agm notice of meeting and proxy form - asx april 2012 company announcements office australian...

20 April 2012 Company Announcements Office Australian Securities Exchange Limited Level 4 20 Bridge Street SYDNEY NSW 2000 AGM NOTICE OF MEETING AND PROXY FORM In accordance with Listing Rule 3.17, please find attached copies of the Notice of Meeting and Proxy Form for the Company’s Annual General Meeting, to be held on Tuesday 22 May 2012, which will be dispatched to shareholders today. We also attach a copy of the Company’s December 2011 Concise Annual Report which will also be dispatched to shareholders today. The Company’s December 2011 Concise Annual Report was previously released to the ASX on 30 March 2012. These documents will be available on the Leighton Holdings website at www.leighton.com.au Yours faithfully, LEIGHTON HOLDINGS LIMITED A. J. MOIR Company Secretary

To: The Shareholders

Notice is hereby given that the 2012 Annual General Meeting of Leighton Holdings Limited (Company) will be held in The Ballroom, Four Seasons Hotel Sydney, 199 George Street Sydney, New South Wales, on Tuesday 22 May 2012 at 10am to transact the following business:

1. Annual Financial Report and Directors’ and Auditor’s Reports

To receive the Financial Report and Reports of the Directors and Auditor for the 6 month financial period from 1 July 2011 to 31 December 2011 (December 2011 Transitional Financial Year).

To consider and if thought fit pass the following resolutions as ordinary resolutions:

2. Remuneration Report

To adopt the Remuneration Report for the December 2011 Transitional Financial Year.

(Note: The vote on this resolution is non-binding.)

3. Election of Directors

3.1 That Ms Paula Dwyer, who was appointed as a Non-executive Director of the Company on 1 January 2012 and, in accordance with Clause 17.2 of the Company’s Constitution, holds office as a Director until the conclusion of this meeting and, being eligible, offers herself for election, be elected.

3.2 That Mr Wayne Osborn, who retires by rotation in accordance with Clause 18 of the Company’s Constitution and, being eligible, offers himself for re-election, be re-elected.

3.3 That Mr Peter Sassenfeld, who was appointed as a Non-executive Director of the Company on 29 November 2011 and, in accordance with Clause 17.2 of the Company’s Constitution, holds office as a Director until the conclusion of this meeting and, being eligible, offers himself for election, be elected.

3.4 That Dr Michael Llewellyn-Smith, who has nominated himself for election as a Director of the Company in accordance with Clause 19.2(c) of the Company’s Constitution, be elected.

See the accompanying Explanatory Notes for information about the election of Directors.

4. Appointment of Deloitte Touche Tohmatsu as auditor of the Company

That Deloitte Touche Tohmatsu, having consented to do so, be appointed to act as auditor of the Company.

5. Approval of the Leighton Holdings Equity Incentive Plan

That the Leighton Holdings Equity Incentive Plan, details of which are summarised in the Explanatory Notes to this Notice of Meeting, is approved for all purposes under the Corporations Act 2001 (Cth) and the ASX Listing Rules.

6. Approval of incentive grants to Executive Directors

6.1 That approval is given to grant rights to receive fully paid ordinary shares in the Company to the Company’s Chief Executive Officer, Mr Hamish Tyrwhitt, under the Leighton Holdings Equity Incentive Plan on the terms summarised in the Explanatory Notes to this Notice of Meeting.

6.2 That approval is given to grant rights to receive fully paid ordinary shares in the Company to the Company’s Chief Financial Officer, Mr Peter Gregg, under the Leighton Holdings Equity Incentive Plan on the terms summarised in the Explanatory Notes to this Notice of Meeting.

Invitation

After the meeting, all shareholders are invited to join the Directors for light refreshments.

By Order of the Board A.J. Moir, Sydney 18 April 2012

LEIGHTON HOLDINGS LIMITED ABN 57 004 482 982

NOTICE OF ANNUAL GENERAL MEETING 2012

Registered Office:472 Pacific HighwaySt Leonards NSW 2065 AustraliaFax number +61 2 9925 6005

Share Registrar:Computershare Investor ServicesPty LimitedLevel 4, 60 Carrington Street Sydney NSW 2000 Australia Fax number + 61 3 9473 2555

Share Registrar’s Postal Address:Share RegistrarComputershare Investor ServicesPty LimitedGPO Box 242Melbourne VIC 3001 Australia

1

Proxies

A proxy form accompanies this notice. Additional proxy forms will be provided by the Company’s Share Registrar, Computershare Investor Services Pty Limited, on request.

As a shareholder entitled to attend and vote at the meeting, you may appoint up to 2 proxies to attend and vote for you. You may specify the proportion or number of votes that the proxy may exercise. If you appoint 2 proxies and do not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the votes.

A proxy need not be a shareholder of the Company.

The key management personnel (KMP) of the Company (which includes each of the Directors) and their closely related parties will not be able to vote your proxy on items 2, 5 and 6 unless you have directed them how to vote. The term “closely related party” is defined in the Corporations Act 2001 (Cth) and includes a member of the KMP’s spouse, dependant and certain other close family members, as well as any companies controlled by the KMP. If you intend to appoint a member of the KMP as your proxy, please ensure that you direct them how to vote on items 2, 5 and 6. If you intend to appoint the Chairman of the meeting as your proxy, you can direct him how to vote on items 2, 5 and 6 by marking the relevant boxes on the proxy form. However, if the Chairman of the meeting is your proxy and you do not mark any of the boxes opposite items 2, 5 and 6, you will be deemed to have directed the Chairman to vote in favour of those items.

The proxy form must be signed by you or your attorney. Proxies given by corporations must be executed either in accordance with section 127 of the Corporations Act 2001 (Cth) or under the hand of a duly authorised officer or attorney.

The proxy form and the power of attorney or other authority under which it is signed (if any), or a certified copy of the power of attorney or authority, must be received at or sent by fax to the Company’s Share Registrar not later than 10 am (AEST) on Sunday, 20 May 2012. See above for the fax number and address of the Share Registrar.

Online Lodgement: You may lodge an electronic proxy online at www.investorvote.com.au (Control Number 185488) not later than 10 am (AEST) on Sunday, 20 May 2012. You will need your Securityholder Reference Number (SRN) or Holder Identification Number (HIN)

and to confirm your postcode if you reside in Australia or country of residence if you reside outside Australia.

Eligibility to Vote

For the purposes of the meeting, shares will be taken to be held by persons who are registered as members as at 7 pm (AEST) on Sunday, 20 May 2012. Accordingly, transactions registered after that time will be disregarded in determining shareholders entitled to attend and vote at the meeting.

Voting Exclusions

Item 2

The Company will disregard any votes cast on item 2:

• byoronbehalfofamemberoftheKMP(whoseremuneration is disclosed in the Remuneration Report) and any closely related parties (such as close family members and any companies the person controls) of those persons; and

• asaproxy,byamemberoftheKMPoracloselyrelated party of a member of the KMP,

unless the vote is cast as proxy for a person entitled to vote on item 2 in accordance with a direction on the proxy form.

Item 5

The Company will disregard any votes cast on item 5:

• inanycapacitybytheExecutiveDirectors(beingtheonly Directors entitled to participate in an employee incentive scheme) and any of their associates; and


unless the vote is cast as proxy for a person entitled to vote on item 5 in accordance with a direction on the proxy form.

In addition, any shareholder who is:

• anemployeeorDirectorofacompanyintheLeighton Group; or

• anassociateofsuchanemployee,

should not cast any votes on item 5 (other than as a directed proxy) if they wish to preserve the benefit of the approvals being sought.

2


Share Registrar:Computershare Investor ServicesPty LimitedLevel 4, 60 Carrington Street Sydney NSW 2000 Australia Fax number +61 3 9473 2555


Item 6

The Company will disregard any votes cast on items 6.1 and 6.2:

• inanycapacitybytheExecutiveDirectors(beingtheonly Directors entitled to participate in an employee incentive scheme) and any of their associates; and


unless the vote is cast as proxy for a person entitled to vote on items 6.1 and 6.2 in accordance with a direction on the proxy form.

3


Share Registrar:Computershare Investor ServicesPty LimitedLevel 4, 60 Carrington Street Sydney NSW 2000 Australia Fax number + 61 3 9473 2555


ITEM 1

ANNUAL FINANCIAL REPORT AND DIRECTORS’ AND AUDITOR’S REPORTS

The Financial Report and the Directors’ and Auditor’s Reports for the December 2011 Transitional Financial Year will be tabled at the meeting. Shareholders will have a reasonable opportunity at the meeting to ask questions about or make comments on the Financial Report and the Directors’ and Auditor’s Reports as well as on the management of the Company. The Financial Report for consideration at the meeting will be the full Financial Report. Any shareholder wishing to receive a copy of the full Financial Report should contact the Company’s Share Registrar, Computershare Investor Services Pty Limited, and a copy will be provided free of charge.

Shareholders will also have a reasonable opportunity at the meeting to ask questions of the Company’s current external auditor, KPMG, relevant to:

(a) the conduct of the audit;

(b) the preparation and content of the Auditor’s Report;

(c) the accounting policies adopted by the Company in relation to the preparation of the financial statements; and

(d) the independence of the auditor in relation to the conduct of the audit.

ITEM 2

REMUNERATION REPORT

Shareholders will have a reasonable opportunity at the meeting to ask questions about or make comments on the Remuneration Report. The Remuneration Report on pages 75 to 112 of the Concise Annual Report sets out the remuneration policies of the Company and reports on the remuneration arrangements in place for Non-executive Directors, Executive Directors and the senior executives of the Group during the December 2011 Transitional Financial Year. As foreshadowed at the Annual General Meeting in November 2011, the Board has conducted a comprehensive review of executive remuneration and incentives. The revised remuneration and incentive scheme is currently being implemented and is described on pages 84 to 88 of the Concise Annual Report.

As prescribed by the Corporations Act 2001 (Cth) (the Act), the vote on the adoption of the Remuneration Report is advisory only and does not bind the Directors or the Company. However, the Board does take the outcome of the vote and discussion at the meeting into account in setting remuneration policy for future years.

The Board recommends that shareholders vote in favour of the adoption of the Remuneration Report.

ITEM 3

ELECTION OF DIRECTORS

The Board’s policy is to maintain a Board with a mix of skills, experience and diversity of backgrounds suitable for the Company’s current and anticipated future circumstances. The Remuneration & Nominations Committee undertakes an assessment of each candidate standing for election or re-election as a Director, based on their background, skills and experience and having regard to the size, market position, complexity and strategic focus of the Leighton Group. On the basis of this assessment, the Remuneration & Nominations Committee makes a recommendation to the Board on whether to support the election or re-election of each candidate.

The experience, qualifications and other details about the candidates for election to the office of Director are set out below.

Item 3.1 Election of Ms Paula Dwyer

Ms Paula Dwyer (51) Non-executive Director B.Com. FCA, FAICD, F.Fin

An independent Non-executive Director and Chairman of the Audit Committee since 1 January 2012. Ms Dwyer holds a Bachelor of Commerce from the University of Melbourne. Ms Dwyer is a Fellow of the Institute of Chartered Accountants in Australia, the Australian Institute of Company Directors and the Financial Services Institute of Australasia.

Ms Dwyer had an executive career in finance holding senior positions in investment management, investment banking and chartered accounting with Ord Minnett (now JP Morgan) and PricewaterhouseCoopers. Ms Dwyer is a Member of the Takeovers Panel, a Board Member of the Faculty of Business and Economics at the University of Melbourne, a Member of the Geelong

4


EXPLANATORY NOTES

Grammar School Council and Deputy Chairman of the Baker IDI Heart and Diabetes Institute.

Ms Dwyer is the Chairman of Tabcorp Holdings Limited (a role she has held since June 2011) and has been a Director of that company since August 2005. Ms Dwyer was appointed a Non-executive Director of Australia and New Zealand Banking Group Limited and of Lion Group on 1 April 2012.

Ms Dwyer was formerly a Director of Suncorp Group Limited from 2007 to February 2012 (where she was also Chairman of the Audit Committee), Foster’s Group Limited from May to December 2011, Healthscope Limited from March to October 2010, Astro Japan Property Group Limited from February 2005 to December 2011, Promina Group Limited from 2002 to 2007, David Jones Limited from 2003 to 2006 and RACV Limited from 2001 to 2002.

Recommendation The Directors (excluding Ms Dwyer) unanimously recommend that shareholders vote in favour of Resolution 3.1.

Item 3.2 Election of Mr Wayne Osborn

Mr Wayne Osborn (60) Non-executive Director Dip EE, MBA, FSTE, MIE Aust, FAICD

An independent Non-executive Director since November 2008. Chair of Thiess Pty Ltd since October 2008 (Director since October 2005). Chair of the Council of the Australian Institute of Marine Science, Trustee of Western Australian Museum, Fellow of Australian Academy of Technological Sciences & Engineering, Fellow of the Explorers Club – New York, Member of the Institution of Engineers Australia and former Chair of Australian Aluminium Council. A Director of Alinta Holdings (formerly Amber Holdings) since March 2011. Mr Osborn has 35 years of experience in the Australian mining, resources and manufacturing sectors and was a former Chairman and Managing Director of Alcoa Australia Ltd.

Mr Osborn is a Director of the following other ASX listed entities: Wesfarmers Limited since March 2010 and Iluka Resources Limited since March 2010.

Recommendation The Directors (excluding Mr Osborn) unanimously recommend that shareholders vote in favour of Resolution 3.2.

Item 3.3 Election of Mr Peter Sassenfeld

Mr Peter Sassenfeld (45) Non-executive Director MBA

A Non-executive Director since 29 November 2011. Mr Sassenfeld joined HOCHTIEF in November 2011 as the Chief Financial Officer and prior to this role he was Chief Financial Officer of Ferrostaal AG. Mr Sassenfeld has also worked as Chief Financial Officer at Krauss Maffei AG and in senior finance roles at Bayer AG and the Mannesmann Group. Mr Sassenfeld graduated in 1991 from the University of Saarland, Germany with an MBA (Diplom-Kaufmann).

Recommendation The Directors (excluding Mr Sassenfeld) unanimously recommend that shareholders vote in favour of Resolution 3.3.

Item 3.4 Election of Dr Michael Llewellyn-Smith

Dr Michael Llewellyn-Smith has nominated himself for election as a Non-executive Director in accordance with Clause 19.2(c) of the Company’s Constitution. Dr Llewellyn-Smith’s biographical details are set out below. These details were provided by Dr Llewellyn-Smith and have not been verified by the Company. By including the statement below on Dr Llewellyn-Smith, the Company does not in any way endorse its accuracy or reliability.

Dr Michael Llewellyn-Smith (69) MA (Cantab), MTCP (Sydney), MA (Adelaide). PhD (Adelaide), LFAIA, LFPIA, LMLGMA. KStJ, JP.

Dr Llewellyn-Smith is the Managing Director of Llewellyns International Urban Management Consultants. He has qualifications and over thirty years’ experience in the fields of Architecture, Town Planning and City Management. He holds three Masters’ Degrees (from Cambridge, Sydney and Adelaide Universities) and a PhD in city planning from The University of Adelaide. Dr Llewellyn-Smith has served as the Deputy City Planner of Sydney, the City Planner and then the Chief Executive Officer of the City of Adelaide, and as the Presiding Member of the South Australian Development Assessment Commission. He is a Life Fellow of the Australian Institute of Architects and the Planning Institute Australia and a Life Member of Local Government Managers Australia. Dr Llewellyn-Smith has worked as a consultant throughout Australia for all spheres of government and has worked overseas

5

in Poland, Sri Lanka and South Africa.

On the basis of the assessment and recommendation from the Remuneration & Nominations Committee, the Board has formed the view that the external candidate, Dr Llewellyn-Smith, does not have the necessary experience for a Director of a publicly listed company of Leighton’s size and complexity.

Recommendation The Board unanimously recommends that shareholders vote against Resolution 3.4.

ITEM 4

APPOINTMENT OF AUDITOR

In order to align the Company’s auditor with that of its parent entity HOCHTIEF, the Board has selected Deloitte Touche Tohmatsu as the Company’s auditor. The Board believes that the appointment of Deloitte Touche Tohmatsu is in the best interests of the Company and its shareholders as it will facilitate the streamlining of the audit process between the Company and its parent entity, HOCHTIEF, as well as resulting in a reduction in costs over time.

The Chairman of the Audit Committee, Ms Dwyer, as a member of the Company, nominated Deloitte Touche Tohmatsu as auditor of the Company and Deloitte Touche Tohmatsu consented to the appointment. A copy of the nomination of Deloitte Touche Tohmatsu as auditor of the Company is on page 12 of the Explanatory Notes.

KPMG, the Company’s auditor since 1976, has agreed to resign as auditor with effect from the close of this Annual General Meeting and the Australian Securities & Investments Commission has consented to the resignation in accordance with section 329(5) of the Act.

Under the Act, shareholder approval is required for the appointment of a new auditor. Subject to this approval being obtained, the appointment of Deloitte Touche Tohmatsu will become effective from the close of this Annual General Meeting.

Recommendation The Board recommends that shareholders vote in favour of the appointment of Deloitte Touche Tohmatsu as auditor of the Company.

ITEM 5

APPROVAL OF THE LEIGHTON HOLDINGS EQUITY INCENTIVE PLAN

The Company is seeking shareholder approval for a new employee share plan. The Leighton Holdings Equity Incentive Plan (Plan) will replace the existing Leighton Senior Executive Option Plan and the Leighton Management Share Plan. The Plan establishes the legal framework under which equity grants will be made for the purposes of the Leighton Group’s short-term incentive and long-term incentive arrangements and any other equity grants.

The Plan is being introduced in light of various legislative changes and follows a review by management and the Remuneration & Nominations Committee (the Committee) of the existing remuneration arrangements. The Plan facilitates the new remuneration arrangements which aim to:

• assistwiththeattraction,motivationandretentionof employees and more closely align the interest of employees with shareholders by matching rewards with the long-term performance of the Company, and accordingly drive the Company’s improved performance;

• aligntheincentivesprovidedtoparticipatingemployees with current market practice and recent legislative changes; and

• providetheCompanywithflexibilitytoaccommodate changes in the Company’s circumstances and shifts in regulatory and market practice from time to time.

A summary of the rules for the Plan (Administration Rules) is set out below. The Administration Rules set out the general terms under which equity grants will be made. The grant of securities to an employee is subject to both the Administration Rules and the terms of the specific grant as set out in an individual employee’s offer documents.

Reasons for seeking approval

Shareholder approval of the Plan is sought for all purposes under the Act and the ASX Listing Rules, including but not limited to:

• ASXListingRule7.2(exception9),sothatanyshares issued under the Plan will be excluded from the calculation of the maximum number of new

6

EXPLANATORY NOTES (continued)

shares that can be issued by the Company in any 12 month period (currently 15% of shares previously on issue) for a period of 3 years from the date of approval.

• Sections200Band200EoftheAct,toenabletheCompany to provide termination benefits arising under the Plan to any current or future participant in the Plan who holds:

- a managerial or executive office in the Group at the time of their leaving or at any time in the 3 years prior to their leaving; and

- securities under the Plan at the time of their leaving,

but only if those securities are granted, or if the Committee exercises certain discretions under the Administration Rules, during the period from the date that this resolution is passed through to close of the 2015 Annual General Meeting.

Summary of the Administration Rules

The key terms are as follows:

• Securities offered: The types of securities that the Committee may offer are options over fully paid ordinary shares (Options), rights to receive fully paid ordinary shares (Rights) and fully paid ordinary shares (Restricted Shares). This provides theCompanywithbroadflexibilitysothatitcaneffectively incentivise employees using the most appropriate instrument (which may vary depending on the seniority of the executive, the jurisdiction in which they are issued, or prevailing market and regulatory conditions). Options, Rights and Restricted Shares are collectively referred to as Incentive Securities under the Administration Rules.

• Eligible to participate: The Committee has the discretion to determine which employees are eligible to participate in the Plan. The definition of employees under the Administration Rules captures any employee of the Company and its wholly-owned subsidiaries, including the Company’s Executive Directors.

• Flexibility to source Shares: Upon vesting of Incentive Securities, participants will become entitled to fully paid ordinary shares in the Company (Shares). The Committee can decide whether to purchase Shares on-market or issue new Shares for the purposes of the Plan.

• Performance conditions: The vesting and/or exercise of Incentive Securities will be conditional on the satisfaction of performance and/or service conditions (depending on the nature of the award) as determined by the Committee and advised to the participant at the time of the grant. This allows the Company to tailor the conditions according to the nature of the award and the relevant participant(s) andtoreflectmarketpracticeasitevolves.

• Price: Unless the Committee determines otherwise, no payment is required by the participant for the grant of an Incentive Security, as the grant will constitute part of the participant’s remuneration.

• Lapse / forfeiture: Unvested or restricted Incentive Securities will lapse or be forfeited (as the case may be) on the earlier of:

- any expiry date applicable to that Incentive Security;

- the participant dealing in respect of an Incentive Security in contravention of the Administration Rules;

- the Committee determining that the participant has acted fraudulently or dishonestly or acted in a way that brings the Group or any company within the Group into disrepute or breached his or her employment obligations;

- at the Committee’s discretion, on cessation of employment in certain circumstances, or in exceptional circumstances including a change of control of the Company; or

- failure to meet a performance condition applicable to the Incentive Security within the prescribed period.

Under the Administration Rules, the Committee also has a discretion to specify additional circumstances in which participant’s entitlement to Incentive Securities may be reduced or extinguished in order to prevent the participant from obtaining an inappropriate benefit.

• Cessation of employment: Unless the Committee determines otherwise, where a participant ceases employment before their Incentive Securities have vested or become exercisable due to:

- resignation or termination for cause – all Incentive Securities held by the participant will lapse or be forfeited (as the case may be); or

7

8


- for any other reason – all Incentive Securities held by the participant will remain on foot, subject to the original performance conditions and will be tested in the ordinary course.

The Committee has discretion under the Administration Rules to determine an alternative treatment for a particular grant and/or participant. This discretion may be exercised by the Committee in appropriate circumstances to accelerate vesting of some or all of a participant’s Incentive Securities so that they vest on termination.

Further details regarding the proposed cessation of employment treatment for short-term and long-term incentive awards are set out in the Explanatory Notes for items 6.1 and 6.2.

The value of any acceleration of vesting cannot be determined in advance and will depend on a range of factors including:

- the Company’s share price at the time of vesting;

- the participant’s length of service and the portion of any relevant performance periods that have expired at the time they cease employment;

- the circumstances in which the participant ceases employment; and

- the number of unvested Incentive Securities that the participant holds at the time they cease employment.

• Exceptional circumstances: The Committee has the discretion to determine that some or all of a participant’s Incentive Securities will vest or cease to be subject to restrictions (as applicable) in exceptional circumstances. The types of exceptional circumstances that could result in the Committee exercising its discretion include:

- an actual or probable change in the control of the Company;

- a participant’s earning capacity being diminished due to injury, incapacitation or other health issues; and

- severe financial hardship affecting the participant or the participant’s family.

• Corporate action / capital reorganisation: In the event of any corporate action or capital reconstruction by the Company (including bonus issues and rights issues), the Committee may

adjust the terms of Rights or Options granted to a participant so as to ensure no material advantage or disadvantage to the participant.

• No dealing / hedging: Any dealing in respect of an Incentive Security is prohibited, unless the Committee determines otherwise or the dealing is required by law. The term “dealing” includes a sale, transfer, assignment, encumbrance, option, swap, any alienation of all or any part of the rights attaching to the Incentive Security or to the underlying share, or an attempt to do so, and any hedging.

Recommendation

The Board (with the Executive Directors abstaining) considers the Plan to be an effective way of incentivising participating employees and more closely aligning their interests with those of shareholders and recommends that shareholders vote in favour of Resolution 5.

ITEMS 6.1 and 6.2

APPROVAL OF INCENTIVE GRANTS TO EXECUTIVE DIRECTORS

Items 6.1 and 6.2 relate to the equity grants to the Executive Directors, Mr Hamish Tyrwhitt and Mr Peter Gregg. These grants are contemplated by the Executive Directors’ employment agreements and will be made under the Leighton Holdings Equity Incentive Plan, as described in item 5. If shareholder approval is obtained, it is intended that these grants will be made in the form of rights to receive fully paid ordinary shares in the Company (rights) on the terms set out below. The purpose of the grants is to more closely align the Executive Directors’ interests with the interest of shareholders, and to encourage the achievement of performance goals and the growth of the Company’s business.

Where the applicable vesting conditions attaching to the rights are satisfied, Mr Tyrwhitt and Mr Gregg will be allocated fully paid ordinary shares in the Company without further action required on their part. Leighton’s current intention is that any shares allocated to the Executive Directors upon vesting of the rights will be acquired on-market, however, it wishes to preserve maximumflexibilityastothesourcingofshares.

As the rights form part of the Executive Directors’ remuneration packages, they will be granted at no cost to the Executive Directors. Further details of the Executive Directors’ remuneration packages are set out in the Remuneration Report contained in the Company’s December 2011 Concise Annual Report.

Reasons for seeking approval

The Company is seeking the approval for the proposed grants of rights to the Executive Directors pursuant to ASX Listing Rule 10.14, which requires the Company to obtain shareholder approval for the issue of new securities to a director under an employee incentive scheme.

Item 6.1 - Equity incentive grant to Mr Hamish Tyrwhitt

In accordance with his employment agreement, item 6.1 seeks approval for the Company to grant Mr Tyrwhitt:

• 104,499rightsashisLTIentitlementforthe2012calendar year (LTI Rights); and

• rightsashisdeferredSTIentitlementforthe2012calendar year (STI Rights) with a maximum value of $1.8 million.

The number of LTI Rights to be granted to Mr Tyrwhitt was calculated by dividing $2.4 million (the maximum value of Mr Tyrwhitt’s LTI opportunity for the 2012 calendar year under his employment agreement) by the volume weighted average price (VWAP) of ordinary shares in the Company over the five trading days following the announcement of the financial results for the December 2011 Transitional Financial Year (excluding the date of the announcement), being $22.9667.

The maximum value of the STI Rights granted as Mr Tyrwhitt’s deferred STI component for the 2012 calendar year is $1.8 million. This value is conditional upon the achievement of exceptional performance levels. Mr Tyrwhitt’s maximum STI is 150% of total fixed remuneration, and 50% of any STI award will be deferred into STI Rights. The maximum deferred STI component therefore equates to 75% of Mr Tyrwhitt’s total fixed remuneration. Further details of Mr Tyrwhitt’s remuneration package (including the value of his STI opportunity at target and threshold performance levels) are set out in the Remuneration Report contained in the Company’s December 2011 Concise Annual Report.

The terms on which Mr Tyrwhitt’s LTI Rights and STI Rights will be granted are summarised below.

Item 6.2 - Equity incentive grant to Mr Peter Gregg

In accordance with his employment agreement, item 6.2 seeks approval for the Company to grant Mr Gregg:

• 76,197LTIRights;and

• STIRightswithamaximumvalueof$1,312,500.

The number of LTI Rights to be granted to Mr Gregg was calculated by dividing 100% of Mr Gregg’s current total fixed remuneration ($1,750,000), by the VWAP of ordinary shares in the Company over the five trading days following the announcement of the financial results for the December 2011 Transitional Financial Year (excluding the date of the announcement), being $22.9667.

The maximum value of the STI Rights granted as Mr Gregg’s deferred STI component for the 2012 calendar year is $1,312,500. This value is conditional upon the achievement of exceptional performance levels. Mr Gregg’s maximum STI is 150% of total fixed remuneration and 50% of any STI award made to Mr Gregg will be deferred into STI Rights. The maximum deferred STI component therefore equates to 75% of Mr Gregg’s total fixed remuneration.

The terms on which Mr Gregg’s LTI Rights and STI Rights will be granted are summarised below.

LTI opportunities for the Executive Directors

Timing of grant If approved, the LTI Rights will be granted shortly following this Annual General Meeting (and, in any event, prior to 22 May 2013). If not approved, the remuneration intended to be provided by way of rights will instead be delivered in cash. The cash award will be equal to the aggregate face value of rights that would otherwise have been granted and be subject to equivalent terms.

Performance period The performance period for the grants will be from 1 January 2012 to 31 December 2014.

9

10


Performance Hurdles

The grants of LTI Rights will be divided into two equal parcels (Parcel A and Parcel B). Parcel A is to be tested against a total shareholder return (TSR) hurdle and Parcel B is to be tested against an earnings per share (EPS) hurdle. Performance against these hurdles is tested at the end of the performance period.

An explanation of how the TSR and EPS hurdles apply and when performance will be tested against those hurdles is set out below.

Parcel A - TSR hurdle

TSR measures the growth in the Company’s share price together with the value of dividends during the period, assuming that all those dividends are re-invested into new shares.

The comparator group comprises those entities within the S&P/ASX 100 Index as at 1 January 2012. The comparator group may be adjusted to take into account events including but not limited to takeovers, mergers, de-mergers or de-listings.

The share prices used to calculate the TSR of a company for the performance period will be measured as follows:

• theopeningsharepricewillbetheVWAPofthatcompany for the 20 trading days preceding (but not including) the first day of the performance period; and

• theclosingsharepricewillbetheVWAPofthatcompany for the 20 trading days ending on the last day of the performance period.

The percentage of Parcel A rights that vest (if any) at the end of the performance period will be determined by reference to the percentile ranking achieved by the Company over the performance period compared to the entities in the comparator group as follows:

TSR Percentile Ranking % of Parcel A that will vest

Below 51st percentile Nil

Equal to the 51st percentile 50%

Between the 51st and 75th percentile

Progressive pro-rata vesting from 50% to 100% (straight-line basis)

75th percentile or above 100%

All Parcel A rights that do not vest following testing of the TSR hurdle will lapse immediately.

Parcel B - EPS Hurdle

EPS measures the percentage earnings generated by the Company attributable to each share on issue. EPS will be calculated based on Net Profit After Tax (NPAT) for the relevant financial year, divided by the weighted average number of shares on issue during the year.

The growth in the Company’s EPS over the performance period will be measured in relation to a notional earnings base of $600 million NPAT (being $1.7830 NPAT per share as at 24 August 2011, based on there being 336,515,596 shares on issue).

The percentage of Parcel B rights that vest (if any) at the end of the performance period will be determined based on the performance achieved against the following hurdle, subject to any adjustments for abnormal or unusual profit items:

Compound annual growth in EPS over the performance period

% of Parcel B that will vest

Below 8% Nil

Equal to 8% 50%

Between 8% and 13% Progressive pro-rata vesting between 50% and 100% (straight-line basis)

13% or above 100%

All Parcel B rights that do not vest following testing of the EPS hurdle will lapse immediately.

11

Treatment of rights on cessation of employment

Subject to the Committee’s discretion to determine otherwise:

• wheretheExecutiveDirectorresignsortheiremployment is terminated by the Company for cause, all unvested LTI Rights will immediately lapse; or

• wheretheExecutiveDirector’semploymentisterminated for any other reason, a pro-rata portion of the unvested LTI Rights (based on how much of the performance period has elapsed) will remain on foot, subject to the original performance conditions and will be tested in the ordinary course. A cash payment will be made in respect of any LTI Rights that vest based on the performance achieved.

STI opportunities for the Executive Directors

Mr Tyrwhitt and Mr Gregg’s STI for 2012 will be determined by reference to the following categories of objectives:

• financialkeyperformanceindicators,whichwillgenerally relate to the financial performance of the Group as a whole; and

• personalobjectives,beinganumberofspecifickey performance indicators relating to matters which are generally within the Executive Directors’ influence.

Following the end of the financial year, performance against the objectives will be tested and an STI will be awarded to the extent that the objectives are satisfied.

Of the STI amount awarded:

• 50%willbedeliveredincash;and

• 50%willbedeferredintoSTIRightsfortwoyearsfrom 1 January 2013.

The number of STI Rights granted will be determined by dividing the relevant dollar amount (ie 50% of the STI award value) by the VWAP of ordinary shares of the Company traded on the ASX over the five trading days following the announcement of the final full-year financial results (excluding the date of announcement).

Timing of grant

If: • shareholderapprovalisobtained;and

• MrTyrwhittandMrGreggsatisfytheminimum

performance levers required to qualify for an STI award,

the STI Rights will be granted in early 2013 and, in any event, prior to 22 May 2013. If not approved, the remuneration intended to be provided by way of rights will instead be delivered in cash on terms equivalent to those set out below.

Treatment of rights on cessation of employment

Subject to the Committee’s discretion to determine otherwise:

• wheretheExecutiveDirectorresignsortheiremployment is terminated by the Company for cause, all unvested STI Rights will immediately lapse; or

• wheretheExecutiveDirector’semploymentisterminated for any other reason (including by way of a genuine retirement), it is intended that any unvested STI Rights will remain on foot until the end of the vesting period and a cash payment will be made in respect of any STI Rights that vest in accordance with the award terms.

Preventing inappropriate benefits

The Committee has a broad discretion to reduce or extinguish the Executive Directors’ entitlement to STI Rights in order to prevent the Executive Director from obtaining an inappropriate benefit. Circumstances in which the Committee could exercise this discretion include an adverse change in the Executive Director’s performance or the Group’s financial position, material misrepresentations or accounting errors, major negligence or reputational damage to the Group.

Shareholder approval

If shareholders do not approve the grant of STI Rights to Mr Tyrwhitt and/or Mr Gregg, the Company will defer payment of 50% of the relevant STI so that it is paid as a cash payment (instead of as an award of STI Rights) on terms consistent with those applicable to STI Rights.

Terms applying to all rights for the Executive Directors

Rights attaching to the rights

The rights do not carry any voting rights or entitlements to receive dividend payments during the vesting period. However, for any STI Rights that vest, the Executive Directors are entitled to receive a cash amount in lieu of any dividends that they would have received if they had enjoyed full rights of ownership in

respect of the underlying shares from the grant date to the vesting date. No dividend equivalent payment will be made for LTI Rights that vest.

In the event the Company makes a bonus issue or pro-rata rights issue to shareholders or undertakes a capital reorganisation, the Committee may make any adjustments it considers appropriate to the terms of the rights in order to minimise or eliminate any material advantage or disadvantage that arises as a result of such action.

Exceptional circumstances

In exceptional circumstances, the Committee may determine that some or all of an Executive Director’s unvested rights will vest before the end of the relevant performance period. The balance (if any) will remain on foot, subject to the existing performance conditions. The types of exceptional circumstances in which the Committee may exercise its discretion to accelerate vesting of the rights include:

• aprobableoractualchangeinthecontrolof the Company;

• theExecutiveDirectors’earningcapacitybeingdiminished due to injury, incapacitation or other health issue; and

• severefinancialhardshipaffectingtheExecutiveDirectors or their families.

No dealing of rights

Any dealing in respect of a right is prohibited unless the Committee determines otherwise or the dealing is required by law. ‘Dealing’ is defined broadly to include sales, transfers, assignments, options, swaps and hedges relating to a security.

Other information relating to the incentive grants to the Executive Directors

• MrTyrwhittandMrGreggaretheonlyDirectorsofthe Company entitled to participate in the Plan.

• ThereisnoloanschemeinrelationtothePlan.

• TherightswillbegrantedatnocosttoMrTyrwhitt and Mr Gregg, as they form part of their remuneration package.

• Nosecuritieshaveasyetbeenreceivedbyparticipants under the Plan. Mr Gregg was granted 38,466 rights as his 2011 LTI award under and in accordance with his employment agreement upon shareholder approval being obtained at the 2011 Annual General Meeting. Further details regarding the rights previously awarded to Mr Gregg are provided in the Remuneration Report contained in the Company’s December 2011 Concise Annual Report.

Recommendation

The Board (with Mr Tyrwhitt and Mr Gregg abstaining) considers the grant of rights to the Executive Directors to be appropriate in all the circumstances and recommends that shareholders vote in favour of Resolution 6.1 and Resolution 6.2.

12



NOTICE OF ANNUAL GENERAL MEETING 2012

000001 000 LEI

MR SAM SAMPLEFLAT 123123 SAMPLE STREETTHE SAMPLE HILLSAMPLE ESTATESAMPLEVILLE VIC 3030

Lodge your vote:

Online:www.investorvote.com.au

By Mail:Computershare Investor Services Pty LimitedGPO Box 242 MelbourneVictoria 3001 Australia

Alternatively you can fax your form to(within Australia) 1800 783 447(outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only(custodians) www.intermediaryonline.com

For all enquiries call:(within Australia) 1300 850 505(outside Australia) +61 3 9415 4000

Proxy Form

For your vote to be effective it must be received by 10.00am (AEST) Sunday 20 May 2012

How to Vote on Items of BusinessAll your securities will be voted in accordance with your directions.

Appointment of Proxy Voting 100% of your holding: Direct your proxy how to vote by markingone of the boxes opposite each item of business. If you do not mark a boxyour proxy may vote as they choose (except in relation to items 2, 5 and 6where you have appointed a member of the key management personnel ofthe company or one of their closely related parties as your proxy, in whichcase there are additional restrictions explained below). If you mark more thanone box on an item your vote will be invalid on that item.Voting a portion of your holding: Indicate a portion of your voting rights byinserting the percentage or number of securities you wish to vote in the For,Against or Abstain box or boxes. The sum of the votes cast must not exceedyour voting entitlement or 100%.Appointing a second proxy: You are entitled to appoint up to two proxies toattend the meeting and vote on a poll. If you appoint two proxies you mustspecify the percentage of votes or number of securities for each proxy,otherwise each proxy may exercise half of the votes. When appointing asecond proxy write both names and the percentage of votes or number ofsecurities for each in Step 1 overleaf.A proxy need not be a securityholder of the Company.Default to the Chairman of the Meeting: Any directed proxies that are notvoted on a poll at the meeting will automatically default to the Chairman of theMeeting, who is required to vote proxies as directed.Proxy voting by key management personnel: The key managementpersonnel of Leighton Holdings Limited (which includes each of the directors)and their closely related parties will not be able to vote your proxy on items 2,5 and 6 unless you tell them how to vote. If you intend to appoint a member ofthe key management personnel or one of their closely related parties as yourproxy, please ensure that you direct them how to vote on items 2, 5 and 6. Ifyou intend to appoint the Chairman of the Meeting as your proxy, you candirect him how to vote by marking the boxes for items 2, 5 and 6. However, ifthe Chairman of the Meeting is your proxy and you do not mark any of theboxes opposite items 2, 5 and 6, you will be deemed to have directed theChairman to vote in favour of those items.

Signing Instructions for Postal FormsIndividual: Where the holding is in one name, the securityholder mustsign.Joint Holding: Where the holding is in more than one name, all of thesecurityholders should sign.Power of Attorney: To sign under Power of Attorney you must lodgethe Power of Attorney with the registrar by 10.00am (AEDT) Sunday 20May 2012. If you have not already lodged the Power of Attorney withthe registrar, please attach a certified photocopy of the Power ofAttorney to this form when you return it.Companies: Where the company has a Sole Director who is also theSole Company Secretary, this form must be signed by that person. Ifthe company (pursuant to section 204A of the Corporations Act 2001(Cth)) does not have a Company Secretary, a Sole Director can alsosign alone. Otherwise this form must be signed by a Director jointly witheither another Director or a Company Secretary. Please sign in theappropriate place to indicate the office held.

Attending the MeetingBring this form to assist registration. If a representative of a corporatesecurityholder or proxy is to attend the meeting you will need toprovide the appropriate “Certificate of Appointment of CorporateRepresentative” prior to admission. A form of the certificate may beobtained from Computershare or online at www.investorcentre.comunder the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions forthe company, please write them on a separate sheet of paper andreturn with this form.

GO ONLINE TO VOTE, or turn over to complete the form

Control Number: 999999

SRN/HIN: I9999999999 PIN: 99999

Leighton Holdings LimitedA.B.N 57 004 482 982

www.investorvote.com.auVote online or view the annual report, 24 hours a day, 7 days a week:

Cast your proxy vote

Access the annual report

Review and update your securityholding

Your secure access information is:

PLEASE NOTE: For security reasons it is important that you keep yourSRN/HIN confidential.

916CR_0_Sample_Proxy/000001/000001

*L000001*

Change of address. If incorrect,mark this box and make thecorrection in the space to the left.Securityholders sponsored by abroker (reference numbercommences with ’X’) should adviseyour broker of any changes.

