by joint ventures and partnerships (2,598) (7,378) Loans to joint ventures and partnerships 17,896 2,276

110 TRANSFIELD SERVICES 2012 Aggregate amounts receivable from, and payable to, each class of other related parties at statement of financial position date are as follows:

2012 2011 $’000 $’000 Receivables and loans Joint venture entities and partnerships 17,641 2,343

No provision for impaired receivables has been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties.

RECONCILIATION OF LOANS Loans from joint ventures and partnerships At 1 July - - Loans received - 2,400 Loan transferred to equity investment - (2,400) At 30 June - -

Loans to joint ventures and partnerships At 1 July 2,343 8,900 Loan transferred (to) equity investment - (1,255) Effect of changes in exchange rates - (200) Loan repayments received (2,598) (7,378) Loans advanced 17,896 2,276 At 30 June 17,641 2,343

No provisions for impairment losses have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties.

(J) GUARANTEES The parent entity provides performance guarantees from time to time on behalf of wholly owned subsidiaries, associates, related parties and joint venture entities and partnerships. These guarantees will only crystallise if the respective guaranteed parties fail to meet their performance obligations. There are also cross guarantees given by Transfield Services Limited, Transfield Services (Holdings) Pty Limited, Transfield Services (Australia) Pty Limited, APP Corporation Pty Limited, Australia Pty Limited, Broadspectrum (WA) Australia Pty Limited, Broadspectrum (Qld) Australia Pty Limited and Transfield Services Engineering Group Pty Limited, ICD Asia Pacific Pty Limited, Transfield Services (Oil & Gas) Pty Limited, Easternwell Group Pty Limited, Piver Pty Limited, Easternwell WA Pty Limited, Gorey & Cole Holdings Pty Limited, Gorey & Cole Drillers Pty Limited, Australian Drilling Solutions Pty Limited, Sides Drilling Pty Limited, Sides Drilling Contractors Pty Limited (trading in its own right), Sides Drilling Contractors Pty Limited ATF the Sides Drilling Contractors Trust, Easternwell Group Investments Pty Limited, Easternwell Group Operations Pty Limited, OGC Services Pty Limited and Easternwell Drilling Holdings Pty Limited, as described in Note 40. No deficiencies of assets exist in any of these companies. No liability has been recognised by the parent entity or the Group in relation to these guarantees.

(K) OWNERSHIP INTERESTS IN RELATED PARTIES Interests held in the following classes of related parties are set out in the following notes: Note (a) Investment in associate 30 (b) Interests in joint ventures and partnerships 31

2012 TRANSFIELD SERVICES 111 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 28. KEY MANAGEMENT PERSONNEL

KEY MANAGEMENT PERSONNEL

2012 2011 $’000 $’000 Short-term employee benefits (cash salary & fees, cash bonuses and non-monetary benefits) 7,182 10,138 Long-term employee benefits 150 88 Post-employment benefits 207 215 Share-based payments 1,821 1,769 9,360 12,210

Detailed remuneration disclosures in respect of key management personnel can be found in the Remuneration Report on pages 45-63.

EQUITY INSTRUMENT DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL AND PERFORMANCE AWARDS Performance Awards provided as remuneration and shares issued on exercise of such Performance Awards Details of Performance Awards provided as remuneration and shares issued on the exercise of such Performance Awards, together with terms and conditions of the Performance Awards, can be found in the Remuneration Report on pages 45-63. The number of Performance Awards over ordinary shares in the Company held during the financial year by each Director of Transfield Services Limited and other key management personnel of the Group, including their personally related parties, are set out below.

BALANCE AT EXERCISED BALANCE AT 2012 THE START OF GRANTED AS DURING THE THE END OF VESTED AND NAME THE YEAR COMPENSATION YEAR FORFEITED15 THE YEAR EXERCISABLE UNVESTED Directors Dr Peter Goode 364,456 336,600 - - 701,056 - 701,056

Other key management personnel of the Group Larry Ames 99,763 130,730 - - 230,493 - 230,493 Elizabeth Hunter 105,784 84,389 - - 190,173 - 190,173 Gareth Mann16 - 101,227 - - 101,227 - 101,227 Steve MacDonald 71,299 99,593 - - 170,892 - 170,892 Kate Munnings 145,619 101,202 (11,495) (7,200) 228,126 - 228,126 Tiernan O’Rourke 126,083 192,477 (5,237) - 313,323 - 313,323 Philip Wratt 49,849 74,283 - - 124,132 - 124,132 Nicholas Yates 75,307 151,547 - (4,300) 222,554 - 222,554 673,704 935,448 (16,732) (11,500) 1,580,920 - 1,580,920 1,038,160 1,272,048 (16,732) (11,500) 2,281,976 - 2,281,976

Larry Ames ceased to be a key management personnel on 1 August 2012. Gareth Mann ceased to be a key management personnel on 7 August 2012.

15 Performance awards reflected as forfeited in these tables are those that have failed to meet vesting conditions, and are not subject to any further retesting, or those awards that are unlikely to meet vesting conditions under the terms of the grant. Legal forfeiture of the performance award is in accordance with the Plan Rules and grant terms. 16 Gareth Mann commenced employment on 1 November 2011. Awards were granted on 30 September 2011.

112 TRANSFIELD SERVICES 2012 BALANCE AT EXERCISED BALANCE AT 2011 THE START OF GRANTED AS DURING THE THE END OF VESTED AND NAME THE YEAR COMPENSATION YEAR FORFEITED17 THE YEAR EXERCISABLE UNVESTED Directors Dr Peter Goode 118,434 246,022 - - 364,456 - 364,45618 Other key management personnel of the Group Larry Ames - 99,763 - - 99,763 - 99,76319 Elizabeth Hunter 64,400 61,934 - (20,550) 105,784 - 105,784 Bruce James 352,150 230,815 (10,482) (113,168) 459,315 - 459,315 Steve MacDonald 102,650 71,299 (18,361) (84,289) 71,299 - 71,299 Kate Munnings 107,068 72,169 - (33,618) 145,619 - 145,619 Tiernan O’Rourke - 126,083 - - 126,083 - 126,08320 Philip Wratt - 49,849 - - 49,849 - 49,84921 Nicholas Yates 49,900 36,707 - (11,300) 75,307 - 75,30722 676,168 748,619 (28,843) (262,925) 1,133,019 - 1,133,019 794,602 994,641 (28,843) (262,925) 1,497,475 - 1,497,475

17 Performance awards reflected as forfeited in these tables are those that have failed to meet vesting conditions, and are not subject to any further retesting, or those awards that are unlikely to meet vesting conditions under the terms of the grant. Legal forfeiture of the performance award is in accordance with the Plan Rules and grant terms. 18 118,434 shares were granted provisionally in 2010. The amount granted as compensation in 2011 includes the balance of awards granted in October 2010. 19 Larry Ames commenced employment on 4 January 2010. Awards were granted on 6 October 2010. 20 Tiernan O’Rourke commenced employment on 11 January 2010. Awards were granted on 6 October 2010. 21 Philip Wratt commenced employment on 11 January 2010. Awards were granted on 6 October 2010. 22 Nicholas Yates commenced employment on 14 September 2009. He became a member of key management on 7 April 2011 upon promotion to Chief Executive - ANZ Infrastructure.

Shareholdings The number of shares in the Company held during the financial year by each Director of Transfield Services Limited and other key management personnel of the Group, including their personally related parties, are set out below.

BALANCE AT RECEIVED DURING THE OTHER CHANGES DURING THE BALANCE AT THE START OF YEAR ON THE EXERCISE YEAR – ACQUISITIONS/ THE END OF 2012 THE YEAR OF OPTIONS / AWARDS (DISPOSALS) THE YEAR Directors Anthony Shepherd 129,483 - 25,000 154,483 Dr Peter Goode 611,111 - - 611,111 Jagjeet Bindra 56,541 - - 56,541 Guido Belgiorno-Nettis AM 58,348,879 - - 58,348,879 Luca Belgiorno-Nettis AM 60,020,472 - - 60,020,472 Steven Crane 141,778 - - 141,778 Douglas Snedden 64,525 - 20,000 84,525 Diane Smith-Gander 14,668 - 10,000 24,668 Graeme Hunt - - - - Other key management personnel of the Group Larry Ames - - - - Elizabeth Hunter - - - - Bruce James 51,947 - - 51,947 Gareth Mann - - - - Steve MacDonald 26,627 - - 26,627 Kate Munnings - 11,495 - 11,495 Tiernan O’Rourke - 5,237 - 5,237 Philip Wratt - - - - Nicholas Yates 79,807 - - 79,807 119,545,838 16,732 55,000 119,617,570

2012 TRANSFIELD SERVICES 113 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 28. KEY MANAGEMENT PERSONNEL (CONTINUED)

EQUITY INSTRUMENT DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL AND PERFORMANCE AWARDS (CONTINUED)

BALANCE AT THE RECEIVED DURING THE OTHER CHANGES DURING THE BALANCE AT START OF THE YEAR ON THE EXERCISE YEAR – ACQUISITIONS/ THE END OF 2011 YEAR OF OPTIONS / AWARDS (DISPOSALS) THE YEAR Directors Anthony Shepherd 124,691 - 4,792 129,483 Dr Peter Goode 500,000 - 111,111 611,111 Jagjeet Bindra 5,000 - 51,541 56,541 Guido Belgiorno-Nettis AM 58,255,347 - 93,532 58,348,879 Luca Belgiorno-Nettis AM 59,797,869 - 222,603 60,020,472 Steven Crane 111,207 - 30,571 141,778 Douglas Snedden 48,000 - 16,525 64,525 Diane Smith-Gander - - 14,668 14,668 Other key management personnel of the Group Larry Ames - - - - Elizabeth Hunter - - - - Bruce James 32,020 - 19,927 51,947 Steve MacDonald 139 - 26,488 26,627 Kate Munnings - - - - Tiernan O’Rourke - - - - Philip Wratt - - - - Nicholas Yates 55,712 - 24,095 79,807 118,929,985 - 615,853 119,545,838

OTHER TRANSACTIONS WITH DIRECTORS AND KEY MANAGEMENT PERSONNEL Dividends received by Directors and key management personnel during the year ended 30 June 2012 amounted to $8,617,010 (2011: $8,574,375).

