Leighton 2002 Concise Annual Report

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Last year’s CD-ROM survey results overwhelmingly Minimum requirements: supported the introduction of new formats like MacOS v8.1 through to 9.2 Macintosh PowerPC, 200MHz the CD-ROM for annual reporting. Though readers still or above prefer to receive and compare information in a paper more than 32Mb RAM format, the additional video and information storage Quicktime v4 or later capability of the CD – without needing an Internet or connection to download – was thought to be Windows 95 (OSR2), 98, ME, NT, 2000, Pentium II, 300 MHz particularly useful. As a result, we have again included or above the company’s Concise Annual Report 2002 in more than 32Mb RAM both colour PDF and black and white text files, as well 16 bit sound card as video of selected directors, senior executives and speakers projects on this year’s disc. Display 800 x 600, 16bit colour Web Browser to connect to Leighton web site If the disc does not start automatically, navigate to the Leighton executable file on the CD identifiable by the Leighton logo icon. > LEIGHTON CONCISE > HOLDINGS LIMITED ANNUAL REPORT 2002 01

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WHO ARE WE? WHAT DO WE DO? Leighton Holdings Limited ACN 004 482 982 Leighton Holdings Limited is the parent company of Leighton Group companies offer a broad range of ABN 57 004 482 982 Australia’s largest project development and contracting project development and contracting services and Notice of Annual General Meeting 2002 group. Founded in Victoria in 1949, the organisation skills to public and private sector clients from a wide To: The Shareholders has grown from a small, privately owned civil range of industries. Project development skills – engineering firm into a dynamic group that includes community infrastructure, property or resources-based Notice is hereby given that the Annual General Meeting Thiess, Leighton Contractors, Leighton Asia, John – and project management of construction and property of the members of Leighton Holdings Limited will be held Holland and Leighton Properties. With over 15,200 developments complement the Group’s contracting at the Four Seasons Hotel Sydney at 199 George Street employees, the Group’s operations are spread all activities. These activities include engineering and Sydney, on Thursday 7 November 2002, at 10.00 am. around the Asia-Pacific region on projects in Australia, building construction, contract mining, environmental A separate Notice of Meeting and Proxy Form is enclosed. Hong Kong, Indonesia, Malaysia, the Philippines, services, operation and maintenance of infrastructure Thailand, Vietnam, China and New Zealand. Leighton and facilities and telecommunications services. During the course of the meeting, a short presentation Holdings is listed on the Australian Stock Exchange and Key resources include an experienced, long-serving on the Group’s operations will be given by Wal King AM, has its head office in Sydney. management team, a strong balance sheet and the Chief Executive Officer. All present are invited to join the largest fleet of mobile plant and equipment in Australia. Directors for light refreshments after the meeting. > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 03

1 CORPORATE REPORT

Silcar maintenance services, Earthstation Western Australia Thiess

1 2 3 CORPORATE REPORT REVIEW OF OPERATING FINANCIAL REPORT COMPANY ACTIVITY

05 HIGHLIGHTS 21 SPECIAL FEATURE 33 THE GROUP’S 47 DIRECTORS’ STATUTORY FUTURE GROWTH OPERATING COMPANIES 07 YEAR IN REVIEW REPORT 35 THIESS 09 FROM THE CHAIRMAN 56 CONCISE FINANCIAL 37 LEIGHTON CONTRACTORS REPORT 11 CHIEF EXECUTIVE’S REPORT 39 LEIGHTON ASIA 64 SHAREHOLDER 13 FINANCIAL MANAGEMENT INFORMATION 41 JOHN HOLLAND 15 OPERATIONS ANALYSIS 43 LEIGHTON PROPERTIES 66 DIRECTORY AND OFFICES 17 CORPORATE GOVERNANCE 18 OCCUPATIONAL HEALTH AND SAFETY 19 ENVIRONMENT AND COMMUNITY 20 CORPORATE MANAGEMENT > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 03

1 CORPORATE REPORT

Silcar maintenance services, Earthstation Western Australia Thiess

1 2 3 CORPORATE REPORT REVIEW OF OPERATING FINANCIAL REPORT COMPANY ACTIVITY

HIGHLIGHTS OUR STRATEGY OF DIVERSIFICATION BY PRODUCTS, GEOGRAPHY AND DELIVERY SYSTEMS CONTINUES TO YIELD SUCCESS

– OPERATING PROFIT BEFORE TAX UP 15% TO $227 MILLION – OPERATING PROFIT AFTER TAX UP 8% TO $169 MILLION – EXCELLENT RETURN ON AVERAGE SHAREHOLDERS FUNDS OF 22% – DIVIDEND UP BY 8% TO 42 CENTS PER SHARE – BALANCE SHEET REMAINS SOUND WITH $524 MILLION OF NET CASH – TOTAL SHAREHOLDER RETURN OF 789% OVER LAST 10 YEARS – WORK IN HAND AT RECORD $8.4 BILLION – OVER $1 BILLION OF NEW WORK WON SINCE YEAR END – RECORD WORK IN HAND TO DELIVER INCREASED REVENUE – UNDERLYING PERFORMANCE OF OPERATIONS REMAINS STRONG

Amcor wine bottling facility South Australia Leighton Contractors > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 05

HIGHLIGHTS OUR STRATEGY OF DIVERSIFICATION BY PRODUCTS, GEOGRAPHY AND DELIVERY SYSTEMS CONTINUES TO YIELD SUCCESS

Amcor wine bottling facility South Australia Leighton Contractors > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 07

2002 2001 $’000 $’000 % Change Operating Revenue – Group 4,979,581 4,272,729 +17 YEAR IN – Joint Venture Entities 240,612 83,017 +190 Total Operating Revenue 5,220,193 4,355,746 +20 New Contracts, Extensions & Variations 5,552,432 5,961,619 -7 REVIEW Value of Work in Hand 8,371,040 7,825,231 +7 Profit from Ordinary Activities Before Tax* 227,285 196,789 +15 Income Tax (59,450) (42,312) +41 Profit from Ordinary Activities After Tax* 169,222 156,156 +8 Dividends 113,575 103,502 +10 Total Equity and Reserves* 789,259 740,170 +7 Total Assets 2,317,774 2,050,160 +13 Cash Net of Borrowings 524,017 400,017 +31 Undrawn Facilities and Guarantees 435,281 432,524 +1 Earnings per Ordinary Share 63.1¢ 59.2¢ +7 Dividends per Ordinary Share 42.0¢ 39.0¢ +8 *excludes outside equity interests

Total Operating Work in Hand Operating Profit Operating Profit Total Assets Revenue $million Before Tax* After Tax* $million $million $million $million 2318 227.3 5220 2050 169.2 196.8 156.2 8371 177.5 7825 4356 1729 171.5 134.1 1576 1507 121.8 145.9 3577 6206 3328 102.9 3035 4767 4115 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02

Phu My 3 power station Vietnam Leighton Asia > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 07

Phu My 3 power station Vietnam Leighton Asia > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 09 FROM THE CHAIRMAN

Overview The Board’s committees were all active during the year in The Company delivered shareholders a strong result ensuring that corporate governance and risk despite tight market conditions, with improvements in management practices are consistently reviewed and profitability, earnings per share and return on shareholder updated. The Group’s corporate governance policy is set funds. Dividends have increased 8 percent to 42.0 cents on pages 53 and 54. per share and we expect to maintain a high payout ratio. Ten scheduled Board meetings were held during Leighton has strived to provide superior shareholder the year and directors attended site visits in Hong Kong, returns. Our Total Shareholder Return (TSR, i.e. dividends Indonesia, Malaysia and around Australia. In line with plus share price movement) over the last 10 years has reporting and continuous disclosure requirements, the exceeded returns provided by the All Ordinaries company made 51 announcements to the Australian Accumulation Index by more than 3 times. A graph Stock Exchange. illustrating these returns is included on page 16. The Board continues to work diligently monitoring The Group’s operations have weathered a downturn in occupational health and safety matters, which it views as the level of available work extremely well and we now a very high priority for a contracting organisation. The have a strong ongoing base of work from which to grow. Group’s major asset remains its people and we believe “THE BOARD CONTINUALLY The Leighton result is testimony to the disciplined strongly that our employees should expect to be able to MONITORS THE BUSINESS process that our operating companies exercise in bidding return home to their families each day in the same across a diverse range of contracting and development condition in which they set out for work. ENVIRONMENT FOR work, and subsequently in the execution of projects. Outlook BEST PRACTICE IN CORPORATE Governance and the Board The Group is in an excellent position going forward GOVERNANCE.” Shareholders’ corporate governance expectations are with a record workload and a strong balance sheet. JOHN MORSCHEL CHAIRMAN continuing to rise. The Board continually monitors the The outlook for the Group remains very strong although business environment for best practice in corporate we need to remain a little cautious about the general governance and has consistently implemented new business environment until we see positive signs of initiatives as appropriate. It is noteworthy that we were recovery in the US. one of the first Australian companies to establish both I am enjoying my first year as chairman and am very audit and ethics committees in 1990 and 1998 pleased to be working in the construction industry again. respectively. It is a pleasure to work with an active and responsible This year the audit committee’s composition has been Board that is focussed on assessing and safeguarding the changed to comprise a majority of non-executive interests of the Group’s stakeholders, namely directors, and we are fortunate in having a non-executive shareholders, clients and employees. director as chairman of the committee who brings I extend my thanks to my Board colleagues for their professional accounting skills to the role. assistance and guidance and to management and staff for their outstanding contribution in a year in which we produced an excellent result for shareholders.

PT Caltex Indonesia sand removal facility Indonesia Thiess > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 09 FROM THE CHAIRMAN

PT Caltex Indonesia sand removal facility Indonesia Thiess > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 11 CHIEF EXECUTIVE’S REPORT

Overview On a more disappointing note, a $45 million provision was Leighton Holdings has reported an excellent performance taken against Nextgen Networks due to the current this year with another record profit and a significant boost instability in the telecommunications market. We continue to work levels. The momentum provided by our work in to support Nextgen as its broadband cable network hand should underpin growth for the next few years. comes on-line next year, closely monitoring its progress with regard to the value of the future investment. Our strategy of diversification by products, geography and delivery systems continues to yield success. Diversity Employees has moderated the effects of the recent construction Our people are fundamental to the success of the Group downturn in Australia, which has now bottomed, and we and I thank them for their contribution over a challenging expect to see significant growth in our traditional year. Occupational health and safety remains an absolute Australian markets over the next few years. imperative and we remain focused on improving the Group’s performance. Review of operations Engineering and infrastructure markets were boosted For some time the Group has had in place a detailed code towards year-end by the announcement of major for ethical standards. We are currently implementing government initiated infrastructure projects, which ethical dimension reporting in conjunction with the St “WE BELIEVE THAT THE NEXT TWO undoubtedly has been a highlight for the Group. Large- James Ethics Centre, which will place us at the leading TO THREE YEARS SHOULD BE A scale projects such as the Parramatta Rail Link in Sydney edge of Australian companies in this area. and the Regional Fast Rail project in Victoria helped push PERIOD OF INCREASED GROWTH Outlook work in hand to a record $8.4 billion at 30 June. AND PROFITABILITY.” The Group has navigated a substantial downturn in the A further billion dollars has subsequently been added to industry in Australia and now has a number of excellent WAL KING AM CHIEF EXECUTIVE this figure, following the finalisation of Leighton projects in its order book. Group companies are presently Contractors’ contracts for the Australian Magnesium undertaking a diverse range of billion dollar projects and Corporation’s Stanwell Magnesium plant in central management’s focus will remain on obtaining successful Queensland and the Spencer Street Station outcomes for our clients and shareholders. redevelopment in Melbourne. Our financial strength will be used to sponsor some of the Our Asian operations performed well and we have major infrastructure projects being developed, underpin continued to increase our penetration into the region. capital expenditure in plant and equipment, and provide Thiess’ performance in the Indonesian mining sector was bonds and guarantees to clients. We will continue to strong. We have recently restructured Leighton Asia into maintain a strong cash balance to take advantage of any two businesses, with the formation of Leighton Asia rationalisation opportunities available in Australia. (Northern) and Leighton Asia (Southern). The restructure We believe that the next two to three years should be a helps reduce management’s span of control and should period of increased growth and profitability, underwritten provide greater focus and commitment to the various by the diversity and size of our workload. markets in which we operate.

Sorell Causeway bridge and approaches Tasmania John Holland > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 11 CHIEF EXECUTIVE’S REPORT

Sorell Causeway bridge and approaches Tasmania John Holland > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 13 FINANCIAL MANAGEMENT

Overview Acquisitions, investments and divestments It has been another good year for the Leighton Group, Our building market presence was extended with John with revenue increasing to a record $5.2 billion and Holland’s acquisition of Fletcher Construction’s Australian operating profit after tax up 8.4 percent to $169.2 million. activities and, post year-end, Leighton Contractors’ Earnings per share improved by 7 percent to 63.1 cents acquisition of WA-based Broad Constructions. and we again provided a solid return on average An investment was made in the listed James Fielding shareholders’ funds for the year of 22.1 percent. Group, cementing our strategic partnership in the Balance sheet property development area, and several property The Group has maintained its financial strength and has divestments were made in Melbourne, including the total assets of $2.3 billion, net assets of $795 million and a St Kilda Road office tower and Mulgrave stages 1 and 2. strong cash position. Gross borrowings were reduced, Risk management lowering interest expenses and we have maintained our Our financial performance continues to be absolutely BBB+ credit rating, which represents an extremely good dependent on understanding and managing risk. We rating for a contracting company. Our financial strength operate within a clearly defined risk management enables us to invest in some of the large infrastructure framework of policies, guidelines, controls and audits. “OUR BALANCE SHEET STRENGTH projects that are set to come on-line in Australia, as well Funds are selectively allocated in accordance with our as other acquisition opportunities. GIVES US THE FINANCIAL BACKING profit expectations, risk profile and potential for growth. The Group invested $440 million over the year, mainly TO SECURE AND EXECUTE The Group treats currency fluctuations as a normal risk of on the purchase of plant and equipment for contract PROJECTS AND REMAIN ON THE the business cycle and only enters into limited hedging mining activities. We expect that the Group’s expenditure arrangements. Appreciation in the Australian dollar over LOOKOUT FOR FURTHER will increase in the next 12 months through project the year had a negative impact on our overseas contribution. investment, plant and acquisitions. COMPLEMENTARY ACQUISITIONS.” Dividends DIETER ADAMSAS DEPUTY CHIEF EXECUTIVE OFFICER AND CFO Significant changes to the accounting standards are The final dividend was increased to 26 cents per share, continuing. One change dictates that future dividends will following an interim dividend of 16 cents. Both were be booked in the financial statements when paid, not franked at 70 percent. In the coming financial year we when declared. The December 2002 dividend will expect to maintain at least 70 percent franking. therefore be booked in the results for the half year to June 2003. The Group’s statement of financial Outlook performance is presented on the basis of liquidity. We are Having improved the Group’s overall financial position currently working through the implications of the and profitability, we started the new financial year with introduction of a new taxation regime. record levels of work in hand, well positioned to win a fair share of a number of major projects currently in planning. Our balance sheet strength gives us the financial backing to secure and execute these projects, and we remain on the lookout for further complementary acquisitions.

St Ives gold mine Western Australia Leighton Contractors > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 13 FINANCIAL MANAGEMENT

St Ives gold mine Western Australia Leighton Contractors > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 15

OPERATIONS ANALYSIS

INVESTMENTS Group Operating Revenue 2002 $5220 million Asia Pacific Transport Consortium John Holland committed by Geographic Area by Market Segment to a 12.5% stake in the concession company for operation of the Alice Springs to Darwin railway. The investment will not be made until the end of construction scheduled for 2004. Burton Coal Mine Thiess maintains a 5% investment in Burton Coal Mine in Queensland. The other 95% is owned by RAG Australia Coal Pty Ltd. James Fielding Group Leighton Holdings acquired a 9% share of the units in James Fielding Group. Nextgen Networks Vytel committed to a 20% stake in 02 01 00 99 98 02 01 00 99 98 Nextgen Networks. The investment will not be made until the 75% Australia 3915 3035 2659 2542 2239 36% Engineering end of construction scheduled for early 2003. & Infrastructure 1846 1577 1099 1070 841 North Goonyella Thiess has a 40% share of the North 23% Asia 1219 1302 765 663 664 Goonyella Coal Mine in Queensland’s Bowen Basin, in 2% Americas/other 86 19 21 16 4 22% Building & Property 1163 1050 927 841 695 partnership with RAG Australia Coal Pty Ltd who hold 60%. Total $million 5220 4356 3445 3221 2907 27% Mining & Resources 1406 1040 907 939 972 Portman Mining Limited Thiess has a 14% interest 11% Telecommunications 619 503 307 229 283 in Portman. 4% Environmental Services 186 186 205 142 116 Reef Networks Pty Limited Leighton Contractors retains 30% Total $million 5220 4356 3445 3221 2907 of Reef Networks. Southland Colliery Thiess has a 10% share of the Southland Colliery in the NSW Hunter Valley. Gympie Gold retains 90%. Group Work in Hand 2002 $8371 million Star City Casino Leighton holds a 15% share in the by Geographic Area by Market Segment management company. PROPERTY DEVELOPMENTS MacArthur Chambers Leighton Properties holds 50% of a site in Brisbane’s CBD currently being developed in stages for a $200 million commercial property. Mulgrave Leighton Properties owns a suburban office park in Melbourne. 100 Pacific Highway Leighton Properties holds a 50% share 02 01 00 99 98 02 01 00 99 98 in a redevelopment property in North Sydney. 74% Australia 6164 5590 3898 3199 3951 37% Engineering Thomastown Leighton Properties owns a 10-hectare site in & Infrastructure 3103 1938 1752 803 1091 Melbourne, which is proposed for an office/industrial 26% Asia 2170 2191 2303 916 816 development. – Americas/other 37 44 5 – – 11% Building & Property 924 810 869 729 1015 Total $million 8371 7825 6206 4115 4767 40% Mining & Resources 3393 3651 2808 2164 2411 7% Telecommunications 552 1011 385 162 24 5% Environmental Services 399 415 392 257 226 Total $million 8371 7825 6206 4115 4767

Leighton Total Shareholder Return versus Total Equity Return on Net Tangible Earnings per Dividends per All Ordinaries Accumulation Index for 10 years & Reserves Total Equity Assets per Ordinary Share Ordinary Share Performance scaled to 100 $million & Reserves Ordinary Share ¢ ¢ % $ 789 1000 2.83 740 2.64 42 2.52 63.1 2.42 39 661 21.4 21.1 59.2 2.26 612 20.3

800 19.9 574 33 51.1 17.9 30 46.6

600 26 39.5

400

200 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 92 93 94 95 96 97 98 99 00 01 02

Total Shareholder Return (TSR) combines share price appreciation and dividends paid to show the total return to the shareholder for the period. The data shown has been sourced from IRESS. > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 15

OPERATIONS ANALYSIS

800 19.9 574 33 51.1 17.9 30 46.6

600 26 39.5

400

200 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 98 99 00 01 02 92 93 94 95 96 97 98 99 00 01 02