Proxy Form Please mark to indicate your directions

Appoint a Proxy to Vote on Your BehalfI/We being a member/s of Leighton Holdings Limited hereby appoint

STEP 1

the ChairmanOR

PLEASE NOTE: Leave this box blank ifyou have selected the Chairman of theMeeting. Do not insert your own name(s).

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxyto act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, asthe proxy sees fit) at the Annual General Meeting of Leighton Holdings Limited to be held in The Ballroom, Four Seasons Hotel Sydney, 199George Street, Sydney New South Wales, on Tuesday 22 May 2012 at 10.00am and at any adjournment of that meeting.

STEP 2 Items of Business PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on yourbehalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

SIGN Signature of Securityholder(s) This section must be completed.

Individual or Securityholder 1 Securityholder 2 Securityholder 3

Sole Director and Sole Company Secretary Director Director/Company Secretary

ContactName

ContactDaytimeTelephone Date

The Chairman of the Meeting intends to vote all available proxies in favour of each item of business except on Item 3.4

of the Meeting

*I9999999999*I 9999999999 I ND

L E I 1 3 7 8 8 1 A

MR SAM SAMPLEFLAT 123123 SAMPLE STREETTHE SAMPLE HILLSAMPLE ESTATESAMPLEVILLE VIC 3030

/ /

XX

To adopt the Remuneration Report for the December 2011 Transitional Financial Year

To elect Ms Paula Dwyer as a Director

To re-elect Mr Wayne Osborn as a Director

To elect Mr Peter Sassenfeld as a Director

2

3.1

3.2

3.3

Direction to Chairman for items 2, 5 and 6: Where I/we have appointed the Chairman of the meeting as my/our proxy (or the Chairman of themeeting becomes my/our proxy by default) in relation to items 2, 5 and 6 but I/we have not marked any of the boxes opposite those items underStep 2 below, I/we nevertheless hereby direct the Chairman of the meeting to vote in favour of the resolutions on those items, even thoughitems 2, 5 and 6 are connected directly or indirectly with the remuneration of members of key management personnel.

To elect Dr Michael Llewellyn-Smith as a Director

Appointment of Deloitte Touche Tohmatsu as auditor of the Company

3.4

4

Approval of incentive grants to Mr Hamish Tyrwhitt6.1

Approval of the Leighton Holdings Equity Incentive Plan5

Approval of incentive grants to Mr Peter Gregg6.2

2

LEIGHTON HOLDINGS LIMITEDABN 57 004 482 982

CONCISE ANNUAL REPORTfOR THE DECEMBER 2011 TRANSITIONAL fINANCIAL YEAR

2011DECEMBER

LEIGHTON CONCISE ANNUAL REPORT fOR THE DECEMBER 2011 TRANSITIONAL fINANCIAL YEAR

Leighton is a strong company with an exciting future. Our businesses are in growth markets in many of the fastest developing regions in the world. We are the 11th largest global contractor* and the world’s largest contract miner. Our solid track record over more than 60 years has been built on a foundation of core values of discipline, integrity, safety and success, and a policy of empowerment of our people. In 2011, we faced serious challenges. The Leighton Group has since rebounded strongly, demonstrating that we are back on track to deliver attractive returns to our shareholders. We are well positioned to meet the challenges and volatility of the global environment.

* Engineering News Record 29 August 2011

NOTICE OF ANNUAL GENERAL MEETING 2012LEIGHTON HOLDINGS LIMITED ABN 57 004 482 982To: The ShareholdersNotice is hereby given that the 51st Annual General Meeting of the members of Leighton Holdings Limited will be held in the: Grand Ballroom, The Four Seasons Hotel 199 George Street, Sydney, New South Wales on Tuesday 22 May 2012 at 10.00 am.

A separate Notice of Meeting and Proxy Form are enclosed. During the course of the meeting, a short presentation on the Group’s operations will be given by Mr Hamish Tyrwhitt, Chief Executive Officer. All present are invited to join the Directors for light refreshments after the meeting.

This document is available in PDF format online at Leighton Holdings’ website www.leighton.com.au

Shareholder Updates can also be downloaded from the company’s website. Printed copies of corporate brochures can also be obtained on request: Phone +612 9925 6636Email [email protected]

Geo

rge

St

Bridge StGrosvenor St

Jamison St

Dalley St

Bent St

Har

ringt

on S

t

Glo

uces

ter S

t

Cum

berla

nd S

tB

radfi

eld

Hw

y Argyle St

Cahill Expressway

Alfred St

Reiby Pl

Loftu

s St

Pitt

St

Youn

g St

The Four Seasons Hotel

The Rocks

Sydney CBD

Circular Quay


2

NOTICE OfMEETING

3

CONTENTS

1 Overview 2 Notice of Meeting 4 A leading international contractor 6 Highlights 8 Chairman’s review 12 Vision & values – refreshed & energised 16 Chief Executive’s review 28 How we operate 30 Operational analysis & investments

32 Board & Senior Management 34 Directors’ resumes 41 Group Executives

42 Corporate Governance Report 44 Governance at Leighton 44 Principle 1: Lay solid foundation for management and oversight 47 Principle 2: Structure the Board to add value 51 Principle 3: Promote ethical and responsible decision-making 53 Principle 4: Safeguard integrity in financial reporting 54 Principle 5: Make timely and balanced disclosure 54 Principle 6: Respect the rights of shareholders 55 Principle 7: Recognise and manage risk 57 Principle 8: Remunerate fairly and responsibly

58 Directors’ Report 75 Remuneration Report

113 Concise Financial Report 114 Consolidated Income Statement 115 Consolidated Statement of Comprehensive Income 116 Consolidated Balance Sheet 117 Consolidated Statement of Changes in Equity 118 Consolidated Statement of Cash Flows 119 Notes to the Concise Financial Report

128 Statutory Statements and Shareholder Information 130 Directors’ Declaration and Auditor’s Report 132 Shareholdings 133 Shareholder information

134 5 Year statistical summary

136 Directory and offices

China

Indonesia

India

Sri Lanka

Hong Kong

Macau Taiwan

Thailand

Philippines

Cambodia

Laos

Malaysia Brunei

Mongolia

Vietnam

Singapore

Botswana

Saudi Arabia

Iraq

BahrainKuwait

Oman

United ArabEmiratesQatar

Papua New Guinea

NewZealand

Australia

A LEADING INTERNATIONAL CONTRACTOR

WHO WE ARELeighton was founded in 1949, listed on the Australian Securities Exchange in 1962 and is based in Sydney, Australia. The Group comprises nine brands, our Operating Companies: Thiess, Leighton Contractors, John Holland, Leighton Properties, Leighton Asia, Leighton Offshore, Leighton Welspun, Habtoor Leighton Group and Leighton Africa. Some of these Operating Companies have been in existence since the 1930s. Our people are our business. We employ more than 53,000 people whose activities are underpinned by our values of discipline, integrity, safety and success. To attract, retain and motivate the best people they must be empowered. People perform their best when they are provided with realistic goals and a clear framework in which to operate. When empowered and accountable, people step up, accepting responsibilities and delivering results. This is the Leighton way. This empowerment occurs within a corporate governance framework defined by Leighton Holdings, which sets standards for ethical and financial performance, health, safety and rehabilitation, and diversity, community and environmental matters.

WHAT WE DOAs a strategic management company, Leighton Holdings provides a robust corporate governance structure, strategic leadership and the financial strength to enable our Operating Companies to compete effectively in the global market place. This role includes:

• setting the vision, values and strategic direction;• setting Group policies and operating guidelines; • maintaining the highest standards of discipline, integrity,

safety and success; • ensuring strict adherence to our Code of Ethics; • reviewing risk management and performance; and • approving acquisitions, investments and development

initiatives. The leadership of an experienced management team and a strong balance sheet support the growth of our Operating Companies. The Operating Companies offer a broad range of contracting and project development services and skills to public and private sector clients across a wide range of industries and geographic locations. These skills include construction, contract mining, operations and maintenance and development services to the infrastructure, resources and property markets. Leighton Holdings is focused on sustainability and the pursuit of excellence in creating solutions for our clients, safe, rewarding and fulfilling careers for our people, and superior and sustainable returns for our shareholders.

The Leighton Group is one of the world’s leading international contractors. We operate in more than 25 countries in Asia, the Middle East, Southern Africa and throughout Australia. We aim to be renowned for excellence through our operating brands and the empowerment of our people.


4

China

Indonesia

India

Sri Lanka

Hong Kong

Macau Taiwan

Thailand

Philippines

Cambodia

Laos

Malaysia Brunei

Mongolia

Vietnam

Singapore

Botswana

Saudi Arabia

Iraq

BahrainKuwait

Oman

United ArabEmiratesQatar

Papua New Guinea

NewZealand

Australia

Leighton Group Operations

WHERE WE AREThe Leighton Group’s Operating Companies conduct business in more than 25 countries. While the listed entity is based in Australia, our Operating Companies have been operating internationally for many years. A strategic move into Asia culminated in the formation of Leighton Asia in 1975. Through the 1980s, 1990s and 2000s, Leighton Asia continued to diversify throughout East and South-East Asia. In 2004, we opened offices in India and the Middle East. The Group took a major step in 2007 with the acquisition of a 45% stake in the UAE and Qatar-based Al Habtoor Engineering, one of the largest contractors in the Middle East. This was renamed the Habtoor Leighton Group in 2007 and has since expanded to Saudi Arabia, Oman, Kuwait and Bahrain. In 2007, Leighton Asia opened its first office in Mongolia, and by 2011 the Group had ventured into Southern Africa. Leighton’s strategy has positioned the Group in prime locations – Australia, Asia, the Middle East and Southern Africa – through operating brands that are highly regarded. Today, the Leighton Group has the broadest footprint of any international contractor in the regions that are poised to provide the greatest share of the world’s economic growth over the next 20 years.

5

6


HIGHLIGHTS

Total revenue#

6 months to 31 Dec 2011

$12.2 billion

Work in hand#

as at 31 Dec 2011

$44.6 billion

Profit / (loss) before tax6 months to 31 Dec 2011

$475.4 million

Profit / (loss) after tax6 months to 31 Dec 2011

$340.0 million

6 months to 6 months to 12 months to 31 Dec 2011 31 Dec 2010 30 Jun 2011PROFIT & LOSS ITEMS $million $million Change $millionRevenue – Group 10,169.2 7,370.6 +38% 15,561.3 – Joint ventures and associates 2,007.7 2,338.5 -14% 3,815.4Total revenue# 12,176.9 9,709.1 +25% 19,376.7

EBITDA (post sales and impairments) 1,111.6 865.1 +28% 534.9Depreciation of property, plant and equipment (512.7) (448.4) +14% (865.6)Amortisation of intangibles (33.0) – n/a (0.6)EBIT 565.9 416.7 +36% (331.3)Finance costs (90.5) (92.2) -2% (159.6)Profit/(loss) before tax 475.4 324.5 +47% (490.9)Income tax (expense)/benefit (130.5) (106.2) +23% 85.2Profit/(loss) after tax 344.9 218.3 +58% (405.7)Profit/(loss) attributable to minority interests (4.9) (1.5) +226% 3.1Profit/(loss) attributable to members 340.0 216.8 +57% (408.8)

EPS AND DPSEarnings per ordinary share 101.0¢ 72.0¢ +40% (133.1¢)Dividends per ordinary share 60.0¢ 60.0¢ nil 60.0¢

NEW CONTRACTS & WORk IN HAND (BACkLOG)New contracts, extensions & variations 10,054.0 16,053.8 -37% 26,065.0Value of work in hand at end of period# 44,559.7 45,641.5 -2% 46,225.8

As at 31 Dec 2011 As at 30 Jun 2011 BALANCE SHEET ITEMS $million $million ChangeTotal capital and reserves 2,766.9 2,319.9 +19%Total assets 9,900.4 9,800.2 +1%Cash and cash equivalents 1,503.2 1,414.7 +6%Interest bearing liabilities 2,143.7 1,826.5 +17%Undrawn loan and guarantee facilities (excl. Devine) 1,163.9 1,191.7 -2%Gearing (including operating leases)^ 32% 35% n/a# Includes the Group’s share of joint ventures and associates. ^ Gearing expressed as: net debt including operating leases to net debt including operating leases plus total equity.

475.

4

340.

0

12.2

44.6

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

7

6 months to 6 months to 12 months to SAFETy* 31 Dec 2011 31 Dec 2010 Change 30 Jun 2011Fatalities (Australia) 2 1 +100% 1Fatalities (international) 1 1 nil 3TRIFR (Australia)1 14.4 16.1 -11% 15.6TRIFR (international)1 3.2 3.5 -9% 3LTIFR (Australia)2 1.6 1.8 -11% 1.8LTIFR (international)2 0.4 0.8 -50% 0.6Potential class 1 (Australia)3 200 229 -13% 454Potential class 1 (international)3 49 63 -22% 100Actual class 1 (Australia) 2 1 +100% 2Actual class 1 (international) 3 5 -40% 7

ENvIRONMENT# Actual environmental level 1 (Australia)4 0 2 -100% 2Actual environmental level 1 (international)4 0 0 nil 0EIFR (Australia)5 0.28 0.22 +27% 0.43EIFR (international)5 0.02 0.08 -75% 0.05

COMMUNITy Corporate Community Investment $2.64m No data n/a $7.89m

WORkFORCE* As at 31 Dec 2011 As at 31 Dec 2010 Change As at 30 Jun 2011Number of direct employees (total) 53,113 49,802 +7% 51,281Female participation (Australia) 16.7% 15.0% +11% 16.1%Female participation (international) 7.0% 7.8% -10% 8.0%Indigenous participation (Australia) 1.3% 1.5% -13% 1.5%Local participation (international)6 56.6% No data n/a No data* Excludes Leighton Middle East & Africa (comprising Habtoor Leighton Group, Leighton Africa and Thiess Services).# Excludes Habtoor Leighton Group. 1 Total recordable injury frequency rate (per million hours worked).2 Lost time injury frequency rate (per million hours worked).3 Class 1 risks are those which could cause a fatality or permanent disabling injury.4 Level 1 environmental incidents are those with highly detrimental impacts on the environment, community and/or company including irreversible and long-term environmental, cultural,

heritage or reputational damage, breaches of statutory or approval conditions with serious legal or contractual consequences, or those with total cleanup costs in excess of $100,000.5 Environmental incident frequency rate (Level 1 and 2) per million hours worked.6 Local participation refers to percentage of locally employed staff in our international operations. Local participation rate not measured prior to 1 July 2011.

Corporate Community Investment


$2.64 million

2.64

07/0

8

08/0

9

09/1

0

10/1

1

Dec

11

Number of fatalities 6 months to 31 Dec 2011

3

3

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

Number of direct employeesas at 31 Dec 2011

53,113

53,1

13

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

Total level 1 environmental incidents


nil

nil

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

In my report to you last year, I said that we had tackled the serious challenges we faced head on, and that the business was now well positioned for the next phase of strong growth and development. In this report, you will see that we have delivered on that promise. The Leighton Group has demonstrated its underlying strength by generating strong performances across our core construction and mining operations in Australia and Asia. We have reported a solid operating profit supplemented by a capital gain from the sale of the HWE Mining iron ore business.

Stephen Johns Chairman

CHAIRMAN’S REvIEw


8

9

The Leighton Group has rebounded strongly to record a net profit after tax of $340 million for the 6 month period to 31 December 2011. This result includes a capital gain from the sale of the HWE Mining iron ore business, and impairments to the carrying values of BrisConnections – the listed toll road owner in Brisbane – and the Habtoor Leighton Group.

This result demonstrates the underlying strength of the business, the capability and commitment of our people and the effectiveness of our strategies.

During this 6 month period we have:• renewed our vision and values to ensure they are aligned with

our shareholders, clients and employees as we look to the next exciting phase of our development;

• made significant improvements to the Group’s approach to risk management; and

• revised the Group’s remuneration and incentive arrangements following engagement with many of our stakeholders.

DIvIDENDS AND RETURNS TO SHAREHOLDERSInvestment returns for shareholders are a combination of share price performance and dividends. I am pleased to report that following our return to profitability we have restored the payment of dividends to shareholders.

Your directors announced an unfranked final dividend of 60 cents per share for the period. This represents a payout ratio of almost 60% of the Group’s reported net profit after tax. While the dividend rate is the same as that paid to shareholders for the 6 months ended 31 December 2010, the total payout is greater as a consequence of the Group’s larger capital base following the capital raising in April 2011.

THE OPERATING ENvIRONMENTWhile growth in the developed economies of Europe and the United States is likely to be less than 2% this year, in Asia (where the Leighton Group has substantial operations) growth is expected to exceed 7%. This growth continues to be fuelled by urbanisation and industrialisation, creating demand for energy, infrastructure, commercial and domestic buildings, and commodities.

Australia, our home market, remains one of the best performing economies in the developed world, with growing global demand for energy, iron ore and other commodities significantly increasing investment in resource projects and accompanying infrastructure.

We are well positioned to meet the challenges and volatility of the global environment.

FINANCIAL STRENGTHDespite the ongoing uncertainty in the global financial markets, at year end the Group had a solid capital base with $2.8 billion of shareholders’ equity and $9.9 billion of total assets. At balance date we retained $1.5 billion in cash on hand and had undrawn bank facilities of $856 million.

Gross debt, including recourse and non-recourse loans, stood at $2.1 billion at 31 December 2011. The maturity profile of this debt has remained relatively long-term in nature. $670 million of loans and other facilities fall due within the next 12 months. Negotiations are well advanced for refinancing the majority of these facilities, with the remainder budgeted to be repaid at maturity.

Gearing, including operating leases, decreased from 35% at 30 June 2011 to 32% at 31 December 2011, below the Group’s targeted range of 35% to 45%. This additional debt capacity, together with the aforementioned cash on hand, highlights the financial strength of the Leighton Group.

During the period Standard & Poor’s downgraded our credit rating from ‘BBB/A-2’ to ‘BBB-/A-3’, and Moody’s lowered our corporate credit rating to ‘Baa2 stable’ outlook from ‘Baa1 negative’ outlook. It is important to note that these changes do not impact existing credit facilities and we strongly believe that these new ratings are not a true reflection of the Group’s credit quality.

In September 2011, Leighton successfully closed a US$600 million syndicated Master Lease Facility. The new 6-year facility streamlines our existing Indonesian leasing arrangements and provides the Group’s two operating subsidiaries in Indonesia with additional capacity to fund their expanding Indonesian mining activities. →

10

SAFETy AND SUSTAINABILITySafety is a core value that is demonstrated through the Group’s commitment to the elimination of fatalities and permanent disabling injuries, and the significant reduction of all other injuries across our operations. We are also committed to zero environmental incidents.

I am therefore deeply saddened to report that there were three fatalities in the 6 months to 31 December 2011. I would like to acknowledge those of our colleagues who lost their lives. On behalf of the Board, I extend our deepest sympathies to their families and friends.

We have stepped up our application of “hard” engineering controls to seek to ensure that there are no further fatalities and no serious injuries. Further details of the Group’s performance and approach to safety are set out in the Directors’ Report starting on page 58 of this Concise Annual Report.

This year we also focused on the following key sustainability areas:

• workplace diversity, with a specific emphasis on gender diversity among senior management;

• the environment; and • community investment.

In line with the ASX Corporate Governance Council’s Principles and Recommendations on diversity, the Board has committed to measurable diversity targets. Further information in relation to the Group’s commitment to workforce diversity is contained in the Corporate Governance Report starting on page 42 of this Concise Annual Report.

REMUNERATIONAs I foreshadowed at the Annual General Meeting in November 2011, the Board has conducted a comprehensive review of executive remuneration and incentives over recent months. The review has included consultation with shareholders, external stakeholders and independent advisers.

The revised remuneration and incentive scheme is underpinned by a number of principles which include:

• an increase in variable rather than fixed remuneration based on performance, including the forfeiture of unvested incentives in appropriate circumstances;

• an increased focus on long-term rather than short-term incentives;

• a greater proportion of total remuneration to be paid in shares rather than cash; and

• alignment of total remuneration with the market so that we can continue to attract and retain the highest quality executives.

WORk IN HANDWork in hand stands at close to record levels. This reflects continuing strong market conditions which are providing the Group with numerous tendering opportunities. We have adopted a highly considered approach when taking on new work. We are selectively pursuing volume that delivers superior profit through a highly disciplined and structured approach to tendering. Our primary focus is to ensure we bid on projects that are expected to deliver an appropriate risk-adjusted return to shareholders.

Work in hand at 31 December 2011 was $44.6 billion, with 64% from the Australia/Pacific region and 36% from international markets. Work in hand is 3% lower than the $46.2 billion recorded at 30 June 2011 and 2% lower than the $45.6 billion reported at 31 December 2010.

The Group’s margin in hand at the project level – which reflects the inherent profit in work in hand – remains at around 11%, supporting a very positive outlook.

During the period, we won around $6.2 billion worth of new contracts and $3.9 billion in extensions and variations.

The Group has an additional $12.4 billion worth of work in mining and services contracts extending beyond five years that is not reflected in the aforementioned work in hand.

We are currently tendering for around $30 billion worth of work. This demonstrates the strength of our operating environment.

SALE OF HWE MINING IRON ORE BUSINESSIn September 2011, the Group sold its HWE Mining iron ore entities and assets to BHP Billiton for $452 million, resulting in a pre tax gain of $229 million and an after tax gain of $167 million. The sale reflected BHP Billiton’s publicly stated intention to transition to an owner operator model, and the sale of the Pilbara-based iron ore assets represented a positive result for both parties. We have been able to recycle capital with the transaction generating net cash flow of approximately $400 million.

CHAIRMAN’S REvIEw CONTINUED


11

The details of the revised remuneration and incentive scheme, including certain transitional arrangements, are set out in the Remuneration Report starting on page 75 of this Concise Annual Report. Any necessary shareholder approvals for these plans will be sought at the next Annual General Meeting which will be held on 22 May 2012.

The Board believes that the revised remuneration and incentive scheme reflects a best practice approach. It achieves our objective of ensuring that we have in place a remuneration and incentive framework to drive performance and behaviours aligned to the long term interests of our shareholders, while providing appropriate rewards for our executives in a competitive environment.

THE BOARD AND SENIOR MANAGEMENTIn the last Concise Annual Report, I reported on important management and Board changes, including my appointment as Chairman and the appointment of our CEO, Hamish Tyrwhitt. The Board is encouraged by the strategic vision and leadership that Hamish is providing.

The Board has moved to fill two vacancies. Mr Peter Sassenfeld, recently appointed as CFO of HOCHTIEF AG, has joined the Board as a Non-executive Director. In addition, Ms Paula Dwyer has been appointed as a Non-executive Director and Chairman of the Audit Committee. Further details of each of their experience and backgrounds are set out on pages 35 and 37 of this Concise Annual Report.

The Board has recently established a Tender Review and Risk Committee comprised solely of Non-executive Directors. The Committee is responsible for monitoring and reviewing the integrity, adequacy and utility of the Group’s risk management systems, controls and metrics. The Committee has oversight of tenders for all key projects or those projects which are considered `high risk’. This is an important initiative for monitoring and reporting on the tendering and risk management practices throughout the Group’s operations.

CODE OF ETHICSThe Board is firmly of the view that the reputation and integrity of the Group will only be maintained if all of its officers and employees observe the highest standards of conduct, and these are set out in our Code of Ethics.

It is therefore extremely disappointing that, as set out in our announcement on 13 February 2012, we have reported to the Australian Federal Police a possible breach of our Code of Ethics in relation to payments that may have been made in connection with work to expand the offshore loading facilities for Iraq’s crude oil exports. We are fully cooperating with the Australian Federal Police as they conduct their investigation, which is still at an early stage.

Observance of our Code of Ethics by all of our people is essential and the Board does not tolerate anything other than the strictest adherence to our Code.

OUTLOOkThe Group’s outlook is positive based on a near record level of work in hand, a solid balance sheet and favourable market conditions. We have rebounded strongly from a disappointing financial year to 30 June 2011 to report a solid level of profitability during the 6 month period to 31 December 2011. This establishes an excellent platform for the future profitability and growth for the Leighton Group.

I conclude this report by expressing my appreciation to shareholders for their support, and to my fellow directors for their contribution during this time of transition and consolidation for the Leighton Group. I also thank our staff of over 53,000 for their efforts in achieving the profit results for the 6 month period to 31 December 2011 and creating a strong foundation for the future. ▨

Stephen JohnsChairman

9 March 2012

Newly-appointed Non-executive DirectorsPeter Sassenfeld andPaula Dwyer

The Leighton Group has evolved and grown to become one of the world’s leading international contractors with a proud heritage of delivering iconic infrastructure, resources and property projects across Australia, Asia and the Middle East. As we look to the next exciting phase of our development, we have revisited our vision, strategy and values to ensure they are aligned with the needs of our shareholders, clients and employees.

Leighton ConCiSe AnnUAL RePoRt foR the DeCembeR 2011 tRAnSitionAL finAnCiAL YeAR

12

Our vision is: “We aim to be renowned for excellence through our

operating brands and the empowerment of our people.”Our vision is about aspiring to excellence in everything

that we do. It’s about pursuing excellence when we:• create solutions for our clients;• create safe, rewarding and fulfilling careers for our people;

and• create superior and sustainable returns for our shareholders.

Our people are delivering projects wearing the uniforms of well regarded brands such as Leighton Contractors, John Holland, Thiess, Leighton Properties, Leighton Asia, Leighton Welspun, Leighton Africa, the Habtoor Leighton Group and a number of other brands.

These brands – or Operating Companies – are central to our strategy and we want each to be renowned for excellence in their own field, and for their own capability and competency. It might be John Holland’s rail expertise, Thiess’ tunnelling capability, Leighton Contractors’ telecommunications skills or Leighton Properties’ sustainable buildings.

Each of our Operating Companies is critical to delivering our vision of being renowned for excellence across the construction, mining, and operations and maintenance markets.

VisionFor much of the Group’s history, we have defined ourselves by our Australian heritage. We are now one of the top 20 contractors in the world, operating throughout Asia, the Middle East and in Southern Africa, as well as throughout Australia.

We need to reflect our new position and the geography of our growth opportunities in clear statements about who we are, where we are headed, and how every one of our people can help us get there.

Although we are made up of nine unique and distinctive Operating Companies and people from over 25 countries, we all need to share one vision, one set of values and one roadmap for achieving that vision.

The first step was to define who we are. The Leighton Group is a leading international contractor.

OUR

13

1993Code of Ethics adopted by Leighton Contractors – an industry first

1987Established decentralised growth strategy

1990Strategies for the 90s

1995Leighton Holdings’ Board adopts Code of Ethics

Corporate Governance Policy published in Annual Report

1996Code of Ethics adopted by each of Leighton Holdings’ operating companies

Ours is a business built on the combined efforts of over 53,000 employees, each of them empowered in their own role, enabled and encouraged to deliver our vision. It might be as an accounts clerk or a quantity surveyor; as an excavator driver or a project director; as a construction foreman or a safety officer. Each of them is encouraged to do their job to the best of their ability so that, as a whole, we are renowned for excellence. They are empowered to set goals, to innovate within boundaries, use their initiative and to celebrate and reward each other’s successes.

The vision for the Group is a unifying framework that sets out the ideals for the sort of business that we want to be – namely one that is renowned for excellence.

StrategyThe Group is delivering on its vision through its strategy. This strategy is to take our core competencies to select markets and deliver projects and value-added services for clients through our diversity, empowered people and financial strength. Our strategy is built on the diversity of our brands – or Operating Companies – our various geographies, our markets and services, and our delivery systems.

Diversification is fundamental to our business model. It acts to moderate the effects of cyclical downturns in certain markets and allows the Group to redeploy its resources to other markets. Diversification is about exporting core competencies to new markets but it is also about extending into related markets as value-adding opportunities arise. The Group has done this on numerous occasions, such as when John Holland acquired an aviation services business, when Leighton Contractors moved into the telecommunications market, and with the recent establishment of a new oil and gas engineering consulting business, Leighton Engineering in Malaysia. →

Underpinning the ability to pursue and deliver work is the strength of the Group’s balance sheet. Having a strong financial base is crucial for a contractor such as Leighton as it allows for investment in new plant and equipment, the provision of bonds and guarantees, and supports the working capital requirements of the Group. In addition, a strong balance sheet allows for acquisitions to be made which can further diversify the Group.

A key element of the financial strategy is also the recycling of capital. The Group is not just an acquirer of assets but also looks to add value to them and then divest when it makes economic sense. An example of the Group creating value for shareholders by bringing its expertise and financial firepower to an underperforming business is the acquisition, turn around and subsequent sale of the assets of the HWE Mining iron ore business. The Group will continue to pursue opportunities to recycle capital that create value for shareholders.

In Australia, our diversification strategy is about ensuring our Operating Companies develop distinctive core competencies and highlight points of difference. We encourage Thiess, Leighton Contractors and John Holland to compete when they have the capability, resources and experience to deliver projects that will generate an appropriate return for shareholders. The role of Leighton Holdings, as a strategic management company, will be to become more involved at the pre-tender phase to ensure that an Operating Company’s approval to bid is based on an assurance and evidence that it has the skills and resources to successfully deliver the project.

The Group has developed world class capabilities in construction, mining, and operations and maintenance. These capabilities are in demand across many developing markets in Asia, the Middle East and Africa. In recent years, this has seen us take our contract mining capability to Mongolia and Botswana, and to consider mining opportunities in the Middle East. Similarly, we are exporting infrastructure construction skills to the Middle East, thereby transforming the Habtoor Leighton Group from a builder to a diversified construction company. We have also encouraged John Holland to partner with the Habtoor Leighton Group to bid for some of the US$40 billion worth of rail investment that will take place in Qatar over the next 10 years. Our strategy includes developing Leighton Offshore into one of the leading international competitors in this market.

vISION AND vALUES – REfRESHED & ENERGISED CONTINUED


2010Refreshed Group’s Code of Ethics

Board approves Group Workforce Diversity Policy

Leighton Holdings’ Safety Framework critically reviewed and revised

2011Series of facilitated workshops engaging staff in the development of behaviours to support Leighton Holdings’ values

1998Established Ethics Committee

St James Ethics Centre review

2007Values book published in Annual Report

Leighton First Quarter Update 10/11 30

BUILDING AN ETHICAL FRAMEWORK Many people in business feel ill-equipped to tackle the complex issues that they now have to confront on an almost daily business. How does one strike an appropriate balance between the demands of competing stakeholders? How do you determine the standards that should apply when doing business in a different country with different cultural patterns? How do you make proper allowance for the effect of new technologies on employees, consumers and the wider society in which the company is located? Finally, how do you do this under the increasingly watchful gaze of the media? Fortunately, there are a few relatively simple fi lters that can be applied by those wanting to ‘road-test’ their judgement. A brief selection of these follows.

SU

STA

ININ

G

AN

E

TH

ICA

L

BU

SIN

ES

S

1 WOULD I BE HAPPY FOR THIS DECISION TO BE ON THE PUBLIC RECORD?

4 WILL THE PROPOSED COURSE OF ACTION BRING ABOUT A GOOD RESULT?

2 WHAT WOULD HAPPEN IF EVERYBODY DID THIS?

5 WHAT WILL THIS PROPOSED COURSE OF ACTION DO TO MY CHARACTER OR THE CHARACTER OF MY ORGANISATION?

3 HOW WOULD I LIKE IT IF SOMEONE DID THIS TO ME?

6 IS THE PROPOSED COURSE OF ACTION CONSISTENT WITH MY ESPOUSED VALUES AND PRINCIPLES?

14

VALUESThe Group’s success over many years has been built on a foundation of values – discipline, integrity, safety and success – and we have revisited these values this year to ensure they are aligned with the needs of our shareholders, clients and employees. We have recommitted to our four values which have been consistently applied across the Group, but we have refreshed the behaviours which underpin these values to more clearly define what is expected of our people and the way they should conduct themselves.

Having strong values provides a framework within which our people can operate and make sensible decisions. Our values go hand-in-hand with the concept of empowerment, a fundamental principle of the Leighton way.

While we can set policies, guidelines, frameworks and codes, ultimately our people need a set of values to guide their thinking, to help them make the right decisions and, ultimately, to create the right outcomes.

A company with a strong and clearly defined set of values means that its people have alignment and consistency with the direction of the business. In Leighton’s case, this has developed a culture that is performance and results oriented. As we continue to grow, the embedding of our values will be critical to ensuring that we can operate in diverse markets with employees of different religions, ethnicity, political persuasion and gender. Our values provide a common unifying bond as we deliver our vision to be renowned for excellence. ▨

STRATEGYTo take our core competencies to diverse markets and deliver

value-added services and projects for clients, through

our empowered people, diversity and financial

strength.

PURP

OSE

DIV

ERSITYVISION

The Leighton Group is a leading

international contractor.We aim to be renowned for excellence through

our operating brands and the empowerment of our

people.

Market/activities

Solutions for clients

Deliverysystems

Safe rewarding

and fulfilling careers

We create

Geographies

Brand

Superior and sustainable

returns

2012Development of a vision statement and refreshed values and behaviours

OUR VALUES

DISCIPLINETake responsibility and deliver

• Set clear goals and meet them• Innovate within boundaries• Don’t compromise• Ask for help

INTEGRITYDo what’s right and ethical

• Respect yourself and others• Be trustworthy• Speak up when something is wrong• Don’t take personal advantage

SAFETYEnsure physical, mental and emotional well-being

• Ensure a safe workplace• Address safety concerns• Check-in and offer support• Take time out

SUCCESSFoster a winning culture

• Empower employees• Encourage teamwork• Use initiative• Deliver excellence• Recognise effort• Celebrate and reward success

15

Our people’s efforts during this period have demonstrated the strength of the Leighton ‘can-do’ culture and our values – discipline, integrity, safety and success – which underpin everything that we do. We are now back on track and I see a very positive future for the Leighton Group and for our shareholders.

Hamish TyrwhittChief Executive Officer

CHIEf ExECUTIvE’S REvIEw

16


17

INTRODUCTIONThe results in this report are a testament to our vision, our values, our strategy and the strength of our business model and its inherent diversification which allows us to pursue opportunities across a range of markets including infrastructure, resources and property. Most importantly, they are a testament to the quality and commitment of our people. The safety, welfare and development of our people is crucial to our continued success.

FINANCIAL PERFORMANCEAs the Chairman has reported, the Group generated a strong underlying profit for the 6 months to December 2011.

Revenue for the period totalled $12.2 billion with $10.0 billion generated from the Australia/Pacific region and $2.2 billion from the Group’s international operations. Revenue from joint ventures and associates was $2.0 billion, a 14% decrease on the prior comparable July to December period.

The major revenue-generating markets for the Group were infrastructure $6.7 billion, resources $4.4 billion and property $885 million. The Group’s Operating Companies provided a range of services to these markets including construction $7.3 billion, contract mining $3.1 billion, and operations and maintenance $1 billion.

Our financial strength is critical to delivering our strategy and during the period we made good progress on a number of strategic initiatives. The Group continues to assess its capital base and examine ways to recycle capital. The sale of the HWE Mining iron ore business has released $400 million which has been reinvested in the business. We aim to continue to recycle capital to higher value areas of our business.

The Group has the funding capacity to finance the replacement of its existing fleet of plant and equipment, and to fund a good level of growth opportunities. This also includes our commitment to fund the completion of Brisbane’s Airport Link project and the Victorian Desalination Project.

A new performance metric – Economic Profit – is currently being rolled out and this is driving changes to the behaviour of our Operating Companies. Economic Profit measures the Group’s ability to generate real cash profits in excess of the cost of the capital.

OPERATIONAL REvIEWThe Group’s Operating Companies recorded a number of project awards during the period across a diverse range of markets and geographies.

Infrastructure In Australia, government infrastructure spending continued to provide a good range of opportunities, particularly in rail construction. The Victorian Government awarded Thiess and Leighton Contractors a share in two packages of work worth $1.34 billion in total to design and construct key sections of the first major new rail line for metropolitan Melbourne in 80 years. The new work includes the design and construction of new track, stations, bridges and other infrastructure. Leighton Contractors has a half share of $505 million worth of the work while Thiess has a 60% share in an alliance worth $835 million.

In Queensland, Thiess was awarded another alliance project, the $475 million Stage 2 Richlands to Springfield Project of the Darra to Springfield Transport Corridor.

Based on its competency in developing complex urban infrastructure, an alliance including Leighton Contractors was selected to deliver the $240 million final stage of the dedicated 31km Southern Sydney Freight Line. In related work, Leighton Contractors was also awarded a $113 million contract to deliver the main construction phase of the Sydney Ports Corporation’s Intermodal Logistics Centre at Enfield. →

Peter GreggChief Financial Officer

Our balance sheet is critical to our strategy and we have a number of initiatives underway which can significantly improve returns to shareholders. We are looking at areas where we can recycle capital to improve our returns, and we have already started to do this with the

sale of the HWE Mining iron ore business and the Burton coal mine. A number of other opportunities to recycle and redeploy capital are available to the Group. A key focus is working capital. We significantly improved our use of working capital during the period and will continue to focus on reducing outstanding claims, improving our payments terms and seeking ways to have others fund our business.

We are also implementing Economic Profit measures in our Operating Companies and assigning a virtual balance sheet to make them more accountable. This will bring greater discipline to their business decisions and force them to look at their business holistically.

19

PropertyLeighton Properties recorded a number of successes during the period, achieving some significant sales that have helped in the recycling of the Group’s capital.

Leighton Properties sold its proposed new office tower in the Ipswich CBD for $93 million. The nine-storey office tower is being developed as part of the $1 billion Ipswich City Heart revitalisation project and comprises 16,000 sqm of commercial office space and is fully pre-committed to the Queensland Government for an initial term of 15 years, with two five-year options. This project is part of the largest CBD renewal project in Australia in more than a decade and draws upon Leighton Properties’ extensive experience in urban renewal and mixed-use precinct developments. In Brisbane, Queensland, Leighton Properties and Leighton Contractors sold the HQ North Tower, a high quality, prime grade office asset with 28,000 sqm of office space and ground floor retail, for $186 million.

Also in Brisbane, Leighton Properties’ experience has been crucial in their selection as the developer of the next important phase of the Boggo Road Urban Village development. A $275 million investment will transform the former jail site into a vibrant, inner-city mixed-use precinct.

In Perth, Western Australia, Leighton Properties commenced the development of Stage One of Kings Square, a 19,000 sqm 11-storey office building with an A-Grade 5 Star Green Star rating. The building is the first in a major urban renewal project that includes the sinking of a rail line bordering the CBD, a $339 million alliance project being delivered by John Holland.

Also in Perth, John Holland was announced as the managing contractor to deliver the design and construction of a new, $1.2 billion state-of-the-art children’s hospital. The award builds on John Holland’s long history of delivering major public health projects both in Western Australia and around the country. →

Thiess’ approach to relationship-based contracting was reflected in an alliance with Ausgrid, one of Australia’s largest energy network providers. The alliance will deliver transmission cable projects for Ausgrid’s five year network investment program and is expected to provide work of up to $210 million to Thiess over five years. Thiess’ tunnelling expertise was rewarded with a further $142 million contract with Ausgrid to deliver vital electricity infrastructure for Sydney.

John Holland was selected as the preferred tenderer for the construction of a 136 kilometre buried water pipeline for $400 million in Central Queensland. John Holland has built a strong partnership with the client, SunWater, having delivered a number of successful projects over the last 40 years, and this award consolidates their position as one of the leading contractors in Queensland.

Water projects are providing a number of other opportunities and Leighton Contractors was awarded a $146 million contract to deliver phase two of the Ord East Kimberley Expansion Project in Kununurra, Western Australia.

The telecommunications sector continues to see significant investments being made by both the private sector and the National Broadband Network for the Federal Government. Leighton Contractors’ subsidiary Visionstream was awarded a number of contracts worth over $250 million during the period. Visionstream is a leading provider of design, construction and operation of communication solutions for industries such as resources, health and transport.

Our two major projects - Brisbane’s Airport Link and the Victorian Desalination Project (VDP) - are drawing closer to completion. We remain on track to open the Airport Link toll road to traffic in June 2012. At VDP we expect to be producing first water by July 2012 and to complete the project towards the end of 2012.

