05 LEIGHTON LEIGHTON HOLDINGS LIMITED CONCISE ANNUAL REPORT 2005 WHO ARE WE? Leighton Holdings Limited is the parent company of Australia’s largest project development and contracting group. Founded in Victoria in 1949, the organisation has grown from a small, privately owned civil engineering fi rm into a dynamic group that includes Thiess, John Holland, Leighton Contractors, Leighton Asia (Northern), Leighton Asia (Southern) and Leighton Properties. With 21,270 employees, the Group’s operations are spread all around the Asia-Pacifi c region on projects in Australia, Hong Kong, Indonesia, Malaysia, Singapore, Philippines, Thailand, Vietnam, China, Taiwan, Sri Lanka, Macau, India, Arabian Gulf, the near Pacifi c and New Zealand. Leighton Holdings is listed on the Australian Stock Exchange and has its head offi ce in Sydney. WHAT DO WE DO? Leighton Group companies offer a broad range of project development and contracting services and skills to public and private sector clients across NOTICE OF ANNUAL a wide range of industries. Project development GENERAL MEETING 2005 skills – community infrastructure, property or Leighton Holdings Limited resources-based – and project management ABN 57 004 482 982 of construction and property developments To: The Shareholders Notice is hereby given that complement the Group’s contracting activities. the Annual General Meeting These activities include engineering and building of the members of Leighton construction, contract mining, environmental Holdings Limited will be held at the Four Seasons Hotel Sydney services, operations and maintenance, and at 199 George Street, Sydney, facilities management. Key resources include an on Thursday 10 November experienced, long-serving management team, 2005, at 10.00 am. A separate Notice of Meeting and Proxy a strong balance sheet and the largest fl eet of Form is enclosed. During the mobile plant and equipment in Australia. course of the meeting, a short presentation on the Group’s operations will be given by Wal King AO, Chief Executive Offi cer. All present are invited to join the Directors for light refreshments after the meeting. THE LEIGHTON GROUP HAS REBOUNDED STRONGLY TO REPORT A 05 RECORD PROFIT RESULT. WE HAVE ALSO CAPITALISED ON THE UPSWING IN THE AUSTRALIAN ENGINEERING AND RESOURCES MARKETS TO SECURE A NUMBER OF NEW CONTRACTS, BOOSTING WORK IN HAND TO A RECORD $15.5 BILLION. OUR FOCUS IS NOW ON SUCCESSFULLY CONVERTING THAT WORK INTO PROFIT. LEIGHTON HOLDINGS LIMITED CONCISE ANNUAL REPORT 2005 01_02 1 Corporate Report 05 _ Key Statistics 07 _ From the Chairman 09 _ Chief Executive’s Report 11 _ Financial Management 14 _ Operations Analysis 15 _ Focus on Resources 17 _ Health, Safety, Environment and Community Report 2 Review of Operations 23 _ Thiess 27 _ John Holland 31 _ Leighton Contractors 35 _ Leighton Asia (Northern) 39 _ Leighton Asia (Southern) 43 _ Leighton Properties 3 Corporate Governance 49 _ Corporate Governance Practices 55 _ Directors’ Report _Directors’ Resumes _Remuneration Report 73 _ Shareholdings and Noteholdings 74 _ Shareholder Information 4 Concise Financial Report 77 _ Statement of Financial Performance 78 _ Statement of Financial Position 79 _ Statement of Cash Flows 80 _ Discussion and Analysis 81 _ Notes to the Concise Financial Report 88 _ Statutory Statements 89 _ 5-year Statistical Summary 90_ Directory and Offi ces 1 CORPORATE REPORT CENTRAL RECLAMATION PHASE III, HONG KONG 03_04 Fg\iXk`e^Gif]`k Fg\iXk`e^Gif]`k KfkXcI\m\el\ Nfib`e?Xe[ 9\]fi\KXo 8]k\iKXo KfkXc8jj\kj d`cc`fe d`cc`fe d`cc`fe d`cc`fe d`cc`fe /''' (-''' *'' )), *,'' ..'* (,+.( )/.%' -+'' ()/'' )+' (/' )',%+ )/'' *'*' (*'+* ).+, )).%* (-0%) -''+ ,-)' )'0%/ +/'' 0-'' (/' (*, )('' )*(/ ,)., )(-* (+'%' 0--) /*.( (('%' *)'' -+'' ()' (+,%+ 0' (+'' (-'' *)'' -' +, .'' '(') '* '+ ', ++.- '(') '* '+ ', ./), '(') '* '+ ', (0-%/ '(') '* '+ ', (,-%) '(') '* '+ ', )',' KEY STATISTICS 2005 2004 % $’000 $’000 change Operating Revenue – Group 6,257,771 4,834,376 +29 – Joint Ventures 1,321,650 1,077,548 +23 Other Revenue 123,605 91,900 +34 Total Revenue 7,703,026 6,003,824 +28 New Contracts, Extensions & Variations 9,755,712 9,575,434 +2 Value of Work in Hand # 15,470,760 13,042,980 +19 Profi t from ordinary activities before tax* 287,044 145,433 +97 Income Tax (81,612) (39,296) +108 Profi t from ordinary activities after tax 205,432 110,031 +87 Total Capital and Reserves* 893,355 844,267 +6 Total Assets 3,029,786 2,744,883 +10 Cash net of Borrowings 399,753 511,184 —22 Undrawn Facilities and Guarantees 651,317 724,827 —10 Earnings per Ordinary Share 75.3¢ 40.4¢ +86 Dividends per Ordinary Share 50.0¢ 45.0¢ +11 *Excludes outside equity interests #Includes Joint Ventures WESTLINK M7, NSW LEIGHTON HOLDINGS LIMITED CONCISE ANNUAL REPORT 2005 05_06 FROM THE CHAIRMAN “WE ARE PLEASED TO BE RETURNING TO MORE NORMAL LEVELS OF PERFORMANCE FOR SHAREHOLDERS” GEOFF ASHTON AM CHAIRMAN RIVER LINKS ON COOMERA, QLD ACHIEVEMENTS YEAR IN REVIEW _______The reconstitution of several of the Improved performance to post record profi t of _______I am pleased to report to shareholders Board’s committees has resulted in an increase $205 million that the Leighton Group has successfully in the activities of Board members. There were delivered a much improved performance in 9 scheduled Board meetings and 18 committee Average return on shareholders’ funds of 23% 2004/05. The Company reported a profi t after tax meetings held during the year. Successful implementation of risk of $205 million, up 87% on last year, while work management recommendations in hand rose by 19% to $15.5 billion. PEOPLE _______A highlight was the successful award of _______The Board recognises the Group’s CHALLENGES AHEAD the Group’s largest ever contract, the $2.5 billion workforce as its greatest strength; a community Continuing to deliver value for shareholders EastLink Motorway in Melbourne, to a joint of more than 21,000 skilled and experienced staff Overcoming skills shortages and venture between Thiess and John Holland. Our who drive the performance of the Company. capacity constraints record work level and the buoyant outlook for the At any time our responsibilities also extend to infrastructure and resources markets – driven by some 20,000 sub-contractors who are integral to Managing risk, especially on large projects a number of major infrastructure projects in our operations. We acknowledge the tremendous Australia and strong demand for this country’s efforts of all Group employees and sub- Continuing to deliver value for shareholders resources – position us well for the future. contractors over the past year, both their The company has a track record over many years contribution to securing new work, as well as the of producing outstanding shareholder returns GOVERNANCE, RISK MANAGEMENT AND enthusiastic performance and professional project and although our results have been less than THE BOARD delivery skills they provide on a daily basis. satisfactory in recent years, we are now returning _______We have incorporated a Summary of to more normal levels of performance. To put this Corporate Governance Practices in this year’s OUTLOOK in perspective, over a 10 year period to 30 June Concise Annual Report. The Summary outlines _______Looking forward, the Australian 2005, Leighton delivered a total shareholder the Board’s policies and principles, as measured construction market continues to offer many return of 21.6% per annum. This year, we reported against the best practice recommendations opportunities, fuelled by signifi cant State and an average return on shareholders funds of contained in the ASX Corporate Governance Federal government spending on transport 23.6% and we will continue our policy of returning Council Guidelines. infrastructure. The resources sector is another substantial funds to shareholders with a dividend _______In line with best practices corporate important market and one that is undergoing of 50 cents per share, franked to 50%. governance processes, David Mortimer was tremendous growth. Overseas, our subsidiaries appointed as the independent, non-executive continue to harness the potential of existing Chairman of the Audit Committee, replacing markets and explore new markets in Asia, building David Robinson. David remains a valued on the new work secured in Indonesia, Hong Kong member of the Audit Committee, and I thank and other countries. him for his leadership over past years. _______As a result of the sustained upswing in _______Last year, the Board initiated an extensive both the infrastructure and resources sectors review of the Company’s risk management the Board expects to post solid profi t growth policies and procedures. The Board believes that in the year ahead. Whilst winning work remains the review’s recommendations have been important, our major focus is to effectively successfully implemented, further enhancing the manage the risks associated with the many large Group’s best practice risk management system. and complex projects currently underway. LEIGHTON HOLDINGS LIMITED CONCISE ANNUAL REPORT 2005 07_08 CHIEF EXECUTIVE’S REPORT “NOW THAT WE HAVE REBOUNDED, OUR FOCUS IS ON EXTRACTING THE PROFIT POTENTIAL FROM OUR WORK IN HAND” WAL KING AO CHIEF EXECUTIVE MT OWEN COMPLEX, NSW ACHIEVEMENTS REVIEW OF OPERATIONS PEOPLE AND THE WORKPLACE Corporate Management W M King AO Finalising Sydney Hilton and progressing _______In Australia, signifi cant investment by _______Our experienced and professional staff, Chief Executive Offi cer Spencer Street Station the public and private sectors in infrastructure and many specialist sub-contractors, are central D S Adamsas is driving an upswing in the Group’s traditional to our performance. Given the strong upswing Deputy Chief Executive Offi cer Work in hand increased to record $15.5 billion and CFO construction market. A highlight was the award in construction and mining activity we are A J Moir Securing $2.5 billion EastLink motorway of the Group’s largest ever project, the $2.5 billion experiencing, the Group has had to develop Company Secretary P Bingham-Hall EastLink motorway in Melbourne, to a joint innovative solutions to the recruitment, retention, Executive General Manager, CHALLENGES AHEAD venture between Thiess and John Holland.