NOTE 29. BUSINESS COMBINATIONS

ACQUISITIONS – 2012 Details of the Group’s acquisition of Inser-Transfield Services SA during the year:

(A) PURCHASE CONSIDERATION Cash paid on settlement 19,935 Contingent consideration - Deferred consideration - Fair value of equity accounted interest held prior to business combination 25,624

Total purchase consideration 45,559 Fair value of net identifiable assets acquired 21,459 Non-controlling interest (773) Goodwill 24,873

114 TRANSFIELD SERVICES 2012 (B) ASSETS AND LIABILITIES ACQUIRED The following fair values have been determined on a provisional basis. If new information obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date identifies adjustments to the above amount for provisions, or any additional provisions that existed at the acquisition date, then the acquisition accounting will be revised.

PROVISIONAL CARRYING AMOUNT FAIR VALUE Cash and cash equivalents 583 583 Trade and other receivables 12,397 12,402 Inventory and work in progress 1,019 1,019 Other assets 684 684 Property, plant and equipment 7,744 7,744 Customer relationships - - Contract intangibles 10,387 25,844 Trademarks and brands - - Trade and other payables (9,413) (9,413) Loans and borrowings (9,407) (9,407) Employee benefits provisions (4,933) (4,933) Other liabilities (3,064) (3,064) Net identifiable assets 5,997 21,459

(C) DETAILS OF ACQUISITION Inser-Transfield Services SA On 27 March 2012, the Group acquired a controlling interest in Inser-Transfield Services SA (Inser) through the acquisition of an additional 40 per cent of the share capital. The Group now holds 90 per cent of the share capital of Inser. Inser had previously been recorded as a joint venture prior to the acquisition of a controlling interest. The gain on acquisition of the controlling interest in Inser as disclosed in Note 32 has been recognised in operating revenues as disclosed in Note 5. The additional interest was acquired to expand the Group’s presence in mining and power generation services in South America. Goodwill is attributable to market growth opportunities as well as revenue synergies from service growth in the South American market. Since acquisition, Inser has contributed $22,751,000 to the Group’s consolidated revenue total, and $928,000 to the Group’s consolidated net profit for the period. Had the acquisition taken place on 1 July 2011, Inser would have contributed $77,472,000 in revenue and $4,088,000 in net loss to the Group. Transaction costs of $485,000 were expensed in the statement of comprehensive income. Total cash consideration, net of cash acquired was $19,352,000.

Other acquisitions On 1 June 2012, the Group acquired the business assets of Steier Oil Field Service (Steier) for total consideration of $22,942,000, comprising cash consideration of $20,042,000 and deferred consideration of $2,900,000. The business was acquired to expand the Group’s presence in mining services in North America. The carrying value and provisional fair value of the net assets acquired included property, plant and equipment and other assets of $3,338,000. The net assets acquired also included identifiable intangible assets with a provisional fair value of $8,860,000 and goodwill of $10,744,000. Goodwill is attributable to market growth opportunities in North America and the technical skill and capability of the workforce and key management personnel. On 5 June 2012, the Group acquired 100% of the share capital of Chesterton International (NSW) Pty Limited (Chesterton) for total consideration of $8,305,000, comprising cash consideration of $3,000,000 and contingent consideration of $5,305,000. Contingent consideration is dependent on the future results of the entity. The business was acquired to expand the Group’s service offering in facilities management. The carrying value of net assets acquired included contract intangibles of $5,500,000, which the Group has provisionally assessed to have a nil fair value pending measurement finalisation. The carrying value and provisional fair value of the remaining identifiable net assets also included other assets of $1,468,000, cash overdraft of $747,000 and other liabilities of $998,000. Goodwill is attributable to the technical skill and capability of the workforce and key management personnel. The revenue and profit contributions from these acquisitions are immaterial to the Group’s results.

2012 TRANSFIELD SERVICES 115 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 29. BUSINESS COMBINATIONS (CONTINUED) ACQUISITIONS – 2011 On 22 December 2010, the Group acquired 100 per cent of the issued share capital of Easternwell Group Pty Limited (Easternwell) in order to expand market share and broaden the Group’s service capability and deliver on the Group’s strategy to pursue higher value work. Easternwell delivers specialist drilling services to the oil and gas industries. Transaction costs of $6,840,000 relating to the acquisition were expensed during the period. The carrying amounts and fair values of the assets and liabilities acquired were:

CARRYING PROVISIONAL VALUE FAIR VALUE $’000 $’000 Cash and cash equivalents 13,961 13,961 Trade and other receivables (net of provision for doubtful debts) 31,116 29,569 Inventory and work in progress (net of provision for obsolete stock) 5,354 4,628 Other assets 3,300 1,983 Property, plant and equipment 135,744 135,744 Deferred tax asset 2,392 19,078 Equity accounted investments 11,208 43,900 Trade and other payables (18,049) (23,435) Finance lease liability (858) (858) Employee benefits provisions (2,799) (2,799) Income tax payable and deferred tax liability (16,200) (36,689) Net carrying value 165,169 185,082 Consideration 598,215 Goodwill and intangible assets recognised 413,133 Comprising: - Customer relationships 96,100 - Brands 6,300 - Goodwill 310,733 413,133

Goodwill is attributable to growth opportunities available to Easternwell and the expansion of markets for the Group’s Resources and Energy sector. The results for the post-acquisition period from 22 December 2010 to 31 December 2010 were not material. Had the results of Easternwell been included from the beginning of the financial year, a further $27,800,000 of statutory EBITDA would have been recognised.

116 TRANSFIELD SERVICES 2012 (A) PURCHASE CONSIDERATION $’000 Purchase consideration Cash paid on initial settlement 545,587 Contingent consideration and working capital adjustment 18,244 Scrip issued to vendors 34,384 Total purchase consideration 598,215

Initial outflow of cash to acquire subsidiary 545,587 Working capital adjustment 1,244 Non-controlling interest 189 Less: Cash and cash equivalents acquired (13,961) Net cash outflow 533,059

In addition to the acquisition of Easternwell, the Group also acquired the assets (property, plant and equipment), business and associated contracts of Silver City Drilling for $20,000,000 on 14 February 2011. The carrying value and fair value of the equipment acquired was $6,234,000 and the contracts were valued at $3,200,000 (included in contract intangibles). A net deferred tax liability of $1,134,000 was also recognised on acquisition. Goodwill of $11,700,000 was recognised on acquisition.

(B) CHANGES TO PROVISIONAL FAIR VALUES $’000 Goodwill provisionally recognised at 30 June 2011 310,733

Adjustments to fair values: Customer relationships 19,400 Income tax payable and deferred tax liability (650) Trade and other payables 3,335 Property, plant and equipment 2,300 Other assets 102 Final goodwill balance at 30 June 2012 335,220

2012 TRANSFIELD SERVICES 117 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 30. INVESTMENT IN ASSOCIATE

OWNERSHIP INTEREST CARRYING AMOUNT

COUNTRY OF PRINCIPAL 2012 2011 2012 2011 NAME INCORPORATION ACTIVITY % % $’000 $’000

RATCH Australia Corporation Australia Infrastructure - 20.0 - 65,483 Limited (‘RAC’) asset ownership

(A) MOVEMENTS IN CARRYING AMOUNTS OF INVESTMENT IN ASSOCIATE Carrying amount at the beginning of the financial year 65,483 179,200 Share of operating profits / (losses) after income tax 10,984 (24,383) Additional capital contribution 3,871 - Share of hedging reserve (Note 24 (a)) (8,265) 3,865 Gain on partial dilution through dividend reinvestment plan - 441 Distribution received (6,207) (15,583) 65,866 143,540 Carrying value of investment reclassified as available-for-sale financial asset23 (65,866) - Carrying value of investment reclassified as held for sale - (78,057) Carrying amount at the end of the financial year - 65,483

(B) SHARE OF (LOSSES) / PROFITS OF ASSOCIATE Operating profits / (losses) before income tax 5,487 (25,048) Income tax benefit / (expense) 5,497 665 Operating profits / (losses) after income tax 10,984 (24,383) Less: distributions received (6,207) (15,583) 4,777 (39,966) Accumulated losses attributable to associates at the beginning of the financial year (80,008) (40,042) Accumulated losses attributable to associates at the end of the financial year (75,231) (80,008)

(C) SHARE OF ASSOCIATES’ EXPENDITURE COMMITMENTS Lease commitments - 159 Other commitments - - Total expenditure commitments - 159

(D) SUMMARISED FINANCIAL INFORMATION OF ASSOCIATE

GROUP’S SHARE OF:

ASSETS LIABILITIES REVENUES PROFIT $’000 $’000 $’000 $’000

2012 - - - -

2011 181,148 115,665 61,172 14,197

23 As detailed in Note 3a, the Group reclassified its 20 per cent ownership interest in RAC from an investment in associate to an available-for-sale financial asset as the investment no longer meets the criteria of an associate under the accounting standards. A net gain has been recognised on reclassification after taking into account the recycling of hedge reserves and provisions.