CHIEf ExECUTIvE’S REvIEw CONTINUED

Hamilton Harbour ResidentialQueensland, AustraliaLeighton Properties

Eclipse TowerNew South Wales, AustraliaDeveloper: Leighton PropertiesConstruction: John Holland


20

Mt Owen ComplexNew South Wales, AustraliaThiess

Thiess also has a major role delivering the Gorgon project and was awarded a $60 million contract to construct a 1.2 kilometre long tunnelled shore crossing under the ocean connecting two offshore gas reserves with the new LNG plant.

In Queensland, John Holland was awarded a marine subcontract worth in excess of $100 million to design and construct a new product loading facility, comprising a 168 metre jetty and loading platform, for Australia Pacific LNG’s proposed Curtis Island LNG facility.

Demand for coal from China, India and other parts of Asia remains strong, supporting the contract mining market which is a core part of the Group’s business. Leighton Contractors was awarded a $120 million, one-year contract extension for the provision of mining services at the Dawson coal mine.

In South Australia, Leighton Contractors’ subsidiary HWE Mining was awarded a 12-month $240 million contract extension for the provision of mining services at the South Middleback Ranges iron ore operations. HWE Mining has been the major contractor on site since 1998, and its proven track record in iron ore mining was a key factor in securing the contract extension, which has provision for a further four-year extension.

In Western Australia, the Leighton Ngarda Joint Venture, an unincorporated joint venture between Leighton Contractors and indigenous contractor Ngarda Civil & Mining, was awarded a $104 million earthworks contract by Rio Tinto.

Thiess maintained its position as a leading contract miner with the award of a $185 million, one year extension to a contract to operate the Meandu coal mine in South-East Queensland. Thiess also won a major $100 million contract with Fortescue Metals Group for Phase One development works on the Solomon Hub iron ore mine in Western Australia’s Pilbara region. The 18 month contract is for initial pioneering and mine establishment works such as haul roads, stockpile pads and the mining of early ore and waste. The contract represents a return to Western Australia for Thiess’ mining business and opens up a new market for them. →

In Sydney, John Holland’s reputation for the delivery of high-end building solutions and their tunnelling expertise has seen them engaged as contractor to deliver vital upgrade works at the Sydney Opera House. This contract, with an approximate value of just over $100 million, is part of a $150 million upgrade, the biggest building works on the site since the opening of the Sydney Opera House in 1973.

The majority-owned residential developer, Devine, achieved a number of milestones during the period, including the successful completion of the first two stages of the $500 million Hamilton Harbour project, and settlement of over 200 new owners into the development. Following the success of Hamilton Harbour Stages 1 and 2, commencement of the $70 million Riverside stage was initiated, comprising 189 units. The Hamilton Harbour project is being undertaken in joint venture with Leighton Properties.

ResourcesThe continuing growth in demand from Asia for commodities such as gas, coal and iron ore has continued to drive construction and mining opportunities for the Group’s Operating Companies. Record investment by energy companies is transforming Australia into one of the leading global suppliers of LNG. The Group is capitalising on the associated civil and building opportunities that this is generating in an area where our Operating Companies have real capability.

On the back of an already strong relationship with Chevron from the Gorgon project, John Holland secured a key contract worth approximately $370 million to design and construct a 3,800-bed accommodation village for the Wheatstone gas project near Onslow in Western Australia. John Holland was also awarded a $223 million contract to design and construct a package of 12 permanent buildings including an operations building, laboratory, maintenance centre, vehicle maintenance shop, fire station and plant warehouse.



Dharma ChandranChief Human Resources Officer

Leighton Holdings has never had a focused Human Resources (HR) function but, given that our business is all about people, it is appropriate that we dedicate resources to developing their capabilities. We will be focused on providing Group-wide specialist policy, governance, compliance and reporting in the areas of executive remuneration

and performance; leadership development and succession planning; and sustainability, safety and diversity. We will also be providing generalist HR support for the employees within Leighton Holdings. We are seeking to create a performance-driven culture at Leighton Holdings. A key initiative has been to work alongside the Board to conduct a comprehensive review of executive remuneration and incentives. Our objective is to

ensure that in future we have in place a remuneration and incentive framework to drive performance and behaviours aligned to the long term interests of our shareholders, while providing appropriate rewards for our executives in a competitive environment.

23

Although no significant new work was won in Mongolia or Indonesia during the period, contract mining and related infrastructure projects in those countries continued to make good progress. Production at the Indonesian mine sites for the period was much better than the previous year, which had been impacted by extremely bad weather. In Mongolia, output at the UHG and Khushuut mines was in line with forecast.

In India, no significant new contracts were won during the period. Good progress was made on the Chenani Nashri road tunnel and the Ramanujan IT Park at Chennai is approaching completion.

Middle EastThe Middle East market has experienced disappointing results over recent years and during the period we took a further impairment to our investment in the Habtoor Leighton Group (HLG). This reflects the slower than anticipated award of new work, particularly in Abu Dhabi, and an ongoing challenge in recovering outstanding receivables. These issues will continue to be closely monitored.

The region is still providing a number of attractive opportunities for HLG. In Doha, Qatar, HLG was awarded the construction of Phase 1 of the North Gate Mall and buildings, a US$290 million mixed use shopping mall and office project. Reflecting the success of the strategy to diversify into more civil engineering work, HLG was awarded a US$306 million contract to expand a 75 kilometre section of road from a single, two-lane carriageway to a four-lane dual carriageway between Bidbid and Sur in Oman. The scope of work also includes the construction of nine interchanges and 50 kilometres of service roads and is a significant win in one of the Group’s target growth markets. HLG has an established reputation for delivering infrastructure and building projects in the UAE and Qatar but this award represents a significant step forward as the Group expands its operating footprint further afield. →

AsiaThiess maintained a solid presence in Indonesia, signing a US$446 million contract with PT. Bayan Resources, Tbk extending the existing contract by three years for the further development and operation of the Teguh Sinar Abadi and Firman Ketaun Perkasa Coal Mines, near Melak in East Kalimantan. Thiess has forged a strong partnership with the Bayan Group which is further evidence of their ability to build and maintain long-term relationships with clients in Indonesia.

In Hong Kong, a major highlight was the award of a $1.0 billion contract to a joint venture including Leighton Asia. The contract involves the construction of the West Kowloon Terminus Station North, part of the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL). This is the largest and final XRL civil contract to be awarded and the fifth MTR Corporation contract secured by Leighton Asia in the past two years, giving a total value of projects of $2.4 billion. On completion, the project will provide a world-class rail terminus and serve as an international gateway to the mainland of China with a daily pass-through of over 100,000 passengers. Facilities will include nine long-haul and six shuttle platforms, customs and immigration facilities, departure lounges, and duty free and other retail outlets. A Leighton Asia joint venture has also secured an $88 million contract to provide fire services, plumbing and drainage to the West Kowloon Terminus Station.

Leighton Asia will build a new $52 million five-storey school campus in Hong Kong which includes a 20,000 sqm school of classrooms, learning support facilities, an international standard gymnasium and a multi-use performance space containing a 350 seat auditorium and an 80 seat theatre.



Macarthur Wind FarmVictoria, AustraliaLeighton Contractors

Al Shaqab Equestrian AcademyQatarHabtoor Leighton Group

Phase 1 Iraq Crude Oil Export Expansion ProjectIraqLeighton Offshore

Guangzhou-Shenzhen-Hong Hong Express Rail Link (XRL)Hong KongLeighton Asia

24

Airport LinkQueensland, AustraliaThiess and John Holland

PEOPLE AND SAFETy With the appointment of a dedicated Chief Human Resources (HR) Officer during the period, Dharma Chandran, we have taken a significant step forward in the development of our people. Our people are our greatest resource, and Dharma and his team are bringing a professional approach to the way we recruit, performance manage, train, reward and develop our people.

This team will be responsible for providing the necessary technical HR advice and assistance to leaders and staff on day-to-day HR matters such as recruitment, identifying development needs and suggesting appropriate solutions, managing performance, setting remuneration and succession planning. The team will also further develop our HR policies and procedures for Leighton Holdings, and provide training to improve the awareness and capability of our leaders in managing our employees.

As the Chairman has pointed out, safety is a core value that is an absolute priority for me and my leadership team. I believe in creating a safe, challenging and fun workplace, while striving to ensure employees return home each day in the same health and condition as when they arrived at work.

THE OUTLOOkI am pleased to report that the Group continues to enjoy a very positive outlook. Our strategy has us positioned in high growth regions of the world for a contracting organisation – Australia, Asia, the Middle East and Southern Africa – with brands that are highly regarded. In fact, we have the broadest footprint of any international contractor operating in this part of the world and are focused on making Leighton an even more international Group. Asia’s demand for energy and resources remains a dominant driver of opportunities, with demand for energy set to double from 2008 to 2030. We are located in markets that are continuing to grow and offering good opportunities for our construction, mining, and operations and maintenance services. We have opportunities to export our competencies into new markets that value the services we can provide. →

In addition, Leighton Offshore was awarded a major contract by Iraq’s South Oil Company. The US$518 million contract is part of a program that aims to stabilise and expand Iraq’s crude oil export capacity with the development of two offshore platforms, a 75 kilometre pipeline and a Single Point Mooring system.

As the Chairman has mentioned, on 13 February 2012 we reported to the Australian Federal Police a possible breach of our Code of Ethics in relation to payments that may have been made in connection with work to expand the offshore loading facilities for Iraq’s crude oil exports. We are fully cooperating with the Australian Federal Police as they conduct their investigation.

RISk MANAGEMENT Identifying, analysing, treating and continually monitoring risks are essential in the risk management process. In most cases the Group has managed risk extremely well; however, as the events of last year demonstrated, there is always more that can and needs to be done.

As a result of a comprehensive review, we have refined our processes for risk selection, further strengthened our Work Procurement Guidelines and revised our delegations for the negotiation of tenders prior to the award of contracts.

As the Chairman has discussed, the Board has established a Tender Review and Risk Committee which will monitor and review the Group’s risk management systems, controls and metrics, and oversee all major tenders. The Committee is supported by the Chief Risk Officer and our Risk Management team. This is a positive step in ensuring that we have in place best practice risk management systems and processes to appropriately treat the key risks of the business.

Mike RolloChief Risk Officer

The Leighton Group has always managed project risk well, but I will be working to improve our whole-of-business or enterprise risk. We are keen to ensure that we continue to entrench our recent improvements to managing the project life

cycle. We realise that Leighton Holdings must be more involved in the business identification and development phase. Our systems have been improved to incorporate a comprehensive Project Risk Assessment to identify high-risk projects at the expression of interest stage. By assessing projects as `business as usual’ or `high risk’ at an early stage, we can avoid committing resources to projects that do not meet our risk profile.

We will develop bid strategies appropriate for the tender and ensure that the best capability or resources within the Group are focused on delivering that project.



27

In Australia, we see that the construction market will remain strong, driven in particular by private sector investment in the gas sector. This is an area where the Group has great experience and competency in delivering civil engineering and building work for major LNG and coal seam methane projects such as the Gorgon, Devil Creek and Pluto projects in Western Australia and APLNG in Queensland. Some $140 billion of capital is currently being invested in energy-related projects and our Operating Companies have the experience and skills to bid for a substantial portion of the upcoming work.

Government spending on infrastructure is likely to remain at high levels with some major rail projects in New South Wales and Victoria driving opportunities. As the leading rail contractor in Australia, the Group is well placed to take on this work. Government spending on roads and other transport infrastructure will continue to underpin a solid outlook for civil construction work.

The telecommunications market and the National Broadband Network (NBN) in particular represent significant opportunities. The Group has substantial expertise in delivering this complex infrastructure and is well positioned as more packages of the NBN are awarded.

Contract mining remains a core market for the Group in Australia, Indonesia and Mongolia. While capital intensive, contract mining offers stable earnings and opportunities for growth, fuelled by continual demand growth from Asia for more coal and other minerals. The Group has a strong position as the world’s largest contract miner which it is using to gain entry into new markets such as Southern Africa. Additionally, substantial investment in new mine, rail and port infrastructure for coal projects will continue to be made in Australia, underwriting a range of construction opportunities for our Operating Companies.

Asia’s growth is also providing construction opportunities for the Group. No other contractor has the Group’s footprint across Asia and this, when combined with our reputation for delivery, positions us uniquely for growth. Hong Kong, Macau, India and other selected Asian markets are continuing to look for the experience and capability of an international contractor like the Leighton Group. We will target opportunities in these markets where our services are valued and we can create value for our shareholders.

In the Middle East, we see a petro-dollar economy driving strong levels of investment in infrastructure, the construction of which is a core competency of the Group. We are bringing this competency to HLG and diversifying the business into new markets such as Oman, Saudi Arabia and Kuwait. While some parts of the Middle East are still suffering the fallout of the global financial crisis, we see the region providing a good range of opportunities in the mid-to-long-term that suit the evolving HLG.

I am confident that the Group is positioned in the best possible markets in the world for the foreseeable future. The Australian, Asian, Middle Eastern and Southern African regions are continuing to grow based on the industrialisation and urbanisation of Asia and the region’s demand for minerals and energy. These markets have English as a business language and the Group has a long established presence and is well known to many clients. As a contractor, we have access to these markets, both directly by working in them, and indirectly as a supplier of services to clients that are supplying to Asia.

Backing these market opportunities is our strong balance sheet which allows us to invest for growth and a near record level of work in hand with a very healthy level of inherent profitability. We also have a workforce of more than 53,000 capable and committed people who are united by a strong set of values of discipline, integrity, safety and success, and they are focused on being renowned for excellence. On behalf of the management team, I thank them for an outstanding contribution during the period.

All of this makes me very positive about the future for the Leighton Group and for our shareholders. ▨

Hamish TyrwhittChief Executive Officer

9 March 2012



Olivia Newton-John Cancer and Wellness CentreVictoria, AustraliaLeighton Contractors

Kaltim Prima Coal MineIndonesiaThiess

Victorian Desalination ProjectVictoria, AustraliaThiess

Operating companies THIESS LEIGHTON CONTRACTORS JOHN HOLLAND LEIGHTON PROPERTIES LEIGHTON ASIA HAbTOOR LEIGHTON GROuP LEIGHTON WELSPuN LEIGHTON AFRICA LEIGHTON OFFSHORE

Revenue1 A$3,809m A$3,580m A$2,400m A$438m3 A$1,389m A$330m Work in hand2 A$16,013m A$9,826m A$6,928m A$1,342m3 A$8,171m A$2,280m Established 1934 1949 1949 1972 1975 1975 No. of employees 19,479 10,283 7,347 50 15,790 24,6784 Managing Director Bruce Munro Craig Laslett Glenn Palin Mark Gray Robert Cooke (Acting)* Laurie Voyer

Scope of operations

Area of operations

1 Operating revenue includes the Group’s share of joint ventures and associates revenue. See note 5 Segment information on pages 122 to 123 of the Concise Financial Report for greater detail. Represents revenue for the 6 month period to 31 December 2011.2 Work in hand includes the Group’s share of work in hand from joint ventures and associates. Work in hand only includes work for 5 years from the reporting date. The value of long-term contracts running past December 2016 is not included. 3 These amounts include revenue and work in hand for Devine Limited.4 The number of employees in HLG is excluded from the Group’s total number of employees as reported.

LEIGHTON HOLDINGS bOARD

HOw wE OPERATE

AuSTRALIA/PACIFIC


28

Integrated mining, construction and services contractor specialising in total mining solutions, civil engineering, process, building, remediation, waste, telecommunications, utilities and facilities management.

Project development, construction and services contractor specialising in civil engineering and infrastructure, building, contract mining, energy, telecommunications and facility management.

Australia, India, Indonesia, New Zealand

Australia, New Zealand, Papua New Guinea

ASIA/INDIA MIDDLE EAST AND AFRICA

29

Operating companies THIESS LEIGHTON CONTRACTORS JOHN HOLLAND LEIGHTON PROPERTIES LEIGHTON ASIA HAbTOOR LEIGHTON GROuP LEIGHTON WELSPuN LEIGHTON AFRICA LEIGHTON OFFSHORE

Revenue1 A$3,809m A$3,580m A$2,400m A$438m3 A$1,389m A$330m Work in hand2 A$16,013m A$9,826m A$6,928m A$1,342m3 A$8,171m A$2,280m Established 1934 1949 1949 1972 1975 1975 No. of employees 19,479 10,283 7,347 50 15,790 24,6784 Managing Director Bruce Munro Craig Laslett Glenn Palin Mark Gray Robert Cooke (Acting)* Laurie Voyer

Scope of operations

Area of operations

1 Operating revenue includes the Group’s share of joint ventures and associates revenue. See note 5 Segment information on pages 122 to 123 of the Concise Financial Report for greater detail. Represents revenue for the 6 month period to 31 December 2011.2 Work in hand includes the Group’s share of work in hand from joint ventures and associates. Work in hand only includes work for 5 years from the reporting date. The value of long-term contracts running past December 2016 is not included. 3 These amounts include revenue and work in hand for Devine Limited.4 The number of employees in HLG is excluded from the Group’s total number of employees as reported.

Multi-disciplined construction and services contractor specialising in civil engineering and building infrastructure, tunneling, communications, energy and resource projects, power transmission, water treatment, marine structures, mining, aviation maintenance services, and construction, operation and maintenance of rail systems.

Undertakes large, complex property developments and provides specialist services in development management.

Multi-disciplined contractor specialising in civil engineering and infrastructure, building and mining.

Multi-disciplined contractor specialising in civil and infrastructure, mining, industrial, building, offshore oil and gas, and rail.

Australia, Hong Kong, India, New Zealand, Qatar, Saudi Arabia, Singapore and United Arab Emirates

Australia Brunei, Cambodia, China, Hong Kong, India, Indonesia, Iraq, Laos, Macau, Malaysia, Mongolia, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Vietnam

Bahrain, Botswana, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates

* On 26 March 2012, Ian Edwards was appointed Managing Director of Leighton Asia, India & Offshore.

Revenue$million

Revenue$million

Revenue$million

Work in hand$million



Infrastructure 2,413 63%Resources 1,396 37%Property – 0%Total 3,809

Infrastructure 1,440 40%Resources 1,947 54%Property 193 6%Total 3,580

Infrastructure 1,827 76% Resources 534 22%Property 39 2%Total 2,400




GroupRevenue$million

GroupWork in hand$million

Infrastructure 6,661 55% Resources 4,400 36% Property 885 7% Corporate 231 2%Total 12,177

Infrastructure 20,180 45%Resources 20,852 47%Property 3,528 8%Total 44,560


Thiess 3,809 31%Leighton Contractors 3,580 29%John Holland 2,400 20%Leighton Properties# 438 4%Leighton Asia/India/O�s 1,389 11%Middle East & Africa 330 3%Corporate 231 2%Total 12,177


Thiess 16,013 36%Leighton Contractors 9,826 22%John Holland 6,928 16%Leighton Properties# 1,342 3%Leighton Asia/India/O�s 8,171 18%Middle East & Africa 2,280 5%Total 44,560

Revenue$million


Infrastructure 520 23%Resources 342 15%Property 1,418 62%Total 2,280

Infrastructure 138 42%Resources 9 3%Property 183 55%Total 330

Revenue$million



Infrastructure 843 61%Resources 514 37%Property 32 2%Total 1,389

Revenue$million

Infrastructure – 0%Resources – 0%Property 438 100%Total 438


Infrastructure – 0%Resources – 0%Property 1,342 100%Total 1,342

OPERATIONAL ANALYSIS & INvESTMENTS

30


GROuP GROuP THIESS LEIGHTON CONTRACTORS JOHN HOLLAND LEIGHTON PROPERTIES# LEIGHTON ASIA HAbTOOR LEIGHTON GROuP by company by market LEIGHTON WELSPuN LEIGHTON AFRICA LEIGHTON OFFSHORE

6 months to 12 months to Dec 2011 Jun 2011 Dec 2011 Jun 2011Group operating revenue by activity $m $m Group work in hand by activity $m $m Construction 7,267 60% 12,006 62% Construction 18,407 41% 19,847 43%Contract mining 3,148 26% 5,177 27% Contract mining 17,823 40% 18,479 40%Services 1,003 8% 2,026 10% Services 6,988 16% 6,178 13%Development 528 4% 133 1% Development 1,342 3% 1,722 4%Corporate/Eliminations 231 2% 35 0%Total 12,177 100% 19,377 100% Total 44,560 100% 46,226 100% Operating revenue Australia/Pacific by market Work in hand Australia/Pacific by market Infrastructure 5,640 56% 9,203 58% Infrastructure 16,620 58% 17,054 53%Resources 3,452 35% 6,155 38% Resources 10,033 35% 12,602 40%Property 670 7% 592 4% Property 2,038 7% 2,337 7%Corporate/Eliminations 231 2% 35 0%Total 9,993 100% 15,985 100% Total 28,691 100% 31,993 100% Operating revenue Asia and Middle East by country Work in hand Asia and Middle East by country Middle East 714 33% 1,246 37% Middle East 2,515 16% 2,122 15%Indonesia 836 38% 1,086 33% Indonesia 8,456 53% 7,109 50%Hong Kong/Macau 329 15% 396 11% Hong Kong/Macau 1,865 12% 1,409 10%India 103 5% 311 9% India 677 4% 1,185 8%Mongolia 86 4% 102 3% Mongolia 1,487 9% 1,440 10%Other 116 5% 251 7% Other 869 6% 968 7%Total 2,184 100% 3,392 100% Total 15,869 100% 14,233 100%

Revenue note: Includes the Group’s share of joint ventures and associates revenue. See Note 5 Segment information on pages 122 to 123 of the Concise Financial Report for greater detail. Represents revenue for the 6 month period to 31 December 2011.Work in hand note: Includes the Group’s share of work in hand from joint ventures and associates. Work in hand only includes work for 5 years from the reporting date. The value of long-term contracts running past December 2016 is not included.

Revenue$million

Revenue$million

Revenue$million






Infrastructure 1,827 76% Resources 534 22%Property 39 2%Total 2,400






Infrastructure 6,661 55% Resources 4,400 36% Property 885 7% Corporate 231 2%Total 12,177

Infrastructure 20,180 45%Resources 20,852 47%Property 3,528 8%Total 44,560


Thiess 3,809 31%Leighton Contractors 3,580 29%John Holland 2,400 20%Leighton Properties# 438 4%Leighton Asia/India/O�s 1,389 11%Middle East & Africa 330 3%Corporate 231 2%Total 12,177


Thiess 16,013 36%Leighton Contractors 9,826 22%John Holland 6,928 16%Leighton Properties# 1,342 3%Leighton Asia/India/O�s 8,171 18%Middle East & Africa 2,280 5%Total 44,560

Revenue$million


Infrastructure 520 23%Resources 342 15%Property 1,418 62%Total 2,280

Infrastructure 138 42%Resources 9 3%Property 183 55%Total 330

Revenue$million



Infrastructure 843 61%Resources 514 37%Property 32 2%Total 1,389

Revenue$million

Infrastructure – 0%Resources – 0%Property 438 100%Total 438


Infrastructure – 0%Resources – 0%Property 1,342 100%Total 1,342

31

GROuP GROuP THIESS LEIGHTON CONTRACTORS JOHN HOLLAND LEIGHTON PROPERTIES# LEIGHTON ASIA HAbTOOR LEIGHTON GROuP by company by market LEIGHTON WELSPuN LEIGHTON AFRICA LEIGHTON OFFSHORE

INvESTMENTSENGINEERING & INFRASTRUCTURE

– AquaSure Thiess has a 5.2% share of the consortium that will finance, design, build, operate and maintain the Victorian Desalination Project.

– BrisConnections Thiess and John Holland will invest $200 million in the consortium that will own, operate and maintain the Airport Link Project in Brisbane.

– Aspire Schools Leighton Contractors has a 50% share of the consortium that will finance, design, construct and maintain 7 schools in South East Queensland for 30 years.

– Cross City Motorway Leighton Contractors has 6% of the company that owns, operates and maintains the Cross City Tunnel in Sydney.

– SA Health Partnership Leighton Contractors has a 19.9% share in the consortium that will finance, design, construct and maintain the new Royal Adelaide Hospital for 35 years.

MINING AND RESOURCES– Cockatoo Island Project

HWE Cockatoo is a 50:50 joint venture partner in an iron ore mine in Western Australia.

LISTED ENTITIES– Sedgman Limited

Thiess owns 32.35% of the listed resources engineering company.

– Macmahon Holdings Limited Leighton Holdings owns 19.45% of the listed engineering and mining contracting company.

# Leighton Properties’ amounts include revenue and work in hand for Devine Limited.

32

BOARD & SENIOR MANAGEMENT


West Gate bridge StrengtheningVictoria, AustraliaJohn Holland

34


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011

DIRECTORS’ RESUMES The Directors during or since the end of the December 2011 Transitional Financial Year are:

STEPHEN PAUL JOHNS (64) Chairman BEc, FAICD, FCA An independent Non-executive Director since December 2009, Chairman since 24 August 2011 and a Director of John Holland Group Pty Ltd since 1 July 2011. A graduate in Economics from the University of Sydney. Fellow of the Institute of Chartered Accountants in Australia and the Australian Institute of Company Directors. Appointed an Executive Director of Westfield Holdings Limited in November 1985, Mr Johns held a number of positions within Westfield, including Finance Director from 1985 to 2002 and became a Non-executive Director of the Westfield Group in October 2003. Mr Johns is a Director of Brambles Limited. As at 31 December 2011, Mr Johns was a Director of the following other ASX listed entities: Westfield Holdings Limited since November 1985* and Brambles Limited since December 2006 (formerly Director of Brambles Industries Limited and Brambles Industries plc since August 2004). He was formerly a Director and Chairman of the ASX listed entity Spark Infrastructure Group from November 2005 to 30 September 2011. * The securities of Westfield Holdings Limited are stapled to those of Westfield Trust and Westfield America Trust, the responsible entities of which are Westfield Management Limited (appointed 11 November 1985) and Westfield America Management Limited (appointed 20 February 1996). The three entities comprise the Westfield Group, the stapled securities of which trade as one security on the ASX.

HAMISH GORDON TYRWHITT (48) Managing Director and Chief Executive Officer BEng (Civil), MIE Aust, CPEng., MemIEHK An Executive Director and Chief Executive Officer since 24 August 2011. Mr Tyrwhitt holds a Bachelor of Engineering from the University of Western Australia. A Chartered Member of the Institution of Engineers Australia, a Member of the College of Civil Engineers Australia and a Member of the Hong Kong Institution of Engineers. Mr Tyrwhitt is a civil engineer with 26 years’ experience in the construction industry. Managing Director of Leighton Asia Limited and Leighton Contractors (Asia) Limited from December 2007 to August 2011. Former General Manager of Leighton Contractors Victoria/South Australia/Tasmania/ New Zealand and Director of Leighton Contractors Pty Limited from January 2005 to February 2007. Appointed General Manager and Director of Leighton Contractors (Malaysia) SDN BHD in 2002 having joined in 1994. Mr Tyrwhitt joined John Holland in Western Australia in 1986 and in 1990 was appointed as a Project Manager in John Holland Construction (Malaysia, Laos and Thailand).

34

DIRECTORS’RESUMES

35

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 PETER ALLAN GREGG (56) Executive Director and Chief Financial Officer BEc An Executive Director since 23 December 2010 (formerly an independent Non-executive Director from July 2006 to October 2009) and a Director of each of the Group’s Operating Companies. A Director of Leighton Welspun Contractors Pvt Ltd since April 2011 and an Alternate Director of Habtoor Leighton Group for Mr H Tyrwhitt since November 2011. Mr Gregg holds a Bachelor of Economics from the University of Queensland. Formerly Chief Financial Officer and Executive General Manager Strategy for the Qantas Group, he was appointed Chief Financial Officer of Leighton Holdings in October 2009. A Fellow of the Finance and Treasury Association, and a Member of the Australian Institute of Company Directors. Mr Gregg is a former Director of the following other ASX listed entities: Qantas Airways Limited from September 2000 to September 2008 and former Chairman of the Singapore-based Jetstar, and its parent company Orangestar, Stanwell Corporation Limited from July 2006 until September 2009, Skilled Group Limited and Skilled Rail Services Pty Ltd from March 2009 to February 2011, and QR Limited (Queensland Railways), a Queensland Government owned corporation, from May 2009 to November 2009.

ACHIM DRESCHER (71) Non-executive Director BEc An independent Non-executive Director since November 1996 and a Director of Leighton Contractors Pty Limited since November 2003. A graduate in Economics from Hamburg University, Germany. A former Managing Director (1989 – 2002) and Chairman (2002 – 2005) of Columbus Line Australia Limited. A Non-executive Director of Sabre Securitisation Limited and Sword Securitisation Limited, Member of The Advisory Council of Germanischer Lloyd AG-Asia Pacific. In 1997 Mr Drescher was awarded the ‘Cross of the Order of Merit’ by the Federal Republic of Germany.

PAULA JANE DWYER (51) Non-executive Director B.Com., FCA, FAICD, F.Fin An independent Non-executive Director and Chairman of the Audit Committee since 1 January 2012. Ms Dwyer holds a Bachelor of Commerce from the University of Melbourne. Ms Dwyer is a Fellow of the Institute of Chartered Accountants in Australia, the Australian Institute of Company Directors and the Financial Services Institute of Australasia. Ms Dwyer had an executive career in finance holding senior positions in investment management, investment banking and chartered accounting with Ord Minnett (now JP Morgan) and PricewaterhouseCoopers. Ms Dwyer is a Member of the Takeovers Panel, a Board Member of the Faculty of Business and Economics at the University of Melbourne, a Member of the Geelong Grammar School Council and Deputy Chairman of the Baker IDI Heart and Diabetes Institute. As at 31 December 2011, Ms Dwyer was a Director of the following other ASX listed entities: Suncorp Group Limited from April 2007 to February 2012 (where she was also Chairman of the Audit Committee) and Chairman of Tabcorp Holdings Limited since June 2011 (Director since August 2005). Ms Dwyer was formerly a Director of Foster’s Group Limited from May to December 2011, Healthscope Limited from March to October 2010, Astro Japan Property Group Limited from February 2005 to December 2011, Promina Group Limited from 2002 to 2007, David Jones Limited from 2003 to 2006 and RACV Limited from 2001 to 2002.

35

36


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ RESUMES continued ROBERT DOUGLAS HUMPHRIS OAM (69) Non-executive Director ARSM, BSc (Eng) Hons, CEng, FIMMM, FAIMM An independent Non-executive Director since September 2004 and a Director of Leighton Asia Limited since 1 November 2011, a former Director of Leighton International Limited from September 2007 to 2 November 2011. Mr Humphris is an Honours graduate in Mining Engineering at the Royal School of Mines, Imperial College, London University. Chairman of Ampcontrol Pty Limited. Former Managing Director of Peabody Resources Pty Limited (previously Costain Australia Limited). Former Chairman of Eroc Holdings Pty Limited, New South Wales Mineral Council, Australian Coal Association and Newcastle Coal Shippers Limited. Former Director of Australian Coal Research Limited and Port Waratah Coal Services Limited. As at 31 December 2011, Mr Humphris was a Director of the following other ASX listed entity: Australian Infrastructure Fund Limited since August 2006.

IAN JOHN MACFARLANE AC (65) Non-executive Director BEc (Hons), MEc An independent Non-executive Director since June 2007. A graduate in Economics from Monash University. Previously Governor of the Reserve Bank of Australia from 1996 to 2006 and Deputy Governor of the Reserve Bank of Australia from 1992 to 1996. Member of International Advisory Board, Goldman Sachs, CHAMP Private Equity and the China Bank Regulatory Commission. Director of the Lowy Institute for International Policy. As at 31 December 2011, Mr Macfarlane was a Director of the following other ASX listed entities: Woolworths Limited since January 2007 and ANZ Bank Limited since February 2007.

WAYNE GEOFFREY OSBORN (60) Non-executive Director Dip EE, MBA, FSTE, MIE Aust, FAICD An independent Non-executive Director since November 2008. Chairman of Thiess Pty Ltd since October 2008 (Director since October 2005). Chair of the Council of the Australian Institute of Marine Science, Trustee of Western Australian Museum, Fellow of Australian Academy of Technological Sciences & Engineering, Fellow of the Explorers Club – New York, Member of the Institution of Engineers Australia and former Chair of Australian Aluminium Council. A Director of Alinta Holdings (formerly Amber Holdings) since March 2011. Mr Osborn has 35 years of experience in the Australian mining, resources and manufacturing sectors and was a former Chairman and Managing Director of Alcoa of Australia Ltd. As at 31 December 2011, Mr Osborn was a Director of the following other ASX listed entities: Wesfarmers Limited since March 2010 and Iluka Resources Limited since March 2010.

36

DIRECTORS’ RESUMES CONTINUED

37

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DAVID PAUL ROBINSON (56) Non-executive Director MCom, BEc, FCA, FTIA A Non-executive Director since December 1990 and a Director of Leighton Properties Pty Limited since May 2000. Alternate Director for Mr P Sassenfeld since 29 November 2011. A graduate of the University of Sydney. Registered company auditor and tax agent. A chartered accountant and principal of the firm Harveys Chartered Accountants in Sydney. Adviser to local and overseas companies with interests in Australia. Participates in construction industry affairs. A trustee of Mary Aikenhead Ministries, the responsible entity for the health, aged care and education works of the Sisters of Charity in Australia. A Director of HOCHTIEF Australia Holdings Limited. Mr Robinson was formerly a Director of Valad Property Group (from February 2010 to 29 August 2011).

PETER-WILHELM SASSENFELD (45) Non-executive Director MBA A Non-executive Director since 29 November 2011. Mr Sassenfeld joined HOCHTIEF in November 2011 as the Chief Financial Officer and prior to this role he was Chief Financial Officer of Ferrostaal AG. Mr Sassenfeld has also worked as Chief Financial Officer at Krauss Maffei AG and in senior finance roles at Bayer AG and the Mannesmann Group. Mr Sassenfeld graduated in 1991 from the University of Saarland, Germany with an MBA (Diplom-Kaufmann).

DR FRANK STIELER (53) Non-executive Director Dr. jur. A Non-executive Director since 16 May 2011. Chairman of the Executive Board of HOCHTIEF AG since May 2011 and a member since March 2009. In addition he is in charge of the HOCHTIEF Europe division and the HOCHTIEF Asia Pacific division as well as the Public-Private Partnerships segment. Dr Stieler studied Law at Johann-Wolfgang-Goethe University in Frankfurt am Main, Germany. After having obtained a doctorate in 1985, he initially held various positions with Lurgi AG, including those of Chief Financial Officer at Lurgi Energie und Umwelt GmbH in 1994 and of Chief Executive Officer at Lurgi Bamag GmbH since mid 1997. Dr Stieler was Senior Vice President at Houston based Azurix, a subsidiary of US energy supplier Enron from 1999 to 2001. Dr Stieler joined Siemens AG in late 2001 where, under the umbrella of the Power Generation Group, he was responsible for the Industrial Application division. In 2008 Dr Stieler was appointed Chief Executive Officer of the Siemens Oil & Gas Division.

37

38


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ RESUMES continued

MANFRED HEINRICH WENNEMER (64) Non-executive Director A Non-executive Director since 6 October 2011. Mr Wennemer was appointed Chairman of the HOCHTIEF AG Supervisory Board on 11 May 2011. Additionally, he acts as Chairman of the Strategy Committee. Currently, he serves on the Supervisory Boards of Allianz Deutschland AG, Knorr-Bremse AG, NV BEKAERT SA as well as in the position of Chairman of the Board at Springer Science + Business Media SA. He is former Chairman (CEO) of the Executive Board of Continental Aktiengesellschaft, Hanover. He studied Mathematics at the Westfaelische Wilhelms-Universitaet Muenster (University of Muenster), Germany and obtained a Masters degree in Business Administration from INSEAD Fontainebleau, France in 1977.

Alternate Directors ROBERT LESLIE SEIDLER AM (63) Alternate Director LLB An Alternate Director for Dr F Stieler since 16 May 2011 and Mr M Wennemer since 10 November 2011. Previously an Alternate Director for Dr H Lütkestratkötter from July 2007 to May 2011 and for Dr H-P Keitel from November 2003 to July 2007. Chairman of Leighton Asia Limited since 1 November 2011 and a Director of Leighton Properties Pty Limited since May 2010. A former Director of Leighton International Limited from November 2009 to 2 November 2011. A graduate of the University of Sydney. Former partner of Blake Dawson. Vice-President, Australia Japan Business Cooperation Committee and Chairman of Hunter Philip Japan Limited. A member of the investment advisory board of the Australian Prime Property Fund, a member of the Australian Government’s Corporations and Markets Advisory Committee, and a member of the NSW Multicultural Business Advisory Panel. A Director of HOCHTIEF Australia Holdings Limited since November 2011. A former Director of the ASX-listed entity Valad Funds Management Limited from February 2005 to 29 August 2011.

Company Secretaries ASHLEY JOHN MOIR (65) Group Company Secretary FCPA, FCIS, MAICD Mr Moir was appointed to the position of Company Secretary in April 1990. He was previously Company Secretary of Australian National Industries Limited. Mr Moir is a former Director and Chairman of Chartered Secretaries Australia (CSA) Limited. VANESSA ROBYN REES (42) Company Secretary Dip Law, FCIS Ms Rees was appointed to the position of Company Secretary in April 2009. She has a financial and legal background and has held various Company Secretarial positions the most recent being with Ascalon Capital Managers Limited and previously within the Investa Property Group. Ms Rees is a Fellow of CSA and is on CSA’s Legislative Review and NSW Professional Development Committees.

38

Alternate Directors Company SecretariesDIRECTORS’ RESUMES CONTINUED

39

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 Retired Directors during the December 2011 Transitional Financial Year are: DAVID ALLEN MORTIMER AO (66) Chairman, Non-executive Director BEc (Hons), FCPA An independent Non-executive Director from September 1997. Elected Chairman on 1 June 2007. Resigned as Chairman and Director on 24 August 2011. DAVID GRAEME STEWART (58) Managing Director and Chief Executive Officer BSc, BE, FIE Aus, ATSE An Executive Director and Chief Executive Officer from 1 January 2011. Former Chief Operating Officer from 2009 to 2010 with responsibility for Habtoor Leighton Group, John Holland and Leighton Properties. Former Group Managing Director of John Holland from January 2006 to June 2009 and former Managing Director of John Holland Construction Pty Ltd in 2003. Former Group Executive Committee Chairman. Ceased as Chief Executive Officer and Managing Director on 24 August 2011.

DR BURKHARD LOHR (48) Non-executive Director Dr. rer.pol A Non-executive Director from May 2008. Resigned as a Director on 12 October 2011.

Former Alternate Director DR KARL REINITZHUBER (45) Alternate Director Dr. rer.pol An Alternate Director for Dr B Lohr from July 2011 to termination on 22 September 2011 following Dr Lohr’s resignation from HOCHTIEF AG. Previously an Alternate Director for Dr Peter Noé from April 2009 to June 2011 and former director of HOCHTIEF Australia Holdings Limited.

39

Retired Directorsduring the December 2011 Transitional Financial Year are:

former Alternate Director

40


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 BOARD AND COMMITTEES LEIGHTON HOLDINGS LIMITED BOARD S P Johns, Chairman H G Tyrwhitt, Chief Executive P A Gregg A Drescher P J Dwyer R D Humphris OAM I J Macfarlane AC W G Osborn D P Robinson P W Sassenfeld Dr F Stieler M H Wennemer Alternate Directors R L Seidler AM Associate Directors M C Gray C A Laslett B A Munro G M Palin L W Voyer Company Secretaries A J Moir, Group Company Secretary V R Rees, Company Secretary

BOARD COMMITTEES Audit Committee P J Dwyer, Chairman S P Johns D P Robinson Remuneration and Nominations Committee S P Johns, Chairman A Drescher W G Osborn R L Seidler AM Dr F Stieler Ethics and Compliance Committee W G Osborn, Chairman R D Humphris OAM R L Seidler AM H G Tyrwhitt Plan Committee (until 10 February 2012) S P Johns, Chairman D P Robinson H G Tyrwhitt Tender Review and Risk Committee (from 10 February 2012) R D Humphris OAM, Chairman I J Macfarlane AC W G Osborn R L Seidler AM

GROUP EXECUTIVE COMMITTEE H G Tyrwhitt, Chairman D Chandran R R Cooke* M C Gray P A Gregg C A Laslett B A Munro G M Palin M J Rollo L W Voyer A J Moir, Secretary * On 26 March 2012, Mr Ian Edwards was

appointed as the Managing Director of Leighton Asia, India and Offshore and to the Group Executive Committee.