Leighton Holdings has long recognised the need to have KPMG is the Group’s principal auditor and was Group’s activities and is the first point of contact for in place a comprehensive series of policies, procedures reappointed to that position by shareholders at the 2001 anybody wishing to learn about our workload, financial and guidelines relating to corporate governance, ethics, Annual General Meeting. KPMG’s engagement partner performance, capabilities and experience. Webcasts of and financial and risk management. responsible for the Leighton Group audit will rotate at the Group’s Annual General Meeting and financial results least every seven years with the last rotation occurring in presentations are further examples of the Company’s goal The 2001/02 financial year has seen corporate scandals February 2001. KPMG have confirmed to the Board that to achieve wider disclosure and communication with dominate headlines around the world. While much of the they have maintained their independence throughout the stakeholders. media’s recent attention has been turned towards the financial year by enforcing strict internal rules and United States, Australia has not been left unscathed by Managing risk is a critical element of the Group’s overall policies and that they were free from conflicts of interest the collapse of well-established companies, and domestic business strategy and has been a key contributor to its when discharging their professional responsibilities as markets have suffered as a direct result. success. While the responsibility for risk management statutory auditor for the year ended 30 June 2002. implementation lies with each of the individual operating Now more than ever, being ethical, acting with integrity The Leighton Group is committed to maintaining ethical companies, Leighton Holdings provides guidelines and and, above all, being accountable and transparent, are standards. A comprehensive and realistic Code of Ethics sets minimum standards for each of their key activities. essential requisites of any company’s business policies. has been in place since 1995 and this is backed by the It also undertakes business audits to review and report on The decentralised structure of the Group means that support and commitment of the Leighton Holdings Ethics the management of risk across the Group’s companies. Leighton Holdings, as the parent company, has the Committee. Ethics Committees have also been Having effective corporate governance policies in place is responsibility for providing overall operating parameters established to oversee and review the operations of the vital. We realise the value of having client, stakeholder for its operating entities. These include setting financial Code of Ethics in each of the Group’s operating and market trust in the Leighton name and its various controls, conducting business audits, investment and subsidiaries. Ethics is an evolving discipline and the brands, and we understand that this is a key requisite for acquisition overview, and ensuring the highest standards individual operating companies have adapted and our continued growth and success in the years ahead. in corporate communications and external affairs. expanded the Leighton Holdings’ Code of Ethics into their own codes which focus more specifically on the ethical The Board established an Audit Committee in 1990 to challenges they face. assist the Board in fulfilling its responsibilities under the Corporations Act in relation to financial reporting, risk Continuous disclosure of the Group’s activities is a legal management and internal control. The Audit Committee necessity for a publicly-listed company such as Leighton also monitors compliance with relevant requirements of Holdings, and is essential in maintaining shareholder applicable laws, regulations and rules. confidence and market trust. A Continuous Disclosure Policy is in place and both Leighton Holdings and the operating companies have supporting procedures for the gathering and release of information to the Australian Stock Exchange. Electronic communication plays an increasingly important part in ensuring the Group achieves its communication objectives. The Leighton Holdings website is a key source of information about the

OCCUPATIONAL HEALTH 18 AND SAFETY

Creating a rewarding, challenging and safe workplace for performance, reviewing quarterly performance reports on all our people is part of the Group’s core values and one all projects. These reports contain detailed statistics and of its highest priorities. The importance of this is management analysis of work-related incidents, all based underlined by the fact that every day our operating on standardised reporting criteria. The reports also companies are engaged in complex and difficult activities. include any remedial action taken or planned, as well as the specific outcomes of such action. The health and safety of our workforce is more than a compliance issue. For us it is about developing and An emphasis on training and awareness programs maintaining a safety-conscious culture throughout each including regular safety workshops and reviews helps operating company. Having our employees return home improve performance and supports the development of a each day in the same health and condition as when they safety-conscious culture. It is an ongoing requirement arrived at work is our daily aim and one that all of the that each employee undergoes a safety induction course Group’s operating companies strive to maintain. before beginning work on any Group project. The Group’s performance and commitment to health and We recognise and understand that the results achieved safety has been well recognised within the industry and in health and safety form a tangible measure of our we have received numerous awards at State, national and overall performance as an organisation. To this end we international level. Currently the Occupational Health and are constantly looking at ways in which to improve Safety (OH&S) procedures within the Group’s operating our performance. Leighton Holdings’ financial support companies are undergoing a significant upgrade to the and sponsorship of the Injury Prevention Council newly introduced Australian Standard AS 4801-2000. (Australia) Accident Injury Research Program will allow Group companies are expected to be fully certified to the the Group to help fund workplace injury research. It will new standard by 2003. also firmly place the Leighton name at the forefront of workplace injury prevention and is one way in which we While our projects maintain a high level of performance in are further developing our competencies in this most preventing workplace injuries, sometimes the nature of important of fields. our business makes this difficult to do across the Teachers’ Housing Malaysia Leighton Asia multitude of work sites where we operate. We recognise the need to continue to be vigilant about our workplace practices right across the Group’s operations. It is with this in mind that Safety Management Committees, consisting of senior managers, have been formed to help establish safety policies in all operating companies. Monthly safety audits occur on all Leighton Group projects, both in Australia and offshore. These audits ensure compliance with our rigorous health and safety policies. The Board oversees the Group’s safety > LEIGHTON CONCISE CORPORATE > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 17 CORPORATE GOVERNANCE

Leighton Holdings has long recognised the need to have KPMG is the Group’s principal auditor and was Group’s activities and is the first point of contact for in place a comprehensive series of policies, procedures reappointed to that position by shareholders at the 2001 anybody wishing to learn about our workload, financial and guidelines relating to corporate governance, ethics, Annual General Meeting. KPMG’s engagement partner performance, capabilities and experience. Webcasts of and financial and risk management. responsible for the Leighton Group audit will rotate at the Group’s Annual General Meeting and financial results least every seven years with the last rotation occurring in presentations are further examples of the Company’s goal The 2001/02 financial year has seen corporate scandals February 2001. KPMG have confirmed to the Board that to achieve wider disclosure and communication with dominate headlines around the world. While much of the they have maintained their independence throughout the stakeholders. media’s recent attention has been turned towards the financial year by enforcing strict internal rules and United States, Australia has not been left unscathed by Managing risk is a critical element of the Group’s overall policies and that they were free from conflicts of interest the collapse of well-established companies, and domestic business strategy and has been a key contributor to its when discharging their professional responsibilities as markets have suffered as a direct result. success. While the responsibility for risk management statutory auditor for the year ended 30 June 2002. implementation lies with each of the individual operating Now more than ever, being ethical, acting with integrity The Leighton Group is committed to maintaining ethical companies, Leighton Holdings provides guidelines and and, above all, being accountable and transparent, are standards. A comprehensive and realistic Code of Ethics sets minimum standards for each of their key activities. essential requisites of any company’s business policies. has been in place since 1995 and this is backed by the It also undertakes business audits to review and report on The decentralised structure of the Group means that support and commitment of the Leighton Holdings Ethics the management of risk across the Group’s companies. Leighton Holdings, as the parent company, has the Committee. Ethics Committees have also been Having effective corporate governance policies in place is responsibility for providing overall operating parameters established to oversee and review the operations of the vital. We realise the value of having client, stakeholder for its operating entities. These include setting financial Code of Ethics in each of the Group’s operating and market trust in the Leighton name and its various controls, conducting business audits, investment and subsidiaries. Ethics is an evolving discipline and the brands, and we understand that this is a key requisite for acquisition overview, and ensuring the highest standards individual operating companies have adapted and our continued growth and success in the years ahead. in corporate communications and external affairs. expanded the Leighton Holdings’ Code of Ethics into their own codes which focus more specifically on the ethical The Board established an Audit Committee in 1990 to challenges they face. assist the Board in fulfilling its responsibilities under the Corporations Act 2001 in relation to financial reporting, Continuous disclosure of the Group’s activities is a legal risk management and internal control. The Audit necessity for a publicly-listed company such as Leighton Committee also monitors compliance with relevant Holdings, and is essential in maintaining shareholder requirements of applicable laws, regulations and rules. confidence and market trust. A Continuous Disclosure Policy is in place and both Leighton Holdings and the operating companies have supporting procedures for the gathering and release of information to the Australian Stock Exchange. Electronic communication plays an increasingly important part in ensuring the Group achieves its communication objectives. The Leighton Holdings website is a key source of information about the

OCCUPATIONAL HEALTH 18 AND SAFETY

Maintaining a healthy and progressive respect for the Group companies are encouraged to foster needs of the environments and communities in relationships within the communities in which they which we work is a key aspect of the Group’s core values operate and recognise the importance the community and one that we continue to improve and expand plays in ensuring a successful project outcome. wherever possible. The public’s involvement in the development process has grown considerably over the years. Effective The Group’s Environmental Policy aims to maintain high community relations programs initiated at the start of standards and encourage continual improvement of our projects keep the lines of communication open. environmental management systems. This enables local concerns to be identified and Environmental management systems are fully integrated prevents issues from becoming problems further down with project management and reporting systems and play the track. a vital role in ensuring our projects meet all the necessary Sponsorship of organisations is another way that environmental objectives and regulations. Quarterly Group companies support the broader community. environmental reports to the Leighton Holdings Board We look to support innovative, and socially and detail any reportable incidents and the corrective action environmentally progressive initiatives preserving taken. Regular training programs and initiatives are held Australia’s built, environmental and cultural heritage. to ensure staff are fully aware of the Group’s Leighton Holdings does this by securing long-term environmental policies and principles. Group companies partnerships with appropriate organisations like continue to maintain certification to the international Landcare, the National Trust of Australia, the management system standard ISO 14001, and regular University of New South Wales (Scientia appeal), audits of projects help ensure that both legislative and Opportunity International, the Westmead Children’s contractual standards are met. Hospital (CHERI initiative), the Sydney Symphony Giving back to the communities in which we work is Orchestra, and the Injury Prevention Council another way the Group adds value. Active community (Australia). Sponsorship and donations are also active relations campaigns on major projects ensure that key at an operating company level, with Group companies Chairman John Morschel, right, is pictured with issues regarding that project’s outcomes are addressed maintaining their own sponsorship programs and often Ben Tjoa, 12, as part of Leighton Holdings’ new two-year partnership with the Sydney Sinfonia and mutually beneficial results are achieved. Such contributing funds in the community or regions in endeavours can take many forms – from constructing which they are working. wetlands and environmental reserves alongside a project site to providing financial support to local and national organisations through sponsorships and donations. CORPORATE MANAGEMENT 20

The corporate management team at Leighton Holdings Technical Resources Leighton Holdings Limited Corporate Management continues to focus on both its governance duties as a The consolidation of Technical Resources into Leighton W M King AM Chief Executive Officer public company, and its role of overseeing and monitoring Holdings will support the Group’s management and D S Adamsas Deputy Chief Executive Officer and CFO the performance of its operating companies. governance systems. As the Group’s specialist service A J Moir Company Secretary P Bingham-Hall Executive General Manager, Corporate unit for 20 years, Technical Resources provided support Another key role for Leighton Holdings over the year has G E McOrist Executive General Manager, Investment and Finance and innovation in project management and controls, M J Rollo Executive General Manager, Group Services been the continued identification and review of growth technical computing systems, corporate communications T G Young Executive General Manager, Financial and Administration opportunities and potential acquisitions. G R Andrews Manager, Technical Computing and engineering. Its restructure will allow the new Group A J Blake Commercial Development Manager Financial control, the preparation of statutory accounts, Services section to offer an enhanced range of multi- J M Grogan Manager, Investor & Media Relations J T Holt Manager, Project Development together with the ongoing review of accounting disciplined support capabilities in addition to its present C L Huon General Manager, Treasury processes to verify their integrity, continue to be core portfolio of skills. P C Janu General Manager, Project Finance responsibilities. Similarly, management of corporate D G Kent Group Taxation Manager As a result three new key areas of support and skill will A T Mason General Manager, External Affairs reporting and communication, and the overview of the be developed within Leighton Holdings: risk management, M K McAuley Manager, Corporate Communications Group’s Code of Ethics are key activities. C M Mendes Group Chief Accountant information systems and project development to service N A Sallustio Manager, Risk Management There has been an increasing need in recent years for the future growth and momentum of the Group’s I A Scoular Manager, Project Services Leighton Holdings to provide a more diversified range of companies. corporate management and governance services to the Risk Management guidelines and standards, as well as Group to ensure its competitive financial advantage and risk management audits, will be developed and positive performance are maintained and improved. undertaken by the new Risk Management section. Decisions were made during the year to re-structure the The formation of a Group Services Information Systems corporate office to better service these needs. Effective section will ensure the Group’s IT capability is developed 1 July 2002, the former Technical Resources was to a high standard, is user-friendly and offers competitive consolidated into Leighton Holdings as Group Services, advantage to all operating companies. headed by Mike Rollo. In January 2003, John Faulkner will relocate from Leighton Asia to take up the role of Maintaining a watchful eye on the performance of our Executive General Manager, Operations in Leighton established markets and those sectors that offer positive Holdings. In his revised role he will focus on strategic potential for the Group is necessary to sustain the growth plans for Asia and other growth and operational Group’s strong performance in the years to come. This activities for the Group in Australia. Leighton Asia will be assisted by Group Services’ new Project (Northern) and Leighton Asia (Southern) will continue to Development division, which will provide support in the report to John Faulkner. sourcing and development of new projects across Group companies, both in Australian and overseas markets. This expansion of these core skills will create a more diversified range of services and expertise within Leighton Holdings to benefit the entire Group. > LEIGHTON CONCISE SPECIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 21

SPECIAL FEATURE

INCREASED INVESTMENT The Group’s business strategy is based on diversity Looking forward, we see a significant upswing in the by geography, by the industries in which it operates, by Australian engineering and infrastructure market. This is IN ROAD AND RAIL, A the companies through which it operates, and the way in being driven by increased expenditure on both road and RESURGENCE IN RESOURCES which services are delivered to clients. Over the years, rail as well as a resurgence in investment in resources this has resulted in a progressive shift away from being a processing infrastructure. At the same time, the non- INFRASTRUCTURE AND A construction-only entity operating in one market. It has residential building and property markets are forecast to RECOVERY IN BUILDING AND added momentum to the Group’s evolution into a recover strongly. financially strong, diversified and uniquely structured The strength of activity in these sectors in Australia PROPERTY MARKETS IN contracting and project development group with an should more than offset the decline in expanded industry focus. It has also allowed the Group’s AUSTRALIA WILL BE THE KEY telecommunications activity and tougher operating operating companies to utilise the full depth of conditions in the contract coal mining market. DRIVERS OF OUR FUTURE their expertise and skills in a range of industries and GROWTH. market sectors, not just in Australia, but also across The following feature stories on resources the Asian region. infrastructure, road, rail, and building and property, provide an insight into the markets we see driving Diversity has allowed us to navigate our way through the growth in the next few years. cyclical nature of most of our key markets whilst still providing growth for shareholders. In recent years, construction spending in Australia reduced significantly. However, telecommunications expenditure was booming and contract coal mining was a major growth market for the Group. In addition, our operations in Asia have grown substantially. > LEIGHTON CONCISE SPECIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 21

SPECIAL FEATURE

INCREASED INVESTMENT The Group’s business strategy is based on diversity Looking forward, we see a significant upswing in the by geography, by the industries in which it operates, by Australian engineering and infrastructure market. This is IN ROAD AND RAIL, A the companies through which it operates, and the way in being driven by increased expenditure on both road and RESURGENCE IN RESOURCES which services are delivered to clients. Over the years, rail as well as a resurgence in investment in resources this has resulted in a progressive shift away from being a processing infrastructure. At the same time, the non- INFRASTRUCTURE AND A construction-only entity operating in one market. It has residential building and property markets are forecast to RECOVERY IN BUILDING AND added momentum to the Group’s evolution into a recover strongly. financially strong, diversified and uniquely structured The strength of activity in these sectors in Australia PROPERTY MARKETS IN contracting and project development group with an should more than offset the decline in expanded industry focus. It has also allowed the Group’s AUSTRALIA WILL BE THE KEY telecommunications activity and tougher operating operating companies to utilise the full depth of conditions in the contract coal mining market. DRIVERS OF OUR FUTURE their expertise and skills in a range of industries and GROWTH. market sectors, not just in Australia, but also across The following feature stories on resources the Asian region. infrastructure, road, rail, and building and property, provide an insight into the markets we see driving Diversity has allowed us to navigate our way through the growth in the next few years. cyclical nature of most of our key markets whilst still providing growth for shareholders. In recent years, construction spending in Australia reduced significantly. However, telecommunications expenditure was booming and contract coal mining was a major growth market for the Group. In addition, our operations in Asia have grown substantially. LEIGHTON CONCISE SPECIAL FUTURE GROWTH HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 23 RESOURCES INFRASTRUCTURE

Australia has been endowed with vast reserves of scale ammonia/urea production facility and, if the project minerals and energy resources that have been proceeds, Thiess will be a joint engineering, procurement fundamental to the development of the nation. Historically and construction (EPC) contractor for the project. these natural resources have been dug up and shipped Mineral processing technology, developed in Australia by overseas for value added processing and then imported the CSIRO, has led to the development of a new industry back as manufactured goods. to produce magnesium. Magnesium is one-third lighter Today however, the economic landscape in Australia than aluminium and has the capacity to revolutionise the has changed and we expect to see significant growth in production of motor vehicles by reducing fuel the provision of resources-related infrastructure. Australia consumption. Australian Magnesium Corporation is has a competitive exchange rate, which makes its developing the largest magnesium smelter in the world at exports internationally competitive and a reformed Rockhampton in Queensland, and has recently appointed taxation system, which is more attractive to business. Leighton Contractors to the role of EPC contractor on this 1 In addition, cheap energy supply is making downstream $1 billion development. minerals processing economically viable. Traditionally the development of large scale resources This positive environment is leading to a surge in infrastructure projects has been the preserve of a few capital spending. New minerals and energy projects are international contractors. However, Group companies are being developed or are under consideration and a using their extensive project management expertise and number include substantial value adding to refine and track record in the resources sector to secure lead roles process resources. in these projects. One of the best examples is the North West Shelf Thiess is designing and constructing new calciners at liquefied natural gas project which, with the recent QAL’s Gladstone alumina refinery in Queensland while signing of a $25 billion contract to supply China, makes it John Holland undertook much of the construction and one of the largest gas suppliers in the world. The North pre-commissioning of the Townsville Zinc Refinery in West Shelf partners are currently building a fourth ‘train’, Queensland. Thiess has developed a significant amount or processing plant, at a cost of $1.6 billion and expect of coal processing infrastructure in recent years and has 2 that a fifth train may be required in the future. Over the a joint venture arrangement with Sedgman, a coal 1 years, the Leighton Group has carried out millions of handling and preparation plant specialist, to boost their South Walker Creek coal mine train loading facility Queensland John Holland dollars worth of work on the North West Shelf and both presence in this market. John Holland has also made a 2 Thiess and John Holland are currently undertaking civil strategic return to the resources market, constructing Artist’s impression of Australian Magnesium Corporation’s works on the fourth train. coal-mining infrastructure at two BHP Billiton mines. Stanwell magnesium plant Queensland Leighton Contractors The development of Australia’s oil and gas reserves, and Looking forward, Australia is well-placed to prosper from production of cheap energy, should lead to the its resources, especially as it develops its processing development of other industries. The Plenty River capabilities. Further investment in the development of Corporation is proposing to develop a $1 billion world Australia’s resources also stands to benefit the Group, as it furthers its penetration of the resources sector. 24

QAL Gladstone stationary calciner plant Queensland Thiess LEIGHTON CONCISE SPECIAL FUTURE GROWTH HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 25 ROAD INFRASTRUCTURE

Over the last 30 years tremendous changes have Looking forward, governments will continue to rely on the occurred in Australia’s road network, both in the physical private sector to fund and develop much of the road layout and in the way it is financed, constructed, operated infrastructure in Australia’s capital cities. A number of and maintained. major projects are now either in active planning or under consideration. The sheer scale of these projects requires Australia now has networks of integrated freeways and a long planning lead-time. However we expect that motorways, with bypassing or tunnelling where possible, national spending on new roads should increase by to provide first class transport systems in most of our around 6 percent to $4.9 billion in 2002/03 and by nearly capital cities. The changes are the result of private sector 14 percent to $5.6 billion in 2003/04. financing of road development, the outsourcing of work to contractors, and a growing acceptance of a ‘user pays’ In excess of $6 billion worth of projects are likely to approach to the provision of public assets. proceed over the next few years. Projects include the Western Sydney Orbital, the Lane Cove Tunnel, the F3 – The escalating costs involved in the funding of larger and 1 Sydney Orbital connection, and the M4 City Link in Sydney more complex road infrastructure have placed more and as well as the Eastern Freeway extension, the Craigieburn more pressures on government budgets. Governments Bypass and the Scoresby Freeway in Melbourne. have reacted by progressively involving the private sector in projects and introducing tolling, starting with the M4 The Leighton Group has developed a strong position as a and M5 motorways in Sydney, and more recently, the M2 provider of road infrastructure. Projects undertaken range Motorway and the Eastern Distributor. In Queensland, the from the upgrading of sections of the Pacific Highway to charging of tolls supported the development of the the delivery of complex road systems such as Brisbane’s Gateway Bridge and more recently, the Logan Motorway. Inner City Bypass and Sydney’s Eastern Distributor. In The city of Melbourne has been reshaped in recent years some cases the Group’s financial strength has been a key by the City Link tollway system. component of successfully developing large scale, private sector projects and we expect that it will become more Contractors have become integral to the development of important in the future. these road networks and now take on almost all of the 2 roles traditionally provided by government including The Australian construction industry is set to experience community consultation, traffic management, a significant upturn in investment on road transport 1 Soldier’s Pinch environmental control, and operation and maintenance of infrastructure over the next few years. A consistent base- New South Wales Thiess the completed road network. This expanded role for load of ongoing work upgrading and maintaining the 2 contractors has provided the Leighton Group with an existing road network around the country will be Port of Brisbane Motorway enormous amount of work over recent years. supplemented by a number of large private sector funded Queensland Leighton Contractors projects. The Leighton Group looks forward to participating in the forthcoming upturn by applying its experience, expertise and financial strength to further develop Australia’s road transport infrastructure.