118 TRANSFIELD SERVICES 2012 NOTE 31. INTERESTS IN JOINT VENTURES AND PARTNERSHIPS

OWNERSHIP INTEREST CARRYING AMOUNT

COUNTRY OF 2012 2011 2012 2011 NAME OF JOINT VENTURE OR PARTNERSHIP INCORPORATION PRINCIPAL ACTIVITY % % $’000 $’000 Incorporated joint ventures Translink Investments Pty Limited Australia Electronic tolling equipment 50 50 1,232 1,248 Metrolink Victoria Pty Limited Australia Tram franchise operator 50 50 - - Transfield Foundation Pty Ltd Australia Australian charity 50 50 - - Transfield Worley Power Services Pty Limited Australia Operations and maintenance 50 50 16,155 3,169 Transdev NSW Pty Limited Australia Public transport - - - 23 Flint Transfield Services Limited Canada Operations and Maintenance 50 50 13,038 16,300 Transfield Dexter Gateway Services Limited Canada Operations and Maintenance 50 50 7,919 1,243 Inser – Transfield Services SA Chile Operations and Maintenance 9024 50 - 17,255 TGE Energy Services (NZ) Ltd New Zealand Operations and Maintenance - 50 - - Transfield Worley Limited New Zealand Operations and maintenance 50 50 10,878 10,492 Transfield Services – Worley Parsons JV (M) Sdn Bhd Malaysia Operations and Maintenance 50 50 791 81 Emirates Transfield Services LLC UAE Operations and Maintenance 49 49 - - Transfield Mannai Facilities Management Services WLL Qatar Operations and Maintenance 49 49 3,052 4,349 Transfield WorleyParsons Nouvelle Caledonie New Caledonia Operations and maintenance 50 50 4,385 3,249 Easternwell Drilling Services Holdings Pty Limited Australia Operations and maintenance 50 50 48,741 45,379 106,191 102,788

Unincorporated joint ventures Transfield Worley Services (Woodside) Australia Operations and maintenance 50 50 145 145 Transfield Worley Services JV Australia Operations and maintenance 50 50 20,517 14,839 Transfield Worley Solutions JV Australia Operations and maintenance 50 50 639 777 Sentinar - Transfield Silcar JV Australia Operations and maintenance 50 50 110 263 Transfield Services WorleyParsons Malaysia Malaysia Operations and Maintenance 50 50 38 101 Transfield Worley TRAGS JV Qatar Operations and maintenance 27.5 27.5 21 1,419 Trility - TS JV (formerly United Utilities) Australia Operations and maintenance 50 50 1,742 1,720 Baulderstone JV Australia Operations and Maintenance - 50 - - Monadelphous Engineering (MTS Joint Venture) Australia Operations and Maintenance 50 - 887 - Allwater Australia Operations and Maintenance 50 - 5,442 - TWH Ahuroa JV New Zealand Operations and Maintenance 50 - - - Cert-Tram JV Australia Operations and Maintenance 50 - - - Transfield Services MacDow JV New Zealand Operations and Maintenance 33.3 - - - 29,541 19,264

Partnerships Partnership Australia Operations and maintenance 50 50 101 101 PPS Partnership Australia Operations and maintenance - 50 - 175 Harbour City Ferries Partnership Australia Operations and maintenance 50 - - -

135,833 122,328

24 Control gained during the year. Refer to Note 29(a) and Note 42(e).

2012 TRANSFIELD SERVICES 119 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 31. INTERESTS IN JOINT VENTURES AND PARTNERSHIPS (CONTINUED)

2012 2011 $’000 $’000 Retained profits attributable to the joint venture entities and partnerships Balance at 1 July 51,504 39,816 Current year profit before tax 53,020 59,259 Income tax expense (8,781) (10,886) Distributions / dividends received (36,852) (36,685) Balance at 30 June 58,891 51,504

Movements in carrying value of investment in joint venture entities and partnerships Balance at 1 July 122,328 89,308 Effect of changes in foreign exchange rates 81 (5,871) Correction of prior year results / Other 321 - Investment and loans in joint ventures 23,976 42,755 Disposals and reclassifications on acquisition of controlling interest in joint venture (18,260) (15,552) Distributions / dividends received (36,852) (36,685) Share of operating profits after tax 44,239 48,373 Balance at 30 June 135,833 122,328

INCORPORATED UNINCORPORATED JOINT VENTURES JOINT VENTURES PARTNERSHIPS TOTAL

201225 2011 2012 2011 2012 2011 2012 2011 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Share of joint venture entities and partnerships’ revenues, expenses and results Revenues 517,970 605,835 210,404 157,379 3,250 24,617 731,624 787,831 Operating expenses (472,665) (555,609) (194,533) (142,392) (3,102) (23,562) (670,300) (721,563) Earnings before interest, taxation, depreciation and 45,305 50,226 15,871 14,987 148 1,055 61,324 66,268 amortisation Depreciation (5,296) (3,477) - - - - (5,296) (3,477) Earnings before interest, taxation and amortisation 40,009 46,749 15,871 14,987 148 1,055 56,028 62,791 Amortisation - (19) - - - - - (19) Earnings before interest and taxation 40,009 46,730 15,871 14,987 148 1,055 56,028 62,772 Net finance income / (expense) (3,174) (3,594) 166 81 - - (3,008) (3,513) Net profit before income tax 36,835 43,136 16,037 15,068 148 1,055 53,020 59,259 Taxation (8,777) (10,864) (4) (22) - - (8,781) (10,886) Net profit after tax 28,058 32,272 16,033 15,046 148 1,055 44,239 48,373

25 Includes profits from Inser-Transfield Services SA up until the date of acquisition of controlling interest.

120 TRANSFIELD SERVICES 2012 2012 2011 $’000 $’000 Share of joint ventures partnerships’ assets and liabilities Cash 34,773 22,000 Other current assets 195,595 143,898 Non-current assets 114,248 95,969 Total assets 344,616 261,867

Current borrowings 45,106 43,332 Other current liabilities 120,804 82,016 Non-current borrowings 19,681 10,999 Other non-current liabilities 5,557 5,191 Total liabilities 191,148 141,538

Net assets 153,468 120,329

Share of joint ventures and partnerships’ commitments Lease commitments 11,057 13,557 Other commitments 7,358 - Total expenditure commitments 18,415 13,557

NOTE 32. RECONCILIATION OF OPERATING PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES

2012 2011 $’000 $’000 Total operating profit / (loss) after income tax 85,024 (19,275) Add: Deficit / (excess) of net cash finance costs over accounting cost 5,303 5,705 Add: Share based payments 3,977 4,607 Add: Depreciation 70,476 53,190 Add: Amortisation 21,274 28,053 Add: Loss on sale of USM (non-cash items) - 18,131 Add: Cumulative USM foreign exchange reserve reclassified to the income statement - 50,301 Less: Net gain from reclassification of investment in RAC to asset held for sale - (2,677) Less: Net gain from acquisition of Inser-Transfield Services SA (7,684) - Less: Net gain on recognition of RAC as a financial asset (9,876) - Unrealised foreign exchange loss (526) (9,442) Cash on disposal of operations and maintenance business recognised in investing activities (18,250) - Difference between share of associate and joint ventures’ results and distributions/dividends received 1,956 40,340 Other non-cash items (10,908) (13,490) Change in operating assets and liabilities, net of effects from purchase of controlled entity Increase in trade and other receivables (14,291) (53,626) Increase in inventories (78,123) (19,520) Decrease in deferred tax assets 7,255 44,351 (Increase) / decrease in other operating assets (26,909) 1,627 Increase in income tax receivable (13,921) - Increase in trade and other payables 57,237 40,072 Decrease in provision for income tax payable - (69,045) Increase in provision for deferred tax liabilities 982 1,129 Increase / (decrease) in employee and other provisions 49,706 (18,225) Net cash inflow from operating activities 122,702 82,206

2012 TRANSFIELD SERVICES 121 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 33. EARNINGS / (LOSS) PER SHARE

2012 2011 CENTS CENTS (A) BASIC EARNINGS / (LOSS) PER SHARE

From continuing operations attributable to the ordinary equity holders of the company 15.6 8.8 From discontinued operations - (12.8) Total basic earnings / (loss) per share attributable to the ordinary equity holders of the Company 15.6 (4.0)

(B) DILUTED EARNINGS / (LOSS) PER SHARE

From continuing operations attributable to the ordinary equity holders of the company 15.6 8.8 From discontinued operations - (12.8) Profit / (loss) per share attributable to the ordinary equity holders of the Company 15.6 (4.0)

(C) RECONCILIATIONS OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE Basic earnings / (loss) per share Profit / (loss) attributable to the ordinary equity holders of the company used in calculating basic earnings per share: From continuing operations 84,765 43,949 From discontinued operations - (63,224) Profit / (loss) attributable to the ordinary equity holders of the Company used in calculating basic earnings per share 84,765 (19,275)

Diluted earnings / (loss) per share From continuing operations 84,765 43,949 From discontinued operations - (63,224) Profit / (loss) attributable to the ordinary equity holders of the Company used in calculating basic and diluted 84,765 (19,275) earnings per share

NUMBER NUMBER (D) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR

Weighted average number of shares used as the denominator in calculating basic and diluted earnings per share 541,739,732 492,400,617

Only Options and Performance Awards which have vested but remain unexercised are used in the calculation of diluted earnings per share. The Group’s current policy is to acquire vested Options and Performance Awards on-market rather than by issuing new shares and the inclusion of options and performance rights would be antidilutive.

122 TRANSFIELD SERVICES 2012 NOTE 34. REMUNERATION OF AUDITORS

2012 2011 $ $ During the year the following amounts were paid to the auditor of the parent entity, its related practices and non-related audit firms.