40

BOARD AND COMMITTEES

41

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 GROUP EXECUTIVES

DHARMA CHANDRAN (47) Chief Human Resources Officer Leighton Holdings ROBERT RITCHIE COOKE (56) Acting Managing Director Leighton Asia, India & Offshore* BRUCE ALWIN MUNRO (58) Managing Director Thiess

HAMISH GORDON TYRWHITT (48) Managing Director and Chief Executive Officer Leighton Holdings PETER ALLAN GREGG (56) Chief Financial Officer Leighton Holdings MARK CHARLES GRAY (59) Managing Director Leighton Properties GLENN MICHAEL PALIN (54) Managing Director John Holland Group

MICHAEL JOHN ROLLO (52) Chief Risk Officer Leighton Holdings CRAIG ALLEN LASLETT (50) Managing Director Leighton Contractors LAURIE WILLIAM VOYER (60) Managing Director Leighton Middle East and Africa

41

GROUP ExECUTIvES


CORPORATE GOvERNANCE REPORT

42

Seaford Rail ExtensionSouth AustraliaThiess

44



CORPORATE GOVERNANCE REPORT GOVERNANCE AT LEIGHTON This Corporate Governance Report discloses the extent to which Leighton Holdings Limited has followed the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Principles and Recommendations) during the period between 1 July 2011 and 31 December 2011 (the December 2011 Transitional Financial Year). As required by the ASX Listing Rules, the information in this Corporate Governance Report is current as at 9 March 2012. Each of the eight principles and their supporting recommendations are addressed. In summary, we have followed all of the Principles and Recommendations for the December 2011 Transitional Financial Year, other than Recommendation 2.1. An explanation as to why this recommendation was not followed in the December 2011 Transitional Financial Year is set out in our response to Principle 2 on page 48 of this Concise Annual Report. This Corporate Governance Report, the Audit Committee Charter, the Charter of Audit Independence, the Terms of Reference and Procedures for the Remuneration and Nominations Committee and the Ethics and Compliance Committee, the Tender Review and Risk Committee Charter, and each of the policies and codes referred to in this Report are available within the Corporate Governance section of our website at www.leighton.com.au.

PRINCIPLE 1: LAY SOLID FOUNDATION FOR MANAGEMENT AND OVERSIGHT The Board is responsible to shareholders for the long-term performance of the company and the entities it controls (collectively, the Group) and for overseeing the implementation of the highest standards of corporate governance with respect to the Group's affairs. To assist the Board in discharging its responsibilities, we have adopted a governance framework which provides for the delegation of functions to Board Committees and senior management (under the leadership of the Chief Executive Officer (CEO)). Whilst ultimate accountability rests with the Board, the framework ensures that functions are carried out by the most appropriate person or group and that a tiered system of responsibility and accountability exists throughout the Group. The diagram opposite illustrates the structure and operation of our governance framework at a Board and senior management level. As part of this framework, we set Governance Guidelines and minimum operating standards for our Operating Companies through the Group Governance System, which covers the following six key areas of business activity: Whole of business; Strategy and planning; Financial management; Reputation; Corporate practices; and Operations / projects (pre-contract, contract delivery

and whole of contract). Each Governance Guideline is supported by more detailed operational guidelines to articulate the objectives, strategies for management, and control and reporting requirements, which are then incorporated into each Operating Company's individual work procedures and practices. Procedures and practices are also regularly reviewed within each Operating Company to monitor compliance and support continuous improvement.

44

CORPORATE GOvERNANCE REPORT

45

COMPANY SECRETARIES

All Directors have open and direct access to the Company Secretaries who support the effectiveness of the Board in all governance matters.

The Board has the following responsibilities:• reviewing and determining the Group’s strategic direction

and operational policies;• establishing goals for management and monitoring the

achievement of these goals;• reviewing and approving the Group’s Business Plan;• appointing, monitoring and rewarding the CEO;• approving all project tenders above a certain level and

significant business transactions including acquisitions, divestments, property developments and capital expenditure;

• monitoring business risk exposures and risk management systems;

• approving and monitoring financial and other reporting;• approving donations and sponsorship budgets; and• reporting to shareholders.

bOARD OF DIRECTORS

STANDING bOARD COMMITTEES1 SENIOR EXECuTIVES

The key responsibilities of the Committee include:• monitoring and reviewing the integrity of the Group’s financial

statements and internal control systems;• reviewing and monitoring the objectivity and effectiveness of

the internal auditors;• overseeing the process for selecting external auditors;• making recommendations to the Board on the appointment of

the auditors, the approval of their remuneration and the terms of their engagement; and

• annually assessing the independence, objectivity and effectiveness of the external auditors, having regard to the provision of non-audit services.

AuDIT

The key responsibilities of the Committee include:• reviewing and approving the remuneration of CEO and the CEO’s

direct reports; and• reviewing and making recommendations to the Board on:– remuneration of Non-executive Directors;– remuneration policies and practices for the Group generally

including the incentive plan, share schemes and other benefits;– superannuation arrangements;– membership of the Board, including proposed new

appointments; and– succession planning for the Board, CEO and the CEO’s

direct reports.

REMuNERATION & NOMINATIONS

1 Responsibilities of each Committee are set out in the relevant Committee’s Charter or Terms of Reference and Procedure available at www.leighton.com.au.

2 Established by the Board on 10 February 2012.3 The CHRO commenced employment with the company on 1 January 2012.

The key responsibilities of the Committee include:• reviewing and making recommendations to the Board

regarding the maintenance of ethical standards and practices generally within the Group;

• reviewing and monitoring compliance with laws and regulations in the areas of occupational health and safety, the environment and competition and consumer law; and

• reviewing and monitoring Group standards and practices related to tender approval probity.

ETHICS & COMPLIANCE

The key responsibilities of the Committee include:• monitoring and reviewing the Group’s overall risk tolerance

and strategy;• monitoring and reviewing the integrity, adequacy and utility

of the Group’s risk management systems, controls and metrics having regard to the Group’s overall risk tolerance and strategy; and

• approving proposals from management for the Group to tender for key projects, and approving tenders for key projects or referring them to the Board for approval.

TENDER REVIEW & RISK2

The CEO is accountable to the Board for the management of the Group and has the authority to approve capital expenditure and business transactions within the policy and authority levels prescribed in the Group’s Business Plan.Specific responsibilities of the CEO include:

• providing strategic direction and leadership for the Group;• ensuring business development and tendering activities are

in accordance with the Group’s overall business strategy and Group tendering guidelines;

• keeping the Board informed of all major project proposals in Australia and overseas by way of specific reports; and

• setting the remuneration levels and bonus payments with the assistance of the CHRO of all personnel, except for the senior executives reporting directly to him.

CHIEF EXECuTIVE OFFICER (CEO)

The CRO is responsible for the overall management and enhancement of the Group’s strategic and operational risk management systems and controls.

CHIEF RISK OFFICER (CRO)

The CHRO is responsible for:• providing Group-wide specialist policy, governance,

compliance and reporting in the areas of:– executive remuneration and performance;– leadership, development and succession planning; and– sustainability, safety and diversity;

• setting the remuneration levels and bonus payments with the assistance of the CFO of all personnel; and

• providing generalist human resources support for the company’s employees.

CHIEF HuMAN RESOuRCES OFFICER (CHRO)3

The CFO is responsible for the statutory accounting, auditing, treasury/funding, taxation, strategy, corporate affairs and information systems across the Group.Specific responsibilities of the CFO include:

• monitoring financial performance and planning against the financial control guidelines which govern the allocation and management of financial resources throughout the Group;

• ensuring that appropriate financial reporting is provided to the Board and regulatory authorities;

• ensuring adequate funding is available to the Group;• management of the information systems and services;• management of relations with investors and analysts; and• management of the strategic direction and Group strategy.

CHIEF FINANCIAL OFFICER (CFO)

AccountabilityDelegation

The Group General Counsel is responsible for the management of the Group’s legal affairs.

GROuP GENERAL COuNSEL

46


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CORPORATE GOVERNANCE REPORT continued Board Committees As set out in the diagram on page 45, the Board has an Audit Committee, a Remuneration and Nominations Committee, an Ethics and Compliance Committee and a Tender Review and Risk Committee to assist in discharging its duties. Copies of the Terms of Reference and Procedures or Charter for each of these Board Committees are available on the Corporate Governance section of our website. It is the Board's policy that each Board Committee should: be chaired by an independent Non-executive

Director (and in the case of the Audit Committee, be chaired by an independent Director who is not the Chairman of the Board);

be comprised solely of Non-executive Directors (except in the case of the Ethics and Compliance Committee which must comprise a majority of Non-executive Directors);

have at least three members; be entitled to obtain independent professional or

other advice at the company's cost; and be entitled to obtain such resources and information

from the Group, including direct access to employees of and advisers to the Group, as they may require.

The members of each Board Committee and their qualifications are set out on pages 34 to 40 of this Concise Annual Report. The number of Committee meetings that were held over the period and the attendance of the Committee members at those meetings are set out in the Directors' Report on page 71 of this Concise Annual Report. A Director may attend any Committee meeting unless they have a material personal interest in a matter being considered. Senior executives and other selected employees are invited to attend Committee meetings as required. Company Secretaries Details regarding the Company Secretaries, including their experience and qualifications, are set out on page 38 of this Concise Annual Report.

Senior executives The senior executive team, under the leadership of the CEO, is responsible for the day-to-day management of the Group. Together, the senior executive team form the Group Executive Committee, the members of which are listed on page 40 of this Concise Annual Report. To ensure appropriate oversight of the senior executive team, we have adopted a range of mechanisms which reinforce the accountability of the senior executive team for functions delegated to them and ensure their performance is assessed accordingly. The CEO reviews the performance of all senior executives who report directly to him (direct reports) by way of formal reviews as appropriate throughout the year. As part of the review process, the CEO considers internal feedback, the individual's performance against requisite standards, and actively monitors their contribution to all aspects of the Group's performance and culture. In addition to the CEO's assessment of performance, the Board has in place a number of supporting measures which enable it to closely monitor senior executive performance, including: regular monthly reporting submitted to the Board,

and attendance by the CEO, CFO and CRO at all Board meetings;

an evaluation of detailed presentations made by the CEO and his direct reports during business planning/strategy review meetings, which are convened annually by the Board and held over a two to three day period; and

regular reporting from the Chairman of the Remuneration and Nominations Committee which monitors the performance of the Group's key senior executives to ensure that the level of reward is aligned with respective responsibilities and individual contributions made to the success of the Group. The minutes of each Remuneration and Nominations Committee meeting are circulated to all Directors.

The performance of the senior executives was reviewed during the December 2011 Transitional Financial Year in accordance with this process. Independent professional advice In addition to the support the Directors receive from the Board Committees, the senior executive team and the Company Secretaries, the Board has a policy of enabling Directors to seek independent professional advice at the company’s expense (subject to Board approval).

46

CORPORATE GOvERNANCEREPORT CONTINUED

47

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE This section outlines the practices and processes applied during the December 2011 Transitional Financial Year in relation to the composition of the Board. We continued to follow the recently introduced Board assessment process that deals with all aspects of Board composition and development as part of an integrated process. This process, which is described on page 50 of this Concise Annual Report, captures relevant information regarding director skills, experience, capabilities and diversity of background and uses this information to guide: Board succession planning; identification and selection of new Directors; and performance assessment and development plans for

individual Directors and the Board as a whole.

Board composition The Board is balanced in its composition with each Director bringing a range of complementary skills and experience to the Group. Further details regarding the relevant skills, experience, tenure and expertise of each Director are set out on pages 34 to 38 of this Concise Annual Report. The table below sets out each Director’s independence status as well as their relevant Board Committee memberships as at the date of this Corporate Governance Report

Directors Independent/non‐independent

Audit Committee

Remuneration and Nominations Committee

Ethics and Compliance Committee

Tender Review and Risk Committee

Stephen P Johns1 Non‐executiveDirector (Chairman)

Independent Member Chairman

Achim Drescher2 Non‐executive Director

Independent Member

Paula J Dwyer3 Non‐executive Director

Independent Chairman

Peter A Gregg Executive Director & CFO

Non‐independent

Robert D Humphris OAM Non‐executive Director

Independent Member Chairman

Ian J Macfarlane AC Non‐executive Director

Independent Member

Wayne G Osborn Non‐executive Director

Independent Member Chairman Member

David P Robinson Non‐executive Director

Non‐independent* Member

Peter W Sassenfeld4 Non‐executive Director

Non‐independent*

Dr Frank Stieler5 Non‐executive Director

Non‐independent* Member

Hamish G Tyrwhitt6 Executive Director & CEO

Non‐independent Member

Manfred H Wennemer7 Non‐executive Director

Non‐independent*

* Representing our majority shareholder, HOCHTIEF Australia Holdings Limited.

1 Mr Johns was appointed Chairman of the Board and Chairman of the Remuneration and Nominations Committee on 24 August 2011 (formerly an independent Non-executive Director and Chairman of the Audit Committee until 24 August 2011). He replaced Mr David Mortimer who resigned as Chairman and Non-executive Director on 24 August 2011. Following Mr Johns’ appointment as Chairman of the Board, he ceased to be Chairman of the Audit Committee but remains a member of the Audit Committee.

2 Mr Drescher was Acting Chairman of the Audit Committee from 1 September 2011 to 31 December 2011. Following Ms Dwyer’s appointment as Chairman of the Audit Committee on 1 January 2012, he ceased to be Acting Chairman and resigned as a member of the Audit Committee.

3 Ms Dwyer was appointed as a Non-executive Director and Chairman of the Audit Committee on 1 January 2012. She replaced Mr Drescher as Chairman of the Audit Committee.

4 Mr Sassenfeld was appointed as a Non-executive Director on 29 November 2011. Mr Robinson is the alternate director for Mr Sassenfeld. Mr Sassenfeld replaced Dr Burkhard Lohr who resigned as a Non-executive Director on 12 October 2011. Dr Karl Reinitzhuber was the alternate director for Dr Lohr from 5 July until 22 September 2011.

5 Dr Stieler was appointed as a member of the Remuneration and Nominations Committee on 5 July 2011. Mr Robert Seidler AM is the alternate director for Dr Stieler and is a member of the Remuneration and Nominations Committee, the Ethics and Compliance Committee and the Tender Review and Risk Committee.

6 Mr Tyrwhitt was appointed as a Director and CEO on 24 August 2011. He replaced Mr David Stewart who was appointed to that role on 1 January 2011. 7 Mr Wennemer was appointed as a Non-executive Director on 6 October 2011. Mr Seidler AM is the alternate director for Mr Wennemer and is a member of the

Remuneration and Nominations Committee, the Ethics and Compliance Committee and the Tender Review and Risk Committee.

47

48


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CORPORATE GOVERNANCE REPORT continued Independence The Board has adopted a definition of independence which is derived from the definition set out in the Principles and Recommendations. In assessing the independence of each Director the Board considers, among other things, whether the Director: is a substantial shareholder of the company (as

defined by the Corporations Act 2001 (Cth) (Corporations Act)) or an officer of, or otherwise associated directly with, a substantial shareholder of the company;

is or has been employed in an executive capacity by the Group, or been a Director after ceasing to hold any such employment, within the last three years;

is or has been a principal of a material professional adviser or a material consultant to the Group, or an employee materially associated with the service provided, within the last three years;

is a material supplier or customer of the Group, or an officer of or a person who is otherwise associated directly or indirectly with a material supplier or customer;

has a material contractual relationship with the Group other than as a Director;

has served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director's ability to act in the best interests of the company; and

is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director's ability to act in the best interests of the company.

Materiality is assessed on a case-by-case basis with reference to each Director's individual circumstances rather than by applying general materiality thresholds. The Board regularly assesses the independence of its Non-executive Directors. Where the independence status of a Non-executive Director changes, we have procedures in place to provide a timely disclosure to the market of the change. As at the date of this Corporate Governance Report, six of the twelve Directors are independent Directors. The Directors who do not meet the Board's test for independence are: Mr H G Tyrwhitt, the company's CEO; Mr P A Gregg, the company's CFO; and

Dr F Stieler, Mr D P Robinson, Mr M H Wennemer

and Mr P W Sassenfeld, all of whom are representatives of HOCHTIEF Aktiengesellschaft (HOCHTIEF), being the parent entity of our majority shareholder HOCHTIEF Australia Holdings Limited.

Although the Board does not have a majority of independent Directors (and consequently the Board's composition does not comply with Recommendation 2.1 of the Principles and Recommendations), the Board has in place a number of policy measures to ensure that independent judgment is achieved and maintained in respect of its decision-making processes. These include: the Chairman of the Board is an independent

Director and has a casting vote at Board meetings in the event of a deadlock;

Directors are entitled to seek independent professional advice at the company's expense, subject to the approval of the Board;

Directors who have a conflict of interest in relation to a particular item of business must absent themselves from the Board meeting before commencement of discussion on the topic; and

Non-executive Directors confer on an as-needs basis without management in attendance.

The Board considers HOCHTIEF's Board representation to be reasonable and appropriate given that HOCHTIEF owns a majority interest of 53.4% of the company's shares as at the date of this Corporate Governance Report. Governance arrangements following change of control of HOCHTIEF For many years, Leighton Holdings and its German-based majority shareholder, HOCHTIEF, have followed a set of governance principles which have seen us operate with a Board and management structure in which the majority of Directors are independent of HOCHTIEF. In September 2010, Spanish-based company Actividades de Construcción y Servicios, SA (ACS) announced a public takeover offer for HOCHTIEF and has subsequently moved to control of HOCHTIEF. In November 2010, ACS indicated that, to the extent that the arrangements bind HOCHTIEF, ACS would seek to continue the existing governance arrangements.

48


49

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 Board selection, appointment and re-election The Board’s Remuneration and Nominations Committee regularly reviews the composition of the Board to ensure that there is an appropriate mix of abilities, experience and diversity of backgrounds to serve the interests of all shareholders. Any recommendations are presented to the full Board. In considering the selection, appointment and re-election of Directors, the Remuneration and Nominations Committee implements our policy of maintaining a Board with a mix of skills, experience and diversity of backgrounds suitable for our current and future circumstances. Leighton aims to maintain a Board whose membership reflects: experience across relevant industries (including

resources, infrastructure and property); involvement in relevant activities (for example,

construction, contract mining, services, development and investment activities and offshore activities);

experience operating in various geographic locations (including Australia/Pacific, Asia and the Middle East);

a variety of technical skills and expertise (for example, engineering, accounting, human resources, legal, risk management, property development and marketing); and

a diversity of backgrounds (for example, gender, previous work roles and educational qualifications).

In assessing both the performance of incumbent Directors and the suitability of new candidates, we also have regard to the individual capabilities and attributes that contribute to an effective Board dynamic including strategic thinking, strong communication skills, high ethical standards and sound judgment. Independent consultants are engaged, where appropriate, to identify possible new candidates for the Board. The Remuneration and Nominations Committee assesses candidates against a range of criteria developed for the role and in doing so considers their background, experience, personal qualities and professional skills. Following this assessment, the Committee provides its recommendation of the preferred candidates for the Board to consider prior to the Board making the appointment. This process was undertaken for the appointment of Directors during the December 2011 Transitional Financial Year.

Recent corporate governance reviews in Australia and internationally have highlighted a lack of diversity among experienced director candidates (and in particular, a low level of female representation on boards). As part of the Board composition review, the Board has identified and is committed to addressing the lack of gender diversity on the Board. In August 2011 the Board committed to a target of appointing at least two female directors to the Board by 2016, with best endeavours to achieve this target earlier. A review by the Remuneration and Nominations Committee of the composition of the Board took place during the December 2011 Transitional Financial Year and resulted in the appointment of Ms Paula Dwyer as a Non-executive Director and as Chairman of the Audit Committee on 1 January 2012. Ms Dwyer’s experience and qualifications are set out on page 35 of this Concise Annual Report. Term of office The tenure of Directors is governed by our Constitution (clauses 17 to 19) and the ASX Listing Rules, which in general terms provide that: one-third of the Directors, excluding the Managing

Director and rounding down to the nearest whole number (Required Number), must stand for election at each Annual General Meeting (AGM);

a Director (other than the Managing Director) must not hold office for the longer of three years or three successive AGMs without seeking re-election;

a Director appointed by the Board (either to fill a casual vacancy or as an addition to existing Directors) only holds office until the next AGM or general meeting after their appointment; and

where additional Directors are required to retire to fulfil the Required Number, the additional Directors to retire will be those who have been longest in office since their last election.

Directors required to retire at a meeting, or only hold office until that meeting, are eligible for re-election or election (as appropriate). Where incumbent Directors are to be nominated for re-election, their performance is reviewed by the Remuneration and Nominations Committee. The Committee then makes recommendations to the Board as to their nomination for re-election. The Board then makes recommendations to shareholders in the Notice of Meeting concerning the election or re-election of any Director.

49

50


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CORPORATE GOVERNANCE REPORT continued Induction and training Upon appointment, Directors receive an induction pack which includes: a letter of appointment, which refers to and

summarises the Securities Trading Policy and the Market Disclosure Policy;

a copy of the Code of Ethics and the company's Constitution;

a Directors' interests disclosure agreement; and a Deed of Indemnity, Insurance and Access. At this time Directors are also introduced to the senior executive team and receive a briefing in relation to meeting arrangements and the culture and values of the Group. We recognise the importance of providing continuing education to Directors so as to enhance their knowledge of the Group and the industries in which we operate. As part of the Board's ongoing development program, Directors attend an annual off-site planning session which generally includes visits to and briefings on current projects. Directors also have the opportunity to attend other domestic and international site visits with the CEO throughout the year. During the December 2011 Transitional Financial Year, Directors visited operations in various domestic and international locations including Hong Kong, India and the Middle East. Performance review As part of its transition towards a systematic approach to Board composition and Director development, the Board has implemented the following initiatives: (a) Board skills and capabilities assessment process A new Board skills and capabilities assessment process was implemented in July 2010. This process involves each Director completing a questionnaire aimed at identifying the skills, experience, capabilities and diversity of background that each Director brings to the Board. The results of the questionnaires are then consolidated and analysed in order to facilitate an assessment of: the Board's collective skills, experience, capabilities

and diversity of backgrounds; criteria for identification and selection of new

Directors (having regard to the current and expected future needs of the company and the Group); and

development priorities for the Board as a whole and for individual Directors.

(b) Independent review of Board effectiveness A Board effectiveness review facilitated by a specialist external consultant was completed in December 2010. The review focused on the interface between the Board, the Board committees and management and sought to identify any areas where the Board could operate more effectively and enhance the contribution it makes to the Group. A Board Performance Action Plan, incorporating the recommendations from the independent review of Board effectiveness and the Board skills and capabilities assessment that took place in late 2010, was initially reviewed and adopted by the Board in February 2011 and progress was reported to the Board in August 2011. Following a number of changes to the Board's composition during 2011, the Action Plan was re-adopted by the current Board in December 2011. Each item on the Action Plan has been progressed with a number of initiatives already implemented. The Board proposes to undertake a further skills and capabilities assessment in June 2012.

50


51

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING The Board is firmly of the view that the reputation and integrity of the Group will only be maintained if all of its officers and employees observe the highest standards of conduct when engaging in corporate activity. Our commitment to ethical and responsible decision-making and the Group’s shared values are promoted throughout the Group which helps to provide a sustainable business and long-term returns to shareholders. Ethics and conduct We have a Code of Ethics which sets out the principles and standards with which all Group officers and employees are expected to comply in the performance of their duties. The Code of Ethics is built on the Group's values and principles and sets out the Group's core values of discipline, integrity, safety and success. It also provides a practical set of obligations for each Group company and for our people. Under the Code, the Group's obligations are to: be commercially competitive; provide a safe and healthy workplace; act with honesty, integrity and fairness; establish clear lines of accountability; create a fun, challenging and performance driven

culture; respect the environment; respect the needs of the communities in which we

work; and encourage and support innovation and technological

leadership. The Group's employees' obligations are to: work together - hard, smart and in the long-term

interests of the Group; respect and look after each other, the people around

them and the community and environment we work in;

act with honesty, integrity and fairness; speak to their employer whenever something really

seems to be wrong; share their ideas for improvements; and assume personal responsibility and accountability

for their work.

In order to ensure that our employees remain well equipped to identify potentially unethical practices and encourage a culture of openness where concerns can be voiced and addressed, we have recently established the Leighton Ethics Line. The Leighton Ethics Line is an independent service operated by Control Risks, which is an international business risk consultancy that provides independent and confidential reporting lines. All reports made to this service are treated confidentially, and anyone who makes a report in good faith will not be disadvantaged as a result of having made a report. Role of the Ethics and Compliance Committee The Board has an Ethics and Compliance Committee whose principal functions are to: review and make recommendations to the Board

regarding ethical standards and practices generally within the Group;

review and monitor compliance with laws and regulations in the areas of occupational health and safety, the environment and competition and consumer law; and

review and monitor Group standards and practices related to tender approval probity.

The Committee reviews incidents resulting in fatalities and, where appropriate, makes recommendations to the Board regarding changes to our Global Safety Standards, practices and legal compliance within the Group's Operating Companies. Under the Corporate Governance System, the Ethics and Compliance Committee regularly examines and makes recommendations to the Board regarding the nature of any changes considered necessary to the Group's Code of Ethics and reviews and monitors the Ethical Dimension Reporting of the Group's Operating Companies. Promotion of ethical and responsible decision-making throughout the Group The Group’s main Operating Companies each have their own well-established Ethics Committees which support Leighton Holdings’ Ethics and Compliance Committee in monitoring and formulating the Group’s ethical policy direction and reporting.

51

52


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CORPORATE GOVERNANCE REPORT continued The Code of Ethics is actively promoted throughout the Group and is easily accessible to new and existing employees through our website. It is a condition of employment that our employees accept and adhere to the Code of Ethics. The Group has also implemented an Ethical Dimension Reporting system which requires each Operating Company (including Leighton Holdings) to submit a quarterly report to the Board’s Ethics and Compliance Committee with a view to ensuring the maintenance of ethical practices within the Group and the achievement of continual improvement in this area. Breaches of the Code of Ethics that are reported through this process or through the Leighton Ethics Line are examined and appropriate action is taken, which may include disciplinary measures. Conflicts All Directors are required to disclose any actual or potential conflict of interest at the time of their appointment and are required to keep these disclosures up to date. Directors who have a conflict of interest in relation to a particular item of business being considered by the Board or Committee must absent themselves from the Board or Committee meeting before commencement of discussion on the topic. Diversity In October 2010, the Board adopted a Group Policy for Workforce Diversity (Diversity Policy) which provides minimum expectations for the Group on workforce diversity (including gender and cultural diversity). These expectations have been reflected in each Operating Company through their own policies, procedures and arrangements to accommodate their operating conditions. The Diversity Policy describes our aspiration to be a global organisation with a leadership and workforce that reflects the diversity of the broader communities in which we operate. The overall objectives of the Diversity Policy are to: increase and retain the number of women and

indigenous people employed by the Group within Australia;

optimise local talent in senior management and the workforce in established international markets;

improve human resources capabilities to manage a diverse workforce;

be acknowledged as setting the industry standard

for achieving workforce diversity; and establish an effective measurement and reporting

framework to enable the achievement of our diversity objectives.

We are currently developing a monitoring framework to assess effectively and regularly the Diversity Policy objectives and the Group's progress in achieving them. The Board has committed to measurable diversity targets, including the appointment of at least two female directors to the Board by 2016. On 1 January 2012 Ms Paula Dwyer was appointed as a Non-executive Director and as Chairman of the Audit Committee. Further information in relation to: the Group’s diversity targets and progress toward

achieving them; and the proportion of women employees in Australian

operations, women in executive and management positions in Australian operations and women on the Board,

can be found in the Directors' Report on pages 65 and 66 of this Concise Annual Report. In order to ensure appropriate leadership of the issues, workforce diversity has also been incorporated as a standing agenda item for the Group Executive Committee meetings. A copy of the Diversity Policy is available on the Corporate Governance section of our website. Dealing in securities In accordance with the law, all officers and employees of the Group who are in possession of inside information are prohibited from dealing in Leighton Holdings’ securities. They are also prohibited from passing on or communicating that information to other persons, including family members and friends. To further guard against the risk of insider trading, we have adopted a Securities Trading Policy which complies with the ASX Listing Rules. We provide informal briefing sessions on the Securities Trading Policy and securities trading law for Directors, senior executives and relevant employees as part of our continuing employee education initiatives. A copy of the Policy is available on the Corporate Governance section of our website.

52


53

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING Role of the Audit Committee The Board has an Audit Committee which assists the Board in fulfilling its corporate governance and oversight responsibilities in relation to financial reporting, risk management and internal control. We undertook a review of the Terms of Reference and Procedures of the Audit Committee following the implementation of the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011. The review led to the adoption of a new Audit Committee Charter in December 2011. The Charter outlines the responsibilities and composition requirements of the Audit Committee. Under the Charter, the Audit Committee is responsible for: monitoring and reviewing the integrity of the

Group's financial statements and internal control systems;

reviewing and monitoring the objectivity and effectiveness of the internal auditors;

overseeing the process for selecting external auditors;

making recommendations to the Board on the appointment of the external auditors, the approval of their remuneration and the terms of their engagement; and

annually assessing the independence, objectivity and effectiveness of the external auditor, having regard to the provision of non-audit services.

The Audit Committee also ensures the rotation of external audit engagement partners every five years as required by the Corporations Act. If circumstances arise where it becomes necessary to replace the external auditor, the Audit Committee will recommend to the Board the external auditor to be appointed to fill the vacancy. Composition of the Audit Committee In accordance with the Audit Committee's Charter and the requirements of the ASX Listing Rules, the Committee: is comprised solely of Non-executive Directors with

appropriate technical expertise; is comprised of a minimum of three Directors; has a majority of independent Non-executive

Directors; and has an independent Director as Chairman of the

Committee who is not the Chairman of the Board.

All Directors who are not Audit Committee members may attend meetings in an ex officio capacity. Further, the Committee may invite other persons to its meetings as it considers necessary, including senior executives and external advisers. The Committee also regularly reports to the Board on matters relevant to the Committee's role and responsibilities, and the minutes of each Committee meeting are circulated to all Directors. External auditor Our external auditor is KPMG. All Audit Committee papers are available to the external auditor, and they are invited to attend all Audit Committee meetings and are available to Audit Committee members at any time. The external auditor also attends the AGM to answer any questions from shareholders. As our external auditor, KPMG is required to confirm its independence and compliance with specified independence standards. To ensure the continuing independence of our external auditor, we adopted a new Charter of Audit Independence in December 2011. The Charter sets out the circumstances in which the auditor can perform non-audit related services and the procedures to be followed to obtain approval for those services where they are permitted. KPMG’s independence declaration is contained on page 74 of this Concise Annual Report.

53

54


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CORPORATE GOVERNANCE REPORT continued PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE Market Disclosure Policy and Procedure We are committed to complying with our continuous disclosure obligations under the ASX Listing Rules and the Corporations Act and to ensuring that shareholders and investors have equal and timely access to material information about the company. To ensure compliance with these obligations, we have a Market Disclosure Policy and Procedure (Market Disclosure Policy) that sets out the measures adopted by the Board to ensure our continuous disclosure obligations are met. The Market Disclosure Policy also sets out our policy in relation to periodic disclosures to the ASX and communications with the financial market, stakeholders and the public generally. Under the Market Disclosure Policy, all announcements are to be factual, not omit material information and be expressed in a clear and objective manner that allows investors to assess the impact of the information when making investment decisions. In accordance with the Market Disclosure Policy, the Managing Director of each Operating Company is responsible for ensuring that all potentially price-sensitive information is reported immediately to our Disclosure Officers. In addition to our Market Disclosure Policy, the Group has established comprehensive policies and procedures to identify matters that are likely to have a material effect on the price of the company’s securities. Although the Board has ultimate responsibility for ensuring that we comply with our continuous disclosure obligations, the Board has delegated to the CEO and CFO (as the Disclosure Officers) responsibility for overseeing compliance with the Market Disclosure Policy. The Company Secretaries manage communications with the ASX. The Board reviews the Market Disclosure Policy at appropriate times to ensure it is effective and remains consistent with relevant laws and ASX requirements.

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS Communicating with shareholders Our Shareholder Communication Policy requires us to communicate with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on our operations and results. In addition to complying with our continuous disclosure obligations (as discussed in Principle 5), we use a number of mechanisms and technologies to ensure shareholders are provided with information about the Group on a regular and timely basis. The mechanisms employed by us to achieve this include: providing regular shareholder communications such

as Shareholder Updates, Half Yearly and Annual Reports, and the Financial Report; and

ensuring shareholders have access to communications through the use of information technology such as: – our website, which includes the above

shareholder communications as well as newsletters, media releases, ASX announcements, significant group briefings and other presentations to analysts;

– webcasting of important events including financial results presentations and the AGM; and

– facilitating the electronic delivery of reports and updates to shareholders through Computershare, the Group's share registry service provider.

Participation at AGMs The Board encourages attendance and full participation by shareholders at our AGMs to ensure a high level of accountability and understanding of the Group’s strategy and goals. To enhance accountability and understanding, important issues are presented to shareholders at AGMs as single resolutions and proceedings of the AGM are webcast live to maximise communication with shareholders. A video of proceedings at the AGM is also made available on our website for viewing by shareholders for a period of at least 6 months after the AGM. Shareholders who are unable to attend the AGM can lodge their proxies through a number of channels described on the proxy form.

54


55

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 PRINCIPLE 7: RECOGNISE AND MANAGE RISK The recognition and management of risk is embedded in all activities of the Group and is a core part of the Group’s culture. The Group’s exposure to risk stems from its broad and evolving business risk profile, which covers areas including operations, safety, reputation, regulation, contract, human resources, finance, information and strategy. It is essential that the Group’s risk management and control framework evolves to address anticipated changes to the Group’s risk profile, as well as to respond to any issues which may emerge. As part of this ongoing process, steps were undertaken during the period to strengthen the Group’s approach to risk management. The Group is also implementing changes to the way it tenders and delivers major projects from a risk management perspective including the recent formation of the Board’s Tender Review and Risk Committee. Further details of these changes are set out in the Chief Executive’s Review on page 24 of this Concise Annual Report. Oversight and management of material business risks The Board is responsible for the oversight of the Group's risk management and control framework. The Audit Committee assists the Board in fulfilling its responsibilities in this regard by reviewing and monitoring the financial and reporting aspects of the Group's risk management and control framework. As required by the Board, management has implemented a policy framework designed to ensure that the Group's material business risks are identified and that adequate controls are in place and function effectively, and for management to report to the Board on whether those risks are managed appropriately. This framework incorporates the maintenance of comprehensive policies, procedures and guidelines which span the Group's diverse contracting and project development activities, including setting financial controls, conducting business audits, investment and acquisition overview, and ensuring high standards in corporate communications and external affairs.

Our risk policy framework covers areas such as: tendering and contract negotiation; design and project management; occupational health and safety; environmental management; competition and consumer laws; interest rate and foreign currency exposures; ethical conduct; gathering and release of material information; crisis management and IT disaster recovery; and business continuity planning. Responsibility for control and risk management is delegated to the appropriate level of management within the Group, with the CEO, CFO and CRO having ultimate accountability to the Board for the risk management and control framework. Areas of material business risk for the Group are highlighted in the Business Plan that is presented to the Board by the CEO each year. The Board then reviews and approves the parameters within which significant business risks that have been identified will be managed before it adopts the Business Plan.

55

56


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CORPORATE GOVERNANCE REPORT continued Risk management and internal control system Arrangements put in place by the Board to monitor risk management include the following: regular monthly reports are made to the Board in

respect of operations, the financial position of the Group and new contracts;

regular reports are made to the Tender Review and Risk Committee by the CRO and the risk review team concerning whole-of-business risks;

regular reports are made to the Audit Committee by the risk review team concerning the program for, and results of, project reviews and reviews of tenders (with reviews of tenders to also be reported to the Tender Review and Risk Committee going forward);

regular reports are made to the Audit Committee by the Executive General Manager, Internal Audit in relation to internal processes and internal control systems;

quarterly reports are made to the Ethics and Compliance Committee by the Operating Companies concerning compliance with laws and regulations and Group standards and practices in the areas of occupational health and safety, the environment, competition and consumer law, tender approval processes and ethical practices;

reports are made to the Board by the Chairman of both the Audit Committee and the Ethics and Compliance Committee (and the Chairman of the Tender Review and Risk Committee going forward), and minutes of these Committee meetings are circulated to the Board;

attendance and reports are made by the Managing Directors of the Group's main Operating Companies at Board meetings on at least a quarterly basis;

presentations are made to the Board or Committees of the Board throughout the year by the CRO, Executive General Manager, Risk, and by other appropriate members of the Group's management team (and/or independent advisers, where necessary) on the nature of particular risks and details of the measures which are either in place or can be adopted to manage or mitigate the risk; and

any Director may request that financial, operational and project audits be undertaken by the risk review team or by the Executive General Manager, Internal Audit.

The Board has also adopted reporting and other procedures which allow it to: monitor the Group's compliance with the continuous

disclosure requirements of the ASX Listing Rules (as discussed in Principle 6); and

assess the effectiveness of its risk management system and its implementation.

In accordance with the systems and procedures outlined above, management regularly reported to the Board as to the effectiveness of the company's management of its material business risks during the December 2011 Transitional Financial Year. In addition to the information provided above, further details on the way we manage risks arising from financial instruments are set out in the Full Financial Report. Role of the Tender Review and Risk Committee In February 2012, the Board established the Tender Review and Risk Committee. The principal objectives and purpose of the Committee are to: monitor and review the Group’s overall risk

tolerance and strategy; monitor and review the integrity, adequacy and

utility of the Group’s risk management systems, controls and metrics having regard to the Group’s overall risk tolerance and strategy; and

approve proposals from management for the Group to tender for key projects, and approve tenders for key projects or refer them to the Board for approval.

The Committee is comprised solely of Non-executive Directors. CEO and CFO assurance The CEO and CFO have given a declaration to the Board concerning the Group’s financial statements in accordance with section 295A of the Corporations Act and recommendation 7.3 of the Principles and Recommendations.

56


57

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY Role of the Remuneration and Nominations Committee The Board has a Remuneration and Nominations Committee that assists the Board in reviewing remuneration policies and practices across the Group and ensures appropriate succession planning is taking place. Under its Terms of Reference and Procedures, the Committee's objectives include: reviewing and approving CEO and senior executive

remuneration; and reviewing and making recommendations to the

Board with respect to: – Non-executive Director remuneration; – the Group's remuneration policies and practices

generally; – superannuation arrangements; – the membership of the Board, including

proposed new appointments; and – succession planning for the Board, the CEO and

senior executives. The Committee engages the assistance of remuneration consultants from time to time, and further details are contained in the Remuneration Report on pages 82 and 83 of this Concise Annual Report. Composition of the Remuneration and Nominations Committee In accordance with its Terms of Reference and Procedures and the requirements of the ASX Listing Rules, the Committee: is comprised solely of Non-executive Directors; is comprised of a majority of independent Directors; is comprised of a minimum of three Directors; is chaired by an independent Non-executive

Director, who is currently the Chairman of the Board; and

meets as and when required and at least quarterly. The CEO has a standing invitation to attend all Committee meetings, but cannot be directly involved in determining his own remuneration. The Committee may seek input from senior executives on remuneration policies, but in order to address the potential for a conflict of interest, the senior executive cannot be directly involved in determining their own remuneration.