Inner City Bypass Brisbane, Queensland Leighton Contractors LEIGHTON CONCISE SPECIAL FUTURE GROWTH HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 25 ROAD INFRASTRUCTURE

Inner City Bypass Brisbane, Queensland Leighton Contractors LEIGHTON CONCISE SPECIAL FUTURE GROWTH HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 27 RAIL INFRASTRUCTURE

For nearly a century, rail has been the poor cousin of road Gold Coast light rail project, both in Queensland. In New transport due to Australia’s dependence on the motor South Wales, new rail lines planned include the Epping to vehicle and the relatively high capital cost of building rail Castle Hill link, the second stage of the Parramatta Rail infrastructure. However, decades of inertia are being Link, and the Sydney to Newcastle line will be upgraded rolled back by the development of new intercity and to accommodate high speed travel. interstate lines, the privatisation of parts of Australia’s While rail construction is experiencing a strong upturn, interstate track network, and the upgrading of the maintenance and refurbishment of the existing network existing network. Rail construction is expected to should also provide significant new work. The Australian increase by more than 200 percent over a five-year Rail Track Corporation has recently earmarked period, from less than $600 million in 2000/01 to almost $500 million for upgrading of rail infrastructure over the $1.8 billion in 2005/06. next five years. The upgrading follows the privatisation of The Victorian Government is currently investing National Rail Corporation and FreightCorp and will 1 $550 million to provide high-speed links for commuters improve the efficiency of interstate freight carriage. between Melbourne and four regional centres. Both John Holland is the biggest rail maintenance contractor in Thiess and John Holland were recently awarded work on Australia and currently maintains over 5,600 kilometres of these routes, which will terminate at the redeveloped track in Western Australia, and 800 kilometres of track in Southern Cross Station in Spencer Street, about to be South Australia and the Northern Territory. Privatisation of upgraded by Leighton Contractors. Melbourne’s train and tram network has also provided In Sydney, a consortium led by Thiess is designing and Thiess an opportunity to undertake long-term constructing the first leg of the $1.6 billion Parramatta maintenance work on 787 kilometres of metropolitan Rail Link, which is the biggest extension to the CityRail track, 118 train stations and 404 tram stations. network since the Richmond line opened in 1864. After Asia is also recording significant investment in the 100 years on the drawing board, construction of the development of rail infrastructure. Leighton Asia is 1,420 kilometre Alice Springs to Darwin rail line is also undertaking four major rail projects in Hong Kong with a underway and John Holland has a lead role in its 2 further $24 billion of Government capital expenditure on construction. rail expected over the next 15 years. Leighton Asia 1 Maintrain rail maintenance facility A number of other new rail initiatives are currently in recently secured track laying work on the Taiwan High New South Wales John Holland planning around the country including construction of the Speed Rail Link, and is also undertaking track laying and 2 Perth to Mandurah rail line in Western Australia, and the rail refurbishment work in Indonesia and Thailand. Cikampek to Cirebon rail project, Segment 1 Robina to Coolangatta extension and development of the Indonesia Leighton Asia Over the next few years rail infrastructure in Australia is set to benefit from a very significant boost to investment. The Leighton Group, with its strong maintenance and construction capabilities, looks set to share in this renewal of rail infrastructure.

Alice Springs to Darwin railway Northern Territory John Holland LEIGHTON CONCISE SPECIAL FUTURE GROWTH HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 27 RAIL INFRASTRUCTURE

Alice Springs to Darwin railway Northern Territory John Holland LEIGHTON CONCISE SPECIAL FUTURE GROWTH HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 29 BUILDING AND PROPERTY

Since its dramatic downturn a little over a decade ago, Trust. Also, Leighton Contractors has recently been the Australian property market has experienced moderate awarded the $167 million refurbishment of the Hilton levels of growth. Different sectors within the property Hotel in Sydney’s CBD. market grew strongly for brief periods driven by factors The Group will continue to strengthen its presence in such as Sydney’s hosting of the Olympic Games. niche sectors by acquisition. During the year John However, the collapse of the technology boom and the Holland acquired the Australian business of Fletcher global economic slowdown through the early part of this Construction, which has a strong retail presence and is decade has impacted across most of the commercial and currently refurbishing David Jones’ flagship Sydney CBD industrial sector. store. Leighton Contractors also acquired Broad Looking forward, the Australian non-residential building Constructions, one of Western Australia’s major building and property market now appears set to experience a contractors in the commercial construction market. strong rebound, with a combination of low interest rates Around $6 billion worth of private and public projects 1 and a strengthening economy expected to stimulate are planned for the health and education sector. Most of growth. The major focal point for the recovery is centred this activity is set to occur in New South Wales and on CBD office developments along the eastern seaboard, Queensland, with New South Wales committed to some redevelopment of shopping centres and some major 15 education and 20 health projects, including a hotels, as well as continued growth in health and $400 million redevelopment of Sydney’s Royal North education spending. Non-residential building is expected Shore Hospital. Public Private Partnership arrangements to increase by 7 percent to $13.5 billion in 2002/03 and by are being trialled in Sydney for schools and could a further 11 percent to $15 billion in 2003/04. generate opportunities for long-term maintenance work Leighton Properties is currently progressing some as well as construction. Defence and correctional selected office projects including the MacArthur facilities are also likely to see reasonable levels of both Chambers development in Brisbane, the 700 Collins construction and maintenance work. John Holland Street building in Melbourne, the KENS site in Sydney’s maintains a large proportion of the defence facilities and CBD and the 100 Pacific Highway site in North Sydney. establishments in New South Wales. 2 Careful to mitigate the risks often associated with office While the industrial market is not forecast to see the 1 tower development, Leighton Properties seeks MacArthur Chambers same levels of activity as the commercial market, investment partners and a level of pre-committed tenancy Queensland Leighton Properties opportunities remain for the Group to provide tailored before commencing projects. 2 solutions for clients. Shoal Bay Country Club Investment in the retail and hotel sectors is likely to be New South Wales Thiess The Australian property market appears to be entering a strong if good levels of consumer spending and period of stronger investment, underwritten by a continued growth in tourism occur. John Holland is strengthening economy and a favourable interest rate currently constructing two shopping centres in New environment. The Leighton Group has a strong presence South Wales for Woolworths and the Stockland Property in the building and property sector, with a diverse track record in both private and public sector projects.

Global Switch data centre New South Wales John Holland LEIGHTON CONCISE SPECIAL FUTURE GROWTH HOLDINGS LIMITED ANNUAL REPORT 2002 FEATURE 29 BUILDING AND PROPERTY

Since its dramatic downturn a little over a decade ago, Trust. Also, Leighton Contractors has recently been the Australian property market has experienced moderate awarded the $167 million refurbishment of the Hilton levels of growth. Different sectors within the property Hotel in Sydney’s CBD. market grew strongly for brief periods driven by factors The Group will continue to strengthen its presence in such as Sydney’s hosting of the Olympic Games. niche sectors by acquisition. During the year John However, the collapse of the technology boom and the Holland acquired the Australian business of Fletcher global economic slowdown through the early part of this Construction, which has a strong retail presence and is decade has impacted across most of the commercial and currently refurbishing David Jones’ flagship Sydney CBD industrial sector. store. Leighton Contractors also acquired Broad Looking forward, the Australian non-residential building Constructions, one of Western Australia’s major building and property market now appears set to experience a contractors in the commercial construction market. strong rebound, with a combination of low interest rates Around $6 billion worth of private and public projects 1 and a strengthening economy expected to stimulate are planned for the health and education sector. Most of growth. The major focal point for the recovery is centred this activity is set to occur in New South Wales and on CBD office developments along the eastern seaboard, Queensland, with New South Wales committed to some redevelopment of shopping centres and some major 15 education and 20 health projects, including a hotels, as well as continued growth in health and $400 million redevelopment of Sydney’s Royal North education spending. Non-residential building is expected Shore Hospital. Public Private Partnership arrangements to increase by 7 percent to $13.5 billion in 2002/03 and by are being trialled in Sydney for schools and could a further 11 percent to $15 billion in 2003/04. generate opportunities for long-term maintenance work Leighton Properties is currently progressing some as well as construction. Defence and correctional selected office projects including the MacArthur facilities are also likely to see reasonable levels of both Chambers development in Brisbane, the 700 Collins construction and maintenance work. John Holland Street building in Melbourne, the KENS site in Sydney’s maintains a large proportion of the defence and CBD and the 100 Pacific Highway site in North Sydney. establishments in New South Wales. 2 Careful to mitigate the risks often associated with office While the industrial market is not forecast to see the 1 tower development, Leighton Properties seeks MacArthur Chambers same levels of activity as the commercial market, investment partners and a level of pre-committed tenancy Queensland Leighton Properties opportunities remain for the Group to provide tailored before commencing projects. 2 solutions for clients. Shoal Bay Country Club Investment in the retail and hotel sectors is likely to be New South Wales Thiess The Australian property market appears to be entering a strong if good levels of consumer spending and period of stronger investment, underwritten by a continued growth in tourism occur. John Holland is strengthening economy and a favourable interest rate currently constructing two shopping centres in New environment. The Leighton Group has a strong presence South Wales for Woolworths and the Stockland Property in the building and property sector, with a diverse track record in both private and public sector projects.

Global Switch data centre New South Wales John Holland LEIGHTON CONCISE REVIEW OF OPERATING HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 31 > >

2 REVIEW OF OPERATING COMPANY ACTIVITY

Manjung power station Malaysia Leighton Asia

33 THE GROUP’S OPERATING COMPANIES 35 THIESS 37 LEIGHTON CONTRACTORS 39 LEIGHTON ASIA 41 JOHN HOLLAND 43 LEIGHTON PROPERTIES LEIGHTON CONCISE REVIEW OF OPERATING HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 31 > >

2 REVIEW OF OPERATING COMPANY ACTIVITY

Manjung power station Malaysia Leighton Asia

33 THE GROUP’S OPERATING COMPANIES 35 THIESS 37 LEIGHTON CONTRACTORS 39 LEIGHTON ASIA 41 JOHN HOLLAND 43 LEIGHTON PROPERTIES > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 33 THE GROUP’S OPERATING COMPANIES

Key Operating Subsidiaries & Focus and Activities Management & Key Statistics Joint Ventures Activity by Industry

Thiess Integrated engineering Managing Director PT Thiess Contractors Indonesia Total Operating Revenue Total Work in Hand and services company Roger Trundle Thiess Services specialising in: Percentage Ownership: 100% Hunter Valley Earthmoving Co – Building No. of Employees: 7,759 Silcar Maintenance Services – Civil engineering Established: 1935 (50% JV with Siemens) – Mining A member of the Leighton Group STCJV Services – Process engineering since 1983 (50% JV with Siemens) Sedgman (50% interest) – Environmental services Head Ofﬁce: Brisbane 55% $1200m Mining & Resources 60% $3013m – Utilities services Operates in Australia, Thiess Roche Linfox JV 27% $580m Engineering & Infrastructure 26% $1284m – Telecommunications South East Asia, near-Pacific (44% JV with Roche 44% and – Facilities O&M region Linfox 12%) 8% $186m Environmental 8% $379m www.thiess.com.au 7% $152m Building & Property 3% $170m 3% $76m Telecommunications 3% $140m $2194m $4986m

Leighton Contractors Project development Managing Director Vytel Total Operating Revenue Total Work in Hand and construction Bob Merkenhof Visionstream contractor specialising Percentage Ownership: 100% LSE Technology in: No. of Employees: 2,008 Metronode – Civil engineering Established: 1949 Broad Construction Services* – Infrastructure Head Ofﬁce: Sydney (70% interest) development Operates in Australia *Acquired July 2002 – Building www.leightoncontractors.com.au Note: – Contract mining 27% $336m Engineering & Infrastructure 32% $290m Leighton Contractors and its 41% $515m Telecommunications 46% $408m – Process engineering key subsidiaries have the benefit – Telecommunications of the Leighton Holdings ASIC 21% $269m Building & Property 10% $93m services class order 98/1418 11% $135m Mining & Resources 12% $109m

$1255m $900m

Leighton Asia Multi-disciplined Managing Director Leighton Contractors (Asia) Total Operating Revenue Total Work in Hand contractor specialising John Faulkner Leighton Contractors (Malaysia) in: Percentage Ownership: 100% Leighton Contractors – Civil engineering and No. of Employees: 3,797 (Philippines) infrastructure Established: 1975 Thai Leighton – Building Head Ofﬁce: Hong Kong PT Leighton Contractors – Contract mining Operates in Hong Kong, Indonesia – Marine engineering Malaysia, the Philippines, Leighton Contractors (Vietnam) – Process engineering Thailand, Vietnam, Indonesia, Vytel Asia (50% JV with Vytel) 62% $521m Engineering & Infrastructure 60% $886m – Telecommunications and other selected countries 30% $247m Building & Property 21% $298m – Rail in Asia $71m Mining & Resources 18% $271m www.leightonasia.com – – Environmental 1% $20m $839m $1475m On 1 July 2002 Leighton Asia was restructured into two separate entities, each with its own managing director. Will Hamilton MD Leighton Asia (Northern) (left) and David Savage MD Leighton Asia (Southern) (right).

John Holland Multi-disciplined Managing Director Quantum Total Operating Revenue Total Work in Hand construction and services Bill Wild Lucon* contractor specialising in: Percentage Ownership: 70%* Defence Maintenance – Civil, mechanical and No. of Employees: 1,568 Management (50% JV with process engineering Established: 1949 Multiplex) – Building A member of the Leighton Group Infratek Networks (45% JV with – Rail since January 2000 ALSTOM 45% and Sinclair – Telecommunications Head Ofﬁce: Melbourne Knight Merz 10%) Operates in Australia and *Acquired September 2002 56% $409m Engineering & Infrastructure 64% $643m Pacific region 40% $293m Building & Property 36% $363m www.johnholland.com.au 4% $28m Telecommunications – $4m

*30% owned by Heytesbury Pty Ltd $730m $1010m

Leighton Properties Provides specialist Managing Director services in: Vyril Vella – Property development Percentage Ownership: 100% – Development risk No. of Employees: 20 management Established: 1972 Head Ofﬁce: Sydney Operates along the east coast of Australia www.leightonproperties.com.au Leighton Asia Multi-disciplined Managing Director Leighton Contractors (Asia) contractor specialising John Faulkner Leighton Contractors (Malaysia) in: Percentage Ownership: 100% Leighton Contractors – Civil engineering and No. of Employees: 3,797 (Philippines) infrastructure Established: 1975 Thai Leighton – Building Head Ofﬁce: Hong Kong PT Leighton Contractors – Contract mining Operates in Hong Kong, Indonesia – Marine engineering Malaysia, the Philippines, Leighton Contractors (Vietnam) – Process engineering Thailand, Vietnam, Indonesia, Vytel Asia (50% JV with Vytel) – Telecommunications and other selected countries – Rail in Asia www.leightonasia.com

On 1 July 2002 Leighton Asia was restructured into two separate entities, each with its own managing director. Will Hamilton MD Leighton Asia (Northern) (left) and David Savage MD Leighton Asia (Southern) (right).

*30% owned by Heytesbury Pty Ltd $730m $1010m

Overview In Queensland, Awoonga Dam was successfully “WITH RECORD LEVELS OF Thiess recorded another good performance, reporting a completed and has been recognised as a leading alliance 22 percent increase in operating revenue with work in project. New works have commenced on road projects at WORK IN HAND, WE ARE WELL hand at a record level of $5 billion. Our positive outlook is Karuah and Charleston in New South Wales. POSITIONED TO PROVIDE A supported by strong workloads in Australia and overseas Building work undertaken during the year included the across the resources, infrastructure, engineering and SOUND PERFORMANCE IN THE Royal Prince Alfred Hospital and Shoal Bay resort in services sectors. An ongoing priority is the focus on client New South Wales, the commencement of Stage 3 of the COMING YEAR.” relationships and the development of our people. ROGER TRUNDLE MANAGING DIRECTOR Lavarack Barracks in Queensland, and a number of The year in review residential/commercial projects in Victoria. The company’s mining and resources activities continued The Services business contributed with ongoing work to be a major source of revenue over the year. In Board across the environmental, telecommunications and Australia, we progressed operations at 12 mine sites in M C Albrecht AC Chairman utilities sectors. Facilities operations and maintenance R S Trundle Managing Director New South Wales and Queensland, and were recently continues to grow with good levels of new work won. D J Argent, E F Finger AO, R J Flew, A C Hardy, awarded the construction of new coal handling facilities Hon R J Kelly, W M King AM at the Hail Creek coal mine in Queensland. We have continued to source and secure new projects Secretary D J Argent and at the same time have actively strengthened In Indonesia, we performed strongly on our $1 billion Senior Executives relationships with our existing clients and business contract for PT Arutmin at the Satui and Senakin coal R S Trundle Managing Director partners with high levels of repeat business. D J Argent Director, Finance & Administration mines, and progressed well at the Kideco and KPC B J Campain Executive General Manager, Thiess Services mines. In other resources-related work, Thiess is Outlook M L Fox Executive General Manager, Qld/NT/Pacific undertaking a significant process engineering project at With the construction sector upturn now becoming N N Jukes Executive General Manager, Operations QAL’s alumina refinery, and major civil works at the apparent, good opportunities are emerging in civil and D K Saxelby Executive General Manager, NSW/ACT & Vic R H Wilson Executive General Manager, Comalco alumina refinery at Gladstone, Queensland and process engineering, and in large-scale transport Development & Corporate Services at the Goro Nickel project in New Caledonia. Work is infrastructure projects in Australia. Both domestic and E P Buratto General Manager, WA ongoing on the LNG4 project at the North West Shelf in international markets continue to provide organic growth M F Connell General Manager, Human Resources Western Australia. in mining and resources, where an increasing demand for D N Johnson General Manager, Vic/Tas/SA/NZ minerals should provide good levels of activity. An T L Bulmer General Manager, South America A highlight was the award of two major rail projects B A Munro General Manager, South East Asia improving outlook for building and property should also towards the end of the year – the Epping to Chatswood D J Overall General Manager, Process Engineering add to our workload, with steady levels of ongoing section of the Parramatta Rail Line in Sydney and two I D Wade General Manager, Information Systems business from our environmental, utilities and packages of the Regional Fast Rail project in Victoria. telecommunications activities. Thiess will consolidate its position in our broadly based business by focusing on our clients’ needs and service delivery. We will continue to build on the capability and enthusiasm of our people and, with record levels of work in hand, are well positioned to provide a sound performance in the coming year.