1. Audit services Audit and review of financial reports fees paid to KPMG 2,228,700 1,816,500 Fees paid to non KPMG audit firms 12,000 - Total remuneration for audit services 2,240,700 1,816,500

2. Other assurance services Other assurance and due diligence services fees paid to KPMG 123,800 279,100

3. Taxation services Fees paid to KPMG: Research and development advice 375,000 500,000 Advice on national payroll tax project work 16,100 95,600

Total remuneration for taxation services 391,100 595,600

Total remuneration of auditors 2,755,600 2,691,200

NOTE 35. EVENTS OCCURRING AFTER STATEMENT OF FINANCIAL POSITION DATE

The following significant events have occurred since the statement of financial position date and prior to signing the financial statements.

DIVIDEND DECLARATION On 16 August 2012, the Company announced the retirement of Luca Belgiorno-Nettis AM and Guido Belgiorno-Nettis AM from the Board of Directors, effective 30 August 2012, and the appointment of Roy McKelvie, effective 31 August 2012. On 29 August 2012, the Directors resolved to pay a dividend of 9.0 cents per share on 24 October 2012. The dividend reinvestment plan remains suspended for the 2012 final dividend.

NOTE 36. CONTINGENT LIABILITIES

Details and estimates of maximum amounts of contingent liabilities are as follows:

2012 2011 $’000 $’000 Bank guarantees in respect of contracts of wholly owned companies 182,332 158,665 Insurance bonds in respect of contracts of wholly owned companies 172,369 110,692 354,701 269,357 The Group’s share of bank guarantees in respect of contracts of joint ventures 16,193 28,157 370,894 297,514

The Group has entered into an unsecured Multi Option Bilateral Facility agreement under which bank guarantees and letters of credit are provided.

Bank guarantees and insurance bonds (excluding joint ventures and non-wholly owned companies) Used 354,701 269,357 Unused 217,508 165,353 Total facility 572,209 434,710

2012 TRANSFIELD SERVICES 123 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 36. CONTINGENT LIABILITIES (CONTINUED)

The Directors are not aware of any material claims on the consolidated entity except as follows:

Legal dispute A controlled entity in the Group is party to a dispute in relation to pre-acquisition road maintenance. Should the outcome of this action be unfavourable the cost for remediation may be borne by the subsidiary. The information usually required by AASB 137 Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it can be expected to prejudice the outcome of the legal dispute process. The Group is defending its position and the Directors continue to review the situation. The Directors are of the opinion that the dispute can be successfully resolved by the Group. No material loss is anticipated in respect of this matter.

NZ Inland Revenue Department (IRD) audit of the Group’s MCN Arrangement The Group operates in a number of tax and legal jurisdictions. From time to time legal entities such as Transfield Services are subject to compliance and other specific audit reviews by Federal and/or State tax authorities in the jurisdictions in which they operate. The IRD in New Zealand is conducting a review of a range of financial instruments used by companies in New Zealand during recent years covering many different industries and companies and centering on the deductibility of interest expense in New Zealand. As part of this review the IRD is currently investigating the tax treatment of the Mandatory Convertible Note (MCN) entered into by the Group. In October 2011 the IRD issued the Group with a Notice of Proposed Adjustment (NOPA) and in April 2012 with a Statement of Position (SOP) in accordance with established steps set out in the NZ Tax Administration Act. Receipt of a NOPA or a SOP does not constitute a Notice of Assessment, nor does it create any liability on the part of the Company. This matter is subject to a formal review process, however the Company believes it has no liability in respect of this matter and will continue to report this as a contingent liability.

NOTE 37. COMMITMENTS FOR EXPENDITURE

2012 2011 $’000 $’000 Operating leases Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year 47,271 53,442 Later than one year but not later than five years 92,428 97,778 Later than five years 11,434 8,795 Commitments not recognised in the financial statements 151,133 160,015

Finance leases Commitments in relation to finance leases are payable as follows: Within one year 17,179 6,548 Later than one year but not later than five years 23,140 16,430 Later than five years 15,432 2,789 Minimum lease charges 55,751 25,767 Future finance charges (9,794) (4,526) Total lease liabilities recognised as a liability 45,957 21,241

The average interest rate implicit in the leases is 6.78 per cent (2011: 8.12 per cent). Capital commitments

2012 2011 $’000 $’000 Commitments in relation to non-contracted capital expenditure is as follows: Within one year 45,803 13,684 Later than one year but not later than five years 4,446 1,634 Later than five years - 411 50,249 15,729

124 TRANSFIELD SERVICES 2012 NOTE 38. SHARE-BASED PAYMENTS

(A) TRANSHARE EXECUTIVE PERFORMANCE AWARDS PLAN A detailed analysis of the conditions of the TranShare Executive Performance Awards Plan is set out in the Remuneration Report on pages 45-63. Set out below are summaries of performance rights granted under the Plan:

BALANCE AT GRANTED EXERCISED FORFEITED BALANCE AT EXERCISABLE EXERCISE THE START OF DURING THE DURING THE DURING THE END OF AT THE END GRANT DATE EXPIRY DATE PRICE THE YEAR YEAR YEAR THE YEAR THE YEAR OF THE YEAR

NUMBER NUMBER NUMBER NUMBER NUMBER NUMBER Performance Rights – Long Term Incentive 28 February 2005 28 February 2012 $Nil 7,742 - (7,742) - - - 30 August 2005 30 August 2012 $Nil 88,591 - (13,291) (65,229) 10,071 10,071 19 April 2006 19 April 2012 $Nil 54,183 - (12,257) (41,926) - - 31 August 2006 31 August 2012 $Nil 40,300 - - (40,300) - - 28 February 2007 28 February 2013 $Nil 82,484 - (3,774) (77,588) 1,122 1,122 31 May 2007 31 May 2013 $Nil 28,750 - - (28,750) - - 31 August 2007 31 August 2013 $Nil 97,150 - - (97,150) - - 28 February 2008 28 February 2013 $Nil 139,450 - - (139,450) - - 31 August 2008 31 August 2014 $Nil 388,051 - - (53,400) 334,651 - 26 September 2009 26 September 2015 $Nil 1,841,298 - - (240,367) 1,600,931 - 6 October 2010 6 October 2014 $Nil 2,867,764 - (494,541) 2,373,223 - 30 September 2011 30 September 2014 $Nil - 4,173,000 - (243,800) 3,929,200 - 5,635,763 4,173,000 (37,064) (1,522,501) 8,249,198 11,193

Performance Rights – MD/CEO Medium Term Incentive 6 October 2010 6 October 2014 $Nil 364,456 - - - 364,456 - 30 September 2011 30 September 2014 $Nil - 336,600 - - 336,600 -

Performance Rights – General Medium Term Incentive 6 October 2010 6 October 2014 $Nil 200,921 - (87,344) (27,743) 85,834 - 30 September 2011 30 September 2014 $Nil - 417,700 - (24,350) 393,350 -

565,377 754,300 (87,344) (52,093) 1,180,240 -

Total Performance Rights 6,201,140 4,927,300 (124,408) (1,574,594) 9,429,438 11,193

The weighted average remaining contractual life of the performance rights outstanding at the end of the period was between two to three years.

2012 TRANSFIELD SERVICES 125 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 38. SHARE-BASED PAYMENTS (CONTINUED) Fair value of performance rights granted Fair values at grant date are independently determined. The assessed fair values at grant date of performance rights granted during the year ended 30 June 2012 are set out in the following tables. For performance rights with internal non-market related measures, values are determined using a binomial option pricing model and for performance rights with TSR hurdles, the Monte-Carlo simulation method is used. These valuation techniques take into account the exercise price, the term of the performance right, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the performance right, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the performance right. The expected volatility of the Company has been determined having regard to the historic volatility of the market price of the Company’s share and the mean reversion tendency of volatilities. The model inputs for performance rights granted during the year ended 30 June 2012 included:

30 SEPTEMBER 2011

AWARD TYPE MD/CEO MTI

TRANCHE 1 TRANCHE 2 TRANCHE 3 TRANCHE 4

Exercise price $Nil $Nil $Nil $Nil Consideration $Nil $Nil $Nil $Nil

Vesting conditions EBITDA margin growth ROFE growth EPS growth Relative TSR Expiry date 30-Sep-13 30-Sep-13 30-Sep-14 30-Sep-14 Share price at grant date $1.90 $1.90 $1.90 $1.90 Expected company share price volatility 35% 35% 35% 35% Expected dividend yield 5.75% 5.75% 5.00% 5.00% Risk free interest rate 3.62% 3.62% 3.61% 3.61% Fair value at grant date $1.69 $1.69 $1.64 $0.45

30 SEPTEMBER 2011

AWARD TYPE LTI PERFORMANCE RIGHTS MTI AWARDS

TRANCHE 1 TRANCHE 2 TRANCHE 3 TRANCHE 1 TRANCHE 2 Exercise price $Nil $Nil $Nil $Nil $Nil Consideration $Nil $Nil $Nil $Nil $Nil Vesting conditions EPS growth Relative TSR ROFE growth EBITDA hurdle EBITDA hurdle Expiry date 30-Sep-14 30-Sep-14 30-Sep-14 30-Sep-13 30-Sep-13 Share price at grant date $1.90 $1.90 $1.90 $1.90 $1.90 Expected company share price volatility 35% 35% 35% 35% 35% Expected dividend yield 5.00% 5.00% 5.00% 6.50% 5.75% Risk free interest rate 3.61% 3.61% 3.61% 3.62% 3.62% Fair value at grant date $1.64 $0.45 $1.64 $1.78 $1.69

(D) DEFERRED RETENTION INCENTIVE PLANS Short-term deferred incentive (ST-DI) The Company delivers the ST-DI component of its remuneration structure for North American participants by providing a specific value of their STI outcome in the form of deferred cash. Participation in the ST-DI is available in North America to the senior managers and selected high-performing managers who participate in the STI Plan but are not eligible to participate in the Company’s LTI Plan based on the eligibility criteria used for that component of remuneration. Individuals are nominated by Operational Chief Executive Officers for consideration by the Managing Director and Chief Executive Officer. The deferred payment under the ST-DI is subject to achieving the earnings targets and is subject to forfeiture in the event that employment within the Group is terminated within three years from the date the ST-DI payment determination date, or as per the contracted term.