Comparison of remuneration structures As disclosed in the Remuneration Report on pages 75 to 112 of this Concise Annual Report, we have designed our remuneration policy in such a way that it motivates senior executives to pursue the long-term growth and success of the Group and demonstrates a clear relationship between senior executives’ performance and remuneration. Consistent with the requirements of the Corporations Act and our Securities Trading Policy, senior executives are prohibited from entering into any “hedging arrangements” or other transactions in financial products that operate to limit the economic risk associated with their entitlements under equity-based remuneration schemes. We ensure that the payment of equity-based executive remuneration is made in accordance with plans approved by shareholders. Details of proposed equity-based remuneration for senior executives for which shareholder approval is being sought at the May 2012 AGM appear in the Notice of Meeting which accompanies this Concise Annual Report. Non-executive Directors receive fees as remuneration for acting as a Director and in some cases as a Director of an Operating Company and/or member of a standing committee of the Board. The amount of each Non-executive Director’s fees depends on the extent of the Director’s responsibilities. Non-executive Directors do not receive shares, options or any performance-related incentives. Further, Non-executive Directors are not entitled to any retirement benefits, other than superannuation in accordance with our statutory superannuation obligations and legacy arrangements for two of the long-serving Non-executive Directors. Details of these retirement benefits as at 31 December 2011 are set out in the Remuneration Report on page 108 of this Concise Annual Report. Further details regarding remuneration of Non-executive Directors, Executive Directors and other senior executives are set out in the Remuneration Report on pages 75 to 112 of this Concise Annual Report.

57


DIRECTORS’ REPORT

Khushuut Coal MineMongoliaLeighton Asia

58

60



DIRECTORS’ REPORT The Directors of Leighton Holdings Limited present their report for the 6 month financial period ended 31 December 2011 (the December 2011 Transitional Financial Year) in respect of the consolidated entity constituted by Leighton Holdings and the entities it controlled during the December 2011 Transitional Financial Year (referred to in this Directors’ Report as the ‘Group’). This Directors’ Report has been prepared in accordance with the requirements of Division 1 of part 2M.3 of the Corporations Act 2001 (Cth) (Corporations Act). In addition, this Directors’ Report integrates a wider spectrum of non-financial management issues as we move to improve our sustainability reporting standards. REVIEW OF OPERATIONS A review of the Group’s operations during the December 2011 Transitional Financial Year and of the results of those operations (as at 9 March 2012) is contained on pages 8 to 31 of this Concise Annual Report. SIGNIFICANT CHANGES Significant changes in the state of affairs of the Group during the December 2011 Transitional Financial Year were as follows: the sale of HWE Mining operations and assets to

BHP Billiton IO Mining Pty Ltd resulting in a gain of $229 million before tax ($167 million after tax) and a reduction of work in hand of approximately $1.2 billion;

the restructure on 1 July 2011 of the overseas operations into Leighton Asia, India & Offshore (LAIO) and Leighton Middle East & Africa (LMEA);

a significant increase in LAIO results, particularly from Hong Kong, Indonesia and Mongolia;

the sale of Wickham Street and Ipswich developments together with completions and settlements of Hamilton Harbour Resident JV which reduced the Leighton Properties result to a small loss;

an impairment of $50 million was taken on the investment in Habtoor Leighton Group (HLG) together with a trading loss of $79 million mainly due to provisioning against legacy project receivables;

an impairment of $70 million was taken on the investment in BrisConnections held by Thiess and John Holland;

the Brisbane Airport Link project confirmed the target toll-road completion date of June 2012 in line with previous forecasts;

the Victoria Desalination Plant reported a loss of

$218 million due to cost overruns with late completion expected in November 2012;

Stephen Johns was appointed Chairman on 24 August 2011 following David Mortimer’s resignation as Chairman and Non-executive Director on that date, and Hamish Tyrwhitt was appointed Managing Director and Chief Executive Officer on 24 August 2011 replacing David Stewart in that role; and

an unfranked final dividend of 60 cents for the December 2011 Transitional Financial Year was declared on 13 February 2012 and is payable to shareholders on 30 March 2012.

Further details regarding these significant changes in the state of affairs and the activities of the Group are provided throughout this Concise Annual Report and the Full Financial Report. FINANCIAL RESULTS Total revenue, including joint venture and associates revenue, for the Group for the December 2011 Transitional Financial Year was $12.2 billion, compared to $19.4 billion for the 12 month period ended 30 June 2011. The profit after tax and minority interests attributable to members of the company for the December 2011 Transitional Financial Year was $340 million, compared to a loss of $409 million for the 12 month period ended 30 June 2011. Further details regarding the financial results of the Group are set out in the Chairman’s Review, Chief Executive Officer’s Review and the Concise Financial Report. DIVIDENDS An unfranked final dividend of 60 cents per share was announced on 13 February 2012, representing the total dividend payment for the December 2011 Transitional Financial Year, and will be paid on 30 March 2012. PRINCIPAL ACTIVITIES During the December 2011 Transitional Financial Year there were no significant changes in the nature of the Group’s principal activities which were and continue to be building, civil engineering, construction, contract mining, telecommunications, environmental services, property development and project management in Australia, the Gulf region and selected parts of Asia. A project has also commenced in Botswana. The Group also performs offshore work in oil and gas.

60

DIRECTORS’REPORT

61

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 EVENTS AFTER END OF TRANSITIONAL FINANCIAL YEAR The Directors are not aware of any specific developments, not outlined in this Concise Annual Report, that have arisen since the end of the December 2011 Transitional Financial Year and that have or may have a significant effect on the Group’s state of affairs, its operations or the results of those operations in future financial years. Note 9 of the Concise Financial Report on page 127 of this Concise Annual Report outlines events which have occurred since the end of the December 2011 Transitional Financial Year, and states that subsequent to reporting date the Group: declared an unfranked final dividend of 60 cents; provided a further $13.6 million in cash collateral

for amounts drawn by HLG on a loan facility; and provided a further interest bearing loan of

$20.4 million to HLG under the same terms as the loans provided at the reporting date.

FUTURE DEVELOPMENTS Likely developments in the operations of the Group in future financial years, and their anticipated results, are referred to on pages 8 to 27 of this Concise Annual Report. Further information on likely developments in the operations of the Group, including the expected results of those operations in future financial years, would, in the Directors’ opinion, result in unreasonable prejudice to the Group and has therefore not been included in this Directors’ Report. This Concise Annual Report contains the information that shareholders would reasonably require to make an informed assessment of the Group’s operations, financial position, business strategies, environmental, social and governance performance and prospects for future financial years (other than any information relating to the Group’s business strategies and prospects for future financial years which would, in the Directors’ opinion, result in unreasonable prejudice to the Group). OPERATIONAL RISK MANAGEMENT Operational risk management activities throughout the Leighton Group are conducted in accordance with the Group Governance System, as described in the Corporate Governance Report. The Group Governance System is supported by detailed guidelines which are updated on a regular basis. These guidelines establish risk management and governance standards which the Operating Companies are required to observe. Each guideline details the activities required for compliance in a particular area, a reporting framework and a periodic review schedule.

Consistent with our operating model, each Operating Company incorporates the Group guidelines into its own internal systems and controls, supplementing the Group guidelines where necessary (but not derogating from them) so as to align them with the individual Operating Company’s operating framework and commercial context. The Group Governance System and the guidelines which underpin it provide management across the Group with a clear and consistent framework for the incorporation of risk management processes and procedures which are considered appropriate into operational activities. Supported by specialist risk management professionals where appropriate, they constitute a key source of assurance for the Board. It must be recognised, however, that risk is an inherent element of the Group’s operational activities. No risk management framework can guarantee that risk-related issues will not arise, and these may on occasions be significant. The Group’s risk management framework is therefore intended to minimise, but cannot eliminate, the potential for significant or unacceptable risk. A significant proportion of our operating business is concerned with contracting activities, the principal Group guidelines for which are known as the Group Work Procurement Guidelines. The Group Work Procurement Guidelines address such matters as authority levels, project selection criteria, requirements with respect to limitations of liability, equity participation, tender preparation and review, financial parameters and approvals for entry into a new country or new business. Key risk control activities carried out include: reviews of tenders; project reviews; and quarterly operational and financial reviews. These are discussed in more detail overleaf.

61

62


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued Reviews of tenders The Group’s procedures require a formal review of every tender offer. Tender risk registers and detailed checklists are used during tender preparation. This is designed to ensure that areas of concern are addressed with appropriate levels of pricing for accepted risks, and that measures are implemented to transfer or reject risk where appropriate. If the value or risk profile of a tender exceeds the delegated authority limits of the Operating Company Managing Director, the tender will require approval from Leighton Holdings’ senior executives (and for certain projects the Board or the Tender Review and Risk Committee) prior to submission. Project reviews All projects above set values are reviewed at the Group level at least once during the life of the project, generally when they are about 20% complete. Other projects involving higher or unusual risks are reviewed on a more regular basis. The purpose of these reviews is to assess the progress of the contract in relation to its operational and commercial risks, including safety, environmental and community aspects. The review report includes a financial forecast and key recommendations for performance improvement with action plans and a timetable to implement. The Board is informed of the review outcomes through regular reports to the Audit Committee. In the December 2011 Transitional Financial Year, 51 project reviews were undertaken with a combined value of over $13.5 billion. Quarterly operational and financial reviews The senior management team of each Operating Company carries out a detailed review of its projects and operations every month. Every three months this review (which lasts several days) is also attended by Leighton Holdings’ senior executives. Probity Our operating model allows and encourages the Operating Companies to act independently of, and in competition with, each other in the provision of services in the Australian market. Strict probity procedures are implemented in order to provide assurance that confidentiality and integrity of information is maintained.

In March 2009, the Board appointed the Hon. Michael McHugh QC as independent Counsel to advise them and to oversee the probity procedures in regard to Operating Companies’ tendering activity. Risk management continuous improvement The Board views the Group’s risk management practices as a source of competitive advantage as it permits informed decisions to be undertaken with regard to the nature of risks involved in tendering and contracting activities. The Corporate Governance System provides for a regime of regular management reviews and reports. Review outcomes contribute to continuous improvement and upgrade of the Group’s processes and procedures from corporate governance through to project performance. Similarly, at an operational level, there is a strong culture of incident reporting which ensures that lessons learned are captured and form part of a continuous improvement process. SUSTAINABILITY We recognise that creating shared value with our employees, society and the environment is essential for our continued growth and profitability. In order to achieve this, we engage with a diverse range of internal and external stakeholders to identify the areas that may impact our ability to deliver on our strategy. In 2011 we continued to focus on the following four areas: 1. safe workplace and practices; 2. workforce diversity; 3. efficient use of natural resources; and 4. community investment. Each focus area has clear objectives, governance, targets (as appropriate), and a monitoring and reporting framework. We recognise that we are at the beginning of our sustainability journey and intend to improve the integration of these issues over the medium-term, so that sustainability continues to be considered in our business strategy and management decisions.

62

DIRECTORS’REPORT CONTINUED

63

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 SAFE WORKPLACE AND PRACTICES Safety is a core value that is demonstrated through the Group’s commitment to the elimination of fatalities and permanent disabling injuries (class 1 injuries) and the systematic reduction of all other injuries across our operations. This is achieved through the Leighton Holdings Global Safety Standards which places an uncompromising emphasis on hazard identification, risk assessment and risk management. In 2011 we adopted a strong advocacy position on industry-wide safety, which included the submission to Safe Work Australia regarding the adoption of the life-saving features in the United Kingdom Construction (Design and Management) Regulation. The UK approach broadens the responsibility for safety by imposing legal obligations on all construction project participants, including designers and clients. We believe that all participants in the construction procurement chain (including clients, designers, contractors and employees) should play a role in ensuring workplace safety, and that only through collaboration and cooperation can class 1 injuries be entirely eliminated. We continued to closely manage our key performance indicators (KPIs) and undertook initiatives and improvements throughout 2011 to achieve our safety objectives. During the period, the Group did not meet its objective of eliminating fatalities, with three fatalities in the 6 months to 31 December 2011 as described in the table below. Two of these occurred within the Group’s Australian operations and one occurred within the Group’s international operations. The fatalities that occurred during the period are highly distressing to the Board and additional strategies and actions have been initiated to seek to eliminate class 1 injuries and where possible apply “hard” engineering controls to prevent reoccurrences. Operating Company

Project name Geography Worker type/ description

Thiess & John Holland (JHG) joint venture

Brisbane Airport Link Project

Queensland, Australia

JHG Employee – Plant/ vehicle interaction

Thiess Satui Coal Mine

South Kalimantan, Indonesia

Subcontractor – Traffic accident

John Holland Perth City Link Rail Project

Western Australia, Australia


Dec

2011# Jun

2011 Jun

2010 Jun

2009 Jun

2008

Fatalities*

Australia 2 1 2 4 1

International 1 3 2 6 5

Total 3 4 4 10 6

Million hours worked*

Australia 61.2 114.5 103.5 93.2 79.1

International 50.6 84.2 73.1 74.8 69.1

Total 111.8 198.7 176.6 168.0 148.2 * Excludes LMEA (comprising HLG, Leighton Africa and Thiess

Services). # The current financial year of the company is the 6 month period from

1 July 2011 to 31 December 2011, and as such the information presented above is not entirely comparable.

63

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 SAFE WORKPLACE AND PRACTICES Safety is a core value that is demonstrated through the Group’s commitment to the elimination of fatalities and permanent disabling injuries (class 1 injuries) and the systematic reduction of all other injuries across our operations. This is achieved through the Leighton Holdings Global Safety Standards which places an uncompromising emphasis on hazard identification, risk assessment and risk management. In 2011 we adopted a strong advocacy position on industry-wide safety, which included the submission to Safe Work Australia regarding the adoption of the life-saving features in the United Kingdom Construction (Design and Management) Regulation. The UK approach broadens the responsibility for safety by imposing legal obligations on all construction project participants, including designers and clients. We believe that all participants in the construction procurement chain (including clients, designers, contractors and employees) should play a role in ensuring workplace safety, and that only through collaboration and cooperation can class 1 injuries be entirely eliminated. We continued to closely manage our key performance indicators (KPIs) and undertook initiatives and improvements throughout 2011 to achieve our safety objectives. During the period, the Group did not meet its objective of eliminating fatalities, with three fatalities in the 6 months to 31 December 2011 as described in the table below. Two of these occurred within the Group’s Australian operations and one occurred within the Group’s international operations. The fatalities that occurred during the period are highly distressing to the Board and additional strategies and actions have been initiated to seek to eliminate class 1 injuries and where possible apply “hard” engineering controls to prevent reoccurrences. Operating Company

Project name Geography Worker type/ description

Thiess & John Holland (JHG) joint venture

Brisbane Airport Link Project

Queensland, Australia


Thiess Satui Coal Mine

South Kalimantan, Indonesia

Subcontractor – Traffic accident

John Holland Perth City Link Rail Project

Western Australia, Australia


Dec

2011# Jun

2011 Jun

2010 Jun

2009 Jun

2008

Fatalities*

Australia 2 1 2 4 1

International 1 3 2 6 5

Total 3 4 4 10 6

Million hours worked*

Australia 61.2 114.5 103.5 93.2 79.1

International 50.6 84.2 73.1 74.8 69.1

Total 111.8 198.7 176.6 168.0 148.2 * Excludes LMEA (comprising HLG, Leighton Africa and Thiess



63

64

LEIGHTON CONCISE ANNUAL REPORT FOR THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued Similarly, the Group did not meet its objective of eliminating class 1 injuries with five class 1 injuries in the 6 months to 31 December 2011 compared to nine class 1 injuries in the 12 months to 30 June 2011. This class of injury is a continuing priority for the Group. As a leading indicator, the Group monitors potential class 1 incidents. As the data in the following table shows, there were 200 potential class 1 incidents in the 6 months ending 31 December 2011 in our Australian operations compared to 454 in the 12 months ending 30 June 2011. In our international operations, there were 49 potential class 1 incidents in the 6 months ending 31 December 2011 compared to 100 in the 12 months ending 30 June 2011. Group class 1 incidents* Dec

2011# Jun

2011 Jun

2010 Jun

2009 Jun

2008 Actual class 1 injuries Australia 2 2 5 10 2 International 3 7 6 8 4 Total 5 9 11 18 6 Potential class 1 incidents Australia 200 454 615 636 232 International 49 100 73 85 52 Total 249 554 688 721 284 * Excludes LMEA (comprising HLG, Leighton Africa and Thiess



The Group’s Total Recordable Injury Frequency Rate (TRIFR) measured per million hours worked was 14.4 in the 6 months ending 31 December 2011 in our Australian operations compared to 15.6 in the 12 months ending 30 June 2011. In our international operations, the TRIFR was 3.2 in the 6 months ending 31 December 2011 compared to 3.0 in the 12 months ending 30 June 2011. * TRIFR is an indicator of injuries (comprising class 1 injuries, lost time

injuries, medical treatment injuries and alternate work injuries) for each million hours worked. Excludes LMEA (comprising HLG, Leighton Africa and Thiess Services).

The Board recognises that Lost Time Injury Frequency Rate (LTIFR) is a lag indicator where lower rates do not necessarily equate to a safer workplace. Rather, the Board believes that the promotion of a reporting culture where a higher number of incidents are reported can be positive, reflecting openness and enabling greater learning across the Group. Although not a key internal indicator, we have chosen to report LTIFR as it is a recognised industry benchmark. The Group’s LTIFR in Australian operations (measured per million hours worked) was 1.6 in the 6 months ending 31 December 2011 compared to 1.8 in the 12 months ending 30 June 2011. In our international operations, the LTIFR was 0.4 in the 6 months ending 31 December 2011 compared to 0.6 in the 12 months ending 30 June 2011. * LTIFR is an indicator of the number of occurrences of lost time, injury

or disease for each million hours worked. Excludes LMEA (comprising HLG, Leighton Africa and Thiess Services).

During 2012, we intend to undertake the following initiatives to improve Group safety performance: safety performance will be directly linked to Group

executive remuneration; safety KPIs will be revised to include a broader

range of leading indicators that provide a clearer picture of performance and encourage an open culture of reporting;

Board review of all class 1 risks to ensure effective strategies are in place to manage and reduce these risks;

a new safety verification program will commence to identify and address gaps in the implementation of the Leighton Holdings Global Safety Standards; and

increased initiatives to share safety lessons across the Group, with a focus on actual and potential class 1 incidents.

64


65

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 WORKFORCE DIVERSITY We recognise that workplace diversity is essential to the sustainability of our workforce. It is our objective that a strong culture of diversity is established across the Group where each employee is respected for who they are and valued for their skills and experience. Our Group Diversity Policy and diversity initiatives focus on demographic diversity which includes gender, ethnicity, age and ability.

* Excludes LMEA (comprising HLG, Leighton Africa and Thiess

Services).

* Excludes LMEA (comprising HLG, Leighton Africa and Thiess

Services). # This information is not currently collected by some Operating

Companies, but collection of this data will be improved going forward. In 2011 we have focused on gender diversity, especially in senior management positions. A significant portion of our workforce are in engineering-related job activities which has presented a challenge for our gender diversity targets given the relatively low level of females entering the profession. Regardless, gender equity continues to be a focus and we have a strong commitment to supporting women entering the workforce, equity in promotion and initiatives to enhance female retention.

In line with our Diversity Policy, we have established the following targets in relation to female participation across the Group: increase the number of women in executive and

senior management positions at Leighton Holdings to 40% by 2016;

increase female representation on the Australian Operating Company boards to 20% by 2016; and

undertake a remuneration review of executive and senior management positions across the Group and implement corrective action if required.

Over the December 2011 Transitional Financial Year, our progress towards achieving these targets was as follows: at Leighton Holdings, female participation at the

executive and senior management level slightly decreased, from 32% at 30 June 2011 to 29% at 31 December 2011;

female participation in the Australian Operating Company Boards has decreased slightly to 16% at 31 December 2011 due to an increase in the total number of Directors, although total female participation in Australian operations increased to 17% during the period; and

the review of gender-based pay forms part of the ongoing remuneration review.

No. of

women Dec 2011 %

No. of women

Jun 2011 %

Leighton Holdings

Board1 0 0 0 0

Executive and management2 6 29 9 32

Total Leighton Holdings 63 38 64 40

Australian operations

Operating Company Boards1 3 16 3 17

Executive and management2 20 11 19 12

Total Australian operations 4,758 17 5,037 16 1 Non-executive Directors only. 2 Executive and management at Leighton Holdings comprises the CEO,

his direct reports and functional heads, and at the Operating Companies comprise Managing Directors and their direct reports, Business Unit Managers, Executive General Managers and Branch General Managers.

Indigenous participation remains a continued focus for the Group. In those areas of our operations with a high aboriginal population, it is our objective to continue to invest in employing indigenous persons in our workforce. We currently employ 1.3% of Aboriginal and Torres Strait Islanders in our domestic workforce.

65

66

LEIGHTON CONCISE ANNUAL REPORT FOR THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued We understand that participation needs to be accompanied by cultural awareness and support programs, such as the Jawun program that we have supported since 2010. This program provides Group employees with an opportunity to work with Indigenous communities and businesses in order to transfer skills and capabilities. We have continued our partnership with the Australian Indigenous Minority Supply Council (AIMSC), which provides a direct business-to-business purchasing link between companies, government agencies and Indigenous-owned businesses. During 2012, we will undertake the following initiatives to improve our commitment to diversity: understand gender pay equity across Group

executives and senior management and undertake rectification actions as required;

strengthen our Diversity Policy to reflect our evolving diversity objectives;

strengthen human resources data, systems and processes to better monitor and manage diversity issues; and

develop appropriate diversity KPIs for the Board and Group executives.

EFFICIENT USE OF NATURAL RESOURCES Environmental management Our key environmental objective is to avoid any pollution or degradation that severely impacts on the community or environment and to appropriately manage all other risks to the environment across our operations. To support this objective, we have an Environmental Framework to maintain and improve our leadership in encouraging environmentally sound practices. The Framework provides guidance to the Operating Companies by setting minimum environmental management standards for all projects, even if not specifically required by the client. The Framework was updated during 2011, including tightening of the incident classifications, to reflect the regulatory environment and improve governance requirements. In 2011, each Operating Company continued to deliver on the Group’s long-term strategy of: managing environmental risks in accordance with

the Group's Risk Management and Control Framework;

establishing and/or maintaining ISO14001 certification in operations;

embedding a culture of reporting and managing

environmental incidents with training and awareness programs; and

regularly reviewing environmental impacts and performance of operations.

In both our Australian and international operations it is pleasing to report there were no Level 1 incidents during the period. Additionally, the number of Level 2 incidents has reduced in comparison to the 6 monthly equivalent figures. The Environmental Incident Frequency Rate (EIFR), the frequency of Level 1 and 2 incidents occurring on projects under the control of an Operating Company per million hours worked, decreased during the period from 0.43 to 0.28 in our Australian operations. The EIFR in our international operations decreased during the period from 0.05 to 0.02. We continue to focus on improving our reporting of environmental incidents. While there has been an increase in minor (Level 3) environmental incidents reported (on an annualised basis), this can be attributed to an increase in the scale of our projects and an emphasis on reporting minor occurrences rather than a deterioration in performance. Going forward, we will continue to encourage an open reporting culture as this is key to continuous improvement. Further details regarding our environmental management performance, including incidents reported by level, can be found on our website.

* Operating Companies utilise a Group-wide Environmental Incident

Classification and Severity Standard which categorises incidents as high (Level 1), medium (Level 2) or low (Level 3). The severity rating is measured according to specified criteria relating to the nature of the incident, breaches or non-compliance with statutory requirements or approval conditions, reputational impact and cost thresholds.

# Excludes HLG.

66


67

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 Group environmental incidents* Dec

2011# Jun

2011 Jun

2010 Jun

2009 Jun

2008

Australia

Level 1 0 2 0 1 0

Level 2 17 48 26 24 25

Level 3 892 1,343 1,150 901 675

EIFR 0.28 0.43 0.25 0.27 0.31

International^

Level 1 0 0 0 0 0

Level 2 1 4 2 8 3

Level 3 31 89 66 78 56

EIFR 0.02 0.05 0.03 0.11 0.04 * Operating Companies utilise a Group-wide Environmental Incident

Classification and Severity Standard which categorises incidents as high (Level 1), medium (Level 2) or low (Level 3). The severity rating is measured according to specified criteria relating to the nature of the incident, breaches or non-compliance with statutory requirements or approval conditions, reputational impact and cost thresholds.

# The current financial year of the company is the 6 month period from 1 July 2011 to 31 December 2011, and as such the information presented above is not entirely comparable.

^ Excludes HLG. Energy efficiency and carbon emissions We recognise that climate change is a significant issue and the Group's Environmental Framework requires that Operating Companies consider energy efficiency and carbon emissions within client requirements. We aim to integrate and report robust and accurate greenhouse gas (GHG) emissions and energy data to establish a strong baseline of the Group's footprint to: meet regulatory requirements; enable forecasting; and inform energy efficiency and sustainability

strategies. Our short-term strategy has focused on improving the quality of the Group's GHG emissions and energy data within Australia to meet regulatory requirements. In light of this, in 2011 we engaged Net Balance to undertake an external audit to provide limited assurance of our reported data for the 12 months ending 30 June 2011. We intend to transition to a higher level of assurance (reasonable assurance) over the next two years for the GHG emissions and energy data reported for the 12 months ending 30 June 2013.

Our medium to long-term strategy is to develop a GHG emissions and energy reporting framework which encompasses both domestic and offshore operations. A research paper was drafted internally during 2011 to inform the development of this reporting framework. The objective of the paper was to propose options for: developing a consistent and robust reporting

approach across our domestic and international operations;

selecting appropriate carbon intensity metrics to allow performance analysis;

setting GHG emissions and energy targets; and identifying Group-wide opportunities for energy and

cost efficiencies. The paper was distributed to the Operating Companies in September 2011 and was discussed at a Group workshop in March 2012. Agreement was reached between the Operating Companies for a common approach to reporting moving forward. Additionally, we achieved agreement in relation to the Group's water and waste reporting. Within Australia, we are subject to reporting requirements under the National Greenhouse and Energy Reporting (NGER) Act 2007 (Cth) and the Energy Efficiency Opportunities (EEO) Act 2006 (Cth). In October 2011, we submitted our third NGER report for the 12 months ending 30 June 2011. The report includes scope 1 and 2 GHG emissions and energy data for Australian facilities where the Group has operational control. While the Group is a large energy user, much of our energy and emissions footprint in Australia is reported through to our clients who have operational control and report to government accordingly.

67

68


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued Energy and emissions as reported under NGER Act 2007 Jun 2011 Jun 2010 Jun 2009

No. of facilities under operational control

264 258 2191

Emissions (t CO2‐e) 963,328 928,246 593,229

Energy use (million GJ) 8.4 7.8 5.3

Uncertainty 7.88% ‐ ‐

Level of assurance2 Limited Nil3 Nil3 1 The June 2009 information has been adjusted to account for changes to

the Group’s entity structure between the June 2009 and June 2010 reports, where we consolidated 21 facilities into 4 facilities.

2 NGER Regulations specify three levels of third party assurance – ‘nil’ for no assurance, ‘limited’ which assesses 60% of Group energy and emissions, and ‘reasonable’ which assesses 80% of Group energy and emissions.

3 Assurance was not required under the NGER Act for these years. Total emissions for which the Group had operational control under NGER continue to increase. This is attributed to an increase in energy use as a result of both more intense project activity and an increase in the amount of work undertaken. For EEO, we transfer our reporting obligations onto two of our Operating Companies, Leighton Contractors and Thiess. The public reports for the first 5 year EEO cycle were submitted in December 2011 and can be found on our website. The second 5 year EEO cycle commenced on 1 July 2011. Changes to EEO include alignment with NGER and the energy coverage rule increasing from 80% to 90%. As a consequence, John Holland will be required to report going forward. Whilst energy efficiencies are managed at an Operating Company level, we will be undertaking analysis in 2012 to identify any Group-wide opportunities that may deliver energy savings across the Group. The Clean Energy Legislative Package (CELP) was passed through Federal Parliament on 8 November 2011. A key element of this package is the Carbon Price Mechanism (CPM), to be introduced on 1 July 2012, which effectively places a price on the emission of certain GHGs (carbon dioxide, methane, nitrous oxide and perfluorocarbons from aluminium smelting) by covering sectors of Australian industry. Preliminary analysis of the CPM suggests that the largest impact on the Group will be from cuts to fuel tax credits (FTCs), which are currently worth more than $110 million per year to the Australian Operating Companies. However, the reduction in FTCs is not expected to be financially material.

Whilst the Group is a large diesel user, the omission of liquid fuels from eligible GHG emissions means the majority of our operations are unlikely to trigger the 25kt CO2-e threshold for direct permit liabilities. Exceptions to this are fugitive emissions from coal mining and non-legacy waste emissions from landfill operations. However, for the majority of these operations the permit liability has been contractually managed through the application of the definition of operational control and passed through to our clients. Of the 264 facilities from which the Group reported for the 12 months ending 30 June 2011, we have retained operational control of two that meet the threshold for a direct permit liability. Using this reported data, we have estimated that our retained liability for these two facilities will be approximately $4.8 million (at $23/t). During the period, the Group commissioned PricewaterhouseCoopers to undertake modelling of the price impact of the CPM on key operational inputs such as electricity, concrete, steel and asphalt over the period from July 2012 to June 2020. The modelling suggests the impact from the CPM will be modest compared to other price increases such as inflation and tax changes. This information will be used by the Australian Operating Companies to inform tender pricing. In 2009, the Australian Operating Companies reviewed existing contract provisions and provided assurance of the ability to pass through costs arising from the CPM. Now with the CELP confirmed, a further review of contracts is currently being undertaken to ensure pass-through provisions relating to the direct and indirect impacts of the CPM are adequate. Other expected impacts of the CELP include additional assessment and verification of both NGER and EEO programs, and tax breaks for green buildings from 1 July 2012 for eligible businesses.

68


69

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 RESPONSIBLE AND ACCOUNTABLE The Group engages with the community at many levels and the relationships it has with its stakeholders are fundamental to the ongoing success of the Group. The Group's key stakeholders are our shareholders, clients, suppliers and the communities in which we operate. Some of these stakeholders, such as current and potential shareholders and employees interact primarily with Leighton Holdings. However, the broader community and clients primarily interact with the Operating Companies. Dealing with certain issues, such as a major legislative change, therefore requires a level of cooperation and coordination across the Group. The Group uses a range of mechanisms to engage with stakeholders including employee surveys that shape human resources policies and practices, community relations strategies to respond to concerns or create opportunities in projects, and government relations campaigns that shape policy and legislation. As a publicly listed company, we communicate with shareholders, regulators, the financial community, the media and other stakeholders in an open and timely manner to ensure that financial markets have sufficient information to make informed investment decisions. Further information in relation to our Shareholder Communications Policy is set out in the Corporate Governance Report on page 54 of this Concise Annual Report. Governments at local, State and Federal levels are important clients and our reputation and standing with government and other groups within the political process has the potential to impact on our operations. Our government relations strategy is to develop positive relationships with members of Parliament at the State and Federal level, their staff, departmental officials, and others involved in the political and policy development process. Key principles include: monitoring, influencing and responding to public

policy and political issues which may impact on business opportunities or major projects; and

maintaining a transparent and bipartisan approach to political expenditure within approved budgets.

Political donations The Group does not make direct political donations. We retain the flexibility to attend targeted fundraisers that build relationships and offer opportunity to participate in policy dialogue. Expenditure reflected in the following table includes payment for attendance at business forums, budget speeches, policy announcements and discussion forums and is spread evenly across government and opposition parties over a 12 month period.

Political Expenditure: July to December 2011* $

Coalition (Liberal and National Party) 5,255

Australian Labor Party 40,350

Total 45,605 * This information represents the current financial year of the company

which is the 6 month period from 1 July 2011 to 31 December 2011. Political expenditure is spread evenly across government and opposition parties over a 12 month period.

As attendance at these events delivers a commercial benefit, this expenditure does not meet the strict definition of a political donation. However, given the ambiguity of the various definitions in State and Federal legislation and in the interests of transparency, the Group reports all such expenditure to the Australian Electoral Commission on an annual basis. COMMUNITY INVESTMENT Our corporate community investment objective is to give something back to the communities within which we operate, and to achieve positive long-term effects that continue after projects are finished. Operating Companies contribute money, time, products, services, leadership and other resources to the communities in which they operate. Strategic corporate community investments are directed to proposals that build the Group’s future skills base, protect the environment and promote excellence through arts and culture. In the December 2011 Transitional Financial Year the Group contributed $2.64 million to the community through a mix of major partnerships with community organisations, sponsorships, charitable donations and workplace giving. Major partnerships focused on five priority areas during the period, with an emphasis on education and supporting the Group’s Indigenous Participation Policy through targeted investment.

69

70


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued Building skills through training and education The Group has a long-term strategy to provide access to training and education to promote employment in construction, resources and services. This aims to reduce the impact of skills shortages across the Group, particularly given the challenges of Australia’s ageing population. Our education strategy supports students at all levels in the development of technical skills. Our long-term partnership with the University of New South Wales supported 11 engineering scholarships during the period. Our support of Primary Science Matters and its ‘Science in a Box’ program provided science resources and teacher training to schools in the Northern Territory and regional New South Wales. In 2012, we will increase the program's presence in the Darwin area and the Tiwi Islands. We are also a gold sponsor and long-term supporter of Robogals, which is an international student-run organisation dedicated to promoting engineering to women, and was founded by Marita Cheng, the 2012 Young Australian of the Year. We also continued to support Engineering Aid Australia's Indigenous Australian Engineering Summer Schools in Sydney and Perth. These schools enable Indigenous students across Australia to spend a week living on a university campus, attending lectures and site visits. The program is aimed at inspiring students to consider engineering as a career. Each Operating Company has its own corporate community investment program that suits its own business needs. For example, Leighton Contractors supports innovative education programs including: providing mentoring opportunities for more than

50 employees to disadvantaged youth through the Beacon Foundation's 'No Dole' program involving 15 New South Wales schools; and

educational scholarships, training and placements for Indigenous students through the Australian Indigenous Education Foundation, the Clontarf Foundation and Garnduwa.

Promoting excellence through arts and culture We have continued our nine year partnership with the Sydney Symphony, renewing a commitment for a further three years to 2015. In addition to being the Presenting Partner of the Sydney Sinfonia mentoring orchestra, since July 2011 we have been the Presenting Partner of the Sinfonietta, a national composition project that gives talented high school music students the opportunity to have their original compositions performed by the Sydney Sinfonia.

Through the Australian National Academy of Music, we supported scholarships for talented music students from across Australia during the period. John Holland is also a proud sponsor of the Victorian Opera. Protecting the environment Consistent with our Code of Ethics, a significant portion of our corporate community investment budget is directed towards community organisations that aim to protect the environment. We have continued our partnership with Landcare Australia as a major sponsor of the National Landcare Awards, sponsoring the ‘Leighton Indigenous Landcare Award’ which will be awarded in 2012. Thiess also continues to sponsor the ‘Thiess International Riverprize’ which is awarded annually for excellence in river management. DIRECTORS AND DIRECTORS’ INTERESTS The Directors in office at the date of this Directors’ Report are listed below together with details of their relevant interest in the securities of Leighton Holdings at that date. Director No. of ordinary

shares held No. of

options/rights over unissued

ordinary shares

Stephen P Johns 14,112 ‐

Hamish G Tyrwhitt 1,110 110,0321

Peter A Gregg 3,652 38,4662

Achim Drescher 12,045 ‐

Paula J Dwyer3 0 ‐

Robert D Humphris OAM 15,000 ‐

Ian J Macfarlane AC 5,795 ‐

Wayne G Osborn 3,673 ‐

David P Robinson 1,489 ‐

Peter W Sassenfeld 1,858 ‐

Dr Frank Stieler4 1,192 ‐

Manfred H Wennemer4 2,745 ‐ 1 Further details about the options held by Mr Tyrwhitt are set out on

pages 110 to 111 of this Concise Annual Report. 2 Further details about the share rights held by Mr Gregg are set out on

page 112 of this Concise Annual Report. 3 During the period between Ms Dwyer’s appointment as a Director on

1 January 2012 and the date of this Directors’ Report, the company was in a trading blackout period. Ms Dwyer will acquire the minimum shareholding required by the company’s Constitution during the next trading window.

4 Robert L Seidler AM is the Alternate Director for Dr Stieler and Mr Wennemer, and holds 100 ordinary shares and 0 options over unissued ordinary shares.

70


71

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 In addition, the Executive Directors are entitled to receive Long-Term Incentive (LTI) grants under their employment agreements. Details of these entitlements are set out in the Remuneration Report on pages 94 to 95 and 100 to 102 of this Concise Annual Report. Shareholder approval for the LTI grants to the Executive Directors will be sought at the May 2012 Annual General Meeting as set out in the Notice of Meeting. BOARD AND COMMITTEES Details of the membership of the Board and the Board Committees, as well as relevant officers of the company, are shown on page 40 of this Concise Annual Report. Details of the qualifications, experience and special responsibilities of each Director and Company Secretary, including the period for which they have held office and their directorships of other listed companies, are also disclosed on pages 34 to 40 of this Concise Annual Report. In addition, details of all Directors who retired during the December 2011 Transitional Financial Year are set out on page 39 of this Concise Annual Report. COMPANY SECRETARIES Full details of the Company Secretaries are set out on page 38 of this Concise Annual Report.

DIRECTOR AND SENIOR EXECUTIVE REMUNERATION Details of our remuneration policy in respect of the Group’s Key Management Personnel (KMP) are detailed in the Remuneration Report on pages 75 to 112 of this Concise Annual Report. The Remuneration Report includes details of the remuneration paid to each Director and each senior executive. CEO/CFO DECLARATION The CEO and CFO have given a declaration to the Board concerning the Group’s financial statements in accordance with section 295A of the Corporations Act and recommendation 7.3 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. DIRECTORS’ MEETINGS The number of Directors’ meetings (including meetings of Committees of Directors) and number of meetings attended by each Director during the December 2011 Transitional Financial Year are set out in the table below. There were no Due Diligence or Special Tender Review Committees formed during the December 2011 Transitional Financial Year, and there were no meetings of the Plan Committee during the December 2011 Transitional Financial Year. The Tender Review and Risk Committee was formed after the end of the December 2011 Transitional Financial Year.

Director Directors’ Meetings Audit Committee Remuneration and

Nominations Committee Ethics and Compliance

Committee

Attended Held* Attended Held* Attended Held* Attended Held*

Achim Drescher 9 9 2 2 4 5 ‐ ‐

Peter A Gregg 8 9 ‐ ‐ ‐ ‐ ‐ ‐

Robert D Humphris OAM 8 9 ‐ ‐ ‐ ‐ 2 2

Stephen P Johns 9 9 4 4 3 3 ‐ ‐

Dr Burkhard Lohr1 6 6 ‐ ‐ ‐ ‐ ‐ ‐

Ian J Macfarlane AC 9 9 ‐ ‐ ‐ ‐ ‐ ‐

David A Mortimer AO 3 3 2 2 2 2 ‐ ‐

Wayne G Osborn 9 9 ‐ ‐ 5 5 2 2

David P Robinson 9 9 4 4 ‐ ‐ ‐ ‐

Peter W Sassenfeld 1 1 ‐ ‐ ‐ ‐ ‐ ‐

Dr Frank Stieler2 9 9 ‐ ‐ 5 5 ‐ ‐

David G Stewart 3 4 ‐ ‐ ‐ ‐ 1 1

Hamish G Tyrwhitt 6 6 ‐ ‐ ‐ ‐ 1 1

Manfred H Wennemer 3 4 ‐ ‐ ‐ ‐ ‐ ‐ * Reflects the number of meetings held during the time the Director held office during the December 2011 Transitional Financial Year.

1 Three Directors’ meetings were attended in person and three by his alternate. 2 Seven Directors’ meetings were attended in person and two by his alternate.