Awoonga dam raising project Queensland > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 35 THIESS

Awoonga dam raising project Queensland > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 37 LEIGHTON CONTRACTORS

Overview Since year-end we have also been awarded the contract “LEIGHTON CONTRACTORS IS Leighton Contractors performed well in 2001/02, meeting to design and construct the new Southern Cross Rail corporate targets for both revenue and funds employed. Station in Melbourne’s Spencer Street. WELL-PLACED TO CAPITALISE ON The company has successfully restructured for growth Construction of Nextgen Networks’ 8,400 kilometres ITS REPUTATION AND CAPABILITY, and has identified or been short-listed on a range of large of fibre-optic cable has progressed well with over projects across the country. TO SUSTAIN GROWTH IN OUR 5,000 kilometres already laid. Other telecommunications During the year we continued to broaden our skills opportunities, however, have been limited. MAJOR MARKETS.” base and extend our engineering capabilities into BOB MERKENHOF MANAGING DIRECTOR We continued to perform well in the mineral and complex process and heavy engineering work. The new resources sector and recently added to our work levels in Amcor bottling facility in South Australia’s Barossa Valley this area. The $89 million St Ives gold mine contract in the was completed ahead of schedule, and the recently Kambalda region of Western Australia is our first alliance Board awarded contract for engineering, procurement and D S Adamsas Chairman mining project and is performing well. construction of the Australian Magnesium Corporation’s R J Merkenhof Managing Director R L Hawkins, A L Jacobs, I M Luck, P J McMorrow, $1 billion Stanwell magnesium plant, near Rockhampton We further developed our business capabilities R F Morris, R P Turchini, L W Voyer, in Queensland, marks our first large scale process throughout the year, focusing on opportunities in new Secretary A L Jacobs engineering venture. sectors such as food and beverage, energy and utilities, Senior Executives and rail infrastructure where we expect to see growth. The year in review R J Merkenhof Managing Director I M Luck General Manager, Vic, SA & Tas While engineering and infrastructure activities were down Outlook P J McMorrow General Manager, WA on last year, largely due to the timing of government Leighton Contractors is well-placed to capitalise R P Turchini General Manager, NSW & ACT projects, Brisbane’s Inner City Bypass has been completed on its reputation and capability, as we look forward L W Voyer General Manager, Qld & NT eight months ahead of schedule and work is well under to sustained growth in our major markets over the next D E Wilson General Manager, Strategic Development A L Jacobs Chief Financial Officer way on the Port of Brisbane motorway alliance project. four to five years. B A Bowman Information Systems Manager It has been a successful year with regards to our The recent award of new contracts for the Australian R L Hawkins National Manager, Development J E Grierson National Manager, Estimating building activity. In Sydney we completed work at the Magnesium Corporation and Southern Cross Station has D M Simpson General Counsel St Vincent’s Hospital as well as the ABC’s new Ultimo doubled our work in hand since June to approx $2 billion. headquarters. The acquisition in July 2002 of WA-based Vytel Pty Limited We are confident that the construction cycle is at the P R Cooper Managing Director commercial building contractors, Broad Construction, has beginning of a resurgence, which will present a growing B T J de Boer Operations Director supplemented our building capability nationally. D Phizacklea Commercial Manager number of major opportunities in the transport and B M Faulks Business Development Director resources sectors over the coming years. Infrastructure P C Harrison General Manager, Development development and process engineering are set to provide growth and, whilst telecommunications activities are expected to come off recent highs, we expect to be able to build on the solid foundations laid this year. > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 37 LEIGHTON CONTRACTORS

Overview Since year-end we have also been awarded the contract “LEIGHTON CONTRACTORS IS Leighton Contractors performed well in 2001/02, meeting to design and construct the new Southern Cross Rail corporate targets for both revenue and funds employed. Station in Melbourne’s Spencer Street. WELL-PLACED TO CAPITALISE ON The company has successfully restructured for growth Construction of Nextgen Networks’ 8,400 kilometres ITS REPUTATION AND CAPABILITY, and has identified or been short-listed on a range of large of fibre-optic cable has progressed well with over projects across the country. TO SUSTAIN GROWTH IN OUR 5,000 kilometres already laid. Other telecommunications During the year we continued to broaden our skills opportunities, however, have been limited. MAJOR MARKETS.” base and extend our engineering capabilities into BOB MERKENHOF MANAGING DIRECTOR We continued to perform well in the mineral and complex process and heavy engineering work. The new resources sector and recently added to our work levels in Amcor bottling facility in South Australia’s Barossa Valley this area. The $89 million St Ives gold mine contract in the was completed ahead of schedule, and the recently Kambalda region of Western Australia is our first alliance Board awarded contract for engineering, procurement and D S Adamsas Chairman mining project and is performing well. construction of the Australian Magnesium Corporation’s R J Merkenhof Managing Director R L Hawkins, A L Jacobs, I M Luck, P J McMorrow, $1 billion Stanwell magnesium plant, near Rockhampton We further developed our business capabilities R F Morris, R P Turchini, L W Voyer, in Queensland, marks our first large scale process throughout the year, focusing on opportunities in new Secretary A L Jacobs engineering venture. sectors such as food and beverage, energy and utilities, Senior Executives and rail infrastructure where we expect to see growth. The year in review R J Merkenhof Managing Director I M Luck General Manager, Vic, SA & Tas While engineering and infrastructure activities were down Outlook P J McMorrow General Manager, WA on last year, largely due to the timing of government Leighton Contractors is well-placed to capitalise R P Turchini General Manager, NSW & ACT projects, Brisbane’s Inner City Bypass has been completed on its reputation and capability, as we look forward L W Voyer General Manager, Qld & NT eight months ahead of schedule and work is well under to sustained growth in our major markets over the next D E Wilson General Manager, Strategic Development A L Jacobs Chief Financial Officer way on the Port of Brisbane motorway alliance project. four to five years. B A Bowman Information Systems Manager It has been a successful year with regards to our The recent award of new contracts for the Australian R L Hawkins National Manager, Development J E Grierson National Manager, Estimating building activity. In Sydney we completed work at the Magnesium Corporation and Southern Cross Station has D M Simpson General Counsel St Vincent’s Hospital as well as the ABC’s new Ultimo doubled our work in hand since June to approx $2 billion. headquarters. The acquisition in June of WA-based Vytel Pty Limited We are confident that the construction cycle is at the P R Cooper Managing Director commercial building contractors, Broad Construction, has beginning of a resurgence, which will present a growing B T J de Boer Operations Director supplemented our building capability nationally. D Phizacklea Commercial Manager number of major opportunities in the transport and B M Faulks Business Development Director resources sectors over the coming years. Infrastructure P C Harrison General Manager, Development development and process engineering are set to provide growth and, whilst telecommunications activities are expected to come off recent highs, we expect to be able to build on the solid foundations laid this year.

ABC accommodation project Sydney, New South Wales > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 39 LEIGHTON ASIA

Overview In the Philippines, the $100 million manufacturing facility “THE DIVERSITY OF OUR CURRENT Leighton Asia had a satisfactory year despite continued for Philip Morris progressed well. Delays in obtaining final sluggishness in Asia’s economies. Revenue remained at a approval to commence the North Luzon Expressway WORKLOAD HAS US WELL similar level and work in hand increased to $1.5 billion. affected this year’s result, but the project should provide POSITIONED TO COUNTER THE In an uncertain economic environment the challenge is to a major workload boost going forward. identify clients and projects that maintain our growth. CONTINUED VOLATILITY OF ASIA’S Expanding to new markets, we won our first projects Our regional spread of work lessens dependence on any in Macau and Sri Lanka and returned to Singapore after a ECONOMIES.” JOHN FAULKNER MANAGING DIRECTOR one market and provides a solid expansion platform. 10-year absence. The year in review Board Outlook N K Chan Chairman Performance was driven by strong results from Malaysia Leighton Asia’s strong workload will provide the J Faulkner Managing Director and Hong Kong. In Malaysia we neared completion on Dr H M Bästlein, W K Hamilton, P G Pollard, foundation for another good performance this year. Our several projects related to the Manjung Power Station. W M King AM, Dr P Noé, D Savage, A B M F Stephens spread of work across disciplines and countries helps to The Teachers’ Housing project continues to be successful, Secretary M Wong counter the effects of the region’s fluctuating economies. achieving 16 million man-hours without a lost-time injury. Corporate J Faulkner Managing Director Through Vytel Asia, we secured a $42 million contract to To provide a more locally based structure and enhance P G Pollard Director and General Manager, Finance & Administration design and install mobile phone base stations throughout our focus and control, Leighton Asia will be divided into D Pestridge Group Commercial Manager peninsula and eastern Malaysia. two geographically separate operating entities — M Wong Group Financial Controller Leighton Asia (Northern) and Leighton Asia (Southern). C I Gordon Group Communications Manager Hong Kong delivered a solid result on the back of good Will Hamilton and David Savage have been promoted to B Cunningham Business Development Director, Australia/Asia progress on existing rail projects. We were awarded a be Managing Directors of these new entities. Leighton Asia (Northern) $200 million housing project for the Hong Kong Housing W K Hamilton Managing Director Authority and a $160 million design and construct In the Northern region, Hong Kong offers good prospects J Dujmovic General Manager, Hong Kong J P Leslie Operations Manager, Thailand contract for a permanent aviation fuel facility for Hong in infrastructure, although commercial building and G Francis Country Manager, Vietnam Kong International Airport. We secured a $100 million housing sectors remain subdued. The Philippines and P F Gomm General Manager, Philippines contract to extend the sewerage system on Hong Kong Vietnam offer further opportunities in the power sector. J F Nash Engineering and Estimating Manager, Hong Kong island. The Australian International School was awarded Our growing rail portfolio has expanded with the recent D J Montgomery Finance & Administration Manager, Hong Kong the Hong Kong Institute of Architects Medal of the Year award of a track work contract for the Taiwan High Speed S K Le Cornu Finance & Administration Manager, Thailand and Vietnam M Templeton Finance & Administration Manager, Philippines for design excellence. Rail project. Leighton Asia (Southern) Our rail workload was enhanced with the award of a A key challenge for Leighton Asia (Southern) will be D Savage Managing Director R D Hodgson President Director, Indonesia $100 million double-tracking project north of Jakarta. replacing the workload previously provided by Malaysia’s H Tyrwhitt General Manager, Malaysia and Brunei This project, coupled with extensions and accelerations Manjung power station and Teachers’ Housing projects. E Wardle General Manager, Singapore, Sri Lanka & India on the Sebuku and ABK Loa Janan coal mines, We are poised to secure a number of projects in the next J Russell Finance & Administration Manager, Indonesia enabled Indonesia to make a worthy contribution. six months and with the Malaysian Government J S Holland Corporate Manager, Finance & Administration, committed to major infrastructure investment, the outlook Malaysia and Brunei Tjoeng Hing Kok New Business, Indonesia is positive. Resource projects in Indonesia also offer K G Plumbe New Business, Malaysia and Brunei considerable opportunities for continued growth. S Heath New Business, Singapore, Sri Lanka & India

MTR Lantau and airport railway phase II Hong Kong > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 39 LEIGHTON ASIA

Overview In the Philippines, the $100 million manufacturing facility “THE DIVERSITY OF OUR CURRENT Leighton Asia had a satisfactory year despite continued for Philip Morris progressed well. Delays in obtaining final sluggishness in Asia’s economies. Revenue remained at a approval to commence the North Luzon Expressway WORKLOAD HAS US WELL similar level and work in hand increased to $1.5 billion. affected this year’s result, but the project should provide POSITIONED TO COUNTER THE In an uncertain economic environment the challenge is to a major workload boost going forward. identify clients and projects that maintain our growth. CONTINUED VOLATILITY OF ASIA’S Expanding to new markets, we won our first projects Our regional spread of work lessens dependence on any in Macau and Sri Lanka and returned to Singapore after a ECONOMIES.” JOHN FAULKNER MANAGING DIRECTOR one market and provides a solid expansion platform. 10-year absence. The year in review Board Outlook N K Chan Chairman Performance was driven by strong results from Malaysia Leighton Asia’s strong workload will provide the J Faulkner Managing Director and Hong Kong. In Malaysia we neared completion on Dr H M Bästlein, W K Hamilton, P G Pollard, foundation for another good performance this year. Our several projects related to the Manjung Power Station. W M King AM, Dr P Noé, D Savage, A B M F Stephens spread of work across disciplines and countries helps to The Teachers’ Housing project continues to be successful, Secretary M Wong counter the effects of the region’s fluctuating economies. achieving 16 million man-hours without a lost-time injury. Corporate J Faulkner Managing Director Through Vytel Asia, we secured a $42 million contract to To provide a more locally based structure and enhance P G Pollard Director and General Manager, Finance & Administration design and install mobile phone base stations throughout our focus and control, Leighton Asia will be divided into D Pestridge Group Commercial Manager peninsula and eastern Malaysia. two geographically separate operating entities — M Wong Group Financial Controller Leighton Asia (Northern) and Leighton Asia (Southern). C I Gordon Group Communications Manager Hong Kong delivered a solid result on the back of good Will Hamilton and David Savage have been promoted to B Cunningham Business Development Director, Australia/Asia progress on existing rail projects. We were awarded a be Managing Directors of these new entities. Leighton Asia (Northern) $200 million housing project for the Hong Kong Housing W K Hamilton Managing Director Authority and a $160 million design and construct In the Northern region, Hong Kong offers good prospects J Dujmovic General Manager, Hong Kong J P Leslie Operations Manager, Thailand contract for a permanent aviation fuel facility for Hong in infrastructure, although commercial building and G Francis Country Manager, Vietnam Kong International Airport. We secured a $100 million housing sectors remain subdued. The Philippines and P F Gomm General Manager, Philippines contract to extend the sewerage system on Hong Kong Vietnam offer further opportunities in the power sector. J F Nash Engineering and Estimating, Hong Kong island. The Australian International School was awarded Our growing rail portfolio has expanded with the recent D J Montgomery Finance & Administration Manager, Hong Kong the Hong Kong Institute of Architects Medal of the Year award of a track work contract for the Taiwan High Speed S K Le Cornu Finance & Administration Manager, Thailand and Vietnam M Templeton Finance & Administration Manager, Philippines for design excellence. Rail project. Leighton Asia (Southern) Our rail workload was enhanced with the award of a A key challenge for Leighton Asia (Southern) will be D Savage Managing Director R D Hodgson President Director, Indonesia $100 million double-tracking project north of Jakarta. replacing the workload previously provided by Malaysia’s H Tyrwhitt General Manager, Malaysia and Brunei This project, coupled with extensions and accelerations Manjung power station and Teachers’ Housing projects. E Wardle General Manager, Singapore, Sri Lanka & India on the Sebuku and ABK Loa Janan coal mines, We are poised to secure a number of projects in the next J Russell Finance & Administration Manager, Indonesia enabled Indonesia to make a worthy contribution. six months and with the Malaysian Government J S Holland Corporate Manager, Finance & Administration, committed to major infrastructure investment, the outlook Malaysia and Brunei Tjoeng Hing Kok New Business, Indonesia is positive. Resource projects in Indonesia also offer K G Plumbe New Business, Malaysia and Brunei considerable opportunities for continued growth. S Heath New Business, Singapore, Sri Lanka & India

MTR Lantau and airport railway phase II Hong Kong > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 41 JOHN HOLLAND

Overview Our Victorian operations performed to expectation, with “THE COMPANY’S REGIONALLY- John Holland delivered a good performance for the year, a number of contract awards during the year including a increasing revenue by 34 percent to $730 million and civil engineering package for the Carlesruhe section on DRIVEN CONSTRUCTION BUSINESS growing work in hand by 59 percent. the Calder Freeway. GREW STRONGLY AND RAIL The company’s regionally-driven construction business We have established a specialist services group SERVICES AND INFRASTRUCTURE grew strongly and rail services and infrastructure work encompassing rail maintenance, telecommunications continued to be a key driver of our growth. services, mechanical and process engineering services, WORK CONTINUED TO BE A KEY and facilities management and building services The acquisition of Fletcher Projects has given John DRIVER OF OUR GROWTH.” to cater for the increased outsourcing of such work. Holland a broader market presence in the construction BILL WILD MANAGING DIRECTOR We recently acquired Lucon, previously Lurgi management field and opens up a number of Construction, a provider of mechanical and process opportunities for the company across Australia. engineering fabrication, construction and maintenance Board The year in review services. This dual strategy of providing operations J L Holmes à Court Chairman John Holland’s presence in the rail sector has been and maintenance services to support our core W J Wild Managing Director strengthened this year and we now have a major share of construction business has delivered a solid contribution D S Adamsas, E A Gaines, I R Johnson, W M King AM, outsourced rail maintenance and infrastructure work this year and is expected to become an even more T A Mairs, H J Ohff, N W Stump Secretaries G W Coffey, J C Horsley across Australia. The Alice Springs to Darwin rail project significant part of our business offering. is performing very well, with track-laying having started in Senior Executives Outlook W J Wild Managing Director April and now proceeding at over 4 kilometres per day. Growth prospects are positive. The introduction of R A Barton General Manager, Qld The award of two packages of work valued at Fletcher to the company will allow John Holland to R J Bennetto General Manager, Southern Region $296 million for the Victoria fast rail project was a major V K Chudacek General Manager, Major Projects pursue an increasing number of opportunities in a milestone. We have also secured a five-year, $150 million G W Coffey General Manager, Development & Investments number of niche sectors including retail refurbishment D W Golightly General Manager, Regional & Corporate Services extension to the WestNet rail maintenance project in and the health sector, particularly in southern states D G Stewart General Manager, NSW/ACT Region Western Australia. where we currently do not have a strong foothold. J C Horsley General Manager, Accounting & Administration R S Mickle General Manager, Western Region Our performance in New South Wales was notable during Growing our revenue base through other strategic D R Tasker General Manager, Rail Division the year. Work commenced on the design and acquisitions will be a key facet of operations in the future. construction of the replacement research reactor at Our focus on the rail sector will be maintained and we will Lucas Heights in Sydney. We undertook a significant continue to use our experience and proven capabilities to amount of building work and began work on a $70 million actively bring new projects into our portfolio. The prison construction and maintenance contract in northern resources sector offers additional opportunities, NSW. Operations progressed well on our $180 million joint especially in the mechanical and process engineering venture contract for facilities management of disciplines. A number of public infrastructure projects are Department of Defence bases. Marking a strategic return also expected in the near future and the company is well- to the resources sector, we were also awarded a contract placed to convert several of these opportunities and for site preparation and earthworks at BHP-Billiton’s continue its growth. Mt Arthur North coal mine in the Hunter Valley.

Facilities manangement for Department of Defence Richmond Airbase New South Wales > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 41 JOHN HOLLAND

Overview Our Victorian operations performed to expectation, with “THE COMPANY’S REGIONALLY- John Holland delivered a good performance for the year, a number of contract awards during the year including a increasing revenue by 34 percent to $730 million and civil engineering package for the Carlesruhe section on DRIVEN CONSTRUCTION BUSINESS growing work in hand by 59 percent. the Calder Freeway. GREW STRONGLY AND RAIL The company’s regionally-driven construction business We have established a specialist services group SERVICES AND INFRASTRUCTURE grew strongly and rail services and infrastructure work encompassing rail maintenance, telecommunications continued to be a key driver of our growth. services, mechancial and process engineering services, WORK CONTINUED TO BE A KEY and facilities management and building services The acquisition of Fletcher Projects has given John DRIVER OF OUR GROWTH.” to cater for the increased outsourcing of such work. Holland a broader market presence in the construction BILL WILD MANAGING DIRECTOR We recently acquired Lucon, previously Lurgi management field and opens up a number of Construction, a provider of mechanical and process opportunities for the company across Australia. engineering fabrication, construction and maintenance Board The year in review services. This dual strategy of providing operations J L Holmes à Court Chairman John Holland’s presence in the rail sector has been and maintenance services to support our core W J Wild Managing Director strengthened this year and we now have a major share of construction business has delivered a solid contribution D S Adamsas, E A Gaines, I R Johnson, W M King AM, outsourced rail maintenance and infrastructure work this year and is expected to become an even more T A Mairs, H J Ohff, N W Stump Secretaries G W Coffey, J C Horsley across Australia. The Alice Springs to Darwin rail project significant part of our business offering. is performing very well, with track-laying having started in Senior Executives Outlook W J Wild Managing Director April and now proceeding at over 4 kilometres per day. Growth prospects are positive. The introduction of R A Barton General Manager, Qld The award of two packages of work valued at Fletcher to the company will allow John Holland to R J Bennetto General Manager, Southern Region $296 million for the Victoria fast rail project was a major V K Chudacek General Manager, Major Projects pursue an increasing number of opportunities in a milestone. We have also secured a five-year, $150 million G W Coffey General Manager, Development & Investments number of niche sectors including retail refurbishment D W Golightly General Manager, Regional & Corporate Services extension to the WestNet rail maintenance project in and the health sector, particularly in southern states D G Stewart General Manager, NSW/ACT Region Western Australia. where we currently do not have a strong foothold. J C Horsley General Manager, Accounting & Administration R S Mickle General Manager, Western Region Our performance in New South Wales was notable during Growing our revenue base through other strategic D R Tasker General Manager, Rail Division the year. Work commenced on the design and acquisitions will be a key facet of operations in the future. construction of the replacement research reactor at Our focus on the rail sector will be maintained and we will Lucas Heights in Sydney. We undertook a significant continue to use our experience and proven capabilities to amount of building work and began work on a $70 million actively bring new projects into our portfolio. The prison construction and maintenance contract in northern resources sector offers additional opportunities, NSW. Operations progressed well on our $180 million joint especially in the mechanical and process engineering venture contract for facilities management of disciplines. A number of public infrastructure projects are Department of Defence bases. Marking a strategic return also expected in the near future and the company is well- to the resources sector, we were also awarded a contract placed to convert several of these opportunities and for site preparation and earthworks at BHP-Billiton’s continue its growth. Mt Arthur North coal mine in the Hunter Valley.