General Medium-term Incentive (General MTI) A similar plan called the short-term deferred retention incentive (ST-DRI) was in place until 30 June 2010. Eligible employees retained their entitlements under the ST-DRI scheme however new awards are granted under the General MTI scheme which is issued under the TranShare Executive Performance Awards Plan.

126 TRANSFIELD SERVICES 2012 The Company delivers the General MTI component of its remuneration structure to employees who previously would have been eligible for the ST-DRI. Under the General MTI, eligible employees receive an award of performance rights based on a percentage of their total fixed remuneration. These performance rights are subject to vesting conditions based on the Company maintaining its earnings performance for 12 and 24 months from the base year. The number of performance rights to be offered to the participant under the general MTI is calculated by dividing the general MTI amount by the ten-day average closing price of the Company’s shares on the date the general MTI amount is approved. Shares are subject to forfeiture in the event that employment with the Group is terminated within two years from the date of grant.

(C) EMPLOYEE SHARE PLAN (TRANSHARE PLAN) A scheme, for which shares are acquired on-market on behalf of employees, was approved by shareholders at the 2004 annual general meeting. All Australian and New Zealand permanent full time and part time employees (excluding executive Directors) are eligible to participate in the scheme. Employees may elect not to participate in the scheme. The acquisition of shares under the TranShare Plan was suspended on 19 May 2009 following changes to the equity plan taxation legislation. The final restructure end dates for shares acquired under the plan were 24 June 2012 for the Australian participants and 23 June 2012 for New Zealand participants.

(D) EXPENSES ARISING FROM SHARE-BASED PAYMENT TRANSACTIONS Total expenses before tax arising from share-based payment transactions recognised during the year as a part of employee benefit expense were as follows:

2012 2011 $’000 $’000 Performance rights expensed under TranShare Executive Performance Awards Plan (LTI & MTI) 3,836 4,607 Short-term DRIs expensed 141 78 3,977 4,685

(E) SHARES UNDER AWARD / OPTION Unissued ordinary shares of Transfield Services Limited under Award at 30 June 2012 are as follows:

DATE AWARDS GRANTED EXPIRY DATE ISSUE PRICE OF SHARES NUMBER UNDER AWARDS 30 September 2011 30 September 2014 $Nil 4,659,150 6 October 2010 6 October 2014 $Nil 2,823,513 26 September 2009 26 September 2015 $Nil 1,600,931 31 August 2008 31 August 2010 $Nil 334,651 28 February 2008 28 February 2013 $Nil - 31 August 2007 31 August 2013 $Nil - 31 May 2007 31 May 2013 $Nil - 28 February 2007 28 February 2013 $Nil 1,122 31 August 2006 31 August 2012 $Nil - 19 April 2006 19 April 2012 $Nil - 30 August 2005 30 August 2012 $Nil 10,071 28 February 2005 28 February 2012 $Nil - 9,429,438

No Award holder has any right under the Awards Plan rules to participate in any other share issue of the Company or any other entity.

2012 TRANSFIELD SERVICES 127 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 39. ASSETS CLASSIFIED AS HELD FOR SALE

2012 2011 $’000 $’000

Securities in RAC classified as held for sale - 92,698

On 2 May 2011, the Group announced that it had entered into an agreement to dispose of 23.8% of the total securities of RAC for a consideration of $92,698,000 in convertible notes, which comprised $85,061,000 in principal payments with interest accruing. The convertible notes were recognised in assets classified as held for sale at 30 June 2011. In accordance with the terms of the disposal agreement, the Group received $42,308,000 on 5 January 2012 in consideration for the first tranche of the convertible notes, and a further $42,753,000 on 29 June 2012 in consideration for the final tranche of the convertible notes.

NOTE 40. DEED OF CROSS GUARANTEE

Transfield Services Limited and its wholly owned subsidiaries Transfield Services (Holdings) Pty Limited, Transfield Services (Australia) Pty Limited, APP Corporation Pty Limited, Broadspectrum Australia Pty Limited, Broadspectrum Australia (WA) Pty Limited, Broadspectrum Australia (Qld) Pty Limited, Transfield Services Engineering Group Pty Limited, ICD Asia Pacific Pty Limited, Transfield Services (Oil & Gas) Pty Limited, Easternwell Group Pty Limited, Piver Pty Limited, Easternwell WA Pty Limited, Gorey & Cole Holdings Pty Limited, Gorey & Cole Drillers Pty Limited, Australian Drilling Solutions Pty Limited, Sides Drilling Pty Limited, Sides Drilling Contractors Pty Limited (trading in its own right), Sides Drilling Contractors Pty Limited ATF the Sides Drilling Contractors Trust, Easternwell Group Investments Pty Limited, Easternwell Group Operations Pty Limited, OGC Services Pty Limited and Easternwell Drilling Holdings Pty Limited are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare and lodge a financial report and a director’s report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investment Commission. The above companies represent a ‘Closed Group’ for the purposes of the Class Order. As there are no other parties to the Deed of Cross Guarantee that are controlled by Transfield Services Limited, they also represent the ‘Extended Closed Group’.

(A) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND SUMMARY OF MOVEMENTS IN CONSOLIDATED RETAINED PROFITS Set out below is a consolidated statement of comprehensive income and summary of movements in consolidated retained profits for the Closed Group.

2012 2011 $’000 $’000 Revenue from continuing operations 2,250,784 1,875,196 Share of net profits of associates and joint venture entities accounted for using the equity method 27,297 20,307 Subcontractors, raw materials and consumables (888,629) (823,465) Employee benefits expense (1,062,359) (526,490) Depreciation and amortisation (55,332) (36,987) Other expenses (156,904) (552,622) Net finance costs (18,587) (40,151)

Profit / (loss) before income tax 96,270 (84,212) Income tax (expense) / benefit (17,993) 11,376 Profit / (loss) from continuing operations after income tax expense 78,277 (72,836) Net profit / (loss) 78,277 (72,836)

Retained profits Retained profits at the beginning of the financial year 9,555 147,158 Net profit / (loss) for the year 78,277 (72,836) Less: Dividends paid (76,053) (64,767) Retained profits at the end of the financial year 11,779 9,555

128 TRANSFIELD SERVICES 2012 (B) STATEMENT OF FINANCIAL POSITION Set out below is a consolidated statement of financial position for the Closed Group.

2012 2011 $’000 $’000 Current assets Cash and cash equivalents 35,932 45,546 Trade and other receivables 753,447 878,161 Income tax receivable 12,422 13,319 Inventories 85,796 43,323 Prepayments and other current assets 10,580 3,661 898,177 984,010 Asset classified as held for sale - 92,698 Total current assets 898,177 1,076,708

Non-current assets Prepayments and other non-current assets 41,476 26,347 Investments accounted for using the equity method 115,139 150,313 Other financial assets 133,348 45,322 Property, plant and equipment 260,662 176,173 Deferred tax assets 73,815 57,639 Intangible assets 519,899 482,981 Total non-current assets 1,144,339 938,775

Total assets 2,042,516 2,015,483

Current liabilities Trade and other payables 424,044 378,496 Loans and borrowings 547 66,670 Provision for employee benefits 77,146 74,487 Derivatives 6,030 85 Other provisions 21,029 3,031 Total current liabilities 528,796 522,769

Non-current liabilities Loans and borrowings 243,450 208,546 Deferred tax liabilities 71,992 32,782 Provision for employee benefits 18,029 4,843 Derivatives - 942 Other provisions 7,680 11,896 Total non-current liabilities 341,151 259,009

Total liabilities 869,947 781,778 Net assets 1,172,569 1,233,705

Equity Contributed equity 1,151,535 1,210,848 Reserves 9,255 13,623 Retained profits 11,779 9,555 Parent entity interest 1,172,569 1,234,026 Non-controlling interest - (321) Total equity 1,172,569 1,233,705

2012 TRANSFIELD SERVICES 129 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 41. DISCONTINUED OPERATIONS

(A) DETAILS OF OPERATIONS HELD FOR SALE On 30 June 2011, the Group completed a sale agreement for the disposal of USM, a company that provides janitorial maintenance services in the United States. There were no operations held for sale at 30 June 2012.