71

72


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued LEIGHTON SENIOR EXECUTIVE OPTION PLAN (LSEOP) The LSEOP was approved by shareholders at the 2006 AGM. Options over shares in the company were first granted under the LSEOP in 2006 (2006 Options) and subsequently in 2008 (2008 Options) and 2009 (2009 Options). Each option entitles the holder to one fully paid ordinary share upon exercise (subject to satisfaction of exercise conditions). The total number of options over unissued ordinary shares in the company outstanding under the LSEOP at the date of this Directors’ Report is detailed in the table below. Plan LSEOP LSEOP LSEOP

Calendar year of grant

2006 Options 2008 Options 2009 Options

No. of executives participating

62 157 322

Date of grant 15 Dec 2006 25 Jan 2008 4 May 2009

Exercise price $19.271 $44.911 $18.871

Expiry date 15 Dec 2011 25 Jan 2013 4 May 2014

No. of options

No. of options

No. of options

Original grant 5,410,000 1,461,000 4,833,500

On issue 5 Sept 20112

797,000 864,035 4,635,500

Exercised since 5 Sept 20112

572,000 ‐ ‐

Vested since 5 Sept 20112

‐ ‐ ‐

Lapsed since 5 Sept 20112

225,000 197,684 604,500

On issue 13 Feb 2012

‐ 666,351 4,031,000

1 The LSEOP Rules, approved by shareholders on 9 November 2006,

require that in the event of a pro-rata issue of shares the exercise price of options on issue be reduced in accordance with the ASX Listing Rules. With effect from 1 July 2011, the amended exercise price for the 2006, 2008 and 2009 Options granted under the LSEOP is as follows:

Grant Date Original

Exercise Price

Adjusted Exercise

Price due to 1:14

Entitlement Offer

18 Aug 2008

Adjusted Exercise

Price due to 1:9

Entitlement Offer

11 Apr 2011 15 Dec 2006 $20.42 $19.89 $19.27 25 Jan 2008 $46.06 $45.53 $44.91 4 May 2009 $19.49 N/A $18.87

2 Date of the 2011 Concise Annual Report for the financial year ended

30 June 2011.

Details of the exercise conditions of options under the LSEOP are contained in the Remuneration Report on pages 94 to 95 of this Concise Annual Report. The names of the persons who currently hold options under the LSEOP are entered in the register of options kept by the company pursuant to section 170 of the Corporations Act. These options do not entitle the holder to participate in any share issue prior to exercise. There are no unissued shares in the company under option as at the date of this Directors’ Report, other than those issued under the LSEOP referred to in the table on this page. No options have been issued since the end of the December 2011 Transitional Financial Year over unissued shares in the company. AUDIT The declaration by the Group’s external auditor to the Directors in relation to the auditor’s compliance with the independence requirements of the Corporations Act and any applicable code of professional conduct for external auditors is set out on page 74 of this Concise Annual Report. No person who was an officer of the company during the December 2011 Transitional Financial Year was a director or partner of the Group’s external auditor at a time when the Group’s external auditor conducted an audit of the Group.

72


73

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 INDEMNITY FOR GROUP OFFICERS AND AUDITORS Constitution Our Constitution includes indemnities in favour of persons who are, or have been, an Officer or auditor of the company. To the extent permitted by law, we indemnify every person who is or has been: an Officer against any liability to any person (other

than the company or a related entity) incurred while acting in that capacity and in good faith; and

an Officer or auditor of the company against costs and expenses incurred by that person in that capacity in successfully defending legal proceedings and ancillary matters.

‘Officer’ for this purpose means any Director or Secretary and includes any other person who is concerned, or takes part, in the management of the company. The current Directors and Company Secretaries of the company are set out on pages 34 to 38 of this Concise Annual Report, and our current auditors are KPMG. Directors’ Deeds Consistent with the shareholder approval obtained at the 1999 AGM, we have entered into a Deed of Indemnity, Insurance and Access (Directors’ Deed) with current and former Directors. These Directors’ Deeds formalise the arrangements between us and the Directors as to indemnities, insurance and access to board records. Under each Directors’ Deed we indemnify the Director to the extent permitted by law against any liability (including liability for legal defence costs) incurred by the Director as an Officer or former Officer of the company or any Operating Company or while acting at the request of the company or any Operating Company as an Officer of a non-controlled entity. Deeds of Indemnity for certain Officers We have entered into Deeds of Indemnity with particular Officers or former Officers of the company or an Operating Company. These Deeds give similar indemnities in favour of those Officers or former Officers in respect of liabilities incurred by the Officers while acting as an Officer of the company or any Operating Company or while acting at the request of the company or any Operating Company as an Officer of a non-controlled entity. The Officers who have the benefit of such a Deed of Indemnity are, or were at the time, a Secretary of the company, Directors of an Operating Company or a General Manager or Senior Manager within the Group.

No claims under the Constitution, Directors’ Deeds or Deeds of Indemnity have been made against the company during or since the end of the December 2011 Transitional Financial Year. INSURANCE FOR GROUP OFFICERS During and since the end of the December 2011 Transitional Financial Year we have paid or agreed to pay premiums in respect of contracts insuring persons who are or have been a Group Officer against certain liabilities (including legal costs) incurred in that capacity. ‘Group Officer’ for this purpose means any Director or Secretary of Leighton Holdings or any subsidiary and includes any other person who is concerned, or takes part, in the management of the company or any of its subsidiaries. Under the above mentioned Directors’ Deeds or Deeds of Indemnity, we have undertaken to the relevant Officer or former Officer that we will insure the Officer against certain liabilities incurred in his or her capacity as an Officer of the company or any subsidiary or as an Officer of a non-controlled entity where the office is or was held at the request of the company or any subsidiary. The insurance contracts entered into by us prohibit disclosure of the specific nature of the liabilities covered by the insurance contracts and the amount of the premiums.

73

74


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued NON-AUDIT SERVICES Details of the amounts paid or payable to our external auditor, KPMG, for non-audit services provided during the period to entities within the Group are set out below. The Board has considered the position and, in accordance with the advice received from the Audit Committee, is satisfied that the provision of the non-audit services during the December 2011 Transitional Financial Year is compatible with the general standard of independence for auditors imposed by the Corporations Act. The Board is satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act for the following reasons: all non-audit services have been reviewed by the

Audit Committee and the Committee believes that they do not impact the impartiality and objectivity of the auditor because of the nature of the services provided during the period and the quantum of the fees which relate to non-audit advisory services compared to the overall fees; and

the Directors believe none of the services undermine the general principles relating to auditor independence, including reviewing or auditing the auditor's own work, acting in a management or decision making capacity for the Group, acting as advocate for the Group or jointly sharing economic risk and rewards.

The non-audit services supplied to entities within the Group by the Group's external auditor, KPMG, and the amount paid or payable by type of non-audit service during the December 2011 Transitional Financial Year are as follows: Non‐audit services Amount paid / payable

$’000

Direct and indirect tax compliance and advisory services

1,979

Other advisory services 703

Total 2,682

LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT To: the directors of Leighton Holdings Limited: I declare that, to the best of my knowledge and belief, in relation to the audit for the 6 month period ended 31 December 2011 there have been: (i) no contraventions of the auditor independence

requirements as set out in the Corporations Act 2001 in relation to the audit; and

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

KPMG A W Young Partner Sydney, 13 February 2012 ROUNDING OFF OF AMOUNTS As Leighton Holdings is a company of the kind referred to in ASIC Class Order 98/100 dated 10 July 1998, the Directors have chosen to round off amounts in this Directors’ Report and the accompanying Concise Financial Report to the nearest hundred thousand dollars, unless otherwise indicated.

74


REMUNERATION REPORT

Zuellig buildingPhilippinesLeighton Asia

75

77


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT (AUDITED) MESSAGE FROM THE BOARD The review of executive remuneration As indicated at the November 2011 Annual General Meeting, we have undertaken a comprehensive review of our approach to executive remuneration. The review revisited the link between our business strategy and remuneration, and considered the feedback we received from our shareholders. The revisions to our approach (described below) are intended to support our strategy, enable us to hire, retain and motivate the high calibre of executives our business requires, and to better align the remuneration that executives receive with the interests of our shareholders. A revised short-term incentive plan with deferral Our past short-term incentive plan focused primarily on profit. In the case of Leighton Holdings executives, this was measured at the Group level, while, for the Managing Directors of the Operating Companies, it was measured at the Operating Company level. Individual executive performance against a range of non-financial objectives was also considered. The revised short-term incentive plan is set out in detail in section 3.4 of this Remuneration Report and incorporates the following key changes: the Leighton Holdings executives will have a

portion of their short-term incentive determined by Group financial performance and a portion determined by non-financial measures relevant to their role;

the Managing Directors of the Operating Companies will have a portion of their short-term incentive determined by Group financial performance, a portion determined by their Operating Company’s financial performance, and a portion determined by non-financial measures relevant to their role;

the relevant financial measures and targets will be selected and set each year by the Remuneration and Nominations Committee in consultation with management. Whilst the Group financial measure will be profit for the financial year ending 31 December 2012 and is expected to remain so, the Operating Companies will be assessed on the financial measures relevant to the specific Operating Company. These measures will be selected from a set that include profitability, the effective use of capital, achievement of cash flow targets and adherence to applicable funding limits;

the non-financial measures and targets will be set

each year and tailored to the role of the executive. The non-financial measures will typically focus on safety and the management of our people. The measures may include such matters as the total recordable injury frequency rate, achieving nil fatalities, succession planning, employee turnover, engagement survey results and demonstration of behaviours aligned with the Leighton values; and

a portion of the short-term incentive earned in each year will be deferred into share rights for two years starting at the end of the short-term incentive performance period. During the deferral period dividends will be accrued and will be paid at the end of the deferral period to the extent that the share rights vest. The Remuneration and Nominations Committee will have the ability to reduce the number of deferred share rights that vest if subsequent events show such a reduction to be appropriate.

A new long-term incentive plan In the past, our long-term incentive plan was used to periodically make grants of share options to selected executives. In light of the review, we have decided to make regular grants each year. A new plan, as outlined in section 3.5 of this Remuneration Report, has been developed that provides flexibility to determine the nature of the grant (ie shares, options or share rights) and its terms. For 2012 the plan will operate as a grant of share rights (ie a right to receive a share in three years’ time if specific performance measures are met). The performance measures will be total shareholder return measured over the three year period against a group of comparator companies and achievement of predetermined compound average annual earnings per share growth targets over the same three year period. Fifty percent (50%) of the 2012 grant will be tested against each performance measure. Unlike our former plan, the new plan will not permit re-testing (ie if the targets are not met when first tested, the share rights will lapse). It is anticipated that, unless there is an identified business or market need to change, subsequent grants will have similar terms to the 2012 grants.

77


REMUNERATION REPORT (AUDITED)

78


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued Discontinuing the medium-term incentive We historically operated a medium-term incentive that periodically rewarded executives with cash payments (part of which was deferred and subject to reduction) based on year-on-year profit growth. As a result of the revised short-term incentive plan and the annual awards under the new long-term incentive plan, the cash-based medium-term incentives have been discontinued. Revised contracts and discontinuing service and retention arrangements New standard executive contracts are being put in place. These new contracts are based on contemporary best practice. In developing these new contracts, we will cease the former practice of incorporating service or retention arrangements into individual contracts. However, we recognise that, from time to time, special arrangements may need to be considered. Existing service and retention arrangements, where appropriate, are being paid out, or replaced with a grant of deferred share rights. In such cases, the agreed terms will enable the recovery or reduction of the amounts in specific circumstances where the individual leaves the Group prior to the original intended payment dates. Shareholder approval The relevant approvals for the above arrangements will be sought at the May 2012 Annual General Meeting. KEY MANAGEMENT PERSONNEL REMUNERATION IN THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR The new arrangements take effect for the financial year ending 31 December 2012. As such, this 6 month period to 31 December 2011 was one of transition. The remuneration arrangements in place during the 6 month period from 1 July 2011 to 31 December 2011 (the December 2011 Transitional Financial Year) are summarised below and further detail is contained in sections 4 and 5 of this Remuneration Report. Changes to remuneration No changes occurred during the December 2011 Transitional Financial Year to the remuneration of incumbent executives or to the fee policy that applies to the Chairman and Non-executive Directors. As disclosed to the market on 9 February 2012, Mr Tyrwhitt’s remuneration was changed as a result of his promotion to Chief Executive Officer (CEO). Section 4.9.1 of this Remuneration Report contains the key terms of Mr Tyrwhitt’s new service agreement.

An adjustment was also made to the remuneration of Mr Munro upon his promotion to Managing Director of Thiess and to the remuneration of Mr Cooke upon his promotion to the role of Acting Managing Director of Leighton Asia, India and Offshore. Short-term incentives For the December 2011 Transitional Financial Year, a transitional short-term incentive plan was in place for the CEO. The short-term incentive award was determined based on the Group’s financial performance compared to a net profit after tax target. As a result of the Group’s financial performance, the CEO earned 78% of his maximum short-term incentive. For Managing Directors of Operating Companies, short-term incentives were determined utilising the principles underpinning the new short-term incentive plan which will be implemented for 2012. The application of these principles resulted in the award varying subject to financial performance of the Group or Operating Company, as well as factors specific to the senior executive. For Leighton Holdings senior executives, other than the CEO, short-term incentives for the December 2011 Transitional Financial Year were determined in accordance with their existing contracts. As explained earlier, it is intended to replace the short-term incentive arrangements in these existing contracts with the new short-term incentive plan. Section 4.5 sets out details on the operation of the short-term incentive plan and how short-term incentive payments link to performance. Long-term incentives The 2008 long-term incentive grant was first tested in July 2010. Half of the grant was subject to an earnings per share measure and, while a portion vested on this first test date, the remainder of the earnings per share component lapsed. The half of the 2008 grant subject to a total shareholder return measure was retested in January 2012 in accordance with its terms. This test showed that Leighton Holdings’ total shareholder return was below the median company in the comparator group. As a result no further vesting of the 2008 grant occurred. The tranche will be retested on 25 July 2012. Mr Gregg had a 2011 long-term incentive grant approved during the December 2011 Transitional Financial Year that may vest in 2014, subject to meeting the specified performance measures. This 2011 grant was made in accordance with his contract, and was approved by shareholders at the November 2011 Annual General Meeting.

78


REMUNERATION REPORT CONTINUED

79

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 Mr Stewart had a 2011 long-term incentive grant approved by shareholders during the December 2011 Transitional Financial Year as part of his termination payment. In accordance with his contract, 75,423 shares were granted. The remainder of his 2011 award lapsed. No other long-term incentives were granted to executives. Other remuneration No new medium-term incentives, service or retention arrangements were put in place during the December 2011 Transitional Financial Year. OTHER MATTERS Mr Tyrwhitt was appointed CEO on 24 August 2011. In order to put a new service agreement and remuneration arrangements in place, Mr Tyrwhitt’s existing medium-term incentives and service and retention benefits were paid out subject to the Remuneration and Nominations Committee’s ability to seek repayment of these payments in certain circumstances.

Further details on the new executive remuneration approach and the remuneration for the December 2011 Transitional Financial Year are set out in this Remuneration Report. I invite you to read the December 2011 Remuneration Report and look forward to answering any questions you may have at our Annual General Meeting in May 2012. Yours faithfully, Stephen Johns Chairman of the Remuneration and Nominations Committee 13 February 2012

TABLE OF CONTENTS

Section Title Description

1 Introduction Describes the scope of the Remuneration Report and the individuals disclosed.

2 Remuneration governance Describes the role of the Board, the Remuneration and Nominations Committee and the Plan Committee and the matters considered (including external advisers) when making remuneration decisions.

3 Introducing the new executive remuneration framework Outlines the remuneration framework applying to the financial year ending 31 December 2012.

4 Executive remuneration during the December 2011 Transitional Financial Year

Outlines the principles applied to executive remuneration, including the performance and remuneration linkages. It also includes a summary of service contract terms for senior executives.

5 Non‐executive Director remuneration Provides detail regarding the fees paid to the Non‐executive Directors.

6 Additional statutory disclosures Provides the additional statutory remuneration information as required by the Corporations Act and applicable accounting standards.

79

80


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued 1. INTRODUCTION This section describes the scope of this Remuneration Report and the individuals disclosed. 1.1 SCOPE This Remuneration Report sets out, in accordance with the relevant Corporations Act 2001 (Cth) (Corporations Act) and accounting standard requirements, the remuneration arrangements in place for the Key Management Personnel of the Group during the December 2011 Transitional Financial Year. As discussed earlier in this Concise Annual Report, the Group has changed its financial year-end to 31 December. As a result, this Remuneration Report discusses the 6 month period ended 31 December 2011. The comparative information presented in this Remuneration Report relates to the prior 12 month financial year ended 30 June 2011. In addition to providing details regarding the December 2011 Transitional Financial Year, this Remuneration Report summarises the changes being made to the remuneration approach that take effect for the financial year commencing 1 January 2012. The information provided in this Remuneration Report has been audited.

1.2 KEY MANAGEMENT PERSONNEL FOR THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR For the purposes of this Remuneration Report, the Key Management Personnel are referred to as either senior executives or Non-executive Directors. The senior executives and the Non-executive Directors as at year-end are listed in table 1.1. Table 1.2 outlines the departures during the December 2011 Transitional Financial Year. Since the end of the December 2011 Transitional Financial Year: Paula Dwyer has been appointed as an independent

Non-executive Director. The appointment of Ms Dwyer was effective 1 January 2012; and

Dharma Chandran has been appointed as Chief Human Resources Officer effective 1 January 2012.

80



81


Table 1.1: Key Management Personnel (as at year-end) Name Title (at year‐end) Change during the December 2011 Transitional

Financial Year

Non‐executive Directors

S P Johns Chairman and independent Non‐executive Director Appointed Chairman of the Board on 24 August 2011

A Drescher Independent Non‐executive Director

R D Humphris OAM Independent Non‐executive Director

I J Macfarlane AC Independent Non‐executive Director

W G Osborn Independent Non‐executive Director

D P Robinson Non‐executive Director

P W Sassenfeld Non‐executive Director Appointed 29 November 2011

Dr F Stieler Non‐executive Director

M H Wennemer Non‐executive Director Appointed 6 October 2011

Senior executives

H G Tyrwhitt CEO, Leighton Holdings, Executive Director Appointed CEO of Leighton Holdings on 24 August 2011. Mr Tyrwhitt was previously the Managing Director, Leighton Asia, India and Offshore

R R Cooke Acting Managing Director, Leighton Asia, India and Offshore Appointed 24 August 2011

M C Gray Managing Director, Leighton Properties

P A Gregg Chief Financial Officer, Leighton Holdings, Executive Director

C A van der Laan Chief Risk Officer and Group General Counsel, Leighton Holdings

C A Laslett Managing Director, Leighton Contractors

B A Munro Managing Director, Thiess Appointed Acting Managing Director, Thiess on 5 August 2011 and Managing Director, Thiess on 14 September 2011

G M Palin Managing Director, John Holland

L W Voyer Managing Director, Leighton Middle East & Africa

Table 1.2: Key Management Personnel (departures during the December 2011 Transitional Financial Year) Name Title Change during the December 2011 Transitional

Financial Year

Departures during the period

D A Mortimer AO Chairman and independent Non‐executive Director Resigned as independent Non‐executive Director and Chairman of the Board on 24 August 2011

Dr B Lohr Non‐executive Director Resigned on 12 October 2011

D G Stewart CEO, Leighton Holdings, Executive Director Ceased to be the CEO, Leighton Holdings and Executive Director on 24 August 2011 and ceased employment on 19 November 2011

S M Sasse General Manager, Organisational Strategy, Leighton Holdings

Ceased employment on 30 September 2011

D K Saxelby Managing Director, Thiess Ceased to be the Managing Director, Thiess on 5 August 2011, and ceased employment on 1 October 2011

81

82


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued 2. REMUNERATION GOVERNANCE This section describes the role of the Board, the Remuneration and Nominations Committee, the Plan Committee and the matters considered when making remuneration decisions. 2.1 ROLE OF THE BOARD AND THE REMUNERATION AND NOMINATIONS COMMITTEE The Board is responsible for the Group's approach to remuneration. Consistent with this responsibility, the Board has established a Remuneration and Nominations Committee. The Remuneration and Nominations Committee comprises a majority of independent Directors. The role of the Remuneration and Nominations Committee is to: review and approve the remuneration of the senior

executives; review and approve the remuneration policies and

practices for the Group generally, including incentive plans and other benefits; and

review and make recommendations to the Board regarding the remuneration of Non-executive Directors.

In making its decisions, the Remuneration and Nominations Committee considers advice from the CEO, other members of management and external advisers. Further information on the Remuneration and Nominations Committee's role, responsibilities and membership is contained in the Corporate Governance Report on pages 45 to 49 of this Concise Annual Report. 2.2 ROLE OF THE PLAN COMMITTEE For the December 2011 Transitional Financial Year, the Plan Committee was responsible for the administration of equity-based incentive plans after awards had been granted. At the conclusion of each relevant performance period, the Plan Committee requests an external assessment of performance against the relevant performance targets. The Plan Committee considered and applied this assessment, which resulted in the relevant proportion of the grant vesting or lapsing in accordance with the plan rules and any other relevant company policies and procedures. The other key responsibility of the Plan Committee during the December 2011 Transitional Financial Year was to determine the treatment of equity awards when a senior executive ceases employment. The Plan

Committee considered the reason for ceasing employment and the terms of the relevant plan rules, offer letter and the individual's contract to make the appropriate determination. For the financial year ending 31 December 2012, the role and membership of the Plan Committee will be revised. The Plan Committee (which will be a management committee) will be responsible for: approving all proposed equity-based incentive

participants (excluding senior executives, which is the responsibility of the Remuneration and Nominations Committee) and quantum. The Plan Committee will also make determinations regarding the treatment of equity awards when participants (excluding senior executives) cease employment;

for all equity based incentive plan participants, the Plan Committee will seek an external assessment of performance against the relevant long-term incentive performance targets and will then consider and apply this assessment, which results in the relevant proportion of the grant vesting or lapsing in accordance with the plan rules and any other relevant company policies and procedures;

reporting to the Remuneration and Nominations Committee, on a quarterly basis, the aggregate amount of any equity-based incentive grants made in the quarter; and

any other tasks delegated by the Remuneration and Nominations Committee related to the equity-based incentives.

The determinations of the treatment of equity awards when a senior executive ceases employment will be made by the Remuneration and Nominations Committee. Any retention grants will need to be approved by the Remuneration and Nominations Committee. 2.3 USE OF EXTERNAL ADVISERS The Remuneration and Nominations Committee seeks and considers advice from external advisers when required. Such advice will typically cover Non-executive Director remuneration, senior executive remuneration and advice in relation to equity plans. With effect from the December 2011 Transitional Financial Year, the Corporations Act requires us to disclose specific details regarding the use of remuneration consultants. The mandatory disclosure requirements only apply to those advisers that provide a "remuneration recommendation" as defined in the Corporations Act.

82



83

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 2.4 EXTERNAL ADVISERS IN THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR The Remuneration and Nominations Committee appointed Egan Associates to provide remuneration advice in the December 2011 Transitional Financial Year. During this period Egan Associates provided a remuneration recommendation in relation to the appropriate remuneration framework for the CEO, and advice on the matters to be addressed in relation to his existing contractual arrangements. The Remuneration and Nominations Committee is satisfied that the recommendations were free from undue influence based on the following reasons: the CEO was not involved in the selection and

appointment of Egan Associates; the CEO was not involved in any aspect of the

development of the advice in relation to his role; and Egan Associates provided written confirmation that

the recommendations were free from undue influence.

During the December 2011 Transitional Financial Year, advice was also provided in relation to Chairman fees and various other matters. This additional advice did not include a remuneration recommendation. As required to be disclosed by the Corporations Act, within the context of the work described above, the fees paid to Egan Associates for the recommendations were $4,725 (excluding GST), and the fees for other advice were $11,760 (excluding GST). In addition, the Remuneration and Nominations Committee appointed Ernst & Young as the lead adviser to assist with the broader review of executive remuneration and to assist with implementation of the recommendations. Ernst & Young were engaged by, and reported to, the Remuneration and Nominations Committee.

The following key services were provided by Ernst & Young: advice and assistance to finalise and communicate

the details of the CEO remuneration arrangements; advice and assistance with the design and

implementation of the incentive plans (including tax and accounting advice);

market practice and governance information; financial modelling and assistance with

transitioning senior executives from existing arrangements to the new framework; and

assistance to draft this Remuneration Report. During the December 2011 Transitional Financial Year no remuneration recommendations, as defined by the Corporations Act, were provided by Ernst & Young.

83

84


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued

3. INTRODUCING THE NEW EXECUTIVE REMUNERATION FRAMEWORK This section discusses the outcomes of the review and the new executive remuneration framework for 2012, including an overview of the redesigned short-term incentive plan and the new long-term incentive plan which were approved by the Remuneration and Nominations Committee. We are in the process of negotiating new service agreements with senior executives that will reflect the new executive remuneration framework. 3.1 OVERVIEW Figure 3.1: Executive remuneration framework for 2012 Business strategy

Our strategy is to take our core competencies to diverse markets and deliver value‐added services and projects for clients through our diversity, empowered people and financial strength. Our strategy is built on the diversity of our brands ‐ or Operating Companies ‐ our various geographies, our markets and services, and our delivery systems.

Remuneration framework

Fixed remuneration

Short‐term incentive plan Long‐term incentive plan

Reviewed annually. Defined peer groups for comparison. A defined policy regarding how remuneration should compare to those peer groups.

The Leighton Holdings executives will have a portion of their short‐term incentive determined by Group financial performance and a portion determined by non‐financial measures relevant to their role. The Managing Directors of the Operating Companies will have a portion of their short‐term incentive determined by Group financial performance, a portion determined by their Operating Company’s financial performance, and a portion determined by non‐financial measures relevant to their role.

Annual long‐term incentive grants will be made under a new plan. The new plan provides the Remuneration and Nominations Committee with the flexibility to determine the nature, terms and conditions of each grant each year. The 2012 grant will operate as an award of share rights (ie a right to receive a share in three years’ time if specific performance measures are met). The 2012 award performance measures will be total shareholder return over the three year period measured against a group of companies and achievement of a predetermined compound annual earnings per share growth target over the same period. It is anticipated that unless there is an identified business or market need to change, subsequent grants will also be share rights with similar terms to the 2012 grants.

Part of the short‐term incentive will be paid in cash.

A portion of the short‐term incentive earned (50% for the CEO and generally 40% for all other senior executives) will be deferred into share rights for two years starting at the end of the short‐term incentive performance period. The Remuneration and Nominations Committee will have the ability to reduce the number of deferred share rights that vest if subsequent events show such a reduction to be appropriate.

Outcomes

Market competitive remuneration to attract and retain the highest quality executive talent.

Short‐term incentives should encourage the achievement of our annual targets and business strategy by focusing on a combination of Group financial performance, Operating Company financial performance and non‐financial performance measures over a 12 month period. Deferral of a portion of the short‐term incentive earned into share rights will further align reward with Group performance, assist with retention and provide the Remuneration and Nominations Committee with the ability to reduce the deferred amount if appropriate, with the benefit of hindsight.

The 2012 grant will focus on growing Group earnings and shareholder returns over the next three years. On an ongoing basis, alignment with shareholders and retention will be enhanced through annual grants. These annual grants will result in continuing exposure to the Group’s share price and a focus on rolling performance periods.

84



85

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 3.2 TIMING FOR INTRODUCTION OF NEW EXECUTIVE REMUNERATION FRAMEWORK Executive remuneration for 2012 will be a mix of fixed remuneration and variable remuneration. Variable remuneration can be earned through short-term and long-term incentives. The different elements of remuneration reflect a focus on both short-term and longer-term performance, and delivery of these elements occurs over different time frames.

As outlined in figure 3.2, the process and timing for determining executive remuneration for 2012 is as follows: over the course of December 2011 and January

2012, a review of existing remuneration relative to market and financial modelling of potential transition approaches was undertaken. The changes to individual remuneration arrangements and contracts to give effect to our revised remuneration approach are being put in place;

short-term incentive targets are being set for the period from 1 January 2012 to 31 December 2012, with performance to be assessed in early 2013: – performance will be assessed and the cash

portion, if any, will be paid in February 2013; and

– deferred share rights, if any, will be granted around February 2013, subject to a two year deferral starting at the end of the short-term incentive performance period, being December 2012 to 31 December 2014; and

long-term incentive awards will be made in May 2012 (subject to shareholder approval at the May 2012 Annual General Meeting). Performance will be assessed over the period from 1 January 2012 to 31 December 2014.

Figure 3.2: Delivery of total remuneration for 2012

Jan 2012

May 2012

Jan / Feb 2013

Fixed remuneration

Short‐term incentive

Long‐term incentive

Short‐term incentive and long‐term incentive performance measurement starts and new fixed remuneration effective

Long‐term incentive share rights allocated (following shareholder

approval)

Feb 2013

Short‐term incentive cash paid and short‐term

incentive deferred shares / share rights allocated

Short‐termincentive award determined

Performance measured (one year)

Dec 2014

Year 1 Years 2 and 3

Deferred short‐term incentive (two years)

Dec2012

Short‐term incentive

performance period ends

Performance measured (three years)

85

86


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued Retention of executives is assisted by means of the deferred component of the short-term incentive (if any) and the annual award and multi-year performance period of the long-term incentive. The annual awards of equity instruments under the long-term incentive plan and the potential annual deferred awards under the short-term incentive plan result in senior executives having ongoing exposure to the company’s share price. Figure 3.3 outlines the layered retention effect created by the design of the remuneration framework and the annual award cycle.

Figure 3.3: Creation of layered retention effect

3.3 APPROACH TO SETTING REMUNERATION LEVELS AND MIX Remuneration levels are reviewed annually and upon change of position. Individual remuneration is determined by the new policy remuneration mix, referencing available market data and consideration of individual factors. The new policy remuneration mix is outlined in table 3.1 opposite. As discussed earlier, new contracts are currently being put in place. In most cases the new policy mix set out in table 3.1 will be applied. However, individual circumstances may result in some individuals having a mix that differs from that set out in table 3.1. The market data referenced in reviewing remuneration is for comparable roles in similar-sized Australian listed companies based on market capitalisation, Group

revenue and Operating Company revenue, as relevant. Consideration is also given, where appropriate, to employee numbers and scope of international operations relative to the peer companies. Fixed remuneration and total target remuneration will typically be positioned at around the 75th percentile of the relevant market. The objective of this target positioning is to facilitate the attraction and retention of the best talent in an extremely competitive market driven by the mining boom and high growth in Asia. Actual market positioning for each individual may deviate from (above or below) the positioning policy due to consideration of internal relativities, experience, tenure in role, individual performance and retention considerations.

Fixed remuneration

Year 2Year 1 Year 3 Year 4 Year 5

2013

2014

Short‐term incentive deferral opportunityShort‐term incentive cash opportunity

Long‐term incentive grant

Fixed remuneration



Fixed remuneration



2012

86



87

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 Table 3.1: New policy remuneration mix

Role New policy remuneration mix (% of total remuneration)

Fixed remuneration Target short‐term incentive (including deferral)

Long‐term incentive (grant value)

Chief Executive Officer and

Chief Financial Officer

33.3% 33.3% (ie 100% of fixed remuneration)

33.3% (ie 100% of fixed remuneration)

Managing Directors of Operating Companies 40.0% 30.0%

(ie 75% of fixed remuneration) 30.0%

(ie 75% of fixed remuneration)

Chief Risk Officer and Group General Counsel and

Chief Human Resources Officer

45.4% 27.3% (ie 60% of fixed remuneration)

27.3% (ie 60% of fixed remuneration)

3.4 REVISED SHORT-TERM INCENTIVE PLAN The revised short-term incentive plan is designed to encourage the achievement of our annual targets and business strategy by aligning short-term performance measures with Group and Operating Company key business objectives over a 12 month period. Each executive has a target short-term incentive amount (described in table 3.1) that can be earned each year, subject to performance against financial and non-financial performance measures. They will also have a specified threshold (for minimum acceptable performance against targets) and maximum (for achieving stretch performance targets). Threshold short-term incentive will be 60% of target short-term incentive and maximum short-term incentive will be 150% of target short-term incentive. By way of example, this means that for a Managing Director of an Operating Company with a target short-term incentive of 75% of fixed remuneration, their threshold short-term incentive would be 45% of fixed remuneration and their maximum short-term incentive would be 112.5% of fixed remuneration. Financial measures For the financial year ending 31 December 2012, 70% of the amount which could be earned as a short-term incentive will be based on performance against financial measures and targets. The Leighton Holdings executives will have this financial component based on Group financial performance.

The Managing Directors of the Operating Companies will have this financial component based on Group financial performance and their Operating Company’s financial performance. For the 2012 short-term incentive, each Manager Director of an Operating Company will have 30% of the amount which could be earned as a short-term incentive based on Group financial performance and the remaining 40% based on relevant individual Operating Company financial targets. The relevant financial measures and targets will be selected and set each year. The Group financial measure will be a profit measure. The Operating Company financial measures will be relevant to the specific Operating Company. These measures will be selected each year from a set that include those that focus on pre-tax profitability (Return on Revenue), the effective use of capital (Return on Funds Employed and/or Economic Profit), achievement of cash flow targets and adherence to applicable funding limits. The measurement approach (through the performance measure selection) will ensure that the appropriate measures of Operating Company performance are considered and rewarded along with Group performance.

87

88


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued Non-financial measures For the financial year ending 31 December 2012, 30% of the amount which could be earned as a short-term incentive will be based on performance against non-financial measures and targets. The measures and targets will be set each year and tailored to the role of the executive. The non-financial measures will typically focus on safety and the management of our people. The measures may include such matters as the total recordable injury frequency rate, achieving nil fatalities, succession planning, employee turnover, engagement survey results and demonstration of behaviours aligned with the Leighton values. Payment A percentage of the amount which is earned as a short-term incentive will be paid in cash and a percentage will be delivered as share rights, vesting of which is deferred for two years (starting at the end of the short-term incentive performance period) without any additional performance measures. Fifty-percent (50%) of any amount earned by the CEO as a short-term incentive, and generally 40% of any amount earned by other senior executives, will be converted into share rights which cannot vest for two years. However, as mentioned earlier, there may be some individual differences from this policy as contracts are finalised. At vesting, the share rights will convert to shares. The Remuneration and Nominations Committee has the ability to settle the awards in cash if appropriate. During the two year deferral period the participant will not receive dividends and will not have voting rights. However, if the participant is entitled to receive shares at the end of the two year deferral period, the participant will be entitled to an amount equal to the dividends that would have accrued during the two year period on the shares if they had vested at the commencement of the two year period. The intention is to pay these dividends in cash, but the Remuneration and Nominations Committee has the ability to provide shares if considered appropriate. The methodology for deferring the amount earned as a short-term incentive may differ for executives employed in jurisdictions other than Australia depending on the legal and tax regimes operating in such jurisdictions. The Remuneration and Nominations Committee will have the ability to reduce the number of shares to be issued under share rights if subsequent events show such a reduction to be appropriate. In making this determination, the Remuneration and Nominations Committee may consider material changes or reversals in the Group’s financial position or profitability from one period to the next, any issues that are likely to have

affected Leighton’s financial soundness, misrepresentations, material restatements due to errors or omissions (eg not a change to accounting standards), major negligence, or reputational damage. 3.5 NEW LONG-TERM INCENTIVE PLAN A new long-term incentive plan has been developed that provides flexibility to determine the type of equity instruments to be granted and the terms and conditions of any such grant. For 2012 the plan will operate as a grant of share rights with a three year performance and vesting period (ie a right to receive a share in three years’ time if specific performance measures are met). The 2012 grant performance measures will be: 50% based on a relative total shareholder

return measure: tested against entities in the S&P / ASX 100 Index defined at the start of the performance period. 50% of this portion of the award will vest for ranking at the 51st percentile, 100% will vest for ranking at the 75th percentile or above, with straight-line vesting between these two points; and

50% based on an earnings per share measure: 50% of this portion will vest for achieving compound annual growth in earnings per share of 8%, 100% will vest for achieving compound annual growth in earnings per share of 13%, with straight-line vesting between these two points.

Unlike our former plan, the new plan will not permit re-testing (ie if the targets are not met when first tested, the awards will lapse). It is anticipated that unless there is an identified business or market need to change, subsequent grants will have similar terms to the 2012 grants. The performance conditions are aligned with the longer-term direction and strategy of the Group as they will encourage a focus on earnings per share growth and the achievement of top quartile shareholder returns over an extended period. 3.6 SHAREHOLDER APPROVAL The relevant approvals for the new equity arrangements will be sought at the May 2012 Annual General Meeting.

88



89

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 4. REMUNERATION DURING THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR As outlined in section 3, a new executive remuneration approach will take effect from 1 January 2012. For the December 2011 Transitional Financial Year an interim approach has been adopted. This section describes the remuneration approach that applied during the December 2011 Transitional Financial Year and the performance and reward linkage. 4.1 REMUNERATION PRINCIPLES THAT APPLIED DURING THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR The review of our approach was conducted over the course of the December 2011 Transitional Financial Year. As such, for the December 2011 Transitional Financial Year, the existing remuneration principles remained in place. As described in the 2011 Remuneration Report, the Remuneration and Nominations Committee’s overall objective was to ensure that remuneration provided to the senior executives is competitive in each of the markets in which the Group operates, and provides executives with appropriate reward for achieving the performance expectations set for them. The key remuneration principles in place during the December 2011 Transitional Financial Year were: provide competitive rewards to attract, motivate

and retain highly skilled executives willing to work in foreign jurisdictions;

reward executives based on performance measures that support the execution of the Group’s business strategy;

provide a balance between short and longer-term, cash and equity, and fixed and variable remuneration; and

align the interests of executives, the Group and shareholders.

4.2 APPROACH TO SETTING REMUNERATION The Remuneration and Nominations Committee obtains external market advice on market practice and movements to ensure remuneration is aligned with comparable roles in companies of similar complexity and size and with reference to the individual senior executive’s responsibilities, location, performance, qualifications and experience within the Group.

During the December 2011 Transitional Financial Year, the remuneration mix of the senior executives consisted of fixed remuneration and short-term incentives only. The target short-term incentive was 100% of fixed remuneration for Mr Tyrwhitt and Mr Gregg, 50% for Mr van der Laan, and 80% for all other senior executives. For the December 2011 Transitional Financial Year, each senior executive could earn a pro-rata short-term incentive to reflect the 6 month performance period. Mr Gregg had a long-term incentive grant equivalent to 100% of fixed remuneration, which was in accordance with his contract and was approved by shareholders at the November 2011 Annual General Meeting. Mr Stewart had his 2011 long-term incentive grant, which was in accordance with his contract, approved as part of his termination payment at the November 2011 Annual General Meeting. Mr Gregg’s and Mr Stewart’s long-term incentive grants were disclosed in the 2011 Remuneration Report.

89

90


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued

4.3 OVERVIEW OF EXECUTIVE REMUNERATION COMPONENTS The components of remuneration for senior executives are shown in table 4.1. Table 4.1: Components of total remuneration Summary Applicable during the December 2011

Transitional Financial Year Continuing in 2012

Fixed remuneration

Base salary, non‐monetary benefits and superannuation.

Continue to apply in 2012.

Short‐term incentives

Annual variable remuneration with quantum subject to annual performance measures.

Transitional short‐term incentive. Future short‐term incentives to be provided under new approach described earlier in this Remuneration Report.

Medium‐term incentives

Deferred cash paid after three years, subject to conditions that include year‐on‐year profit growth.

No new medium‐term incentives during the December 2011 Transitional Financial Year.

Discontinued, with some legacy amounts still due for payment.

Long‐term incentives

Longer‐term equity based award. Grants to two participants, as disclosed in the 2011 Remuneration Report, were approved in the December 2011 Transitional Financial Year (Mr Gregg and Mr Stewart).

New long‐term incentive grants to be made using the approach described earlier in this Remuneration Report. Existing 2008 share option grants were subject to retesting in January 2012 and existing 2009 share option grants are due to be tested in May 2012.

Other remuneration (service and retention awards)

Additional remuneration in accordance with employment contracts.

No new service and termination arrangements put in place in the December 2011 Transitional Financial Year. Mr Tyrwhitt’s legacy contractual service and retention awards were paid out during the December 2011 Transitional Financial Year.

Legacy contractual arrangements are to be paid out or replaced with restricted shares where appropriate.

4.4 FIXED REMUNERATION Fixed remuneration received by senior executives comprised base salary, superannuation and other benefits and was subject to approval by the Remuneration and Nominations Committee. Base salary No changes were made to the base salary for senior executive roles compared to the previous period. Mr Tyrwhitt, Mr Munro and Mr Cooke all received increases due to their promotions to new roles. Mr Tyrwhitt’s base salary was set at the same level as his predecessor, Mr Stewart. Non-cash benefits Non-cash benefits provided as part of fixed remuneration may include one or more of company motor vehicles, car allowances, novated vehicle leases, voluntary superannuation contributions, salary continuance premiums, fringe benefits and other salary sacrificed benefits agreed from time to time. Expatriate benefits were provided to senior executives in overseas locations.