Facilities manangement for Department of Defence Richmond Airbase New South Wales > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 43 LEIGHTON PROPERTIES

Overview Our performance in Victoria has been pleasing with the “THE PROVEN EXPERTISE OF OUR Leighton Properties completed the sale of a number of sale of the Moorabbin bulk goods warehouse on the development properties during the year, providing a solid Nepean Highway for $32 million and our St Kilda Road STAFF, TOGETHER WITH OUR contribution to revenue and delivering an improved return commercial office tower for $73 million. We also EXCELLENT CLIENT AND PROJECT on funds employed. continued to subdivide and divest parcels of the Thomastown industrial site and were successful in selling PARTNER RELATIONSHIPS WILL We have been active in the industrial and commercial stages 1 and 2 of the Mulgrave high-tech industrial park markets along the eastern seaboard despite recent HELP LEIGHTON PROPERTIES LIFT to the James Fielding Group. economic uncertainty and have identified a number of ITS CONTRIBUTION TO GROUP new opportunities in the property and development The Bureau of Meteorology has chosen our office tower sector, which are currently being progressed. development in the Melbourne Docklands precinct at 700 RESULTS.” Collins Street as its new headquarters. The tower will be VYRIL VELLA MANAGING DIRECTOR We have also continued to build on our relationships developed in joint venture with Folkestone Limited. with our key project partners, which is helping to develop a competitive edge and to maximise the use of During the year our strategic partnership with the James Board our capital base. Fielding Group was strengthened. The partnership is J C Elvy Chairman exploring joint development opportunities and is V A Vella Managing Director The year in review providing a retail investment vehicle for some of our D S Adamsas, A W Beck, R H Borger, B W Clark, In Sydney, construction of the office tower and car park completed property developments. M C Gray, W M King AM, G J Paramor, D P Robinson at 383 Kent Street was completed and 67 percent of the Secretary B W Clark development is currently leased. We also secured Stage 1 During the year John Elvy was appointed as chairman of Senior Executives and Stage 2 development approval for the $600 million the board of Leighton Properties and Greg Paramor, V A Vella Managing Director commercial development at the KENS site (Kent, Erskine, executive chairman of the James Fielding Group, also J C Barrett Manager, Corporate Services R H Borger Manager, Queensland Napoleon and Sussex Streets) in the CBD. joined the board. B W Clark Commercial Manager A development proposal was lodged for a $120 million Outlook M C Gray Manager, New South Wales North Sydney office tower at 100 Pacific Highway that will The property sector has come through the recent period A W Beck Manager, Victoria be progressed in joint venture with ISPT. Our relationship of economic uncertainty relatively unscathed and we with ISPT was further strengthened when we were named believe that prospects for the commercial and industrial as preferred developers for a $140 million commercial/ property markets are looking positive. Leighton industrial development at Lane Cove. Properties is progressing a number of existing opportunities in NSW, Victoria and Queensland and is In Queensland, good progress was made on construction confident of converting a good portion of these in the of the MacArthur Chambers retail and commercial near future. development in Brisbane’s CBD, undertaken in joint venture with the Seymour Group. Agreement has been The proven expertise of our staff, together with our reached with prospective tenants for approximately excellent client and project partner relationships will help 95 percent of the total available space. Leighton Properties lift its contribution to Group results.

Moorabbin Homemaker Centre Victoria > LEIGHTON CONCISE REVIEW OF OPERATING > HOLDINGS LIMITED ANNUAL REPORT 2002 COMPANY ACTIVITY 43 LEIGHTON PROPERTIES

Moorabbin Homemaker Centre Victoria LEIGHTON CONCISE FINANCIAL HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 45 > >

3 FINANCIAL REPORT

ABK Loa Janan coal mine, East Kalimantan, Indonesia Leighton Asia

47 DIRECTORS’ STATUTORY REPORT 51 DIRECTORS’ RÉSUMÉS 53 CORPORATE GOVERNANCE POLICY 55 SHAREHOLDINGS 56 CONCISE FINANCIAL REPORT 64 SHAREHOLDER INFORMATION FINANCIAL CALENDAR 65 STATISTICAL SUMMARY 66 DIRECTORY AND OFFICES LEIGHTON CONCISE FINANCIAL HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 45 > >

3 FINANCIAL REPORT

ABK Loa Janan coal mine, East Kalimantan, Indonesia Leighton Asia

47 DIRECTORS’ STATUTORY REPORT 51 DIRECTORS’ RÉSUMÉS 53 CORPORATE GOVERNANCE POLICY 55 SHAREHOLDINGS 56 CONCISE FINANCIAL REPORT 64 SHAREHOLDER INFORMATION FINANCIAL CALENDAR 65 STATISTICAL SUMMARY 66 DIRECTORY AND OFFICES > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 47

DIRECTORS’ STATUTORY REPORT

The Directors of Leighton Holdings Limited present their report for Financial results specific sites. The Group has in place and adheres to an the financial year ended 30 June 2002 in respect of the consolidated Total revenue for the Consolidated Entity for the financial year was Environmental Policy that has established a quarterly environmental entity constituted by the Company and the entities it controlled up by 15% to $5.0 billion. Operating profit after tax attributable to reporting regime that ensures environmental performance is during the financial year (referred to in this report as either the members of the Company increased by 8% to $169.2 million. reported from project/site level, up through the levels of ‘Consolidated Entity’ or the ‘Group’). This report has been prepared Dividends management, to the Board of Leighton Holdings. in accordance with the requirements of Division 1 of Part 2M.3 of A final ordinary dividend of 26 cents per share, franked to the As part of the Group’s internal reporting processes, operating the Corporations Act 2001. extent of 70%, was announced on 15 August 2002 and will be paid management is required to report the number of environmental Review of operations on 30 September 2002. Together with the interim ordinary dividend incidents occurring and what has happened to resolve such A review of the operations of the Consolidated Entity during the of 16 cents per share, franked to the extent of 70% which was paid incidents, regardless of whether they infringe any regulations. financial year and of the results of those operations is contained on on 28 March 2002, the total dividend payment out of the profits During the financial year, the Environmental Incident Severity pages 1 to 44 of this Concise Annual Report. for the financial year will be 42 cents per share and will amount to Classifications were reviewed and further refined into 12 types of Significant changes $113.6 million. impacts, including measurable limits where suitable, to ensure Significant changes in the state of affairs of the Consolidated Entity The final dividend of 25 cents per share, franked to the extent of consistency in reporting and management across the Group. The during the financial year were as follows: 50%, referred to in the Directors’ statutory report for the financial severity of the impact is reported as high, medium or low, according – Due to the uncertainties in the telecommunications market a year ended 30 June 2001 and payable out of the profits for that to the following classification: $45 million provision has been made against the Group’s financial year was paid on 28 September 2001. Incident Classification: $92 million investment in Nextgen to be made in the second Principal activities Level 1: half of the 2003 financial year. (pages 11, 15 and 57) During the financial year there were no significant changes in the (High Severity) refers to pollution or degradation, which has (or may – Leighton Properties disposed of $129 million of development nature of the Consolidated Entity’s principal activities which were have) irreversible detrimental effects on the environment and/or properties which included the sale of its long-term commercial building, civil engineering construction, contract mining, community. The effects extend to a wide scale beyond the site. property at 417 St Kilda Road, Melbourne for $73 million. (pages telecommunications, environmental services, property development Level 2: 13, 43, 57 and 58) and project management in Australia, Hong Kong and selected (Medium Severity) refers to pollution or degradation with a parts of South-East Asia. – Leighton Holdings acquired 3.795 million units in PA Property persistent (greater than three months) but reversible detrimental Trust for $8.35 million. Following a merger between PA Property Events after end of financial year effect on the environment and/or community. The event is Trust and James Fielding Group in November 2001 the Company In the Directors’ opinion, no matter or circumstance has arisen contained on-site. invested a further $8 million in a capital raising and currently since the end of the financial year that has significantly affected or Level 3: holds a 9% interest in the merged entity. (pages 13, 15, 43 and 58) may significantly affect the state of affairs of the Consolidated (Low Severity) refers to pollution or degradation, which has a short- Entity, its operations or results in future financial years. In addition, – Engineering and infrastructure markets were boosted towards term (less than three months) and reversible detrimental effect on the Directors are not aware of any specific developments, not the environment and/or community. The event affects the ability of year-end by the announcement of some major government covered generally in this Concise Annual Report, that are likely to initiated infrastructure projects. Large-scale projects such as the people off-site to enjoy their normal environment, such as a minor have a significant affect on the operations of the Consolidated noise disturbance. It may result in Level 1 or 2 damage if it Parramatta Rail Link in Sydney and the Regional Fast Rail project Entity or its expected results in future financial years. in Victoria helped increase the Group’s work in hand to a record continues to occur. $8.4 billion at 30 June 2002. (pages 5, 7, 11, 15, 27, 35 and 41) Future developments During the financial year the Group’s Australian operations recorded Likely developments in the operations of the Consolidated Entity in and reported on the following environmental incidences: – The Australian contracting business of Fletcher Constructions future financial years and their anticipated results are referred to in was acquired by John Holland bringing $160 million of building pages 9 to 14. Further information on likely developments in the Level 1 Level 2 Level 3 work with additional new work prospects. John Holland paid no operations of the Consolidated Entity, including the expected results 0 20 186 net cash on the transaction and no accounting goodwill resulted. of those operations in future financial years, would in the Directors’ The circumstances which led to the above Level 2 and 3 incidents (pages 13, 29 and 41) opinion result in unreasonable prejudice to the Company and has have all been remedied as at the date of this report. therefore not been included in this report. Environmental Regulation The Group’s Australian operations are subject to a range of Commonwealth, State and Territory laws governing the protection of the environment. A number of the Group’s diverse operations work under particular environmental licences and/or approvals at Directors and Directors’ interests Directors’ and Senior Executives’ emoluments Relevant provisions are raised in the accounts each year The Directors of Leighton Holdings Limited in office at the date of this The Remuneration Committee is responsible for making recommend- in regard to the expected financial benefit to be derived under 48 report are listed below together with details of their relevant interest in ations to the Board on remuneration arrangements for the Executive retention arrangements and annual bonus and incentive the securities of the Company or a related body corporate. Directors and senior executives. The broad remuneration policy is to arrangements. No. of options ensure that remuneration properly reflects the relevant person’s duties Executive Directors and senior executives may be invited by the Board No. of ordinary over unissued and responsibilities, and that the remuneration is competitive in to participate in the Leighton Executive Share Option Plan, which Names shares ordinary shares attracting, retaining and motivating people of the highest quality. currently provides share option incentives where specified performance John Powell Morschel 4,000 – The Remuneration Committee believes that the best way to achieve this criteria are met. Wallace MacArthur King AM 6,660 650,000 objective is to provide Executive Directors and senior executives with a In determining remuneration, regard is given to comparable companies Dieter Siegfried Adamsas 103,060 620,000 remuneration package consisting of fixed components which reflect the and advice is periodically taken from leading independent remuneration Martin Carl Albrecht AC 335,000 – person’s responsibilities, duties and personal performance, annual consultants. Geoffrey John Ashton 2,500 – bonuses which reward both individual and company performance each Geoffrey James Dixon 2,000 – year, deferred incentives which reward individual and company perform- The remuneration of Non-executive Directors is determined by the Achim Drescher 2,000 – ance and also assist in retention. Deferred incentives are normally Executive Directors having regard to amongst other things the level of Ian Rutledge Johnson 2,000 – payable to participants on completion of certain conditions after 3 years fees paid to Non-executive Directors by other companies of similar size Hans-Peter Keitel 1,560* – or, in some cases, on retirement. Also, in the case of key executives their and stature. Non-executive Directors do not receive any performance David Allen Mortimer 23,500 – services are secured by the Group entering into various retention related remuneration. Busso Peus 2,305* – arrangements over durations of usually between 3 to 5 years, which The aggregate amount payable to the Non-executive Directors of the David Paul Robinson 1,250 – provide a financial benefit to the relevant executive only on completion of Company must not exceed the maximum annual amount approved by *Non-beneficially held service for the agreed period. The value of the retention arrangements is the Company’s shareholders (currently $1,300,000 as determined at the Details of Directors’ qualifications, experience, special responsibilities and interest in calculated and reported as remuneration in the year in which payment is 2001 Annual General Meeting). shares in the Company are set out on pages 48, 51 and 52 of this Concise Annual Report. made.

Directors’ and Executives’ benefits Details of the nature and amount of each element of the emoluments paid or accrued in the 2002 financial year for each Director of the Company and each of the five named executives receiving the highest emolument are: Consolidated Remuneration Annual Deferred Superannuation Total Retirement Other and Company Package(a) Bonus(b) Incentive(c) Contributions(d) Compensation Benefits(e) Benefits(e) Total Executive Directors W M King AM 1,908,634 1,950,000 4,897,309 281,930 9,037,873 – – 9,037,873 D S Adamsas 1,301,186 1,300,000 450,000 180,400 3,231,586 – – 3,231,586 Non-executive Directors J P Morschel 157,472 – – 15,747 173,219 – – 173,219 M C Albrecht AC 81,920 – – 7,463 89,383 – – 89,383 G J Ashton 86,796 – – 8,000 94,796 – – 94,796 G J Dixon 80,000 – – 8,000 88,000 – – 88,000 A Drescher 80,000 – – 8,000 88,000 – – 88,000 I R Johnson 113,750 – – 10,700 124,450 – – 124,450 H-P Keitel 110,000 – – 11,000 121,000 – – 121,000 D A Mortimer 83,445 – – 8,345 91,790 – – 91,790 B Peus 80,000 – – 8,000 88,000 – – 88,000 D P Robinson 88,000 – – 8,800 96,800 – – 96,800 M A Besley (Retired Nov 2001) 82,159 – – – 82,159 830,370 – 912,529 R M Wylie (Retired Aug 2001) 27,083 – – – 27,083 438,893 – 465,976 Senior Executives J Faulkner (f) 1,093,192 457,666 57,208 119,278 1,727,344 – 302,059 2,029,403 R Trundle 730,219 500,000 60,000 82,600 1,372,819 – – 1,372,819 R Turchini 1,052,692 75,000 – 94,600 1,222,292 – – 1,222,292 R Merkenhof 771,543 250,000 – 117,920 1,139,463 – – 1,139,463 D Savage (g) 457,101 509,970 34,325 53,522 1,054,918 – 63,835 1,118,753

(a) Reflects the annual compensation package consisting of payroll salary, benefits and separately in Notes 36 and 37 and interest accrued thereon is detailed in Note 40. Options to acquire shares in the Company were granted to employees including the above retention payments. (d) Superannuation contributions to company or complying superannuation funds. Executive Directors and senior executives during the year under the Leighton Executive Share (b) Annual performance based bonus payable within 12 months. (e) Retirement and other benefits includes amounts contractually due to employees on Option Plan (LESOP) which are exercisable in accordance with the Plan rules at the market (c) Deferred performance based incentives normally payable to participants on completion of retirement, overseas accommodation and living costs. Amounts paid to M A Besley and price at date of issue. The exercise prices of $10.96 and $10.44 were higher than the market certain conditions after 3 years or upon retirement. R M Wylie were in accordance with the Non-executive Directors retirement plan approved by value at 30 June 2002 of $10.39. Details of the terms under which the options were issued under The bands reported for directors and executives remuneration and total remuneration shown shareholders at the 1996 AGM. LESOP are set out on page 50. No options were issued during the year to the above Non- in Notes 36 and 37 of the Full Financial Report 2002 exclude the deferred incentives which are (f) Mr Faulkner is based in Hong Kong with compensation paid in Hong Kong dollars. executive Directors. payable upon completion of certain conditions. The deferred incentives are however detailed (g) Mr Savage is based in Malaysia with compensation paid in US dollars. > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 49

DIRECTORS’ STATUTORY REPORT CONTINUED

Directors’ Meetings The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each of the Directors of the Company during the financial year are: No. of Special Tender No. of Special Tender No. of No. of Audit No. of Remuneration No. of Ethics No. of Plan Review Committee Review Committee Directors’ Meetings Committee Meetings Committee Meetings Committee Meetings Committee Meetings No.1 Meetings No.2 Meetings Director Attended Held* Attended Held* Attended Held* Attended Held* Attended Held* Attended Held* Attended Held* D S Adamsas 10 10 4 4–––––––––– M C Albrecht AC 5 5 –––––––––––– (Appointed 8 November 2001) G J Ashton 10 10 ––––22––11–– M A Besley AO 4 4 – –3311–––––– (Retired 8 November 2001) A Drescher 9 10 – – 5 5 –––––––– G J Dixon 8 10 –––––––––––– I R Johnson 10 10 ––––22––––11 H-P Keitel 5 10 – – 5 5 –––––––– W M King AM 10104455––44–––– J P Morschel 9 9 – –221144––11 (Appointed 16 August 2001) D A Mortimer 9 10 3 3 ––––44–––– B Peus 5 10 –––––––––––– D P Robinson 10 10 4 4 –––––––––– R M Wylie OBE 1111–––––––––– (Retired 16 August 2001)

*Reflects the number of meetings held during the time the Director held office during the financial year. Indemnity for Group Officers and Auditors Deeds of Indemnity Directors Deed The Company’s Constitution has included since 3 November 1994 In prior financial years, by Deeds of Indemnity, each between the The Company has entered into a Deed of Indemnity, Insurance and indemnities in favour of persons who are or have been an Officer or Company and a particular officer or former officer of the Company Access (“Directors Deed”) with each current and former Director of auditor of the Company. or a subsidiary, the Company has given similar indemnities in favour the Company who has held office since 4 November 1999. These Briefly, to the extent permitted by law, the Company indemnifies of that officer or former officer in respect of liabilities incurred by Deeds formalise the arrangements between the Company and the every person who is or has been: the officer while acting as an officer of the Company or any Directors as to indemnities, insurance and access to board records subsidiary or while acting at the request of the Company or any and replaced any existing Deeds of Indemnity previously executed – an Officer against any liability to any person (other than the subsidiary as an officer of a non-controlled entity. by the Company in favour of those Directors. Under each Directors Company or related entity) incurred while acting in that capacity Deed the Company indemnifies the Director to the extent permitted and in good faith; and The officers who have the benefit of such a Deed of Indemnity are or were at the time a Director of the Company, the Company’s by law against any liability (including liability for legal defence – an Officer or auditor of the Company, against costs and expenses Secretary and certain persons who are or were at the time Directors costs) incurred by the Director as an officer or former officer of the incurred by that person in that capacity in successfully defending of a Leighton subsidiary or have or had the status of General Company or any subsidiary or while acting at the request of the legal proceedings and ancillary matters. Manager or Senior Manager within the Leighton Group. Company or any subsidiary as an officer of a non-controlled entity. ‘Officer’ for this purpose means any Director or Secretary of the In approving each Directors Deed the Board relied on the resolution Company and includes any other person who is concerned, or takes approved by shareholders at the Annual General Meeting of the part, in the management of the Company. Company on 4 November 1999 and on sections 195(1A)(b) and 212 of the Corporations Act 2001. The current Directors and Secretary of the Company are named at page 51 and 52 and the Company’s current auditors are KPMG. No claims under the indemnities have been made against the Company during or since the financial year.