(B) FINANCIAL PERFORMANCE OF DISCONTINUED OPERATIONS The results of the discontinued operations for 30 June 2011 until disposal are presented below:

2011 $’000 Revenue 450,306 Expenses (445,151) Results from operating activities 5,155 Income tax credit 1,267 Profit after tax from operations - USM 6,422

Loss on disposal before taxation (18,131) Tax expense (1,214) (19,345) Reclassification of cumulative foreign currency translation reserve (previously recognised in reserves) (50,301) Total loss on disposal of USM (after tax) (69,646)

Profit after tax from operations - USM 6,422 Total loss on disposal of USM (after tax) (69,646) Loss from discontinued operations (63,224)

Basic and diluted loss per share from discontinued operations (12.8)

(C) ASSETS AND LIABILITIES — DISCONTINUED OPERATIONS The major classes of assets and liabilities of USM are as follows:

2011 $’000 Assets Cash and cash equivalents 801 Trade and other receivables 58,820 Property, plant and equipment 13,072 Intangible assets 252,707 Other assets 319 325,719

Liabilities Trade and other payables 46,267 Loans and borrowings 1,624 Other liabilities 18,645 66,536

Net assets attributable to discontinued operations 259,183

130 TRANSFIELD SERVICES 2012 (D) CASH FLOW INFORMATION — USM OPERATIONS The net cashflows of USM are as follows:

2011 $’000 Net operating cashflows 12,261 Net investing cashflows (5,334) Net financing cashflows (5,533) Net cashflows for the year 1,394

(E) LOSS ON DISPOSAL OF USM

2011 $’000 Consideration received or receivable: Cash 257,941 Carrying value of net assets sold (259,183) Loss on sale of investment (1,242) Less: Transaction costs (16,889) Loss on disposal before income tax (18,131) Income tax expense (1,214) Recycling of foreign currency translation reserve (50,301) Loss on disposal after income tax (69,646)

NOTE 42. PARENT ENTITY FINANCIAL INFORMATION

(A) SUMMARISED STATEMENT OF FINANCIAL POSITION

PARENT ENTITY

2012 2011 $’000 $’000 Current assets 1,252,744 1,266,876 Assets classified as held for sale - 92,698 Non-current assets 203,328 172,520 Total assets 1,456,072 1,532,094

Current liabilities 13,063 2,897 Non-current liabilities 225,192 256,109 Total liabilities 238,255 259,006

Net assets 1,217,817 1,273,088

Equity Contributed equity 1,151,535 1,211,013 Reserves 10,792 13,967 Retained profits 55,490 48,108 Total equity attributable to equity holders of the Company 1,217,817 1,273,088

2012 TRANSFIELD SERVICES 131 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 42. PARENT ENTITY FINANCIAL INFORMATION (CONTINUED)

(B) SUMMARISED STATEMENT OF COMPREHENSIVE INCOME

PARENT ENTITY

2012 2011 $’000 $’000 Revenue from ordinary activities 84,130 113,543 Share of net profits of associates and joint ventures accounted for using the equity method 5,796 - Depreciation and amortisation - - Net finance costs (12,285) (1,215) Interest paid / payable (8,180) (17,553) Amortisation of establishment fees (4,918) (3,685) Finance income 813 20,023 Other expenses (482) (870) Net loss on investment in RAC - (135,492) Profit/(loss) before income tax 77,159 (24,034)

Income tax (expense)/benefit (2,423) 29,452 Profit from continuing operations after income tax 74,736 5,418

Other comprehensive income (3,372) (784) Total comprehensive income for the period 71,364 4,634

Profit and total comprehensive income attributable to: Owners of the Company 71,364 4,634

(C) GUARANTEES AND CONTINGENT LIABILITIES The parent entity provides performance guarantees from time to time on behalf of wholly owned subsidiaries, associates, related parties and joint venture entities and partnerships. These guarantees will only crystallise if the respective guaranteed parties fail to meet their performance obligations. There are also cross guarantees given by entities within the Extended Closed Group. No deficiencies of assets exist in any of these companies. No liability has been recognised by the parent entity or the Group in relation to these guarantees, as the fair value of the guarantee is immaterial.

132 TRANSFIELD SERVICES 2012 Details and estimates of maximum amounts of contingent liabilities are as follows:

PARENT ENTITY

2012 2011 $’000 $’000

Bank guarantees in respect of contracts of wholly owned companies 182,332 158,665 Insurance bonds in respect of contracts of wholly owned companies 172,369 110,692 354,701 269,357 Transfield Services’ share of bank guarantees in respect of contracts of joint ventures 16,193 28,157 370,894 297,514

The parent entity has entered into an unsecured Multi Option Bilateral Facility agreement under which bank guarantees and letters of credit are provided. Bank guarantees and insurance bonds (excluding joint ventures and non-wholly owned companies)

Used 354,701 269,357 Unused 217,508 165,343 Total facility 572,209 434,700

The parent entity is, in the normal course of business, called upon to give guarantees and indemnities in respect of the performance by controlled entities, associates, related parties and joint venture entities and partnerships of their contractual and financial obligations. These guarantees and indemnities only give rise to a liability where the relevant guaranteed entity fails to perform its contractual obligations and the guarantee is called upon. The parent entity has a formal deed of guarantee to these entities. The Directors are not aware of any material claims on the parent entity.

(D) CAPITAL COMMITMENTS The parent entity has no capital commitments at 30 June 2012 (2011: $Nil).

E) INVESTMENTS IN CONTROLLED ENTITIES

ULTIMATE EQUITY COST OF PARENT ENTITY’S HOLDING INVESTMENT

CLASS OF COUNTRY OF SHARES AS 2012 2011 2012 2011 INCORPORATION APPLICABLE % % $’000 $’000 Transfield Services (Holdings) Pty Limited Australia Ordinary 100 100 81,013 81,013 Transfield Services (Australia) Pty Limited Australia Ordinary 100 100 14,76027 12,42027 Transfield Services (International) Pty Limited Australia Ordinary 100 100 - - Transfield Services (New Zealand) Limited New Zealand Ordinary 100 100 86327 65527 Transfield Metrolink Pty Limited Australia Ordinary 100 100 - - Transfield Services Engineering Group Pty Limited Australia Ordinary 100 100 - - Collinsville Operations Pty Limited Australia Ordinary 100 100 - - TranShare Plan Company Pty Limited Australia Ordinary 100 100 - - Transfield Services Share Plan Trust Australia Ordinary 100 100 - - Transfield Services (Asia) Sdn Bhd Malaysia Ordinary 100 100 - - Transfield Services (Malaysia) Sdn Bhd (In Members Voluntary Malaysia Ordinary 100 100 - - Liquidation) Transfield Services ( Ferries) Pty Limited Australia Ordinary 100 100 - - Transfield Services (NWDF) Pty Limited Australia Ordinary 100 - - - Transfield Services (Finance) Pty Limited Australia Ordinary 100 - - - Transfield Services (Sydney Ferries) Pty Limited Australia Ordinary 100 - - -

26 Legal ownership is 49 per cent however commercial ownership is 75 per cent-100 per cent. These entities are consolidated for Group reporting purposes. 27 Represents impact of share-based payment expenses borne by subsidiaries which are eliminated on consolidation.

2012 TRANSFIELD SERVICES 133 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 42. PARENT ENTITY FINANCIAL INFORMATION (CONTINUED)

E) INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)

ULTIMATE EQUITY COST OF PARENT ENTITY’S HOLDING INVESTMENT

CLASS OF COUNTRY OF SHARES AS 2012 2011 2012 2011 INCORPORATION APPLICABLE % % $’000 $’000 Broadspectrum Resources Pty Limited (In Liquidation) Australia Ordinary 100 100 - - Broadspectrum Australia Pty Limited Australia Ordinary 100 100 - - Broadspectrum Australia (WA) Pty Limited Australia Ordinary 100 100 - - Broadspectrum Australia (QLD) Pty Limited Australia Ordinary 100 100 - - Global Broadspectrum Sdn Bhd (In Members Voluntary Malaysia Ordinary 100 100 - - Liquidation) Transfield Services Mauritius Limited Mauritius Ordinary 100 100 - - Broadspectrum Pte Limited Singapore Ordinary 100 100 - - APP Corporation Pty Limited Australia Ordinary 100 100 9427 - APP Corporation (NZ) Limited New Zealand Ordinary 100 100 - - Chesterton International (NSW) Pty Limited Australia Ordinary 100 - - - Transfield Services Americas Inc, formerly known as (APP USA Ordinary 100 100 2,49527 2,10727 Corporation (North America) Inc.) Transfield Services Infrastructure Inc. (trading as Transfield USA Ordinary 100 100 42027 33727 Services North America Transportation Infrastructure) (formerly known as VMS. Inc) Transfield Asset Management Services, Inc (In liquidation) USA Ordinary 100 - - - Transfield Services Canada (Holdings) Limited Canada Ordinary 100 100 - - Transfield Services Canada Limited Canada Ordinary 100 100 1,06827 79427 Transfield Services Holdings (Delaware) Pty Limited LLC Australia / USA Ordinary 100 100 - - Aquas Holdings Pty Limited Australia Ordinary 100 100 - - Australian Quality Assurance Superintendence Pty Limited Australia Ordinary 100 100 - - Transfield Emdad Services LLC UAE Ordinary 4926 4926 - - Intergulf General Contracting LLC UAE Ordinary 4926 4926 - - Transfield Services (Chile) Pty Limited Australia Ordinary 100 100 - - Transfield Services (Delaware) General Partnership USA N/A 100 100 95227 95227 TIMEC Company Inc. USA Ordinary 100 100 1,61327 1,34827 TIMEC Operating Company, Inc USA Ordinary 100 100 - - TIMEC Specialty Services, Inc USA Ordinary 100 100 - - Transfield Services Upstream Holdings, LLC USA Ordinary 100 - - - Transfield Services Oilfields, LLC USA Ordinary 100 - - - HRI, Inc USA Ordinary 100 100 - - Tianjin Broadspectrum Electrical and Mechanical China Ordinary - 100 - - Commissioning Services Ltd (wound up on 18 April 2012) Transfield Services (India) Pty Limited Australia Ordinary 100 100 - - Hofincons Infotech Industrial Services Pvt Limited India Ordinary 100 100 - - TSNZ Pulp and Paper Maintenance Services Limited New Zealand Ordinary 100 100 - - Inversiones Transfield Services (Chile) Holdings Limitada Chile Ordinary 100 100 - - Inversiones Transfield Services (Chile) Limitada Chile Ordinary 100 100 - - Inser-Transfield Services SA (Chile) Chile Ordinary 90 - - - Ingeneria Ambiental y Servicios S.A. (Chile) Chile Ordinary 100 - - - Transfield Services Mannai Oil and Gas Services WLL Qatar Ordinary 4926 4926 - -

26 Legal ownership is 49 per cent however commercial ownership is 75 per cent-100 per cent. These entities are consolidated for Group reporting purposes. 27 Represents impact of share-based payment expenses borne by subsidiaries which are eliminated on consolidation.