Retirement/superannuation benefits Retirement benefits were provided under various superannuation plans or retirement arrangements for senior executives. The superannuation plans provided for specified contribution amounts for employees in accordance with government regulations and Group policies. Members of the various superannuation plans may be provided with life insurance and/or total and permanent disability insurance and salary continuance insurance. Where salary continuance insurance is not provided through the superannuation plan, the relevant employer may provide such cover directly to the senior executive.

90



91

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 4.5 SHORT-TERM INCENTIVE PLAN December 2011 Transitional Financial Year short-term incentives Table 4.2 summarises the approach to short-term incentives for senior executives (excluding the CEO) during the December 2011 Transitional Financial Year. The principles underlying the new approach to short-term incentives, as outlined in section 3.4 of this Remuneration Report, were used during the December 2011 Transitional Financial Year for Managing Directors of Operating Companies.

For Leighton Holdings senior executives, short-term incentives for the December 2011 Transitional Financial Year were determined in accordance with their existing contracts. As explained earlier, it is intended to replace the short-term incentive arrangements in these existing contracts with the new short-term incentive plan. The CEO’s short-term incentive for the December 2011 Transitional Financial Year was based on a transitional short-term incentive arrangement which is outlined beneath table 4.2.

Table 4.2: Summary of December 2011 Transitional Financial Year short-term incentives for senior executives (excluding the CEO) Who participated? All senior executives (excluding the CEO).

How much could executives earn under the December 2011 Transitional Financial Year short‐term incentive?

Mr Gregg’s target short‐term incentive was 100% of fixed remuneration, and his maximum was 125% of fixed remuneration. Mr van der Laan’s target short‐term incentive was 50% of fixed remuneration, and his maximum was 100% of fixed remuneration. For Managing Directors of Operating Companies, target short‐term incentive was 80% of fixed remuneration, and the maximum was 120% of fixed remuneration. For the December 2011 Transitional Financial Year, senior executives could earn 50% of their target short‐term incentives to reflect the 6 month performance period.

Over what period was performance measured?

The December 2011 Transitional Financial Year from 1 July 2011 to 31 December 2011.

What were the performance conditions?

Short‐term incentives in the December 2011 Transitional Financial Year were linked to performance against either Group and/or individual Operating Company financial targets. The Remuneration and Nominations Committee also takes into account any other factor that it deems relevant in the determination of the year’s short‐term incentives.

For Managing Directors of Operating Companies, 30% of the short‐term incentive was calculated on Group financial performance and the balance on their Operating Company’s financial (40%) and non‐financial (30%) performance.

For Leighton Holdings executives, other than the CEO, performance was assessed against a return on average shareholders’ funds employed financial measure, in accordance with their current contract. Short‐term incentive target was payable if 20% return on average shareholders’ funds employed was achieved and maximum short‐term incentive was payable if 25% return on average shareholders’ funds employed was achieved. For the Chief Financial Officer, the short‐term incentive award was subject to a 5% penalty due to fatalities during the period.

Why were those performance measures chosen?

The performance measures chosen ensure that a significant proportion of total remuneration (described in section 4.3) is determined by performance against relevant financial objectives. This aligns executive interests with the Group’s and Operating Company’s financial performance.

Who assessed performance against targets and approves the payments?

The CEO reviews the company and senior executive’s performance and recommends the short‐term incentive payment for each senior executive to the Remuneration and Nominations Committee for approval.

How were the short‐term incentives paid?

The short‐term incentives were paid in cash once the financial statements of the Group had been finalised and audited for the December 2011 Transitional Financial Year.

CEO short-term incentive For the December 2011 Transitional Financial Year, the CEO’s short-term incentive was based on a transitional short-term incentive plan that covers both the December 2011 Transitional Financial Year and the financial year ending 31 December 2012 (refer to the CEO contract summary in section 4.9.1 for details of the short-term incentive arrangements for the financial year ending 31 December 2012).

For the December 2011 Transitional Financial Year, threshold and target levels of financial performance were set. If the threshold level of performance was achieved, 30% of fixed remuneration could be earned as a short-term incentive. If the target level of performance was achieved, a maximum of 50% of fixed remuneration could be earned as a short-term incentive. There was no additional short-term incentive opportunity for exceeding target performance. The target and threshold short-term incentives represent a pro-rata amount to reflect the 6 month performance period.

91

92


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued For the December 2011 Transitional Financial Year, performance was assessed against Group net profit after tax excluding the effect of the sale of the HWE Mining Iron Ore business (HWE) and the impairments relating to BrisConnections and Habtoor Leighton Group (HLG). The Remuneration and Nominations Committee also had discretion to consider Group net profit after tax and determine the extent to which it considered that, in substance, the target had been met. The CEO’s short-term incentive target was for the Group to achieve $300 million in net profit after tax excluding the effect of the sale of HWE and the impairments relating to BrisConnections and HLG, and the threshold was for the Group to achieve $250 million in net profit after tax excluding the effect of the sale of HWE and the impairments relating to BrisConnections and HLG. The Remuneration and Nominations Committee reviews the company and the CEO’s performance and approves any short-term incentive payment to the CEO.

Link between short-term incentive payments, Group and Operating Company performance Short-term incentive payments for the December 2011 Transitional Financial Year were determined based on senior executive performance against financial targets and non-financial targets (where applicable). For Leighton Holdings senior executives, short-term incentives were based on performance against Group financial targets. For Managing Directors of Operating Companies, short-term incentives were based on performance against Group and Operating Company financial targets. For each senior executive, table 4.3 provides the percentage of the maximum short-term incentive for the December 2011 Transitional Financial Year that was paid. The table also provides a brief summary of how each senior executive’s short-term incentive was determined.

Table 4.3: Percentage of available short-term incentive paid and link to performance Senior executive Short‐term

incentive earned (A$)

Percentage of maximum short‐term incentive

Link between short‐term incentive award and performance

H G Tyrwhitt $931,200 78% Group net profit after tax, excluding the effects of the sale of HWE and the impairments relating to HLG and BrisConnections, was between the threshold and target levels of performance. The short‐term incentive was calculated on a straight‐line, pro‐rated basis from 30% to 50% of fixed remuneration.

R R Cooke $290,206 73% The Operating Company financial target and Group financial target were achieved. However, the short‐term incentive award was pro‐rated given that Mr Cooke has only been in his role for part of the performance period.

M C Gray $100,000 18% While the Operating Company financial target was not achieved, the Group financial target was. Mr Gray was awarded a short‐term incentive based on Group financial performance and because his contribution during the December 2011 Transitional Financial Year has led to the prospects for the future of Leighton Properties improving.

P A Gregg $867,000 82% The Group financial target was achieved. The short‐term incentive award was increased to reflect Mr Gregg’s outstanding contribution to the Group during the December 2011 Transitional Financial Year.

C A van der Laan $307,000 65% The Group financial target was achieved. The short‐term incentive award was adjusted to recognise Mr van der Laan’s contribution on a number of regulatory and compliance initiatives.

C A Laslett $800,000 118% The Operating Company financial target and Group financial target were achieved. The short‐term incentive award was increased above the maximum short‐term incentive in recognition of Mr Laslett’s contribution to the negotiation and completion of the HWE sale.

B A Munro $300,000 59% While the Operating Company financial target was not achieved, the Group financial target was achieved. Mr Munro was awarded a short‐term incentive based on Group financial performance and in recognition that he commenced in his position part way through the performance period and generated a strong financial result within the Thiess mining business which he led for a significant part of the December 2011 Transitional Financial Year.

G M Palin $300,000 44% While the Operating Company financial target was not achieved, the Group financial target was achieved. Mr Palin was awarded a short‐term incentive based on Group financial performance and the fact that the Airport Link performance and outlook improved and underlying profit was strong.

L W Voyer $‐ ‐% Mr Voyer’s short‐term incentive, if any, for the December 2011 Transitional Financial Year has not yet been determined at the date of this Remuneration Report.

92



93

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 4.6 MEDIUM-TERM INCENTIVES - LEGACY PLAN CLOSED TO NEW PARTICIPATION The medium-term incentive plan is closed to participation and there were no new awards of medium-term incentives during the December 2011 Transitional Financial Year. However, as a result of medium-term incentive participation in previous financial years, the following payments were made during the December 2011 Transitional Financial Year or are due to be paid in future financial years: Mr Tyrwhitt’s 2009 and 2010 medium-term

incentives were both paid out to settle the company’s obligations under his existing service agreement. These payments were $108,000 and $564,706 respectively. The medium-term incentives were paid out subject to the Remuneration and Nominations Committee’s ability to require repayment of these payments if the CEO discontinues his employment prior to the date on which he would have been entitled to receive these payments under his previous service agreement (being 31 July 2012 and 31 July 2013 respectively); and

the following individuals have 2010 medium-term

incentives that are payable on 31 July 2013: Mr Palin, Mr Munro and Mr Voyer. The amounts payable are $75,000, $300,000 and $300,000 respectively.

Table 4.4 describes how the 2009 and 2010 medium-term incentives operate.

Table 4.4: Summary of medium-term incentives for senior executives

Who participated in the medium‐term incentives?

The Managing Directors and Deputy Managing Directors of the Operating Companies, and other senior members of their teams, as well as other Leighton Holdings senior executives.

Over what period is performance assessed?

Over a one year period to determine the award. However, as noted below, subsequent years’ performance during the three year deferral period can reduce the size of the award.


If an Operating Company (or the Group, for those who are Leighton Holdings senior executives) achieves a year‐on‐year increase in profit, a pool of 5% of the profit increase is available for allocation to the relevant executives. The size of the profit increase therefore determines the total bonus opportunity. Separate incentive pools are calculated for each relevant individual Operating Company and the Group. The actual proportion of the pool that an individual is awarded is based on their level of responsibility and individual performance. 20% of each pool is allocated to the respective Managing Director of the Operating Company, and they then allocate the remainder of their pool. The maximum medium‐term incentive any individual can be awarded is 80% of fixed remuneration. It is not mandatory to allocate the entire pool that is available. Payment of any amount allocated is deferred for three years and is subject to the reduction described below. If, in any given year, year‐on‐year profit growth is not achieved, no awards will be allocated for that year. In addition, if that year falls within the three year deferral period for a previous award, any deferred incentive previously awarded but as yet unpaid will be reduced by up to 50%, although the Remuneration and Nominations Committee retains discretion in appropriate cases to mitigate the reduction. Accordingly, the maximum amount payable at the end of any three year deferral period is 100% of the originally deferred amount and the minimum payable is 12.5% of the originally deferred amount.


The medium‐term incentive and its assessment of performance provide an incentive for senior executives to increase the profit results of their Operating Company or the Group (as the case may be), on a year‐on‐year basis.

Who assessed performance? Performance is measured and the pools quantitatively determined. The Remuneration and Nominations Committee approves the awards and may make adjustments. Such adjustments may be made as a result of under or over achievements against the performance targets and may take into account non‐financial indicators of performance.

What happens if a senior executive ceases employment?

Senior executives who resign from the Group prior to the date that the medium‐term incentive is payable forfeit any unpaid incentive, except where the senior executive is made redundant, retires, dies or resigns due to serious injury or ill health, in which case the award is payable. If the company terminates a senior executive’s employment, the Remuneration and Nominations Committee can determine that a pro‐rata payment may be made in exceptional circumstances.

93

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 4.6 MEDIUM-TERM INCENTIVES - LEGACY PLAN CLOSED TO NEW PARTICIPATION The medium-term incentive plan is closed to participation and there were no new awards of medium-term incentives during the December 2011 Transitional Financial Year. However, as a result of medium-term incentive participation in previous financial years, the following payments were made during the December 2011 Transitional Financial Year or are due to be paid in future financial years: Mr Tyrwhitt’s 2009 and 2010 medium-term

incentives were both paid out to settle the company’s obligations under his existing service agreement. These payments were $108,000 and $564,706 respectively. The medium-term incentives were paid out subject to the Remuneration and Nominations Committee’s ability to require repayment of these payments if the CEO discontinues his employment prior to the date on which he would have been entitled to receive these payments under his previous service agreement (being 31 July 2012 and 31 July 2013 respectively); and

the following individuals have 2010 medium-term

incentives that are payable on 31 July 2013: Mr Palin, Mr Munro and Mr Voyer. The amounts payable are $75,000, $300,000 and $300,000 respectively.

Table 4.4 describes how the 2009 and 2010 medium-term incentives operate.

Table 4.4: Summary of medium-term incentives for senior executives

Who participated in the medium‐term incentives?

The Managing Directors and Deputy Managing Directors of the Operating Companies, and other senior members of their teams, as well as other Leighton Holdings senior executives.

Over what period is performance assessed?

Over a one year period to determine the award. However, as noted below, subsequent years’ performance during the three year deferral period can reduce the size of the award.


If an Operating Company (or the Group, for those who are Leighton Holdings senior executives) achieves a year‐on‐year increase in profit, a pool of 5% of the profit increase is available for allocation to the relevant executives. The size of the profit increase therefore determines the total bonus opportunity. Separate incentive pools are calculated for each relevant individual Operating Company and the Group. The actual proportion of the pool that an individual is awarded is based on their level of responsibility and individual performance. 20% of each pool is allocated to the respective Managing Director of the Operating Company, and they then allocate the remainder of their pool. The maximum medium‐term incentive any individual can be awarded is 80% of fixed remuneration. It is not mandatory to allocate the entire pool that is available. Payment of any amount allocated is deferred for three years and is subject to the reduction described below. If, in any given year, year‐on‐year profit growth is not achieved, no awards will be allocated for that year. In addition, if that year falls within the three year deferral period for a previous award, any deferred incentive previously awarded but as yet unpaid will be reduced by up to 50%, although the Remuneration and Nominations Committee retains discretion in appropriate cases to mitigate the reduction. Accordingly, the maximum amount payable at the end of any three year deferral period is 100% of the originally deferred amount and the minimum payable is 12.5% of the originally deferred amount.


The medium‐term incentive and its assessment of performance provide an incentive for senior executives to increase the profit results of their Operating Company or the Group (as the case may be), on a year‐on‐year basis.

Who assessed performance? Performance is measured and the pools quantitatively determined. The Remuneration and Nominations Committee approves the awards and may make adjustments. Such adjustments may be made as a result of under or over achievements against the performance targets and may take into account non‐financial indicators of performance.

What happens if a senior executive ceases employment?

Senior executives who resign from the Group prior to the date that the medium‐term incentive is payable forfeit any unpaid incentive, except where the senior executive is made redundant, retires, dies or resigns due to serious injury or ill health, in which case the award is payable. If the company terminates a senior executive’s employment, the Remuneration and Nominations Committee can determine that a pro‐rata payment may be made in exceptional circumstances.

93

94


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued 4.7 LONG-TERM INCENTIVES - LEGACY PLAN CLOSED TO NEW GRANTS Details of existing long-term incentive grants The legacy 2008 and 2009 share option grants remain in place and will be tested at their respective performance measurement dates. During the December 2011 Transitional Financial Year, a long-term incentive grant to Mr Gregg was approved by shareholders at the November 2011 Annual General Meeting. As part of Mr Stewart’s termination payment, approval was given at the November 2011 Annual General Meeting for his 2011 long-term incentive grant.

These grants were previously disclosed in the 2011 Remuneration Report. Table 4.5 outlines the terms of unvested 2008 and 2009 share option grants and the 2011 long-term incentive grant to Mr Gregg. Mr Stewart’s 2011 long-term incentive grant is discussed beneath table 4.5 on the following page and also in section 4.9.2 and table 6.2.

Table 4.5: Summary of long-term incentive plan grants 2008 and 2009 share option grants 2011 long‐term incentive grant to Mr Gregg

What is granted? Grants were made in the form of share options that vest after three years subject to performance against the relevant performance measures. Upon exercise of these options, ordinary shares in the company will be provided to the participant.

The grant was made in the form of share rights. The share rights are granted for no cost and entitle the participant to receive one fully‐paid ordinary share in the company per right, subject to the terms and conditions determined by the Remuneration and Nominations Committee, including vesting conditions linked to service and performance over the three to five year performance period. This grant was disclosed in the 2011 Remuneration Report.

What are the performance measures?

Parcel A (50%) will be tested against a relative total shareholder return hurdle. Parcel B (50%) will be tested against a growth in earnings per share hurdle.

How is total shareholder return performance measured?

The total shareholder return of the company is measured as a percentile ranking compared to a comparator group of listed entities over the performance period (from grant date to test date). The comparator group is the entities in the S&P / ASX100 Index (and for the 2011 long‐term incentive grant to Mr Gregg, the comparator group is the entities in the S&P / ASX100 Index, excluding financial organisations and real estate investment trusts). Awards vest based on the ranking against the comparator group companies in accordance with the following schedule:

Company’s total shareholder return ranking in the comparator group

% of Parcel A vesting

Below 50th percentile Nil

At 50th percentile 50%

Between 50th & 75th percentiles Between 50% and 100% increasing on a straight line basis

At or above 75th percentile 100%

How is the earnings per share performance measured?

The company’s annual compound earnings per share growth is measured over the three year performance period. Awards vest based on the growth in earnings per share in accordance with the following schedule:

Earnings per share growth per annum

% of Parcel B vesting

Below 8% Nil

Equal to 8% 20%

Between 8% & 12% Between 20% and 100% increasing on a straight line basis

12% or greater 100%

94



95

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 Table 4.5: Summary of long-term incentive plan grants (continued)

2008 and 2009 share option grants 2011 long‐term incentive grant to Mr Gregg

Why were these performance measures chosen?

Total shareholder return was chosen because it provides a direct link between senior executive reward and shareholder returns. Senior executives will not derive any benefit from that portion of the grants unless the company’s performance is at least at the median of the comparator group. In addition, this hurdle provides a relative, external, market‐based performance measure against those companies with which the company competes for capital, customers and talent. Earnings per share was chosen as it provides a direct link to increasing the earnings per share received by shareholders.

When will performance be tested?

There are four test dates for the share options, being 3, 3.5, 4 and 4.5 years after the date the share options were granted. The share options have more than one test date as the participating senior executives generally did not participate more often than once every three years.

Testing of both Parcel A and B will first occur on 31 December 2013. If the performance measures are not met on that date, 25% of the award lapses, and the remaining 75% is tested again after 6 months. If the performance measures are not met on the re‐test date, a further 25% of the award lapses, and the remaining 50% is tested again after 6 months. Any share rights that remain unvested on 31 December 2014 will lapse.

Do the share options and share rights attract dividends and voting rights?

Share options do not carry voting or dividend rights. Shares allocated upon exercise of vested share options rank equally with other ordinary shares on issue.

The share rights do not carry any rights to dividends or voting until and to the extent that vesting occurs. Shares allocated upon exercise of vested share rights rank equally with other ordinary shares on issue.

What happens in the event of a change in control?

If a change of control event occurs, the share options vest and become exercisable.

If a change of control occurs, there will be no accelerated vesting of the share rights.

What if a senior executive ceases employment?

Share options will lapse if either: • the senior executive’s employment ceases (other than

due to special circumstances, which includes death, total and permanent disability, normal retirement or redundancy or such other circumstances as the Plan Committee may determine); or

• if the senior executive is dismissed. Where a senior executive’s employment ceases due to special circumstances, the exercise conditions attaching to the share options may be reduced or waived. Should a senior executive retire, generally any unexercised share options held at the date of retirement will not lapse; and unvested share options will continue on foot following the senior executive’s departure and will remain subject to the same performance measures (ie vesting of the share options will only occur if the performance measures are satisfied at the test date).

If employment ceases for any reason other than due to retirement, resignation, for cause or in the event of death, and the cessation occurs on or before 31 December 2012, any unvested share rights will vest in full. If employment ceases due to retirement, resignation or for cause, all unvested share rights will lapse.

Can participants hedge against the risk under the long‐term incentive grants?

The Corporations Act and the Group’s Securities Trading Policy prohibits senior executives from entering into hedging arrangements regarding both vested and unvested securities, which includes long‐term incentive grants.

As part of Mr Stewart’s termination payment, approval was given at the November 2011 Annual General Meeting for his 2011 long-term incentive grant. In accordance with his contract and the approval of shareholders, no performance hurdles attached to the grant of shares made to Mr Stewart and therefore they vested immediately.

95

96


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued Link between long-term incentive grant outcomes and Group performance The 2008 long-term incentive grant was retested in January 2012. This test showed that Leighton Holdings’ total shareholder return was below the median company in the comparator group. As a result no further vesting of the 2008 grant occurred. The tranche will be retested on 25 July 2012.

As required by the Corporations Act, table 4.6 sets out the 5 year performance of the Group in Australian dollars.

Table 4.6: Year-on-year performance snapshot

Opening share price1

($)

Closing share price ($)

Share price appreciation

(%)

Dividendp/share

paid($)

Total shareholder

return2 (%)

Earnings per

share($)

Profit before

tax ($m)

Net profit

after tax ($m)

Return on

equity (%)

Cash flowfrom

operations($m)

Gross debt

equity ratio(%)

December 2011 Transitional Financial Year3

20.99 19.04 (9.3) 0.00 (6.8) 1.01 475 340 13 328 77.5

2011 27.99 20.85 (25.5) 0.60 (50.6) (1.33) (491) (409) (17) 1,700 78.7

2010 22.40 29.00 29.5 1.50 (7.4) 2.05 843 612 25 1,987 65.0

2009 49.90 23.50 (52.9) 1.15 15.8 1.50 585 440 23 1,302 54.7

2008 41.60 50.40 21.2 1.45 69.9 2.19 768 608 43 1,223 103.6

2007 17.60 40.80 131.8 1.10 73.0 1.62 584 450 37 1,285 26.7 1 The opening share price takes into account trades after market close on the last day of the financial year. 2 Total shareholder return is determined over a rolling three year period. 3 The December 2011 Transitional Financial Year relates to a 6 month period and, as such, the information presented above is not entirely comparable to the

2007 to 2011 full financial year information in this table.

96



97

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 4.8 SENIOR EXECUTIVE TOTAL REMUNERATION Table 4.8 on pages 98 and 99 of this Remuneration Report details the Group’s senior executive remuneration in accordance with the Corporations Act and accounting standards. The Remuneration and Nominations Committee is aware, however, that the required format to present this information may make it difficult for shareholders to form an understanding of the value senior executives derived from the various components of their remuneration in the December 2011 Transitional Financial Year.

Table 4.7 therefore sets out the value of the total remuneration (fixed remuneration, short-term incentive earned, the value of any long-term incentives that vested during the December 2011 Transitional Financial Year, and any other payments received in the period) for the Group’s current senior executives during the December 2011 Transitional Financial Year (including prior year awards where the executive realised value from these awards in the December 2011 Transitional Financial Year). This table has been included to assist shareholders to understand the value derived from the various components of remuneration for those executives that remained in employment at year-end, and as such the senior executives who had ceased employment prior to 31 December 2011 have not been included in this table. Table 4.7 has not been audited.

Table 4.7: Total remuneration for senior executives during the December 2011 Transitional Financial Year in Australian dollars (Unaudited)

Name Fixed

remuneration1

Short‐term incentive earned

(and paid in early 2012)2

Long‐term incentives

(value vested during the

December 2011 Transitional

Financial Year) Other3

Total remuneration

for the December 2011

Transitional Financial Year

Transitional payments in December

2011 Transitional

Financial Year4

H G Tyrwhitt5 1,383,348 931,200 ‐ 37,563 2,352,111 3,897,417

R R Cooke (from 24 August 2011) 276,516 290,206 ‐ 24,714 591,436 ‐

M C Gray 453,557 100,000 ‐ 2,500 556,057 ‐

P A Gregg 830,385 867,000 ‐ ‐ 1,697,385 ‐

C A van der Laan 518,282 307,000 ‐ ‐ 825,282 ‐

C M Laslett 545,809 800,000 ‐ 18,533 1,364,342 ‐

B A Munro (from 5 August 2011) 483,236 300,000 ‐ ‐ 783,236 ‐

G M Palin 605,132 300,000 ‐ 3,000 908,132 ‐

L W Voyer6 523,614 ‐ ‐ 94,935 618,549 ‐ 1 This amount represents fixed remuneration, being cash salary and superannuation. 2 This amount represents cash short-term incentive payments to the senior executive for the December 2011 Transitional Financial Year to be paid in March

2012. 3 Includes the value of fringe benefits but excludes the costs associated with spouse travel where the Group has specifically requested the attendance of spouses. 4 Payments made in the December 2011 Transitional Financial Year to close out previous service agreements. 5 Mr Tyrwhitt received transitional payments totalling $3,897,417 relating to his previous service agreement and relocation and expatriate allowances. Details

are itemised in section 4.9.1 of this Remuneration Report on page 102. 6 Mr Voyer’s short-term incentive, if any, for the December 2011 Transitional Financial Year has not yet been determined at the date of this Remuneration

Report.

97

98


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued Table 4.8 provides full details of total remuneration for the CEO and other senior executives in Australian dollars. Table 4.8: Statutory senior executive remuneration table

Short‐term employee benefits Post‐employment Subtotal

Cash salary Bonuses (a)

Non‐monetary benefits (b) Other

Superannuation benefits

Termination benefits

Curren

t sen

ior e

xecutiv

es

H G Tyrwhitt1 December 2011 Transitional Financial Year 1,304,239 931,200 37,563 800,000 79,109 ‐ 3,152,111FY June 2011 1,107,879 840,000 93,646 ‐ 81,104 ‐ 2,122,629R R Cooke2 December 2011 Transitional Financial Year 258,841 290,206 24,714 ‐ 17,675 ‐ 591,436FY June 2011 ‐ ‐ ‐ ‐ ‐ ‐ ‐M C Gray December 2011 Transitional Financial Year 428,556 100,000 2,500 ‐ 25,001 ‐ 556,057FY June 2011 846,180 ‐ 5,000 ‐ 71,670 ‐ 922,850P A Gregg December 2011 Transitional Financial Year 822,495 867,000 ‐ ‐ 7,890 ‐ 1,697,385FY June 2011 1,731,565 ‐ ‐ 750,000 15,204 ‐ 2,496,769C A van der Laan December 2011 Transitional Financial Year 505,802 307,000 ‐ ‐ 12,480 ‐ 825,282FY June 2011 46,505 ‐ ‐ ‐ 702 ‐ 47,207C A Laslett3 December 2011 Transitional Financial Year 520,809 800,000 18,533 ‐ 25,000 ‐ 1,364,342FY June 2011 927,077 541,667 108,975 ‐ 36,465 ‐ 1,614,184B A Munro4 December 2011 Transitional Financial Year 475,348 300,000 ‐ ‐ 7,888 ‐ 783,236FY June 2011 ‐ ‐ ‐ ‐ ‐ ‐ ‐G M Palin December 2011 Transitional Financial Year 580,132 300,000 3,000 ‐ 25,000 ‐ 908,132FY June 2011 1,118,340 ‐ 101,704 ‐ 40,989 ‐ 1,261,033L W Voyer5 December 2011 Transitional Financial Year 523,614 94,935 ‐ ‐ ‐ 618,549

FY June 2011 1,070,449 ‐ 184,735 ‐ ‐ ‐ 1,255,184

Form

er se

nior executiv

es D G Stewart6

December 2011 Transitional Financial Year 997,128 ‐ ‐ ‐ 19,359 2,400,000 3,416,487FY June 2011 2,065,546 ‐ ‐ ‐ 50,000 ‐ 2,115,546D K Saxelby7 December 2011 Transitional Financial Year 302,494 ‐ 78,200 ‐ 20,399 757,500 1,158,593FY June 2011 1,621,453 ‐ 28,641 ‐ 50,000 ‐ 1,700,094S M Sasse8 December 2011 Transitional Financial Year 158,555 ‐ ‐ ‐ 7,890 658,555 825,000FY June 2011 372,230 200,000 ‐ 200,000 8,986 ‐ 781,216

1 Mr Tyrwhitt was appointed Managing Director and CEO of Leighton Holdings on 24 August 2011. Contractual arrangements under his contract as Managing

Director of Leighton Asia, India and Offshore were paid out (as discussed in section 4.9.1). Mr Tyrwhitt received a relocation and expatriate allowance of $800,000.

2 Mr Cooke was appointed Acting Managing Director of Leighton Asia, India and Offshore on 24 August 2011. The amounts in the table reflect payments made after this date.

3 Mr Laslett’s ‘FY June 2011’ comparative in the table above is a 10 month period starting 1 September 2010. 4 Mr Munro was appointed Acting Managing Director, Thiess on 5 August 2011 and Managing Director on 14 September 2011. The amounts in the table reflect

payments made after 5 August 2011. 5 Mr Voyer’s short-term incentive for the December 2011 Transitional Financial Year is still being quantified by the Remuneration and Nominations Committee. 6 Mr Stewart ceased to be Managing Director and CEO of Leighton Holdings on 24 August 2011 and ceased to be an employee on 19 November 2011.

Mr Stewart’s termination payment was as per his contractual terms as disclosed in the Notice of Meeting for the November 2011 AGM and transitional arrangements are summarised in section 4.9.2 of this Remuneration Report. The Termination Payment for notice being $2,400,000 has not been paid at the date of this Remuneration Report.

7 Mr Saxelby ceased to be Managing Director of Thiess on 5 August 2011 and ceased employment on 1 October 2011. Mr Saxelby’s termination payment was as per his contractual terms and are summarised in section 4.9.2 of this Remuneration Report.

8 Mr Sasse ceased employment on 30 September 2011. Mr Sasse’s termination payment was as per his contractual terms and are summarised in section 4.9.2 of this Remuneration Report.

98



99


MTI Long‐term employee benefits Total payments &

accruals

Contract / retention to 31

December 2011 (f)

Percentage of variable bonuses

(short‐term incentive +

medium‐term incentive) (g)

Percentage variable long‐

term incentive (h)

Medium‐term incentive

deferred (c)

Share based payments fair

value (d)

Contract / retention accrued in


Financial Year (e)

‐ 87,938 1,624,515 4,864,564 ‐ 29.5% 2.8%

630,000 186,900 602,773 3,542,302 800,197 69.3% 8.8% ‐ 10,749 ‐ 602,185 ‐ 49.1% 1.8% ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 31,453 93,728 681,238 837,437 18.0% 5.7% ‐ 144,281 185,927 1,253,058 743,709 0.0% 15.6% ‐ 196,306 ‐ 1,893,691 ‐ 51.1% 11.6% ‐ 96,165 ‐ 2,592,934 ‐ 0.0% 3.9% ‐ ‐ ‐ 825,282 ‐ 37.2% 0.0% ‐ ‐ ‐ 47,207 ‐ 0.0% 0.0% ‐ 15,781 113,804 1,493,927 977,230 58.6% 1.2% ‐ 52,198 156,042 1,822,424 719,522 33.6% 3.2% ‐ 15,781 67,299 866,316 200,433 38.3% 2.0% ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 31,563 264,986 1,204,681 1,156,946 33.0% 3.5%

(100,000) 101,719 706,676 1,969,428 891,961 0.0% 8.1% ‐ 31,453 342,261 992,263 1,401,022 0.0% 5.1% ‐ 145,281 209,808 1,610,273 1,058,761 0.0% 11.6% ‐ 238,835 527,564 4,182,886 2,400,000 0.0% 7.0%

(200,000) 351,933 948,938 3,216,417 2,372,436 0.0% 16.6% ‐ (333,318) 246,756 1,072,031 2,318,000 0.0% (28.8%)‐ 239,094 435,246 2,374,434 2,071,244 0.0% 14.1% ‐ (41,031) (34,995) 748,974 ‐ 0.0% (5.0%)‐ 50,013 34,995 866,224 34,995 0.0% 0.0%

(a) This amount represents cash short-term incentive payments to the senior executive for the December 2011 Transitional Financial Year to be paid in March

2012. (b) Includes the value of fringe benefits but excludes the costs associated with spouse travel where the Group has specifically requested the attendance of spouses. (c) Deferred incentives represent the value under the medium-term incentive deferred incentive plan (as discussed in section 4.6). This plan was discontinued and

there were no new awards made in the December 2011 Transitional Financial Year. Negative amounts in the FY June 2011 line represent a reduction in the accrued but unpaid amounts for the 2008 medium-term incentive awards.

(d) In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the fair value of equity compensation granted or outstanding during the December 2011 Transitional Financial Year (ie options awarded under the LSEOP that remained unvested and grant of awards under executive contracts as at 31 December 2011). The fair value of equity instruments is determined as at the grant date and is progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that senior executives may ultimately realise should the equity instruments vest. The fair value of options and equities at the date of their grant has been determined in accordance with AASB 2. The negative value disclosed in the share based payment column reflects the reversal of share based payment charges due to forfeited or lapsed options.

(e) The amounts shown for contract/retention benefits are the amounts accrued during the period for benefits due under each senior executive’s service contract, assuming the senior executive remains an employee for the whole retention period and earns their full benefit entitlement. However, if the senior executive is paid out their contract/retention, the full accrual is accounted for in the December 2011 Transitional Financial Year.

(f) The amounts shown for contract/retention benefits to 31 December 2011 are the amounts accrued to 31 December 2011 from contract commencement date. A nil balance indicates that the contract/retention has been paid out and there is no further cash contract/retention component.

(g) Percentage calculation is based on the variable short-term incentive and medium-term incentive bonus awarded in the December 2011 Transitional Financial Year. It excludes any claw-back of previously disclosed medium-term incentive awards and also excludes sign-on (Mr Sasse $200,000 in June 2011) and guaranteed contract awards (Mr Gregg $750,000 in June 2011).

(h) The percentage of each senior executive’s remuneration for December 2011 Transitional Financial Year that consisted of equity.

99

100


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued 4.9 SUMMARY OF EXECUTIVE SERVICE AGREEMENTS Remuneration and other terms of employment for the Key Management Personnel who were senior executives as at 31 December 2011 are formalised in service agreements. We are in the process of negotiating service agreements with senior executives to standardise the terms of these agreements. Details of those revised contracts will be disclosed in next year's Remuneration Report. A summary of the current executive contracts is set out in table 4.9.

4.9.1 CEO APPOINTED DURING THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR Mr Tyrwhitt was appointed as Managing Director and CEO of Leighton Holdings on 24 August 2011. This section outlines the key terms of Mr Tyrwhitt's new service agreement as well as the treatment of historical financial benefits under his previous service agreement with Leighton Asia Limited. The following specific remuneration arrangements exist under Mr Tyrwhitt's new service agreement as disclosed to the ASX in February 2012. Fixed remuneration Mr Tyrwhitt’s fixed remuneration is $2,400,000 (including superannuation contributions). Fixed remuneration will be reviewed annually. Transitional short-term incentive An 18 month transitional short-term incentive arrangement will apply to accommodate the company's move to a 31 December year-end and to ensure that the measures of financial performance in this period are properly assessed. The total target short-term incentive opportunity for the 18 month period represents one and a half times the CEO's annual short-term incentive opportunity. The transitional short-term incentive will apply for the following periods and performance will be assessed at the end of the relevant period: Period 1: The 6 months ending 31 December 2011; Period 2: The 12 months ending 30 June 2012; and Period 3: The 12 months ending 31 December 2012. Under the transitional short-term incentive, performance during Period 1 and 2 will be assessed against Group net profit after tax, excluding the effects of the sale of HWE. The Remuneration and Nominations Committee also has discretion to consider Group net profit after tax and determine the extent to which it considers that, in substance, the targets have been met. Performance during Period 3 will be assessed against a combination of financial and personal objectives that are yet to be determined. For Periods 1 and 2, performance at the target level will achieve the maximum amount of short-term incentive. The performance measures and targets are as follows:

100



101


Period 1 (test and payment): Target short-term

incentive (50% of fixed remuneration) will be awarded if $300 million Group net profit after tax, excluding the effect of the sale of HWE and any other matters the Remuneration and Nominations Committee takes into account, is achieved. Threshold short-term incentive (30% of fixed remuneration) will be awarded if $250 million Group net profit after tax is achieved;

Period 2 (test but no payment): Target short-term incentive (100% of fixed remuneration) will be awarded if $600 million Group net profit after tax, excluding the effect of the sale of HWE and any other matters the Remuneration and Nominations Committee takes into account, is achieved. Threshold short-term incentive (60% of fixed remuneration) will be awarded if $540 million Group net profit after tax, excluding the effect of the sale of HWE and any other matters the Remuneration and Nominations Committee takes into account, is achieved; and

Period 3 (test and payment): If threshold performance is achieved, 25% of fixed remuneration will be awarded. If target performance is achieved, 50% of fixed remuneration will be awarded. If maximum performance is achieved, 100% of fixed remuneration will be awarded.

The short-term incentive for Period 1 will be paid in cash shortly after the end of the December 2011 Transitional Financial Year. The short-term incentive amount for Period 2 (which will be reduced by the short-term incentive amount paid for Period 1) will form part of the short-term incentive payment made after the conclusion of Period 3 (ie after the financial year ending 31 December 2012). The short-term incentive payment for Period 3 will be determined based on: the Period 2 short-term incentive amount (as

described above); performance against financial measures for the

second half of Period 3; and performance against personal objectives for Period 3

as a whole.

Fifty-percent (50%) of the Period 3 short-term incentive amount will be paid in cash shortly after the financial year ending 31 December 2012. Fifty-percent (50%) of the Period 3 short-term incentive amount will be deferred as share rights, subject to shareholder approval. Short-term incentive plan for the financial year ending 31 December 2013 For the financial year ending 31 December 2013, the new short-term incentive plan (described in section 3 of this Remuneration Report) will apply; however, the financial and non-financial performance measure weightings may differ. At threshold level of performance, Mr Tyrwhitt's short-term incentive is 60% of fixed remuneration, at target level of performance his short-term incentive is 100% of fixed remuneration and at maximum level of performance his short-term incentive is 150% of fixed remuneration. Fifty-percent (50%) of any short-term incentive awarded will be paid in cash and 50% will be deferred as share rights for two years starting at the end of the short-term incentive performance period. The deferred share rights will accrue dividends as if the shares were vested at the commencement of the two year period that will only be paid if and when the share rights vest. The deferred portion will be subject to reduction or forfeiture in certain circumstances as described in section 3. Long-term incentive plan Mr Tyrwhitt is eligible to participate in the new long-term incentive plan on terms determined by the Remuneration and Nominations Committee, subject to receiving any required or appropriate shareholder approval. The first grant will be made during the financial year ending 31 December 2012 and will vest subject to performance conditions measured over a three year performance period. These awards will be equivalent to 100% of Mr Tyrwhitt's fixed remuneration at the date of the grant.

101

102


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued Treatment of previous service agreement Under Mr Tyrwhitt's previous service agreement with Leighton Asia Limited, he had the potential to receive certain financial benefits if he remained employed under that agreement. These benefits do not form part of the Group's ongoing approach to remuneration and in the interests of finality, the Remuneration and Nominations Committee took the view that these benefits should be paid out subject to reduction or forfeiture in certain circumstances. The details of these benefits and the circumstances in which they will be reduced or forfeited are outlined below: Mr Tyrwhitt's 2009 and 2010 medium-term

incentives were paid out on 9 November 2011 and were $108,000 and $564,706 respectively. Mr Tyrwhitt will be required to repay these amounts if he ceases employment prior to the original vesting dates (31 July 2012 for the 2009 medium-term incentive and 31 July 2013 for the 2010 medium-term incentive);

Mr Tyrwhitt's retention compensation of $1,555,845 was paid out. This will be repayable in the event that Mr Tyrwhitt resigns or is dismissed for cause before the original payment dates being 1 January 2013 (60% is repayable at this date), 1 January 2017 (50% is repayable at this date) and 1 January 2022 (40% is repayable at this date);

Mr Tyrwhitt was paid out his service payment of $868,867. This will be repayable in the event that Mr Tyrwhitt resigns or is dismissed for cause before the vesting date (1 January 2022), or if Mr Tyrwhitt fails to observe the post-employment restraints provided for in his contract; and

Mr Tyrwhitt was paid a relocation and expatriate allowance of $800,000.

Details of Mr Tyrwhitt's prior contract with Leighton Asia Limited (that remained in place during the December 2011 Transitional Financial Year) are set out in table 4.9.