Insurance for Group Officers Leighton Executive Share Options Plan (LESOP) The Company’s two Executive Directors were granted 2002 Options During and since the financial year the Company has paid or agreed LESOP was approved by shareholders at the 1998 AGM. The total under LESOP as part of their remuneration and as approved by to pay premiums in respect of contracts insuring persons who are number of options over unissued ordinary shares in the Company shareholders at the 2001 Annual General Meeting. The number or have been a Group Officer against certain liabilities incurred in outstanding under LESOP at the date of this report is 8,262,300 and granted was as follows: that capacity. ‘Group Officer’ for this purpose means any Director or are detailed as follows: Name No of options granted Secretary of the Company or any subsidiary and includes any other (i) 2,207,300 options granted on 5 August 1999 at an exercise person who is concerned, or takes part, in the management of the D S Adamsas 400,000 price of $5.84 per option and with an expiry date of 5 August 2004 W M King AM 600,000 Company or of any subsidiary. (the “1999 Options”). The five most highly remunerated officers of the Group were also Under the above mentioned Deeds of Indemnity and Directors (ii) 5,965,000 options granted on 27 March 2002 at an exercise Deeds, the Company has undertaken to the relevant officer or granted 2002 Options under LESOP as part of their remuneration price of $10.96 per option and with an expiry date of 27 March 2007 as follows: former officer that it will insure the officer against certain liabilities and 90,000 options granted on 12 April 2002 at an exercise price incurred in his or her capacity as an officer of the Company or any of $10.44 per option and with an expiry date of 12 April 2007 (the Name No of options granted subsidiary or as an officer of a non-controlled entity where the “2002 Options”). J Faulkner 300,000 office is or was held at the request of the Company or any R Trundle 200,000 subsidiary. The exercise of the 1999 Options and the 2002 Options is subject to the following conditions: R Turchini 60,000 The insurance contracts entered into by the Company prohibit R Merkenhof 200,000 disclosure of the nature of the liabilities insured by the insurance (i) the options may only be exercised on or after the second and no D Savage 70,000 later than the fifth anniversary of the date of grant; contracts and the amount of the premiums. The names of the persons who currently hold options under LESOP Share options (ii) not more than 50% of the options held by an option holder and are entered in the register of options kept by the Company Leighton Staff Equity Participation Plan (“LSEPP”) having the same date of grant may be exercised before the third pursuant to section 170 of the Corporations Act 2001. The register At the date of this report there are no options over unissued anniversary of the date of grant (the “ First Tranche”); may be inspected free of charge. ordinary shares in the Company outstanding under LSEPP. (iii) (performance hurdle) no option is exercisable unless the These options do not entitle the holder to participate in any share Since 1 July 2001 under LSEPP: percentage increase in Leighton’s total shareholder returns (that is, issue of any other body corporate. growth in share price plus dividends reinvested) during the period of (i) 1,000,250 shares have been issued on exercise of options at an the two years ending 28 days before the proposed exercise of the There are no unissued shares in the Company under option as at exercise price of $5.41 each; option equals or exceeds the percentage increase in either the ASX the date of this report, other than those issued under LESOP (ii) no options have been granted. All Industrials Accumulation Index or the ASX 100 Industrials referred to above. In accordance with the amendments to LSEPP approved by Accumulation Index during the same two year period. Rounding off of amounts shareholders at the 1998 Annual General Meeting, no further Independent advice received by the Company from Egan Associates As the Company is a company of the kind referred to in ASIC invitations will be issued to Group employees to acquire in July 2001 and July 2002 confirmed that the performance hurdle Class Order 98/100 dated 10 July 1998, the Directors have shares or options under LSEPP unless and until shareholders had been achieved in respect of the 1999 Options. The first chosen to round off amounts in this report and the accompanying determine otherwise. assessment of the performance hurdle in respect to the First Concise Financial Report to the nearest thousand dollars, unless Tranche of the 2002 Options will occur in February 2004. otherwise indicated. The expiry date of options issued under LESOP is extended by Signed at Sydney this 11th day of September 2002 in accordance 6 months in the case of options held by an Executive who dies or with a resolution of the Directors. suffers total and permanent disablement (as defined in the Plan Rules) during the 6 month period before the fifth anniversary of the date of grant of the options. Since 1 July 2001 under LESOP: (i) 6,070,000 of the 2002 Options have been granted; J P Morschel W M King AM Chairman Chief Executive Officer (ii) 7,500 of the 1999 Options and 15,000 of the 2002 Options have lapsed; (iii) 4,330,200 shares have been issued on exercise of 1999 Options at an exercise price of $5.84 each. Executives holding options under LESOP are only entitled to participate in a new issue of shares in the Company if they have become entitled to exercise their options and they do so during the period prescribed in the Plan Rules and participate as a result of being a holder of shares in the Company. 50 Insurance for Group Officers Leighton Executive Share Options Plan (LESOP) The Company’s two Executive Directors were granted 2002 During and since the financial year the Company has paid or agreed LESOP was approved by shareholders at the 1998 AGM. The total Options under LESOP as part of their remuneration and as to pay premiums in respect of contracts insuring persons who are number of options over unissued ordinary shares in the Company approved by shareholders at the 2001 Annual General Meeting. or have been a Group Officer against certain liabilities incurred in outstanding under LESOP at the date of this report is 8,262,300 and The number granted was as follows: that capacity. ‘Group Officer’ for this purpose means any Director or are detailed as follows: Name No of options granted Secretary of the Company or any subsidiary and includes any other (i) 2,207,300 options granted on 5 August 1999 at an exercise person who is concerned, or takes part, in the management of the D S Adamsas 400,000 price of $5.84 per option and with an expiry date of 5 August 2004 W M King AM 600,000 Company or of any subsidiary. (the “1999 Options”). The five most highly remunerated officers of the Group were also Under the above mentioned Deeds of Indemnity and Directors (ii) 5,965,000 options granted on 27 March 2002 at an exercise Deeds, the Company has undertaken to the relevant officer or granted 2002 Options under LESOP as part of their remuneration price of $10.96 per option and with an expiry date of 27 March 2007 as follows: former officer that it will insure the officer against certain liabilities and 90,000 options granted on 12 April 2002 at an exercise price incurred in his or her capacity as an officer of the Company or any of $10.44 per option and with an expiry date of 12 April 2007 (the Name No of options granted subsidiary or as an officer of a non-controlled entity where the “2002 Options”). J Faulkner 300,000 office is or was held at the request of the Company or any R Trundle 200,000 subsidiary. The exercise of the 1999 Options and the 2002 Options is subject to the following conditions: R Turchini 60,000 The insurance contracts entered into by the Company prohibit R Merkenhof 200,000 disclosure of the nature of the liabilities insured by the insurance (i) the options may only be exercised on or after the second and no D Savage 70,000 later than the fifth anniversary of the date of grant; contracts and the amount of the premiums. The names of the persons who currently hold options under LESOP Share options (ii) not more than 50% of the options held by an option holder and are entered in the register of options kept by the Company Leighton Staff Equity Participation Plan (“LSEPP”) having the same date of grant may be exercised before the third pursuant to section 170 of the Corporations Act 2001. The register At the date of this report there are no options over unissued anniversary of the date of grant (the “ First Tranche”); may be inspected free of charge. ordinary shares in the Company outstanding under LSEPP. (iii) (performance hurdle) no option is exercisable unless the These options do not entitle the holder to participate in any share Since 1 July 2001 under LSEPP: percentage increase in Leighton’s total shareholder returns (that is, issue of any other body corporate. growth in share price plus dividends reinvested) during the period of (i) 1,000,250 shares have been issued on exercise of options at an the two years ending 28 days before the proposed exercise of the There are no unissued shares in the Company under option as at exercise price of $5.41 each; option equals or exceeds the percentage increase in either the ASX the date of this report, other than those issued under LESOP (ii) no options have been granted. All Industrials Accumulation Index or the ASX 100 Industrials referred to above. In accordance with the amendments to LSEPP approved by Accumulation Index during the same two year period. Rounding off of amounts shareholders at the 1998 Annual General Meeting, no further Independent advice received by the Company from Egan Associates As the Company is a company of the kind referred to in ASIC invitations will be issued to Group employees to acquire in July 2001 and July 2002 confirmed that the performance hurdle Class Order 98/100 dated 10 July 1998, the Directors have shares or options under LSEPP unless and until shareholders had been achieved in respect of the 1999 Options. The first chosen to round off amounts in this report and the accompanying determine otherwise. assessment of the performance hurdle in respect to the First Concise Financial Report to the nearest thousand dollars, unless Tranche of the 2002 Options will occur in February 2004. otherwise indicated. The expiry date of options issued under LESOP is extended by Signed at Sydney this 11th day of September 2002 in accordance 6 months in the case of options held by an Executive who dies or with a resolution of the Directors. suffers total and permanent disablement (as defined in the Plan Rules) during the 6 month period before the fifth anniversary of the date of grant of the options. Since 1 July 2001 under LESOP: (i) 6,070,000 of the 2002 Options have been granted; J P Morschel W M King AM Chairman Chief Executive Officer (ii) 7,500 of the 1999 Options and 15,000 of the 2002 Options have lapsed; (iii) 4,330,200 shares have been issued on exercise of 1999 Options at an exercise price of $5.84 each. Executives holding options under LESOP are only entitled to participate in a new issue of shares in the Company if they have become entitled to exercise their options and they do so during the period prescribed in the Plan Rules and participate as a result of being a holder of shares in the Company. > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 51

DIRECTORS’ RESUMES

The Directors during or since the end of the year are:

J P Morschel, (59) W M King AM, (58) D S Adamsas, (59) M C Albrecht AC, (63) G J Ashton, (64) G J Dixon, (62) DipQS, FAIM, FAICD BE, MEngSc, Hon.FIEAust, CP BComm, FAICD B.Tech (Civil), FTSE, FIE Aust, FAICD, FAIM A Non-executive Director since Appointed a Non-executive Eng, FAICD, FAIM, FAIB, FTSE A graduate of the University of FAICD, FAIM, DUniv (QUT) A Non-executive Director since 1999. Managing Director and Director and Deputy Chairman A graduate of the University of NSW. An Executive Director Appointed a Non-executive 1996. Chairman of the Chief Executive Officer of on 16 August 2001. Elected NSW. An Executive Director since 1988. Joined the Company Director on 8 November 2001. Superannuation Trust of QANTAS Airways Limited. Before Chairman in November 2001. since 1975. Appointed Chief in 1971 and has held various Chairman of Thiess Pty Ltd and Australia. A Director of the NSW joining QANTAS held senior Chairman CSR Limited. Director Executive in 1987. A civil senior accounting and Geodynamics Ltd. A director of State Transit Authority and commercial positions with both of Rio Tinto plc and Rio Tinto engineer who joined Leighton commercial positions within the Portman Limited and former Managing Director of Australian Airlines and Ansett Limited, Singapore Contractors in 1968 and became Group. Appointed Associate Queensland Gas Company Clyde Industries Limited and Airlines, and has served on the Telecommunications Limited and Managing Director of that Director in 1985. Responsible for Limited. He is a member of the Monier Limited. Immediate past Commercial Board of the Tenix Pty Limited. Patron of the company in 1977. Appointed overall Group management Queensland Premier’s Business National President of the International Air Transport Property Industry Foundation Deputy Managing Director of reporting, statutory accounting, Round Table, a Director of the Australian Industry Group. Association. A Director of Air and a Trustee of the Art Gallery Leighton Holdings in 1983. A auditing, treasury, taxation and Wesley Medical Research Chairman of a number of private Pacific Ltd, Fiji Resorts Ltd, of NSW. Director of Coca-Cola Amatil insurance. Appointed Deputy Institute Board. Chairman of Q- companies. Mission Australia (Sydney City Limited. Participates in Chief Executive Officer of the RAPID – Queensland Recreation Mission) and the Starlight Formerly Chairman of Comalco Foundation. Limited, Director of Westpac construction industry affairs and Leighton Group in June 2001. and Sport Association for People Banking Corporation and is the President of the Australian Director of the Committee for with an Intellectual Disability. He Managing Director of Lend Constructors Association. Economic Development of is the former Managing Director Lease Corporation Limited. Member of the Business Council Australia (CEDA). President of of Thiess Pty Ltd, a position he of Australia. Honorary Fellow of the Financial Executives held for 15 years before retiring the Institution of Engineers and International of Australia. Fellow in October 2000. Fellow of the Australian Institute of the Australian Institute of of Company Directors, the Company Directors. Australian Institute of Management, the Australian Institute of Building and the Academy of Technological Sciences and Engineering. Member of the American Society of Civil Engineers. Founding Councillor of the Australia Business Arts Foundation.

A Drescher, (62) I R Johnson, (61) Dr H-P Keitel, (55) D A Mortimer, (57) Dr B Peus, (60) D P Robinson, (46) BEc BSc(Hons), FAICD Dr.-Ing.E.h. BEc(Hons), FCPA Dr of Law MCom, BEc, FCA A graduate in economics from A graduate of the University of A graduate in studies on civil A Non-executive Director since Studied at the Universities of A graduate of the University of Hamburg University, Germany. New England. A Non-executive engineering at Technical 1997. Chairman of Citect Münster, Lausanne and Berlin. Sydney. A Non-executive A Non-executive Director since Director since 1997. Chairman of University Stuttgart and on Corporation Limited and MIA Graduated and awarded Director since 1990. Alternate 1996. Chairman of Columbus Newcrest Mining Limited. business administration and Limited. Deputy Chairman of Doctorate of Law from the Director from 1987 to December Line Australia Pty Limited, Non- Director of John Holland Group economics at Technical Australia Post. A Director of University of Münster. A Non- 1990. A chartered accountant executive Director of Austal Pty Limited. Former Group University Munich, Germany. Adsteam Marine Limited, Petsec executive Director since 1994. and principal of the firm Harveys Limited, Adsteam Marine Executive of CRA Limited. A Non-executive Director since Energy Limited and Macquarie Joined HOCHTIEF in 1977 and Chartered Accountants in Limited, Sword Securitisation 1992. Elected Deputy Chairman Infrastructure Investment was a member of the Board of Sydney. Responsible for Limited and the Sydney Maritime in November 1998. Joined Management Limited. Former Executive Directors until the end business development services Museum Limited. HOCHTIEF AG in 1988 as Managing Director and Chief of 2001. Presently Chairman of within that firm. Participates in Director to the Board Executive Officer of TNT Limited. HOCHTIEF Australia Limited, construction industry affairs. A He was founding Director of the responsible for international President of HOCHTIEF Canada Director of HOCHTIEF Australia German Australian Chamber of business. Became a member of Inc. and a Director of AECON Limited. Industry and Commerce in 1977 the Board of Executive Directors Group Inc., Toronto. and the Chamber’s Chairman in 1990 and was appointed from 1986 to 1993. In 1997 Chairman of the Board of Mr Drescher was awarded the Executive Directors of Retired Directors “Cross of the Order of Merit” by HOCHTIEF AG in 1992. Other Morrish Alexander Besley AC the Federal Republic of directorships include Pilkington A Non-executive Director since Germany. PLC, UK, Ballast Nedam NV, The 1989. Elected Chairman in 1990 Netherlands, and The Turner and held this position until his Corporation, USA. He is a retirement from the Board on 8 member of several Supervisory November 2001. Boards. A Director of HOCHTIEF Australia Limited. Rodney Malcolm Wylie OBE A Non-executive Director since 1985 and Deputy Chairman since February 1990. Retired from the Board on 16 August 2001.

Leighton Holdings Limited Board Associate Directors Board Nominations Committee Executive Committee J P Morschel Chairman J Faulkner, R J Merkenhof, J P Morschel Chairman W M King AM Chairman H-P Keitel Deputy Chairman R S Trundle, V A Vella, W J Wild W M King AM D S Adamsas, J Faulkner, W M King AM Chief Executive Secretary R J Merkenhof, A J Moir, Ethics Committee D S Adamsas, M C Albrecht, A J Moir M J Rollo, R S Trundle, J P Morschel Chairman G J Ashton, G J Dixon, A Drescher, V A Vella, W J Wild Audit Committee G J Ashton, I R Johnson I R Johnson, D A Mortimer, D P Robinson Chairman Remuneration Committee B Peus, D P Robinson D S Adamsas, D A Mortimer, J P Morschel Chairman J P Morschel, W M King AM, W M King AM, A Drescher, Secretary A J Moir H-P Keitel 52

Leighton Holdings Limited Board Associate Directors Board Nominations Committee Executive Committee J P Morschel Chairman J Faulkner, R J Merkenhof, J P Morschel Chairman W M King AM Chairman H-P Keitel Deputy Chairman R S Trundle, V A Vella, W J Wild W M King AM D S Adamsas, J Faulkner, W M King AM Chief Executive Secretary R J Merkenhof, A J Moir, Ethics Committee D S Adamsas, M C Albrecht AC, A J Moir M J Rollo, R S Trundle, J P Morschel Chairman G J Ashton, G J Dixon, A Drescher, V A Vella, W J Wild Audit Committee G J Ashton, I R Johnson I R Johnson, D A Mortimer, D P Robinson Chairman Remuneration Committee B Peus, D P Robinson D S Adamsas, D A Mortimer, J P Morschel Chairman J P Morschel, W M King AM, W M King AM, A Drescher, Secretary A J Moir H-P Keitel > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 53

CORPORATE GOVERNANCE POLICY

1 2 4 The Board Appointment and Retirement of Non-executive Directors Business Risk Management The Leighton Board is responsible to shareholders for the Group’s It is the Board’s policy to determine the terms and conditions Areas of significant business risk to the Group are highlighted in overall corporate governance. The Board’s responsibilities include: relating to the appointment and retirement of Non-executive the Business Plan presented to the Board by the Chief Executive – reviewing and determining strategic direction and policy; Directors on a case by case basis and in conformity with the Officer each year. – establishing goals for Management and monitoring the requirements of the ASX Listing Rules and the Corporations The Board reviews and approves the parameters under which such achievement of those goals; Act 2001. risks will be managed before adopting the Business Plan. – appointing, monitoring and rewarding senior Managers; and Non-executive Directors are subject to re-election by rotation at – reporting to shareholders. Arrangements put in place by the Board to monitor risk least every three years and must be re-elected at each Annual management include: The Company has presently ten Non-executive Directors and two General Meeting following their 72nd birthday. Executive Directors in conformity with the Board’s policy that the – regular monthly reporting to the Board in respect of operations, Board have a majority of Non-executive Directors. 3 the financial position of the Group and new contracts; – attendance and reports by the Managing Directors of the The Chairman is a Non-executive Director. HOCHTIEF is Compensation Arrangements for Directors and Senior Executives represented on the Board by three Non-executive Directors, namely Group’s main operating subsidiaries at Board Meetings on at The Board has established a Remuneration Committee whose least a quarterly basis; Messrs H-P Keitel, B Peus and D P Robinson. principal functions include: The Board is balanced in its composition with each current Director – review and approve the remuneration of executive Directors and – presentations made to the Board or Committees of the Board bringing to the Group a range of complementary skills and other senior executives of the Group; throughout the year by appropriate members of the Group’s management team (and/or independent advisers, where experience, as set out on pages 51 and 52 under the heading – review and make recommendations to the Board regarding: ‘Directors’ Resumes’. necessary) on the nature of particular risks and details of the – the remuneration policies and practices for the Group generally measures which are either in place or can be adopted to manage It is the Board’s policy that the Chairman and Chief Executive including participation in the incentive plan, share scheme and or mitigate the risk; and Officer, acting as a Nomination Committee, should assess and other benefits; and make recommendations to the Board regarding the membership of – superannuation arrangements. – any Director may request that operational and project audits be undertaken by the Group Services Division. the Board, including proposed new appointments. The current members of the Remuneration Committee are Messrs Where appropriate, independent consultants are engaged to J P Morschel (Chairman), W M King AM, H-P Keitel and A Drescher. The Board has also adopted reporting and other procedures which allow it to monitor Group performance regarding: identify possible new candidates for the Board. As Chief Executive Officer, Mr King absents himself from the The Board has nine scheduled full meetings each year. Other meetings before any discussion by the Committee in relation to his – the Company’s compliance with the continuous disclosure meetings are held on short notice when particular issues arise own remuneration. requirements of the ASX Listing Rules; and which require discussion and a decision by the Board. The remuneration of Non-executive Directors is determined by the – health and safety, environment and trade practices. Members of the Board visit significant locations and projects when Executive Directors having regard to the level of fees paid to Non- it is considered that actual inspection and meetings with local executive Directors by other companies of similar size and stature. management will assist Directors’ understanding of important The aggregate amount payable to Non-executive Directors operational issues. as a Director of Leighton Holdings Limited must not exceed the maximum annual amount approved by the Company’s shareholders (currently $1,300,000 as determined at the 2001 Annual General Meeting). Under the policy approved by shareholders at the 1996 Annual General Meeting, retiring Non-executive Directors who have held office for three years or more are permitted to receive a retiring allowance which rises with the length of their service. The maximum allowance is payable in the case of a Non-executive Director who has held office for at least 10 years and in such a case the allowance is an amount equal to the Director’s total fees during the last five years before retirement.