134 TRANSFIELD SERVICES 2012 ULTIMATE EQUITY COST OF PARENT ENTITY’S HOLDING INVESTMENT

CLASS OF COUNTRY OF SHARES AS 2012 2011 2012 2011 INCORPORATION APPLICABLE % % $’000 $’000 Transfield Services Qatar LLC Qatar Ordinary 4926 4926 10527 - ICD (Asia Pacific Pty Limited (formerly known as Industrial Australia Ordinary 100 100 - - Contract Designers (Asia Pacific) Pty Limited) Transfield Services (Ontario) Limited Canada Ordinary 100 100 - - Transfield Services (Alberta) Limited Canada Ordinary 100 100 - - Transfield Services (Oil & Gas) Pty Limited Australia Ordinary 100 100 - - Easternwell Group Pty Limited Australia Ordinary 100 100 3627 - Piver Pty Limited Australia Ordinary 100 100 - - Porcelain Holdings Pty Limited Australia Ordinary 100 100 - - Colby Corporation Pty Limited Australia Ordinary 100 100 - - Colby Unit Trust Australia Ordinary 100 100 - - Easternwell WA Pty Limited Australia Ordinary 100 100 - - Gorey & Cole Holdings Pty Limited Australia Ordinary 100 100 - - Gorey & Cole Drillers Pty Limited Australia Ordinary 100 100 - - Australian Drilling Solutions Pty Limited Australia Ordinary 100 100 - - Sides Drilling Pty Limited Australia Ordinary 100 100 - - SDC Plant & Equipment Pty Limited Australia Ordinary 100 100 - - SDC Plant & Equipment Trust Australia Ordinary 100 100 - - Sides Drilling Contractors Pty Limited Australia Ordinary 100 100 - - Sides Drilling Contractors Trust Australia Ordinary 100 100 - - Peak Drilling Pty Limited Australia Ordinary 100 100 - - Easternwell Group Investments Pty Limited Australia Ordinary 100 100 - - Easternwell Engineering Pty Limited Australia Ordinary 100 100 - - Easternwell Group Assets Pty Limited Australia Ordinary 100 100 - - EWS Aircraft Pty Limited Australia Ordinary 100 100 - - EWG Aircraft Pty Limited Australia Ordinary 100 100 - - Easternwell Group Operations Pty Limited Australia Ordinary 100 100 - - Easternwell Training Pty Limited Australia Ordinary 100 100 - - Easternwell Service No2 Pty Limited Australia Ordinary 100 100 - - O.G.C Services Pty Limited Australia Ordinary 100 100 - - Easternwell Drilling Holdings Pty Limited Australia Ordinary 100 100 - - Easternwell Drilling Assets Pty Limited Australia Ordinary 100 100 - - Easternwell Drilling Pty Limited Australia Ordinary 100 100 - - Easternwell Drilling Labour Hire Pty Limited Australia Ordinary 100 100 - - Eastern Catering Services Holdings Pty Limited Australia Ordinary 100 100 - - Eastern Catering Services Pty Limited Australia Ordinary 100 100 - - ETSH Pty Limited Australia Ordinary 100 100 - - Eastern Pressure Control Pty Limited Australia Ordinary 51 51 - - Silver City Drilling (QLD) Pty Limited Australia Ordinary 100 100 - - Easternwell TS Pty Limited Australia Ordinary 100 100 - - 103,419 99,626

26 Legal ownership is 49 per cent however commercial ownership is 75 per cent-100 per cent. These entities are consolidated for Group reporting purposes. 27 Represents impact of share-based payment expenses borne by subsidiaries which are eliminated on consolidation.

2012 TRANSFIELD SERVICES 135 DIRECTORS’ DECLARATION FOR THE YEAR ENDED 30 JUNE 2012

In the Directors’ opinion: (a) the financial tatementss and notes set out on pages 66 to 135 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of their performance, as represented by the results of their operations, changes in equity and their cash flows, for the financial year ended on that date; and (b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable; (c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in Note 40 will be able to meet any obligations or liabilities which they are, or may become, subject by virtue of the deed of cross guarantee described in Note 40.

The Directors draw attention to Note 1(a) to the financial statements which include a statement of compliance with International Financial Reporting Standards. The Directors have been given the declaration by the Managing Director and Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Directors.

Anthony Shepherd Dr Peter Goode Chairman Managing Director and Chief Executive Officer at Sydney 29 August 2012

136 TRANSFIELD SERVICES 2012 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TRANSFIELD SERVICES LIMITED

Independent auditor’s report to the members of Transfield Services Limited Report on the financial report We have audited the accompanying financial report of Transfield Services Limited (the Company), which comprises the consolidated statement of financial position as at 30 June 2012, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 42 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the Group comprising the company and the entities it controlled at the 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 of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 1, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements of the Group comply 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 of the financial report that gives a true and fair view 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, a true and fair view which is consistent with our understanding of the Group’s financial position and of its performance. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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

2012 TRANSFIELD SERVICES 137 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 the Group is in accordance with theCorporations Act 2001, including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.

(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1.

Report on the remuneration report

We have audited the remuneration report included in pages 46 to 63 of the directors’ report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards.

Auditor’s opinion

In our opinion, the remuneration report of Transfield Services Limited for the year ended 30 June 2012, complies with Section 300A of the Corporations Act 2001.

KPMG

S J Marshall Partner

Sydney 29 August 2012

138 TRANSFIELD SERVICES 2012 SHAREHOLDER INFORMATION

THE SHAREHOLDER INFORMATION SET OUT BELOW WAS APPLICABLE AS AT 31 AUGUST 2012 (A) DISTRIBUTION OF EQUITY SECURITIES

RANGE TOTAL HOLDERS UNITS % OF ISSUED CAPITAL 1 – 1,000 6,520 2,936,017 0.57 1,001 – 5,000 6,858 18,297,082 3.55 5,001 – 10,000 2,783 20,260,232 3.93 10,001 – 100,000 2,358 50,297,975 9.75 100,001 and over 104 423,934,246 82.20 Total 18,623 515,725,552 100

(B) EQUITY SECURITY HOLDERS Top 20 holders of quoted equity securities:

RANK NAME UNITS AT 31 AUGUST 2012 % OF UNITS 1 HSBC Custody Nominees (Australia) Limited 107,831,137 20.91 2. J P Morgan Nominees Australia Limited 75,772,917 14.69 3. National Nominees Limited 68,237,401 13.23 4. Transfield (TSL) Pty Limited 57,849,887 11.22 5. Citicorp Nominees Pty Limited 33,405,248 6.48 6. J P Morgan Nominees Australia Limited 22,190,305 4.30 7. BNP Paribas Noms Pty Ltd 5,464,567 1.06 8. Argo Investments Limited 4,797,040 0.93 9. Frami Pty Limited 4,460,513 0.86 10. HSBC Custody Nominees (Australia) Limited 4,237,645 0.82 11. QIC Limited 4,086,753 0.79 12. HSBC Custody Nominees (Australia) Limited-GSCO ECA 2,683,103 0.52 13. Citicorp Nominees Pty Limited 2,275,427 0.44 14. Milton Corporation Limited 1,519,032 0.29 15. Bond Street Custodians Limited 1,489,196 0.29 16. Bond Street Custodians Limited 1,480,627 0.29 17. AMP Life Limited 1,272,268 0.25 18. Mr Andrew Bruce + Mrs Wendy Bruce 1,000,000 0.19 19. Share Direct Nominees Pty Ltd <10026 A/C> 1,000,000 0.19 20. Lucuna Pty Ltd 992,679 0.19 Totals: Top 20 holders of FULLY PAID ORDINARY (TOTAL) 402,045,745 77.96 Total Remaining Holders Balance 113,679,807 22.04

(C) SUBSTANTIAL SHAREHOLDERS IN TRANSFIELD SERVICES LIMITED Substantial shareholder information as shown in substantial shareholder notices received by the Company as at 31 August 2012.

DATE OF LAST NOTICE NUMBER OF SHARES INTEREST 1 Transfield Pty Limited Group 23 December 2010 57,849,887 11.191% 2 BT Investment Management Limited 29 December 2010 57,234,871 11.07% 3 Westpac Banking Corporation 29 December 2010 57,234,871 11.07% 4 Mondrian Investment Partners Limited 12 July 2011 40,092,997 7.29% 5 JCP Investment Partners Limited 4 June 2012 37,878,707 7.21%

Note 1: The number of shares and interest figures above reflect the shareholding as at the date of last notice and may not be an accurate reflection of current number of shares and interest held, although in each case, the relevant interest held is 5 per cent or more of the total number of votes attached to Transfield Services Limited voting shares, unless advised otherwise by each entity. Note 2: BT Investment Management Limited is majority owned by Westpac Banking Corporation. At the date of last notice, both BT Investment Management Limited and Westpac Banking Corporation reported the same amount of relevant interest in Transfield Services Limited, although BT Investment Management (RE) Limited is the largest shareholder within this group, holding 41,526,330 Transfield Services shares as at the date of its last notice.

(D) VOTING RIGHTS Holders of Transfield Services Limited fully paid ordinary shares have, at general meetings, one vote on a show of hands and, upon a poll, one vote for each fully paid ordinary share held.