5 6 10 54 Audit Review Board Committees Generally Ethical Standards An Audit Committee was established by the Board in June 1990. It is the Board’s policy that Committees of the Board dealing with Leighton recognises the need for Directors and employees The functions of this Committee include: corporate governance matters should: to observe the highest standards of behaviour and business – be chaired by a Non-executive Director; ethics when engaging in corporate activity. The Group intends – assist the Board in the discharge of its responsibilities in respect – generally be constituted with at least half the membership being to maintain a reputation for integrity. of the preparation of the Group’s financial statements and the persons who are non-executive Directors. In September 2002 the Group’s internal controls; To this end the Board established an Ethics Committee in Board amended this policy so that in future all Committees November, 1998 whose principal function is to review – recommend to the Board nominees for appointment as external dealing with corporate governance matters, except the and make recommendations to the Board regarding the auditors; Nominations Committee, should be constituted with a majority of maintenance of ethical standards and practices generally – review the scope of the audit, the level of audit fees and the Non-executive Directors; within the Leighton Group. performance of the external auditors; – be entitled to obtain independent professional or other advice at the cost of the Company; and The current members of the Ethics Committee are Messrs – provide a line of communication between the Board and the – be entitled to obtain such resources and information from the J P Morschel (Chairman), G J Ashton and I R Johnson. external auditors; and Group, including direct access to employees of and advisors to In September 1995 the Board adopted a Code of Ethics, which – examine the external auditors evaluation of internal controls and the Group, as they may require. sets out the principles and standards with which all officers and management’s response. Board Committees operate in accordance with terms of reference employees are expected to comply in the performance of their The current members of the Audit Committee are Messrs established by the Board and report to the Board. The Board respective functions. D P Robinson (Chairman), J P Morschel, W M King AM, reviewed and amended the terms of reference for the Audit Under the Code officers and employees are expected to: D S Adamsas, and D A Mortimer. Committee in August 2002 to provide that membership of the – comply with the law; Committee will comprise a majority of Non-executive Directors, and – act honestly and with integrity; that the Non-executive Director members of the Committee are to – not place themselves in situations which result in meet the external auditors at least twice each year without divided loyalties; Management in attendance. – use Leighton’s assets responsibly and in the best interests of Leighton; – be responsible and accountable for their actions. 7 The Code and its implementation are reviewed each year. Annual Review by the Board It is the Board’s policy that the Board should at least once each year: A copy of the Code of Ethics is available to shareholders on – review the performance of the Board, the Group and Management; request and is available from the Leighton website and www.leighton.com.au – review the allocation of the work of the Group between the Board and Management. 8 Directors’ Access to Independent Professional Advice For the purposes of the proper performance of their duties, Directors are entitled to seek independent professional advice at the Company’s expense, subject to the approval of the Board. 9 Equity Participation by Directors The Company’s Constitution requires Directors to hold at least 1,000 shares in the Company but additional shareholdings by Directors are encouraged. The Company has a policy, which restricts the times, and circumstances in which Directors and senior executives may buy or sell shares in the Company. Unrestricted trading is limited to specified short periods after announcements are made to the ASX of the half yearly and preliminary final results and after the Annual General Meeting. > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 53

CORPORATE GOVERNANCE POLICY

SHAREHOLDINGS

Information as to shareholdings on 2 September 2002 is as follows: Twenty Largest Shareholders Substantial Shareholdings The percentage of the total holding of the 20 largest shareholders, The names of the substantial shareholders and the numbers of as shown in the Company’s Register of Members, is 78.76% and the equity securities in which they have an interest, as shown in the their names and numbers of shares are as follows: Company’s Register of Substantial Shareholders, are: % of Total Name No. of Shares Share- Name Number holdings HOCHTIEF Australia Limited 135,194,792 Hochtief Australia Limited 135,190,927 50.03 The following companies hold a relevant interest in Westpac Custodian Nominees Limited 14,131,930 5.23 these shares. JP Morgan Nominees Australia Limited 13,042,871 4.83 HOCHTIEF Aktiengesellschaft, (“HOCHTIEF AG”), National Nominees Limited 10,861,510 4.02 (the parent company of HOCHTIEF Australia Limited.) NRMA Nominees Pty Limited 5,034,604 1.86 RWE Aktiengesellschaft, (a major shareholder in Queensland Investment Corporation 4,765,249 1.76 HOCHTIEF AG.) Commonwealth Custodial Services Limited 3,760,180 1.39 Number of Shareholders 18,369 AMP Life Limited 3,600,524 1.33 Of ordinary shares which have equal voting rights* Zurich Australia Limited 3,235,093 1.20 * Voting Rights: On a show of hands every member present in person or by proxy or The National Mutual Life Association of attorney or duly appointed representative shall have one vote and on a poll every member Australasia Limited 3,086,344 1.14 present as aforesaid shall have one vote for each share of which he/she is the holder. MLC Limited 2,765,337 1.02 Distribution Schedule Citicorp Nominees Pty Limited Category No. of Shareholders (CFS WSLE Imputation Fnd A/C) 2,273,808 0.84 Westpac Financial Services Limited 1,915,522 0.71 1–1,000 9,092 Citicorp Nominees Pty Limited 1,586,581 0.59 1,001–5,000 7,468 Cogent Nominees Pty Limited 1,519,921 0.56 5,001–10,000 1,120 Citicorp Nominees Pty Limited 10,001–100,000 622 (CFS WSLE Aust Share Fnd A/C) 1,405,023 0.52 100,001 and over 67 ANZ Nominees Limited 1,280,427 0.47 18,369 Citicorp Nominees Pty Limited There were 94 shareholders with less than a marketable parcel (CFS Imputation Fund A/C) 1,197,630 0.44 (44 shares). Westpac Life Insurance Services Limited 1,190,031 0.44 Citicorp Nominees Pty Limited (CFS WSLE Industrial Shr A/C) 1,016,625 0.38 212,860,137 78.76

56 CONCISE FINANCIAL REPORT

Amcor wine bottling facility South Australia Leighton Contractors > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 55

SHAREHOLDINGS

56 CONCISE FINANCIAL REPORT

Amcor wine bottling facility South Australia Leighton Contractors > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 57

STATEMENT OF FINANCIAL PERFORMANCE for the year ended 30 June 2002 Consolidated 2002 2001 $’000 $’000

Revenues from ordinary activities 5,034,845 4,393,254 Discussion and analysis of Statement of Financial Performance Expenses from ordinary activities (4,817,566) (4,181,595) Total operating revenue (including our share of joint venture Borrowing costs (6,817) (12,638) entities’ revenue) was $5.22 billion, up 20% from $4.36 billion Share of net profits of associates and joint venture entities 23,201 3,219 for the previous year. The principal sources of operating revenue Profit from ordinary activities before income tax expense 233,663 202,240 were engineering and infrastructure $1.85 billion, mining and Income tax expense relating to ordinary activities (59,450) (42,312) resources $1.41 billion, building and property development $1.16 billion, telecommunications $619 million and environmental Profit from ordinary activities after income tax expense 174,213 159,928 services $186 million. Net profit attributable to outside equity interest (4,991) (3,772) The result reflects strong contributions from the Group’s Asian Net profit attributable to members of the parent entity 169,222 156,156 operations and a solid performance across the diversified contracting activities in Australia, despite a very competitive operating environment. Other changes in equity attributable to members of the Group operating profit after tax and outside equity interests was parent entity up 8% to $169.2 million. Pre-tax profit after outside equity Net exchange difference on translation of financial statements of interests was up 15% to $227.3 million. self-sustaining foreign operations (27,351) 12,229 Total other changes in equity attributable to members of the The Australia/Pacific operations contributed $141 million profit parent entity (27,351) 12,229 before tax, up by 21%. Revenue was up by 29% to $3.91 billion. John Holland continued to meet its recovery program targets and Total changes in equity from non-owner transactions attributable has made an increased contribution to the Group. The sale of to the members of the parent entity 141,871 168,385 several of Leighton Properties’ developments in Melbourne also made a contribution to the Group’s performance. Basic earnings per share – cents 63.1 59.2 A provision of $45 million has been taken against Nextgen Diluted earnings per share – cents 62.8 59.1 Networks, due to the current instability in the Dividends per share – cents – Interim 16.0 14.0 telecommunications market. The Group will continue to support – Final 26.0 25.0 Nextgen Networks as it develops its business and will closely Dividend payout ratio 67.1% 66.3% monitor its progress with regard to the value of the future investment. The Group is due to invest $92 million in Nextgen in The statement of financial performance is to be read in conjunction with the discussion the second half of 2002/03. and analysis and the notes to the concise financial statements set out on pages 60 to 62. Another strong performance was recorded by the Group in Asia with a similar level of revenue and profit achieved to that of the previous year. Due to the appreciation of the Australian dollar during the year, profit before tax was down 5% to $77 million and revenue was down 6% to $1.22 billion. Indonesian contract mining operations, construction in Malaysia and rail work in Hong Kong were the major contributors. The return on shareholders’ funds averaged 22.1% over the year, compared with 22.3% last year. A final dividend of 26 cents per share franked to the extent of 70% will bring the full year ordinary dividend to a total of 42 cents per share. This compares with 39 cents per share last year representing an 8% increase. STATEMENT OF FINANCIAL POSITION 58 as at 30 June 2002 Consolidated 2002 2001 $’000 $’000

Assets Discussion and analysis of Statement of Financial Position Cash assets 588,363 500,133 The statement of financial position presents the Group’s assets Receivables 804,268 662,640 and liabilities in the order of their liquidity. Inventories 53,596 161,405 Investments in other entities 84,691 65,081 The Group’s net assets increased during the year by 7.3% to Investments accounted for using the equity method 49,217 11,903 $795 million. Net tangible assets per ordinary share increased Deferred tax assets 88,697 80,287 during the same period from $2.64 to $2.83. Property, plant and equipment 614,249 528,907 The continued expansion in the activity of the Group has resulted Intangible assets 34,693 39,804 in an increase in total assets from $2.05 billion to $2.32 billion. Total assets 2,317,774 2,050,160 This increase is largely reflected in increases in receivables, cash and plant. The Group’s investment in property, plant and Liabilities equipment has increased to $614 million mainly in plant and Payables 1,182,861 987,125 equipment involved in mining operations. Current tax liabilities 18,525 37,813 Provisions 251,764 163,738 The level of net cash (cash less borrowings) held by the Group Interest bearing liabilities 64,346 100,116 at 30 June 2002 was $524 million compared to $400 million at Deferred tax liabilities 5,732 21,079 30 June 2001. Total liabilities 1,523,228 1,309,871 Other significant movements in balance sheet items include: – an increase in accounts payable in line with the expansion in the Net assets 794,546 740,289 activity of the Group; – an increase in investments in other entities following investments Equity in the James Fielding Group; Contributed equity 399,391 378,598 Reserves (25,048) 2,303 – a decrease in inventories following the sale of development Retained profits 414,916 359,269 properties in Melbourne including the St Kilda Road office Total parent entity interests 789,259 740,170 building, Melbourne; Outside equity interest 5,287 119 – total provisions increased with a provision of $45 million taken Total equity 794,546 740,289 against Nextgen Networks and a 21% increase in employees;

The statement of financial position is to be read in conjunction with the discussion – the foreign currency translation reserve has decreased as a result and analysis and the notes to the concise financial statements set out on pages 60 to 62. of the appreciation of the Australian dollar against the US dollar. > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 59

STATEMENT OF CASH FLOWS for the year ended 30 June 2002 Consolidated 2002 2001 $’000 $’000

Cash flows from operating activities Discussion and analysis Statement of Cash Flows Cash receipts in the course of operations 4,875,965 4,101,727 Receipts from customers increased to $4.9 billion primarily Cash payments in the course of operations (4,122,205) (3,484,360) reflecting the growth in revenue. Dividends received 2,020 1,424 The Group repaid borrowings of $28 million in the year which Interest received 17,556 17,119 was in accordance with the loan agreements entered into with Borrowing costs paid (7,130) (11,560) third parties. No short-term borrowings were entered into Income taxes paid (108,949) (50,573) during the financial year. Net cash provided by operating activities 657,257 573,777 The final 2001 and interim 2002 cash dividends totalled Cash flows from investing activities $110 million. Payments for investments in controlled entities and businesses (33,270) (34,873) Strong cash flows from operating activities were recorded in Payments for property, plant and equipment (446,212) (346,997) Australia and Asia totalling $657 million, an increase of 14%. Proceeds from sale of assets 37,465 99,815 This cash was partly applied to our net plant purchases, Proceeds from/(payments for) investments in other entities 11,841 (49,430) acquisitions and investments, including 9% interest acquired in (Loans to)/repayments by executives 497 (970) the James Fielding Group. Net cash used in investing activities (429,679) (332,455) The appreciation in the Australian dollar during the financial Cash flows from financing activities year has had the effect of decreasing the Group’s opening cash Proceeds from share issues 20,793 14,707 balance by $22 million. Proceeds from borrowings – 166,170 The cash balance has increased by 18% to $588 million. The net Repayment of borrowings (27,867) (182,282) cash position (cash less borrowings) is $524 million compared to Distributions to outside equity interests – (24,192) $400 million at June 2001. The Group’s undrawn facilities have Dividends paid (109,971) (89,705) increased by $2 million to $435 million. Net cash used in financing activities (117,045) (115,302) Net increase in cash held 110,533 126,020 Net cash at the beginning of the financial year 500,133 348,029 Effects of exchange rate changes on the balances of cash held in foreign currencies at the beginning of the year (22,303) 26,084 Net cash at reporting date 588,363 500,133

The statement of cash flows is to be read in conjunction with the discussion and analysis and the notes to the concise financial statements set out on pages 60 to 62. NOTES TO THE CONCISE FINANCIAL REPORT 60 for the year ended 30 June 2002

1 Basis of Preparation of Concise Financial Report position and financing and investing activities of the Group as the full The concise financial report has been prepared in accordance with the financial report. Corporations Act 2001, Accounting Standard AASB 1039 “Concise Financial It has been prepared on the basis of historical costs and except where Reports” and applicable Urgent Issues Group Consensus Views. The stated, does not take into account changing money values or current financial statements and specific disclosures required by AASB 1039 have valuations of assets. These accounting policies have been consistently been derived from the Consolidated Entities full financial report for the applied by each entity in the Group and except where there has been a financial year. Other information included in the concise financial report is change in accounting policy as detailed in Note 6, are consistent with those consistent with the Consolidated Entities full Financial report. in the previous year. A full description of the accounting policies adopted by The concise financial report does not, and can not be expected the Consolidated Entity may be found in the Consolidated Entity’s full to, provide as full an understanding of the financial performance, financial Financial Report.

Consolidated 2002 2001 $’000 $’000 2 Revenues Construction contracting services 4,585,413 3,929,318 Other contracting services 186,241 185,591 Income from investment in coal mines 12,182 8,819 Sale of development properties 129,064 98,194 Other development property revenue 66,681 50,807 Revenue from operating activities 4,979,581 4,272,729 Interest – Related parties 264 348 – Other parties 15,204 18,938 Dividends – Other parties 2,331 1,424 Proceeds from sale of other assets 37,465 99,815 Revenues from ordinary activities 5,034,845 4,393,254

3 Expenses Materials 1,308,727 1,085,945 Subcontractors 1,516,979 1,303,633 Plant costs 751,911 700,541 Labour 803,076 732,307 Insurance 22,262 15,663 Amortisation of goodwill 6,037 11,875 Operating leases – minimum lease payments 58,441 40,428 Professional fees 96,911 68,849 Foreign exchange (gains)/losses (1,952) (136) Book value of assets sold 30,880 89,308 Cost of development properties sold 118,821 89,457 Provision against future Nextgen investment 45,000 – Other expenses 60,473 43,725 Expenses from ordinary activities 4,817,566 4,181,595 > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 61

NOTES CONTINUED

4 Segment Information Australia/ South Pacific East Asia Americas Eliminations Total Primary Segment – Geographical $’000 $’000 $’000 $’000 $’000 2002 Total operating revenue 3,914,876 1,219,387 85,930 – 5,220,193 Joint venture entities’ operating revenue (240,612) – – – (240,612) Proceeds from sale of assets 32,312 5,153 – – 37,465 Segment revenue 3,706,576 1,224,540 85,930 – 5,017,046 Other unallocated revenue 17,799 Revenue from ordinary activities 5,034,845 Segment result 124,021 77,692 9,188 – 210,901 Assets 1,789,691 565,345 25,759 (63,021) 2,317,774 Liabilities 1,247,697 387,094 26,875 (138,438) 1,523,228

2001 Total operating revenue 3,034,569 1,302,191 18,986 – 4,355,746 Joint venture entities’ operating revenue (83,017) – – – (83,017) Proceeds from sale of assets 45,388 54,427 – – 99,815 Segment revenue 2,996,940 1,356,618 18,986 – 4,372,544 Other unallocated revenue 20,710 Revenue from ordinary activities 4,393,254 Segment result 123,051 84,657 (1,500) – 206,208 Assets 1,520,779 708,657 28,477 (207,753) 2,050,160 Liabilities 916,994 414,185 30,780 (52,088) 1,309,871 NOTES CONTINUED 62 Consolidated 2002 2001 $’000 $’000 5 Dividends Dividends provided for or paid by the Company are: 2001 final dividend paid on shares issued post reporting date 670 – Interim dividend A partially franked interim ordinary dividend of 16 cents per share, (2001: 14 cents per share) was paid on 28 March 2002. Franked: 70% (2001: unfranked) Tax rate: 30% 43,006 37,207 Final dividend A partly franked final ordinary dividend of 26 cents per share, (2001: 25 cents per share) will be paid on 30 September 2002. Franked: 70% (2001: 50%) Tax rate: 30% (2001: 30%) 69,899 66,295 113,575 103,502

6 Changes in accounting policies (iii) Interest payable on deferred incentive arrangements was (i) As a result of applying revised Accounting Standard, AASB 1005 previously included in employee costs in the statement of financial Segment Reporting, a number of comparative amounts in performance. From 1 July 2001 these amounts have been classified the segment information note (note 4) have been represented or as borrowing costs, 2002: $1,871 (2001: $1,766). Due to this change, reclassified to ensure comparability with the current the comparative information of the Consolidated Entity has been reporting period. restated as follows: – in the statement of financial performance: (ii) As a result of applying revised Accounting Standard, AASB 1027 expenses from ordinary activities $4,181,595 (previously Earnings per Share, basic and diluted earnings per share for $4,183,361); borrowing costs $ 12,638 (previously $10,872); – note 3 the comparative period ended 30 June 2001 have been adjusted so labour costs $732,307 (previously $734,073); - note 4 that the basis of calculation used is consistent with that of the Australia/Pacific segment result $123,051 (previously $121,285); current period. Diluted earnings per share in previous years - total segment result $206,208 (previously $204,442). This change adjusted the earnings used in the determination of basic earnings has had no impact on the result or the statement of financial per share by taking into account earnings that would have arisen position of the Consolidated Entity in the current or previous had the dilutive options been exercised during the financial year. financial years. Under the revised accounting standard diluted earnings per share is calculated by adjusting the weighted average number of shares to include potential ordinary shares assumed to have been issued for no consideration. > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 63