2012 TRANSFIELD SERVICES 139 INDEX

A N Annual General Meeting … pg 2, 37, 48, 52, 127 Nomination Committee … pg 42, 43 Apprentices … pg 9 Notes to and forming part of the Consolidated Financial … pg 70-135 Auditor’s Independence Declaration to Directors … pg 65 O Awards … pg 5, 29, 32, 43 Operations … pg 18 B Australia and New Zealand … pg 5, 10, 13, 20, 22, 30, 36 Board of Directors … pg 9, 14, 34, 36 Americas … pg 5, 8, 11, 12, 13, 24, 26, 36 Middle East and Asia … pg 4, 8, 12, 26, 30, 32, 36 Business snapshot … pg 4, 5 P C Property and Facilities Management … pg 6, 21, 23, 27 Chairman’s report … pg 8 Code of Business Conduct ... pg 30, 38 R Community engagement … pg 30, 31 Reconciliation Action Plan … pg 28, 31 Consolidated statement of cash flows … pg 68, 74 Remuneration report … pg 37, 38, 40 Consolidated statement of changes in equity … pg 69, 71 Resources and Energy … pg 5, 8, 10, 11, 12, 20, 21, 24, 29, 36 Consolidated statement of comprehensive income … pg 66, 71, 76, 128 Review of operations … pg 18, 20, 24, 26 Consolidated statement of financial position … pg 67, 74, 129 Risk management … pg 12, 37, 38 Corporate directory … pg 141 S Corporate governance … pg 8, 34, 36, 37, 38 Safety performance … pg 24, 29 D Senior executive team … pg 16 Directors’ declaration … pg 136 Shareholder information … pg 139 Director’s report … pg 40 Sustainability (Sustainable Business) … pg 28, 33 Diversity … pg 4, 9, 28, 32, 33 Dividends … pg 6, 7, 8, 40, 51, 69, 108

E Easternwell … pg 8, 10, 20, 21 Environment … pg 10, 25, 28, 32, 33, 42

F Financial highlights … pg 6 Financial report … pg 36, 39-139

H Health and Safety … pg 12, 29 Human Resources … pg 34, 36

I Indigenous … pg 28, 31, 32 Infrastructure … pg 4, 5, 6, 8, 9, 11, 12, 20, 22, 24, 25, 26, 31, 36

J Joint Ventures … pg 5, 6, 8, 10, 11, 21, 22, 23, 24, 26, 30, 36

M Managing Director and CEO’s report … pg 10

140 TRANSFIELD SERVICES 2012 CORPORATE DIRECTORY

Directors Bankers Anthony Shepherd AO – Chairman Australia and New Zealand Mizuho Corporate Bank, Ltd. Jagjeet (Jeet) Bindra – Deputy Chairman Banking Group Limited Level 33, 60 Margaret Street Dr Peter Goode** Level 1, 20 Martin Place Sydney NSW 2000 Guido Belgiorno-Nettis AM * Sydney NSW 2000 Australia Luca Belgiorno-Nettis AM * Australia National Australia Bank Limited Steven Crane Bank of America Level 4, 255 George Street Diane Smith-Gander Level 38, Governor Phillip Tower1 Sydney NSW 2000 Douglas Snedden Farrer Place Australia Graeme Hunt** Sydney NSW 2000 Roy McKelvie (appointed 31 August 2012) Australia Natixis Level 30, Aurora Place, Chief Risk and Legal Officer/Company Secretary The Bank of Tokyo-Mitsubishi UFJ, 88 Phillip Street Kate Munnings Ltd. Sydney NSW 2000 Level 25, 1 Macquarie Place Australia Joint Company Secretary Sydney NSW 2000 Eve Roberts Australia The Royal Bank of Scotland plc, Australia Branch Senior management BOS International Level 27, Aurora Place, Peter Goode** Managing Director and Chief Executive Officer Level 27, 45 Clarence Street 88 Phillip Street Tiernan O’Rourke Chief Financial Officer Sydney NSW 2000 Sydney NSW 2000 Eion Turnbull Chief Executive Operations Support Australia Australia Nicholas Yates Chief Executive Infrastructure ANZ Crédit Industriel et Commercial, Sumitomo Mitsui Banking Joe Sofra *** Chief Executive (Interim) Resources and Energy Singapore Branch Corporation, Sydney Branch and Executive General Manager Marketing and 63 Market Street #15-01 Level 3, The Chifley Tower, Business Development Singapore 048942 2 Chifley Square Philip Wratt**** President Americas and Middle East and Asia Sydney NSW 2000 The Hong Kong and Shanghai Steve MacDonald Chief Executive Marketing and Investments Australia Elizabeth Hunter Chief Executive Human Resources Banking Corporation Ltd. Stephen Phillips Chief Information Officer HSBC Centre, Level 32, 580 Westpac Banking Corporation George Street Level 3, Westpac Place, * Retired from the Transfield Services Limited Board of Directors effective Sydney NSW 2000 275 Kent Street 30 August 2012. Australia Sydney NSW 2000 ** Dr Peter Goode’s resignation announced on 29 August 2012 and effective Australia 30 September 2012. Graeme Hunt takes over as interim Managing Director J.P. Morgan and Chief Executive Officer on 30 September 2012. Level 32 Grosvenor Place, 225 Wells Fargo Bank N.A *** Gareth Mann was appointed Chief Executive Resources and Energy on 25 October George Street 23/F AIA Central, 2011. As of 7 August 2012, Gareth was appointed Chief Executive, Transfield Worley Power Services Pty Ltd. Sydney NSW 2000 1 Connaught Road **** With the amalgamation of Americas and Middle East region reporting lines, former Australia Hong Kong President Americas Larry Ames left the Company on 2 August 2011. Phil Wratt was appointed President Americas, Middle East and Asia

Principal registered office in Australia Level 10, 111 Pacific Highway North Sydney NSW 2060

Share register Computershare Investor Services Pty Limited Level 4, 60 Carrington Street Sydney NSW 2000

Auditors KPMG 10 Shelley Street Sydney NSW 2000

Securities exchange listing Transfield Services Limited shares are listed on the Australian Securities Exchange, stock code: TSE.

Website address www.transfieldservices.com

Annual report production and photography The Annual Report was produced in-house by Transfield Services. The photographs throughout the Annual Report are of our people delivering essential services and essential infrastructure globally. 2012 TRANSFIELD SERVICES 141 OFFICE LOCATIONS

AUSTRALIA CANADA QATAR Head office FT Services No. 5, Al-Wakaalat Street Level 10, 111 Pacific Highway Suite 3000, 715 5th Avenue SW Industrial Area, Salwa North Sydney NSW 2060 Calgary Alberta Doha Locked Bag 917 Canada AB T2P 2X6 State of Qatar North Sydney NSW 2059 Telephone: +1 403 265 9033 PO Box 24258 Telephone: +61 2 9464 1000 Facsimile: +1 403 265 9063 Telephone: +974 44076223 Facsimile: +61 2 9464 1111 Facsimile: +974 55865218 Transfield Services Roads 311 Glenferrie Road Suite 101, 2275 Upper Middle Road East UNITED ARAB EMIRATES Malvern VIC 3144 Oakville Ontario Marina Office Park Compound Telephone: +61 3 8823 7500 Canada ON L6H 0C3 Villa No. A31, Waves Breaker Facsimile: +61 3 8823 7763 Telephone: +1 905 491 6933 Behind Marina Mall Facsimile: +1 905 491 6801 From the end of November 2012, the Abu Dhabi, United Arab Emirates Melbourne office will be relocating to: PO Box 514 Level 3, 509 St Kilda Road CHILE Telephone: +971 2 499 7666 Melbourne VIC 3004 InserTS Facsimile: +971 2 658 1617 Avenida José Miguel Carrera # 1579 Telephone: +61 3 8823 7500 Antofagasta UNITED STATES OF AMERICA Level 5, 181 Adelaide Terrace Chile Transfield Services East Perth WA 6004 Telephone: +56 55 533600 Suite 1250, 1330 Post Oak Boulevard PO Box 3357, East Perth WA 6892 Facsimile: +56 55 533619 Houston Texas 77056 Telephone: +61 8 9422 3100 United States of America Facsimile: +61 8 9422 3111 InserTS Las Bellotas 199 Of. 114. Tel: +1 713 964 2800 151 South Terrace Providencia – Santiago Fax: +1 713 964 2801 Adelaide SA 5000 Chile Infrastructure GPO Box 2765, Adelaide SA 5001 Telephone: +56 2 2337485 Suite 500, 411 East Franklin Street Telephone: +61 8 8409 4100 Facsimile: +56 2 2336588 Richmond VA 23219 Facsimile: +61 8 8409 4101 United States of America Level 4 INDIA Telephone: +1 804 261 8000 52 Merivale Street Golden Millennium Mezzanine Floor South Brisbane QLD 4101 No. 69/1 & 69/1B, Millers Road Telephone: +61 (0) 7 3248 8700 Vasantha Nagar Facsimile: +61 (0) 7 3248 8790 Bangalore 560 052 Karnataka, India Easternwell Telephone: +91 44 2836 2837 10 Russell Street Facsimile: +91 44 2836 4691 Toowoomba QLD 4350 Telephone: +61 7 4659 1555 NEW ZEALAND Facsimile: +61 7 4659 1599 Level 3, 277 Broadway Newmarket 1149 ICD Auckland 2 Solent Circuit PO Box 99964 Norwest Business Park NSW 2153 Telephone: +64 9 523 9900 PO Box 7304, Baulkham Hills BC Facsimile: +64 9 523 9999 1755 NSW 2153 Telephone: +61 2 8882 2700 Facsimile: +61 2 8882 2299

142 TRANSFIELD SERVICES 2012