STATUTORY STATEMENTS

Directors’ Declaration Independent Audit Report on the Audit Opinion In the opinion of the Directors of Leighton Holdings Limited the Concise Financial Report to the Members of In our opinion the concise financial report of Leighton Holdings accompanying concise financial report of the Consolidated Entity, Leighton Holdings Limited Limited and its controlled entities for the year ended 30 June comprising Leighton Holdings Limited and its controlled entities for Scope 2002 complies with AASB 1039 “Concise Financial Reports” the year ended 30 June 2002 set out on pages 57 to 62: We have audited the concise financial report of Leighton Holdings issued in Australia. (a) has been derived from or is consistent with the full financial Ltd and its controlled entities for the financial year ended 30 June report for the financial year; and 2002 consisting of the statement of financial performance, (b) complies with Accounting Standard AASB 1039 statement of financial position, statement of cash flows, “Concise Financial Reports”. accompanying notes 1 to 6 and the accompanying discussion and analysis on the statement of financial performance, statement of KPMG Signed in accordance with a resolution of the Directors. financial position and statement of cash flows in order to express an opinion on it to the members of the Company. The Company’s Directors are responsible for the concise financial report. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the concise financial report is free of material misstatement. We have JP Morschel also performed an independent audit of the full financial report of D K Jukes Chairman Leighton Holdings Limited and its controlled entities for the year Partner ended 30 June 2002. Our audit report on the full financial report was signed on 11 September 2002 and was not subject to any qualification. Our procedures in respect of the audit of the concise financial report included testing that the information in the concise financial report is consistent with the full financial report and examination, on S J Marshall a test basis, of evidence supporting the amounts, discussion and Partner W M King AM analysis, and other disclosures which were not directly derived from the full financial report. These procedures have been undertaken to Chief Executive Officer Dated at Sydney this 11th day of September, 2002. form an opinion whether, in all material respects, the concise financial report is presented fairly in accordance with Accounting Standard AASB 1039 “Concise Financial Reports” issued in Dated at Sydney this 11th day of September, 2002. Australia. The audit opinion expressed in this report has been formed on the above basis. > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 63

STATUTORY STATEMENTS

Directors’ Declaration Independent Audit Report on the Audit Opinion In the opinion of the Directors of Leighton Holdings Limited the Concise Financial Report to the Members of In our opinion the concise financial report of Leighton Holdings accompanying concise financial report of the Consolidated Entity, Leighton Holdings Limited Limited and its controlled entities for the year ended 30 June comprising Leighton Holdings Limited and its controlled entities for Scope 2002 complies with AASB 1039 “Concise Financial Reports”. the year ended 30 June 2002 set out on pages 57 to 62: We have audited the concise financial report of Leighton Holdings (a) has been derived from or is consistent with the full financial Ltd and its controlled entities for the financial year ended 30 June report for the financial year; and 2002 consisting of the statement of financial performance, (b) complies with Accounting Standard AASB 1039 statement of financial position, statement of cash flows, “Concise Financial Reports”. accompanying notes 1 to 6 and the accompanying discussion and KPMG analysis on the statement of financial performance, statement of Chartered Accountants Signed in accordance with a resolution of the Directors. financial position and statement of cash flows in order to express an opinion on it to the members of the Company. The Company’s Directors are responsible for the concise financial report. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the concise financial report is free of material misstatement. We have D K Jukes JP Morschel also performed an independent audit of the full financial report of Partner Chairman Leighton Holdings Limited and its controlled entities for the year ended 30 June 2002. Our audit report on the full financial report was signed on 11 September 2002 and was not subject to any qualification. Our procedures in respect of the audit of the concise financial report included testing that the information in the concise financial S J Marshall report is consistent with the full financial report and examination, on Partner a test basis, of evidence supporting the amounts, discussion and analysis, and other disclosures which were not directly derived from W M King AM Dated at Sydney this 11th day of September, 2002. Chief Executive Officer the full financial report. These procedures have been undertaken to form an opinion whether, in all material respects, the concise financial report is presented fairly in accordance with Accounting Standard AASB 1039 “Concise Financial Reports” issued in Dated at Sydney this 11th day of September, 2002. Australia. The audit opinion expressed in this report has been formed on the above basis.

SHAREHOLDER INFORMATION 64

2002 Financial report Services Pty Limited at the above address. Please note you are not Financial calendar* A copy of the Group’s 2002 Financial Report, including the required by law to provide your tax file number if you do not wish to. independent Audit Report, is available to all shareholders, and will 2002 Stock exchange listing be sent to shareholders without charge upon request. The Financial The Company is listed on the Australian Stock Exchange. The home 9 September Shares begin trading ex Dividend Report can be requested by telephone from our Group Information branch is Sydney. Manager on (02) 9925 6612 and is available from the Leighton 13 September Books close for Final Dividend website www.leighton.com.au Share information 30 September Final Dividend paid Information regarding Substantial Shareholders, the Enquiries 7 November Annual General Meeting 20 largest holders and shareholding distribution is on page 55. If you have any questions about your shareholding, dividend 31 December Half-year end payments, tax file number, change of address etc, you should Audit committee contact the Company’s Shareholder Enquiry Line at Computershare As at 11 September 2002, the Company has a formally constituted Investor Services Pty Limited: Audit Committee of the Board of Directors. 2003 by phone on 1300 855 080 (local) or Additional information – Appendix 4B 11 February Half-year Results announced 61 3 9615 5970 (international); or In accordance with ASX listing rule 4.10.1 we advise that the 7 March Shares begin trading ex Dividend following information contained in the Appendix 4B dated the 15th by fax on 02 8234 5050 (local) or 14 March Books close for Interim Dividend August 2002 is different to that in the Annual Report: statement of 61 2 8234 5050 (international); or financial performance: expenses from ordinary activities 2002: 31 March Interim Dividend paid by email at [email protected] $4,817,566 (previously $4,819,437), 2001: $4,181,595 (previously 30 June Year end $4,183,361); borrowing costs 2002: $6,817 (previously $4,946), 2001: Or write to: 14 August Preliminary Final Results announced $12,638 (previously $10,872); notes to the concise financial report, Computershare Investor Services Pty Limited 8 September Shares begin trading ex Dividend note 3, labour costs 2002: $803,076 (previously $804,947), 2001: GPO Box 7045 $732,397 (previously $734,073), note 4 Australia/Pacific segment 12 September Books close for Final Dividend Sydney NSW 1115 result 2002: $124,021 (previously $122,150), 2001: $123,051 30 September Final Dividend Paid Dividend payment (previously $121,285), Total segment result 2002: $210,901 6 November Annual General Meeting The final dividend of 26 cents per share will be paid on (previously $209,030), 2001: $206,208 (previously $204,442). 30 September 2002 and will be franked to the extent of 70%. These changes occurred due to a reclassification of costs from *Note timing of events can be subject to change remuneration to borrowing costs and had no impact on the result or Direct dividend deposit into bank accounts the statement of financial position of the Consolidated Entity in the If you choose, your Leighton dividends can be paid directly into a current or previous financial years. bank, building society or credit union account in Australia on the dividend payment date. Details of the dividend payment will be Share buy-back confirmed by an advice mailed to you on that date. Leighton Holdings does not have a current on-market buy-back program. Application forms are available from our share registrar, Computershare Investor Services Pty Limited. Other available publications In addition to the Annual Report the Company distributes the If you subsequently change your bank account, please promptly Chairman’s Address, the Half Yearly and Preliminary Final Reports notify the registrar in writing quoting your old bank account number and quarterly Corporate Updates to all shareholders. Newsletters as an added security check. are published bi-monthly and are available on request. Should you Tax file numbers wish to be put on the mailing list, please contact the Group Since 1 July 1991, all companies have been obliged to deduct tax at Information Manager on (02) 9925 6612. the top marginal rate from unfranked dividends paid to investors, Leighton Holdings is pleased to offer shareholders a complimentary resident in Australia, who have not supplied them with a tax file copy of the special commemorative book “Leighton: 50 years of number or exemption particulars. Tax will not be deducted from the achievement 1949–1999”. Copies can be obtained by contacting the franked portion of a dividend. Group Information Manager on (02) 9925 6612 or via email at If you have not already done so, a Tax File Number Notification form [email protected] or Tax File Number Exemption form should be completed for each Removal from annual report mailing list holding and returned to our Registrars, Computershare Investor If you do not wish to receive an Annual Report please advise the Company in writing. > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 65

STATISTICAL SUMMARY

2002 2001 2000 1999 1998 $’000 $’000 $’000 $’000 $’000 Summary of Financial Position Contributed equity 399,391 378,598 363,891 361,884 130,563 Total parent entity interest 789,259 740,170 660,580 612,339 573,803 Total equity 794,546 740,289 684,890 632,878 590,594 Total liabilities 1,523,228 1,309,871 1,044,431 943,116 916,309 Total assets 2,317,774 2,050,160 1,729,321 1,575,994 1,506,903

Summary of Financial Performance Revenues from ordinary activities 5,034,845 4,393,254 3,577,364 3,327,878 3,034,546 Profit from ordinary activities before interest and income tax expense 240,480 214,878 206,827 188,497 163,017 Profit from ordinary activities before income tax expense 233,663 202,240 201,374 181,818 155,148 Income tax expense relating to ordinary activities 59,450 42,312 43,371 50,424 44,981 Profit from ordinary activities after income tax expense 174,213 159,928 158,003 131,394 110,167 Net profit attributable to members of the parent entity 169,222 156,156 134,080 121,809 102,852

Financial Statistics Earnings per ordinary share – basic 63.1¢ 59.2¢ 51.1¢ 46.6¢ 39.5¢ – diluted 62.8¢ 59.1¢ 50.7¢ 46.1¢ 39.5¢ Dividends per ordinary share 42.0¢ 39.0¢ 33.0¢ 30.0¢ 26.0¢ Return on equity attributable to members 21.4% 21.1% 20.3% 19.9% 17.9% Return on total assets 7.3% 7.6% 7.8% 7.7% 6.8% Operating profit before interest and tax to total revenue 4.8%4.9%5.8%5.7%5.4% Operating profit attributable to members to total revenue 3.4% 3.6% 3.7% 3.7% 3.4% Dividend times covered 1.5 1.5 1.5 1.6 1.5 Dividend payout ratio 67.1% 66.3% 64.7% 64.5% 66.0% Interest times covered 35.3 17.0 18.7 28.2 20.7 Net tangible assets per ordinary share $2.83 $2.64 $2.52 $2.42 $2.26 Current ratio 1.1 1.2 1.3 1.2 1.3 Total equity to total assets 34.3% 36.1% 39.6% 40.2% 39.2% Total equity to total liabilities 52.2% 56.5% 65.6% 67.1% 64.5% Gross borrowings to total equity 8.1% 13.5% 14.3% 14.7% 20.2% Net borrowings to total equity (66.0%) (54.0%) (36.5%) (42.8%) (42.2%) Number of employees 15,228 12,615 12,698 10,502 11,970

DIRECTORY AND OFFICES 66

Leighton Holdings Limited Thiess Pty Ltd Hunter Valley Earthmoving Co. Leighton Asia Limited Leighton Contractors (Laos) Co. Ltd. Queensland ACN 004 482 982 ABN 087 010 221 486 Pty Ltd Head Office KM 18 Tha Ngone Road Level 4, John Oxley Centre ABN 57 004 482 982 Head Office ABN 050 000 366 450 Leighton Contractors (Asia) Limited PO Box 1614 South Tower Head Office Thiess Centre 125 Racecourse Road 39th Floor Sun Hung Kai Centre Vientiane 339 Coronation Drive Level 5, 472 Pacific Highway 179 Grey Street Rutherford NSW 2320 30 Harbour Road Lao PDR Milton Qld 4064 St Leonards NSW 2065 South Bank Qld 4101 Tel. +61 2 4932 5955 Hong Kong Tel. +856 21 752 015-16 Tel. +61 7 3368 3144 Tel. +61 2 9925 6666 Tel. +61 7 3002 9000 Fax. +61 2 4932 4311 Tel. +852 2823 1111 Fax. +856 21 752 017 Fax. +61 7 3368 4028 Fax. +61 2 9925 6005 Fax. +61 7 3002 9009 Silcar Fax. +852 2529 8784 Leighton Contractors (Vietnam) Western Region www.leighton.com.au www.thiess.com.au ABN 019 839 038 065 www.leightonasia.com Limited Level 11, Durack Centre Board of Directors Queensland, Northern Territory 885 Mountain Highway Leighton Contractors (Asia) Limited Level 2, Kimdo Business Centre 263 Adelaide Terrace John Powell Morschel and the Pacific Bayswater VIC 3153 Shanghai Office 123 Le Loi Street Perth WA 6000 Wallace MacArthur King AM Level 5, Thiess House Tel. +61 3 9721 7575 19th Floor, Suite 1909 District 1 Tel. +61 8 9223 2323 Dieter Siegfried Adamsas Kings Row, 40 McDougall Street Fax. +61 3 9721 7916 China Merchants Tower Ho Chi Minh City Fax. +61 8 9221 1270 Martin Carl Albrecht AC Milton Qld 4064 BOS Australia Pty Ltd 161 Lujiazui Road East, Pu Dong Vietnam Northern Territory Geoffrey John Ashton Tel. +61 7 3368 0200 ABN 074 009 180 616 Shanghai 200120 Tel. +848 821 5524 110 Coonawarra Road Geoffrey James Dixon Fax. +61 7 3368 0250 7 Yeates Road China Fax. +848 821 0637 Winnellie NT 0820 Achim Drescher New South Wales and Australian Kwinana WA 6167 Tel. +8621 5882 3345 PT Leighton Contractors Indonesia Tel. +61 8 8984 3322 Ian Rutledge Johnson Capital Territory Tel. +61 8 9419 5222 Fax. +8621 5882 4029 5th Floor, Santoso Building Fax. +61 8 8947 2175 Hans-Peter Keitel Level 5 Fax. +61 8 9419 3638 Leighton Contractors (Philippines) Inc. Jl. H.R. Rasuna Said Kav. B-6 Rail Division David Allen Mortimer 26 College Street Leighton Contractors Pty Limited 9th Floor Kuningan Level 10, Durack Centre Busso Peus Sydney NSW 2000 ABN 098 000 893 667 Insular Life Building Jakarta 12910 263 Adelaide Terrace David Paul Robinson Tel. +61 2 9332 9444 Head Office 6781 Ayala Avenue Indonesia Perth WA 6000 Associate Directors Fax. +61 2 9331 4264 472 Pacific Highway Makati City 1226 Tel. +6221 520 1139 Tel. +61 8 9225 4777 John Faulkner Victoria, South Australia and St Leonards NSW 2065 Philippines Fax. +6221 520 9864/69 Fax. +61 8 9325 7024 Robert John Merkenhof Tasmania Tel. +61 2 9925 6666 Tel. +632 841 0998 Leighton Asia Limited Fax. +632 811 0158 Leighton Properties Pty Limited Roger Stewart Trundle Level 2 Fax. +61 2 9925 6004 Level 2, 472 Pacific Highway ABN 041 009 765 379 Vyril Anthony Vella 493 St Kilda Road www.leightoncontractors.com.au Leighton Contractors (Malaysia) St. Leonards, NSW 2065 Head Office & NSW Branch William Joseph Wild Melbourne VIC 3004 New South Wales Sdn Bhd Australia Ground Level Secretary Tel. +61 3 9864 8888 Levels 9 & 10 14th Floor Tel. +61 2 9925 6618 472 Pacific Highway Ashley John Moir Fax. +61 3 9864 8811 12 Help Street Menara Multi-Purpose Fax. +61 2 9925 6951 St Leonards NSW 2065 No. 8 Jalan Munshi Abdullah Principal Registered Office in Western Australia Chatswood NSW 2067 John Holland Group Pty Ltd Tel. +61 2 9925 6666 Level 13, St George’s Square Tel. +61 2 9414 3333 50100 Kuala Lumpur ABN 037 050 242 147 Fax. +61 2 9925 6003 Australia Malaysia Level 5, 472 Pacific Highway 225 St George’s Terrace Fax. +61 2 9415 2510 Head Office Fax. +61 2 9925 6152 (NSW) Perth WA 6000 Tel. +603 2692 2388 70 Trenerry Crescent www.leightonproperties.com.au St Leonards NSW 2065 Queensland Fax. +603 2693 5388 Tel. +61 2 9925 6666 Tel. +61 8 9214 4200 Level 3, 143 Coronation Drive Abbotsford Vic 3067 Leighton Properties (Vic) Fax. +61 8 9214 4244 Milton Qld 4064 Lot B701, 7th Floor Tel. +61 3 9934 5209 Level 50, Rialto Principal Bankers Wisma Merdeka Phase II Fax. +61 3 9934 5275 Commonwealth Bank of Australia Thiess NZ Limited Tel. +61 7 3215 4400 525 Collins Street Unit A1 Fax. +61 7 3215 4480 Jalan Tun Razak www.johnholland.com.au Melbourne Vic 3000 48 Martin Place 88000 Kota Kinabalu Sydney NSW 2000 1066 Great South Road Victoria Southern Region Tel. +61 3 9228 7032 Mt Wellington Sabah ABN 11 004 282 268 Fax. +61 3 9228 7036 National Australia Bank Limited Level 1, 5 Queens Road Malaysia 255 George Street Auckland NZ Melbourne Vic 3004 70 Trenerry Crescent Leighton Properties (Qld) Tel. +649 276 1225 Tel. +6088 268 311 Abbotsford Vic 3067 Sydney NSW 2000 Tel. +61 3 9228 7700 Fax. +6088 251 311 Level 14, Central Plaza One Fax. +649 276 1228 Fax. +61 3 9228 3000 Tel. +61 3 9934 5209 345 Queen Street Auditor Thai Leighton Limited Fax. +61 3 9934 5265 KPMG PT Thiess Contractors Indonesia Western Australia Brisbane Qld 4000 JI. T.B. Simatupang Kav. 12 6th Floor, SPC Bldg. New South Wales and Australian Tel. +61 7 3229 8938 Chartered Accountants 1 Altona Street 1 Soi Chaemchan The KPMG Centre Pondok Pinang West Perth WA 6005 Capital Territory Fax. +61 7 3220 2273 Jakarta 12310 Sukhumvit 55 Road Level 6, 235 Pyrmont Street 45 Clarence Street Tel. +61 8 9324 1166 Bangkok 10110 Sydney NSW 2000 Indonesia Fax. +61 8 9481 2449 Pyrmont NSW 2009 Tel. +62 21 7599 9999 Thailand Tel. +61 2 9552 4288 Produced by Group Services, Share Registrar Office Fax. +62 21 7599 9800 Vytel Pty Limited Tel. +662 381 3344 Fax. +61 2 9552 4535 Leighton Holdings Limited Computershare Investor Services ABN 30 088 704 269 Fax. +662 391 4503 Designed by Emery Vincent Design Pty Limited Thiess Services Pty Ltd Victoria Gardens Location Photography: Kraig Carlstrom GPO Box 7045 ABN 069 010 725 247 Level 1, 678 Victoria Street People Photography: Karl Schwerdtfeger Print Management: The Production Centre Sydney NSW 1115 69 Grindle Road Richmond Vic 3121 Rocklea Qld 4106 Film Separations: Kolorart Graphics Tel. 1300 855 080 Tel. +61 3 8416 0400 Printing: Pot Still Press Tel. +61 7 3715 1500 Fax. +61 3 8416 0444 Fax. +61 7 3715 1545 > LEIGHTON CONCISE FINANCIAL > HOLDINGS LIMITED ANNUAL REPORT 2002 REPORT 65

STATISTICAL SUMMARY

Financial Statistics Earnings per ordinary share – basic 63.1¢ 59.2¢ 51.1¢ 46.6¢ 39.5¢ – diluted 62.8¢ 59.1¢ 50.7¢ 46.1¢ 39.5¢ Dividends per ordinary share 42.0¢ 39.0¢ 33.0¢ 30.0¢ 26.0¢ Return on equity attributable to members 21.4% 21.1% 20.3% 19.9% 17.9% Return on total assets 7.3% 7.6% 7.8% 7.7% 6.8% Operating profit before interest and taxto total revenue 4.8% 4.9% 5.8% 5.7% 5.4% Operating profit attributable to members to total revenue 3.4% 3.6% 3.7% 3.7% 3.4% Dividend times covered 1.5 1.5 1.5 1.6 1.5 Dividend payout ratio 67.1% 66.3% 64.7% 64.5% 66.0% Interest times covered 35.3 17.0 18.7 28.2 20.7 Net tangible assets per ordinary share $2.83 $2.64 $2.52 $2.42 $2.26 Current ratio 1.1 1.2 1.3 1.2 1.3 Total equity to total assets 34.3% 36.1% 39.6% 40.2% 39.2% Total equity to total liabilities 52.2% 56.5% 65.6% 67.1% 64.5% Gross borrowings to total equity 8.1% 13.5% 14.3% 14.7% 20.2% Net borrowings to total equity (66.0%) (54.0%) (36.5%) (42.8%) (42.2%) Number of employees 15,228 12,615 12,698 10,502 11,970

DIRECTORY AND OFFICES 66