Other key terms Other key terms of Mr Tyrwhitt's service agreement include the following: Mr Tyrwhitt's employment can be terminated by

either party giving 6 months' notice or payment in lieu of notice;

the consequences for unearned short-term incentive payments or unvested share rights on termination will be in accordance with the short-term incentive plan and the long-term incentive plan; and

Mr Tyrwhitt will have post-employment restraints for up to 12 months, and if he complies he will receive a payment equivalent to the relevant proportion of his then applicable fixed remuneration for the actual period of the restraint less any payment made to him in lieu of notice as described above.

102



103

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 4.9.2 DEPARTING SENIOR EXECUTIVES DURING THE DECEMBER 2011 TRANSITIONAL FINANCIAL YEAR The following arrangements applied to outgoing senior executives. All payments were in accordance with individual contracts and shareholder approval was sought where required. Mr Stewart Mr Stewart ceased to be Managing Director and CEO of Leighton Holdings on 24 August 2011 and ceased employment with the Group on 19 November 2011. Mr Stewart's termination arrangements were in line with his service agreement and, where required, shareholder approval was obtained at the November 2011 Annual General Meeting. The termination arrangements comprised payment in lieu of notice of $2,400,000, an award of 75,423 fully-paid shares in Leighton Holdings Limited (in relation to the first tranche of his 2011 long-term incentive award), a payment of $1,000,000 if he complies with restraint obligations, a one-off compensation payment in relation to retention provisions of $480,000 and a one-off service compensation payment of $1,920,000 which is equal to 80% of his fixed remuneration. Mr Stewart also received accrued statutory entitlements of $466,732. As at the date of this Remuneration Report, Mr Stewart has not received payment in lieu of notice, his payment for complying with restraint obligations and the 75,423 fully paid shares in Leighton Holdings Limited. Mr Saxelby Mr Saxelby ceased to be Managing Director of Thiess on 5 August 2011 and ceased employment with the Group on 1 October 2011. Mr Saxelby's termination arrangements were in line with his service agreement, comprised payment in lieu of notice (equal to 6 months' fixed remuneration) and accrued statutory entitlements totalling $1,832,564. He was also entitled to service compensation of $1,712,000 and payment in relation to retention awards of $606,000. In addition we entered into a consultancy agreement with Mr Saxelby, which commenced on 1 October 2011 and will end on 31 March 2012, under which total payments of $566,000 will be due.

Mr Sasse Mr Sasse ceased employment on 30 September 2011. Mr Sasse's termination arrangements were in line with his service agreement and comprise payment in lieu of notice (equal to 3 months' fixed remuneration) and accrued statutory entitlements totalling $671,055. In addition we entered into a consultancy agreement with Mr Sasse commencing on 1 October 2011 and will end on 30 September 2012, under which total payments of $887,500 will be due. 4.9.3 FINALISATION OF TERMINATION ARRANGMENTS FOR FORMER CEO As previously reported, Mr Wal King retired as an Executive Director and CEO on 31 December 2010 after 43 years of service within the Group with his contract of employment ceasing on 31 January 2011. Details of Mr King's termination arrangements were disclosed in the 2011 Remuneration Report. At the November 2011 Annual General Meeting it was announced that the Remuneration and Nominations Committee had determined, in accordance with the contractual agreement, not to make payment of the transition bonus (previously detailed) in relation to the transition to a new CEO and senior executive team.

103

104


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued Table 4.9: Terms of senior executive service agreements in place at 31 December 2011 Name Position Date of

commencement Termination date of current agreement

Fixed remuneration at 31 Dec 2011 (A$)

Notice

H G Tyrwhitt Managing Director Leighton Asia, India and Offshore Promoted to CEO of Leighton Holdings in August 2011. New contract agreed on 9 February 2012 and disclosed in section 4.9.1.

1 December 20074 years’ service 21 years’ previous service (1986 – 2007)

1 January 2022 $2,400,000 6 months by either party

R R Cooke Acting Managing Director Leighton Asia, India and Offshore

18 June 20074 years’ service

Evergreen $664,024 3 months by either party

M C Gray Managing Director Leighton Properties Pty Limited

2 March 198724 years’ service

30 June 2014 $930,000 6 months by eitherparty

P A Gregg Chief Financial OfficerLeighton Holdings Limited

14 October 20092 years’ service

30 June 2015 $1,700,000 12 months by either party

C A van der Laan

Chief Risk Officer and Group General Counsel Leighton Holdings Limited

15 June 2011<1 years’ service

Evergreen $950,000 6 months by eitherparty

C A Laslett Managing Director Leighton Contractors Pty Limited

12 September 198328 years’ service

Evergreen $1,130,000 6 months by eitherparty

B A Munro Managing Director Thiess Pty Ltd (from 14 September 2011)

10 February 198626 years’ service

30 June 2015 $850,000 3 months by either party

G M Palin Managing Director John Holland Group Pty Limited

4 October 199318 years’ service

31 August 2019 $1,130,000 3 months by eitherparty

L W Voyer Managing Director Leighton Middle East & Africa

21 February 197239 years’ service

30 June 2012(2 x 12 month options to extend to June 2014)

$1,050,000 6 months by either party

104



105


Termination benefits Restraint Other

Payment on termination of employment of a service benefit of 80% of fixed remuneration (where termination occurs other than for cause or resignation).

12 months unpaid Annual Expatriate Benefits.Payment over the period to the termination date or on early termination of employment by the employer of a retention benefit in 3 parts: 40% of fixed remuneration on 1 January 2013, 50% of fixed remuneration on 1 January 2017 and 60% of fixed remuneration on 1 January 2022 (other than if terminated for gross misconduct).

None. None Annual Expatriate Benefits.Participation in the short‐term incentive and long‐term incentive arrangements.

Payment on termination of employment of a service benefit of 70% of final fixed remuneration (other than if terminated for gross misconduct).

12 months unpaid Payment on the termination date or on early termination of employment by the employer of a retention benefit of 70% of final fixed remuneration (other than if terminated for gross misconduct).

Long‐term incentive award will lapse if retire or resign before vesting.

12 months unpaid $750,000 retention payment paid on 15 January 2011. Short‐term incentive up to 125% of fixed remuneration if targets are exceeded based on measures 70% financial and 30% KPI’s. 2011 long‐term incentive grant of share rights equalling 75% of fixed remuneration, split into 2 equal parts with vesting after 3 years, subject to earnings per share and total shareholder return performance measures. Future year’s long‐term incentive grants of 75% fixed remuneration issued annually in securities, subject to performance measures to be determined by the Remuneration and Nominations Committee.

Accelerated vesting of long‐term incentive where termination occurs before December 2012 other than for cause or resignation. Long‐term incentive award will lapse if retire or resign before vesting.

6 months unpaid Short‐term incentive up to 100% of fixed remuneration if targets are exceeded. From 2012, long‐term incentive grant of securities on 1 January annually of 50% fixed remuneration subject to performance measures determined by the Remuneration and Nominations Committee.

Statutory benefits. Silent Retention payment of 100% of base salary on 3 September 2012.

Payment on termination of employment of a service benefit of 75% of final fixed remuneration.

12 months unpaid A pro‐rata short‐term incentive and long‐term incentive amount will be payable in the case of termination other than for cause.

Payment on termination of employment of a service benefit of 80% of final fixed remuneration (other than if terminated for gross misconduct).

12 months unpaid Retention benefit in three payments on each of 50% of fixed remuneration on 1 July 2011, 25% of fixed remuneration on 1 July 2012 and 25% of fixed remuneration on 1 July 2013.

Payment on termination of employment of a service benefit of 100% of fixed remuneration (where termination occurs other than for cause or resignation); inclusive of previous accrued service less $410,856.

12 months unpaid Annual Expatriate Benefits.Payment on the termination date of a retention benefit to the maximum of 100% of fixed remuneration (being 60% to June 2012, 80% to June 2013 or 100% to June 2014). Special Bonus for Business Plan targets to June 2012 $1,000,000, 30 June 2013 $500,000, and 30 June 2014 $500,000.

105

106


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued 5. NON-EXECUTIVE DIRECTOR REMUNERATION This section explains the remuneration for Non-executive Directors. Details of the Non-executive Directors for the December 2011 Transitional Financial Year are set out in table 5.1. In addition, Ms Dwyer has been appointed as an independent Non-executive Director and Chairman of the Audit Committee. The appointment of Ms Dwyer was effective 1 January 2012.

Table 5.1: Non-executive Directors Director Position Board Committees (as at 31 December 2011)

S P Johns1 Chairman and independent Non‐executive Director

Chairman – Remuneration and Nominations Chairman – Plan Audit

A Drescher2 Independent Non‐executive Director Chairman – Audit (Acting) Remuneration and Nominations

R D Humphris OAM Independent Non‐executive Director Ethics and Compliance

Dr B Lohr3 Non‐executive Director*

I J Macfarlane AC Independent Non‐executive Director

W G Osborn Independent Non‐executive Director Chairman – Ethics and Compliance Remuneration and Nominations

D P Robinson4 Non‐executive Director* Audit Plan

P W Sassenfeld5 Non‐executive Director*

Dr F Stieler Non‐executive Director* Remuneration and Nominations

M F Wennemer6 Non‐executive Director*

R L Seidler AM7 Alternate Director* Remuneration and Nominations Ethics and Compliance

* Representing our majority shareholder, HOCHTIEF Australia Holdings Limited.

1 Mr Johns was appointed Chairman of the Board, Chairman of the Remuneration and Nominations Committee and Chairman of the Plan Committee on 24 August 2011. Following his appointment as Chairman of the Board, Mr Johns ceased to be Chairman of the Audit Committee but remains a member of the Audit Committee.

2 Mr Drescher was appointed Acting Chairman of the Audit Committee on 1 September 2011 and retired from that position on 31 December 2011 prior to the appointment of Ms P J Dwyer as an independent Non-executive Director and Chairman of the Audit Committee on 1 January 2012.

3 Dr Lohr appointed Dr K Reinitzhuber as his alternate Director on 5 July 2011 and resigned his directorship on 12 October 2011. 4 Mr Robinson was appointed as Mr Sassenfeld’s alternate Director on 29 November 2011. 5 Mr Sassenfeld was appointed a Non-executive Director on 29 November 2011 and appointed Mr Robinson as his alternate Director on 29 November 2011. 6 Mr Wennemer was appointed a Non-executive Director on 6 October 2011 and appointed Mr Seidler AM as his alternate Director on 6 October 2011. 7 Mr Seidler AM is the alternate Director for Dr F Stieler (appointed 16 May 2011) and Mr Wennemer (appointed 6 October 2011).

106



107

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 5.1 SETTING NON-EXECUTIVE DIRECTOR REMUNERATION Remuneration for Non-executive Directors is designed to ensure that the Group can attract and retain suitably qualified and experienced Directors. Fees are based on a number of factors including requirements of the role, size and complexity of the Group and market practice. In recognition of the additional responsibilities and time commitment of Committee Chairmen and members, additional fees are paid to Committee members. Non-executive Directors do not receive shares, share options or any performance-related incentives. Directors are also entitled to be remunerated for any travel and other expenses reasonably incurred when attending meetings of the Board or in connection with the business of the company. The Remuneration and Nominations Committee reviews and makes recommendations to the Board with regard to Non-executive Directors’ fees and committee fees annually. The Remuneration and Nominations Committee may seek advice from independent remuneration advisers in forming their recommendations including information regarding the level of fees paid to Non-executive Directors of other companies of similar size and complexity. 5.2 CURRENT FEE LEVELS AND FEE POOL The fees are determined by the Board after considering the recommendations of the Remuneration and Nominations Committee. The last fee increase was effective from 1 July 2010. The aggregate annual fees payable to the Non-executive Directors for their services as Directors are limited to the maximum annual amount approved by shareholders. The maximum annual amount is currently $3,500,000 (including superannuation contributions) as approved by shareholders at the 2007 Annual General Meeting. For the December 2011 Transitional Financial Year, total Non-executive Director fees paid were $1,383,996 which equates to 79% of the pro-rata approved maximum annual amount. Table 5.2 sets out the fees paid to Directors for the December 2011 Transitional Financial Year. In addition to these fees, superannuation contributions will be made to the benefit of all Non-executive Directors capped at the maximum amount required under the Superannuation Guarantee Legislation.

Table 5.2: Board and committee fees in Australian dollars (pro-rata fees for the 6 month period were paid)

Chairman1 Deputy

Chairman Member

Board 620,000 225,0002 185,000

Audit Committee 46,000 ‐ 23,000

Ethics and Compliance Committee

40,000 ‐ 20,000

Remuneration and Nominations Committee

40,000 ‐ 20,000

Plan Committee ‐ ‐ ‐

Special Committee Fee3 3,850 ‐ 3,850 1 The Chairman of the Board, who is also the Chairman of the

Remuneration and Nominations Committee and a member of the Audit Committee, receives no standing committee fees in addition to his Board fees.

2 Currently there is no Deputy Chairman of the Board. 3 This fee is payable to all Non-executive Directors for each day of service

on a Special Committee.

107

108


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued 5.3 DIRECTORS OF OPERATING COMPANIES

Non-executive Directors may receive additional fees for acting as a Director of one or more Operating Companies of the Group. Roles held by Non-executive Directors as Directors of Operating Companies at 31 December 2011 are set out in table 5.3.

Table 5.3: Operating Company appointments (as at 31 December 2011) Director Operating Company Role

A Drescher Leighton Contractors Pty Limited Non‐executive Director

R D Humphris OAM Leighton Asia Limited Non‐executive Director

S P Johns John Holland Group Pty Limited Non‐executive Director

W G Osborn Thiess Pty Limited Non‐executive Director and Chairman

D P Robinson Leighton Properties Pty Limited Non‐executive Director

R L Seidler AM (Alternate Director) Leighton Properties Pty Limited Leighton Asia Limited

Non‐executive Director Non‐executive Director and Chairman

5.4 ALTERNATE DIRECTORS The Group does not pay Directors fees to alternate Directors. Financial arrangements for alternate Directors are a private matter between the Non-executive Director and the relevant alternate Director. Mr Seidler retired as a partner of Blake Dawson during 2010 and is now a consultant to that firm. He is a Non-executive Director of Leighton Properties Pty Limited and Leighton Asia Limited for which he receives Director’s fees directly from the relevant Operating Company. Mr Seidler received committee membership fees of $22,000 for the December 2011 Transitional Financial Year. 5.5 NON-EXECUTIVE DIRECTORS’ RETIREMENT BENEFITS The Company previously operated the Non-executive Directors’ Retirement Plan which was approved by shareholders at the 1996 Annual General Meeting. On 5 November 2003, the Board resolved to remove retirement benefits for Non-executive Directors appointed after that date and all Non-executive Directors appointed from this date were paid increased Board fees to compensate them for the removal of the retirement benefits. On 1 July 2008, the Board resolved to close the plan from that date with the effect that there was no further increase in benefits payable to the Non-executive Directors remaining in the plan.

As at 31 December 2011, two Non-executive Directors remained in the plan, namely Mr Drescher and Mr Robinson. Each of these Directors will receive a maximum benefit on retirement limited to their entitlement under the plan as if they had retired on 1 July 2008. Mr Mortimer resigned as Chairman on 24 August 2011 after 14 years of service. Mr Mortimer received Directors fees of $93,922 for the period from 1 July 2011 to retirement date. On 2 February 2012 Mr Mortimer also received a defined retirement benefit of $590,866 (being $693,750 less $102,884 previously contributed) which had been previously accrued and disclosed to shareholders.

108



109

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 .5.6 NON-EXECUTIVE DIRECTOR TOTAL REMUNERATION Details of Non-executive Directors’ remuneration in Australian dollars for the financial year ended 30 June 2011 and the December 2011 Transitional Financial Year are set out in table 5.4. Table 5.4: Non-executive Director remuneration Short‐term benefits Post‐employment benefits Total

Board & Committee

fees Other

Subsidiary Board fees and extra

service fees

Non‐ monetary benefits

Superannuation contributions

Termination benefits

Remuneration for services as a Non‐executive Director

Curren

t

S P Johns1 Dec 2011 Transitional Financial Year 252,534 ‐ 31,422 ‐ 10,718 ‐ 294,674Financial year ended 30 June 2011 231,000 ‐ 3,801 ‐ 11,403 ‐ 246,204A Drescher2 Dec 2011 Transitional Financial Year 112,833 ‐ 51,136 ‐ 13,004 ‐ 176,973Financial year ended 30 June 2011 205,000 ‐ 81,818 ‐ 23,386 ‐ 310,204R D Humphris OAM Dec 2011 Transitional Financial Year 95,500 ‐ 17,500 ‐ 14,890 ‐ 127,890Financial year ended 30 June 2011 188,079 ‐ 74,813 ‐ 32,125 ‐ 295,017I J Macfarlane AC Dec 2011 Transitional Financial Year 92,500 ‐ ‐ ‐ 7,890 ‐ 100,390Financial year ended 30 June 2011 185,000 ‐ ‐ ‐ 15,204 ‐ 200,204W G Osborn Dec 2011 Transitional Financial Year 122,500 ‐ 68,250 ‐ 14,640 ‐ 205,390Financial year ended 30 June 2011 233,413 ‐ 136,500 ‐ 28,704 ‐ 398,617D P Robinson Dec 2011 Transitional Financial Year 104,000 ‐ ‐ ‐ 7,890 ‐ 111,890Financial year ended 30 June 2011 205,000 ‐ 6,850 ‐ 15,204 ‐ 227,054P W Sassenfeld3 Dec 2011 Transitional Financial Year 17,077 ‐ ‐ ‐ 1,537 ‐ 18,614Financial year ended 30 June 2011 ‐ ‐ ‐ ‐ ‐ ‐ ‐Dr F Stieler Dec 2011 Transitional Financial Year 129,308 ‐ ‐ ‐ 10,303 ‐ 139,611Financial year ended 30 June 2011 ‐ ‐ ‐ ‐ ‐ ‐ ‐M H Wennemer4 Dec 2011 Transitional Financial Year 44,115 ‐ ‐ ‐ 3,945 ‐ 48,060Financial year ended 30 June 2011 ‐ ‐ ‐ ‐ ‐ ‐ ‐

Form

er

Dr B Lohr5 Dec 2011 Transitional Financial Year 51,942 ‐ ‐ ‐ 7,890 ‐ 59,832Financial year ended 30 June 2011 185,000 ‐ ‐ ‐ 15,204 ‐ 200,204D A Mortimer AO6 Dec 2011 Transitional Financial Year 91,591 ‐ ‐ ‐ 2,331 ‐ 93,922Financial year ended 30 June 2011 620,000 ‐ ‐ ‐ 15,204 ‐ 635,204

1 Mr Johns was appointed Chairman of the Board, Chairman of the Remuneration and Nominations Committee and Chairman of the Plan Committee on

24 August 2011. Following his appointment as Chairman of the Board, Mr Johns ceased to be Chairman of the Audit Committee but remains a member of the Audit Committee.

2 Mr Drescher was appointed Acting Chairman of the Audit Committee on 1 September 2011 and retired from that position on 31 December 2011. 3 Mr Sassenfeld was appointed a Non-executive Director on 29 November 2011. 4 Mr Wennemer was appointed a Non-executive Director on 6 October 2011. 5 Dr Lohr resigned as a Non-executive Director on 12 October 2011. 6 Mr Mortimer resigned as an independent Non-executive Director and Chairman on 24 August 2011. As detailed in section 5.5 Mr Mortimer received Directors

fees of $93,922 for the period from 1 July 2011 to retirement date. On 2 February 2012 Mr Mortimer also received a defined retirement benefit of $590,866 (being $693,750 less $102,884 previously contributed).

109

110


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued 6. ADDITIONAL STATUTORY DISCLOSURES This section provides additional statutory remuneration information as required by the Corporations Act and applicable accounting standards. Table 6.1: Movement in long-term incentives

Name Date of grant

Number granted/ awarded

AdjustedExercise Price

(A$)1 Vested

(first test date)

Balance share options

30 June 2011

Number of share options

vested in December 2011

Transitional Financial Year2

Share options granted on 15 December 2006, the exercise price was $19.89, the first test date was 15 December 2009, and all unexercised share options lapsed on 15 December 2011 H G Tyrwhitt 15.12.06 20,000 19.27 15.12.09 ‐ R R Cooke 15.12.06 ‐ 19.27 15.12.09 ‐ M C Gray 15.12.06 125,000 19.27 15.12.09 65,000 C A Laslett 15.12.06 60,000 19.27 15.12.09 ‐ B A Munro 15.12.06 75,000 19.27 15.12.09 37,500 G M Palin 15.12.06 75,000 19.27 15.12.09 ‐ L W Voyer 15.12.06 125,000 19.27 15.12.09 ‐ D G Stewart 15.12.06 200,000 19.27 15.12.09 100,000 S M Sasse 15.12.06 60,000 19.27 15.12.09 ‐ D K Saxelby 15.12.06 125,000 19.27 15.12.09 42,500 Share options granted on 25 January 2008, the exercise price was $45.53, the first test date was 25 January 2011, and all unexercised share options will lapse on 25 January 2013 H G Tyrwhitt 25.01.08 50,000 44.91 25.01.11 30,032 R R Cooke 25.01.08 10,000 44.91 25.01.11 6,006 M C Gray 25.01.08 25,000 44.91 25.01.11 15,016 L W Voyer 25.01.08 25,000 44.91 25.01.11 15,016 D K Saxelby 25.01.08 75,000 44.91 25.01.11 45,049 Share options granted on 4 May 2009, the exercise price was $19.49, the first test date is 4 May 2012, and all unexercised share options will lapse on 4 May 2014 H G Tyrwhitt 04.05.09 80,000 18.87 04.05.12 80,000 R R Cooke 04.05.09 18,000 18.87 04.05.12 18,000 M C Gray 04.05.09 35,000 18.87 04.05.12 35,000 C A Laslett 04.05.09 25,000 18.87 04.05.12 25,000 G M Palin 04.05.09 50,000 18.87 04.05.12 50,000 B A Munro 04.05.09 25,000 18.87 04.05.12 25,000 L W Voyer 04.05.09 35,000 18.87 04.05.12 35,000 D G Stewart 04.05.09 50,000 18.87 04.05.12 50,000 S M Sasse 04.05.09 15,000 18.87 04.05.12 15,000 D K Saxelby 04.05.09 50,000 18.87 04.05.12 50,000 TOTAL 739,119 1 The exercise price for the options was amended as at 1 July 2011 as per the ASX Listing Rule formula and notified to the ASX on 24 June 2011. This table

represents the exercise price as at 31 December 2011. 2 The total shareholder return tranche of the 2008 option grant did not meet the hurdles on the first or subsequent test dates being 25 January 2011, 25 July

2011 and 25 January 2012. The tranche will be retested on 25 July 2012. 3 The options in this column represent the portion of the 2008 option grant earnings per share parcel that vested being 20.13%. The lapsed 79.87% were

previously reported. 4 On the exercise of each option, by paying the exercise price (being $19.27 for the 2006 grant; $44.91 for the 2008 grant; $18.87 for the 2009 grant), the holder

received one fully paid ordinary share in Leighton Holdings Limited. 5 These represent options granted that lapsed during the December 2011 Transitional Financial Year due to a failure to fully satisfy performance conditions or

failure to exercise the options, and/or unvested options held that were forfeited upon cessation of employment with the Group. 6 The amount is based on the weighted average closing market price on the date the options were exercised less the exercise price per option (which is based on

the Volume Weighted Average Price (VWAP) over 20 trading days up to and including the date the grant was made) multiplied by the number of options exercised.

7 This amount is the weighted average closing market price on the dates the options were exercised or lapsed. The ultimate value to the executive will depend on the actual market price on the ultimate date of sale.

8 The amount is based on the weighted average closing market price on the date the options lapsed less the exercise price per option (which is based on the Volume Weighted Average Price (VWAP) over 20 trading days up to and including the date the grant was made) multiplied by the number of options lapsed.

110



111

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 Number of share

options exercisable in


Financial Year3

Number of share options exercised

in December 2011 Transitional

Financial Year4

Number of share options forfeited

/ lapsed5

Balance share options

31 Dec 2011

Value exercised in December

2011 Transitional Financial Year

(A$)6

Closing share price on exercise

date (A$)7 Value forfeited /

lapsed (A$)8

‐ ‐ 65,000 ‐ 87,100 20.61 ‐ 37,500 ‐ 74,250 21.25 ‐ ‐ (100,000) ‐ 20.21 (94,000) ‐ 42,500 ‐ 18,275 19.70

5,032 30,032 1,006 6,006 2,516 15,016 2,516 15,016 7,549 (45,049) ‐

80,000 18,000 35,000 25,000 50,000 25,000 35,000 (50,000) ‐ (15,000) ‐ (50,000) ‐

18,619 145,000 (260,049) 334,070 179,625 (94,000)

111

112


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 DIRECTORS’ REPORT continued REMUNERATION REPORT continued Table 6.2: Performance rights granted to Executive Directors

Name

Date of interest award

Number nominated

VWAP at date of award(A$)1

Value at date of award(A$)

First test date

Balance of interest

30 Jun 2011

Balance of interest

30 Dec 2011

Fair Value of grant in


Financial Year (A$)2

Performance rights awarded to Executive Directors subject to contract terms and shareholder approval at the November 2011 AGM

P A Gregg3 01.01.2011 38,466 33.14639 1,275,000 01.01.2014 38,466 38,466 146,235

D G Stewart4 01.01.2011 75,423 33.14639 2,500,000 19.11.2011 75,423 75,423 282,082

Total 113,889 3,775,000 113,889 113,889 428,317 1 The Volume Weighted Average Price of Leighton Holdings Limited securities over 15 trading days up to and including 15 December 2010 was $33.14639. 2 The fair value of equity instruments is determined as at the date of interest granted and is progressively allocated over the vesting period. The amount

included as remuneration is not related to or indicative of the benefit (if any) that senior executives may ultimately realise should the equity instruments vest. The fair value of equities at the date of their grant has been determined in accordance with AASB 2.

3 Mr Gregg was appointed as Chief Financial Officer on 14 October 2009 and an Executive Director on 23 December 2010. He is entitled to an annual award of securities under his executive contract based on 75% fixed remuneration divided by $33.14639 (VWAP). Shareholder approval was received at the November 2011 AGM.

4 Mr Stewart was entitled under his executive contract to three annual tranches of 75,423 shares in Leighton Holdings Limited. On termination of his employment on 19 November 2011, Mr Stewart is entitled to receive the first tranche of 75,423 shares, and shareholder approval was received at the November 2011 AGM. The remaining two tranches lapsed on termination.

The Leighton Holdings Limited Directors’ Report for the December 2011 Transitional Financial Year is signed at Sydney on the 13th day of February 2012 in accordance with a resolution of the Directors. S P Johns H G Tyrwhitt Chairman Chief Executive Officer

112



CONCISE fINANCIAL REPORT

Devil Creek DevelopmentWestern AustraliaJohn Holland

113

114



CONCISE FINANCIAL REPORT CONSOLIDATED INCOME STATEMENT for the period ended 31 December 2011

Note

6 months to December 2011 $m

12 months to June 2011 $m

Revenue 2 10,169.2 15,561.3Expenses 3 (9,365.5) (15,363.2)Finance costs 4 (90.5) (159.6)Share of profits / (losses) of associates and joint venture entities (237.8) (529.4)

Profit / (loss) before tax 475.4 (490.9)Income tax (expense) / benefit (130.5) 85.2

Profit / (loss) for the period 344.9 (405.7)

Attributable to: Members of the parent entity 340.0 (408.8)Minority interest 4.9 3.1

Profit / (loss) for the period 344.9 (405.7)

Dividends per share ‐ Final* 6 60.0¢ nil ‐ Interim* 6 n/a 60.0¢ Basic earnings per share 101.0¢ (133.1¢)Diluted earnings per share 101.0¢ (133.1¢)

* The effect of the change in the financial year to a 31 December year end date is that a dividend declared in respect of a 6 month period ended 31 December is a

final dividend and a dividend declared in respect of a 6 month period ended 30 June is an interim dividend. The Consolidated Income Statement is to be read in conjunction with the notes to the Concise Financial Report.

114

CONCISE fINANCIAL REPORT

115

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the period ended 31 December 2011 6 months to

December 2011 $m


Profit / (loss) for the period (before minority interest) 344.9 (405.7) Other comprehensive income: ‐ Foreign exchange translation differences (net of tax) 68.5 (269.2)‐ Effective portion of changes in fair value of cash flow hedges (net of tax) 30.4 3.0‐ Change in fair value of available‐for‐sale assets (net of tax) ‐ (6.7)‐ Change in value of equity reserves (net of tax) (0.8) (7.1)

Net gain / (loss) recognised directly in equity 98.1 (280.0)

Total comprehensive income / (expense) for the period 443.0 (685.7)

Attributable to: Members of the parent entity 438.1 (688.8)Minority interest 4.9 3.1

Total comprehensive income / (expense) for the period 443.0 (685.7)

The Consolidated Statement of Comprehensive Income is to be read in conjunction with the notes to the Concise Financial Report.

115

116


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CONCISE FINANCIAL REPORT continued CONSOLIDATED BALANCE SHEET as at 31 December 2011

Note December 2011 $m

June 2011 $m

Assets Cash and cash equivalents 1,503.2 1,414.7Trade and other receivables 2,461.6 2,484.0Current tax assets 92.6 102.8Inventories: consumables and development properties 481.3 726.7Property, plant and equipment 4.6 4.7

Total current assets 4,543.3 4,732.9 Trade and other receivables 777.9 373.3Inventories: development properties 420.4 422.2Investments accounted for using the equity method 998.8 1,003.6Other investments 63.6 65.2Deferred tax assets 307.3 432.8Property, plant and equipment 2,520.0 2,614.5Intangibles 269.1 155.7

Total non‐current assets 5,357.1 5,067.3

Total assets 9,900.4 9,800.2

Liabilities Trade and other payables 4,025.8 4,639.3Current tax liabilities 59.3 47.0Provisions 305.3 292.6Interest bearing liabilities 7 669.8 271.3

Total current liabilities 5,060.2 5,250.2 Trade and other payables 352.3 421.2Provisions 247.1 253.7Interest bearing liabilities 7 1,473.9 1,555.2

Total non‐current liabilities 2,073.3 2,230.1

Total liabilities 7,133.5 7,480.3

Net assets 2,766.9 2,319.9

Equity Share capital 2,027.2 2,016.2Reserves (209.3) (305.7)Retained earnings 866.2 526.2

Total equity attributable to equity holders of the parent 2,684.1 2,236.7Minority interest 82.8 83.2

Total equity 2,766.9 2,319.9 The Consolidated Balance Sheet is to be read in conjunction with the notes to the Concise Financial Report.

116

CONCISE fINANCIAL REPORT CONTINUED

117

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the period ended 31 December 2011

Share Capital

$m Reserves

$m

Retained Earnings

$m

Attributable to Equity Holders

$m

Minority Interest

$m

TotalEquity

$m

Total equity at 30 June 2010 1,232.9 (40.5) 1,372.3 2,564.7 3.4 2,568.1

Total comprehensive income ‐ (280.0) (408.8) (688.8) 3.1 (685.7)

Transactions with owners in their capacity as owners:

‐ Contributions of equity 783.3 783.3 783.3‐ Dividends (437.3) (437.3) (437.3)‐ Share based payments 14.8 14.8 14.8‐ Other 2.2 2.2

Total transactions with owners 783.3 14.8 (437.3) 360.8 2.2 363.0

Minority ‐ acquisition of controlled entity

74.5 74.5

Total equity at 30 June 2011 2,016.2 (305.7) 526.2 2,236.7 83.2 2,319.9

Total comprehensive income ‐ 98.1 340.0 438.1 4.9 443.0

Transactions with owners in their capacity as owners:

‐ Contributions of equity 11.0 11.0 11.0‐ Dividends ‐ Share based payments (1.7) (1.7) (1.7)‐ Other (5.3) (5.3)

Total transactions with owners 11.0 (1.7) ‐ 9.3 (5.3) 4.0

Total equity at 31 December 2011 2,027.2 (209.3) 866.2 2,684.1 82.8 2,766.9

The Consolidated Statement of Changes in Equity is to be read in conjunction with the notes to the Concise Financial Report.

117

118


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CONCISE FINANCIAL REPORT continued CONSOLIDATED STATEMENT OF CASH FLOWS for the period ended 31 December 2011



Cash flows from operating activities Cash receipts in the course of operations (including GST) 11,000.7 17,040.5Cash payments in the course of operations (including GST) (10,672.8) (15,340.6)

Cash flows from operating activities 327.9 1,699.9

Dividends received ‐ 0.1Interest received 24.0 23.9Finance costs paid (66.9) (128.4)Income taxes paid (50.8) (274.2)

Net cash from operating activities 234.2 1,321.3

Cash flows from investing activities Payments for intangibles (30.8) ‐Payments for plant and equipment (502.3) (1,378.5)Proceeds from sale of property, plant and equipment 44.8 25.4Payments for investments in controlled entities and businesses (5.0) (8.7)Cash acquired from acquisition of investments in controlled entities and businesses ‐ 22.8Proceeds from sale of investments in controlled entities and businesses 458.5 90.5Cash disposed from sale of investments in controlled entities and businesses ‐ (108.5)Proceeds from sale of other investments 0.8 56.9Loans to associates (122.3) (300.6)

Net cash from investing activities (156.3) (1,600.7)

Cash flows from financing activities Proceeds from share issues 11.0 783.3Proceeds from borrowings 223.0 396.7Repayment of borrowings (199.5) (207.6)Repayment of finance leases (68.8) (62.3)Distributions to minority interest (5.1) (0.3)Dividends paid ‐ (437.3)

Net cash from financing activities (39.4) 472.5

Net increase / (decrease) in cash held 38.5 193.1Net cash at the beginning of the period 1,414.7 1,313.7Effects of exchange rate fluctuations on cash held 50.0 (92.1)

Net cash at reporting date 1,503.2 1,414.7

The Consolidated Statement of Cash Flows is to be read in conjunction with the notes to the Concise Financial Report.

118

CONCISE fINANCIAL REPORT CONTINUED

119

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 NOTES TO THE CONCISE FINANCIAL REPORT for the period ended 31 December 2011 NOTE 1 BASIS OF PREPARATION OF THE CONCISE FINANCIAL REPORT Leighton Holdings Limited (the “Company”) obtained approval from the Australian Securities and Investments Commission (“ASIC”) to change its financial year end date from 30 June to 31 December. As a result the current financial year of the Company is the 6 month period 1 July 2011 to 31 December 2011. As such, the amounts presented in the financial report are not entirely comparable. Effective 1 January 2012, the financial years of the Company are for twelve month periods ending 31 December which aligns with the financial year of its major shareholder, HOCHTIEF Australia Holdings Limited (“HOCHTIEF”) and its ultimate parent, Actividades de Construcción y Servicios, SA (“ACS”). The concise financial report has been prepared in accordance with the Corporations Act 2001 and Accounting Standard AASB 1039 Concise Financial Reports. The financial statements and specific disclosures required by AASB 1039 have been derived from the Consolidated Entity’s full financial report for the financial period. Other information included in the concise financial report is consistent with the Consolidated Entity’s full financial report. The concise financial report does not, and can not be expected to, provide as full an understanding of the financial performance, financial position and financing and investing activities of the Group as the full financial report. Further financial information can be obtained from the Consolidated Entity’s full financial report which is available free of charge on request. The concise financial report is presented in Australian dollars and has been prepared on a historical cost basis, except for derivative financial instruments and available-for-sale assets that have been measured at fair value at reporting date. All financial information presented in Australian dollars has been rounded off to the nearest hundred thousand dollars, unless otherwise stated. The Consolidated Entity’s accounting policies have been consistently applied by each entity in the Group and are consistent with those in the previous year. A full description of the accounting policies adopted by the Consolidated Entity may be found in the Consolidated Entity’s full financial report. NOTE 2 REVENUE Note 6 months to

December 2011 $m


Construction contracting services 5,798.2 9,159.7Mining contracting services 3,138.5 5,177.0Property development revenue 519.1 76.5Other services revenue 683.4 1,118.3

Revenue from external customers 10,139.2 15,531.5

Interest ‐ Related parties 8.6 4.4‐ Other parties 15.5 18.3Unwinding of discounts on non‐current receivables ‐ Related parties 3.5 5.6‐ Other parties 2.4 1.4Dividends / distributions ‐ 0.1

Other revenue 30.0 29.8

Total revenue 5 10,169.2 15,561.3

119

120


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CONCISE FINANCIAL REPORT continued NOTES continued NOTE 3 EXPENSES Note 6 months to

December 2011 $m


Materials (2,369.4) (4,369.9)Subcontractors (2,364.8) (3,777.2)Plant costs (779.3) (1,166.2)Personnel costs (2,292.0) (4,100.8)Depreciation of property, plant and equipment 4 (512.7) (865.6)Amortisation of intangibles 4 (33.0) (0.6)Net gain / (loss) on sale of assets 4 244.8 322.2Net gain on acquisition of controlled entities 4 ‐ 101.0Impairments 4 (123.9) (301.1)Property development and property joint ventures write‐downs (0.6) (80.1)Property development ‐ cost of goods sold (548.7) (78.1)Foreign exchange gains / (losses) (8.7) 2.8Operating lease payments ‐ plant and equipment (151.3) (324.8)Operating lease payments ‐ other (46.2) (84.7)Professional and consultancy fees (150.6) (245.5)Other expenses (229.1) (394.6)

Total expenses (9,365.5) (15,363.2)

120

CONCISE fINANCIAL REPORT CONTINUED NOTES CONTINUED

121

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 NOTE 4 ITEMS INCLUDED IN PROFIT / (LOSS) BEFORE TAX



Finance costs Interest ‐ Related parties (1.2) (4.2)‐ Other parties (52.0) (108.2)Finance charge for finance leases (9.6) (10.3)Facility fees (16.3) (26.0)Impact of discounting ‐ Related parties (10.5) (9.3)Interest rate swap close out transferred from equity (0.9) (1.6)

Total finance costs (90.5) (159.6)

Depreciation of property, plant and equipment ‐ Buildings (1.4) (3.0)‐ Plant and equipment (505.5) (849.5)‐ Leasehold land, buildings and improvements (5.8) (13.1)

Total depreciation of property, plant and equipment (512.7) (865.6)

Amortisation ‐ Intangibles (33.0) (0.6)

Net gain / (loss) on sale of assets ‐ Controlled entities and businesses 229.3 259.4‐ Other investments ‐ 49.0‐ Land and buildings ‐ 0.2‐ Plant and equipment 15.5 13.6

Total gain / (loss) on sale of assets 244.8 322.2

Net gain on acquisition of controlled entities ‐ Controlled entities ‐ 101.0

Impairments ‐ Investments in infrastructure toll road companies (70.0) (4.0)‐ Investments accounted for using the equity method (50.0) (296.4)‐ Other investments (0.8) ‐‐ Intangibles (3.1) (0.7)

Total impairments (123.9) (301.1)

121

122


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CONCISE FINANCIAL REPORT continued NOTES continued NOTE 5 SEGMENT INFORMATION

6 months to December 2011 Thiess

$m

Leighton Contractors $m

John Holland $m

Leighton Middle East & Africa $m

Leighton Asia, India & Offshore $m

Commercial & Residential $m

Corporate $m

Eliminations $m

Total $m

Revenue

Segment revenue before interest

3,809.3 3,594.5 2,400.0 329.8 1,388.6 527.8 205.4 (108.5) 12,146.9

Interest revenue 0.2 ‐ ‐ ‐ ‐ ‐ 29.8 ‐ 30.0

Segment revenue 3,809.5 3,594.5 2,400.0 329.8 1,388.6 527.8 235.2 (108.5) 12,176.9

Inter‐segment revenue ‐ 14.4 ‐ ‐ ‐ 89.8 4.3 (108.5) ‐

Segment joint venture and associate revenue

703.8 250.3 305.5 329.8 215.4 2.7 200.2 ‐ 2,007.7

External revenue 3,105.7 3,329.8 2,094.5 ‐ 1,173.2 435.3 30.7 ‐ 10,169.2

Result

Segment result before interest, gains on sale and impairments

61.8 279.8 67.9 (71.1) 145.0 18.3 (41.2) ‐ 460.5

Interest ‐ (16.5) (7.9) (32.8) (9.8) (17.3) (6.2) ‐ (90.5)

Segment result before gains on sale and impairments

61.8 263.3 60.0 (103.9) 135.2 1.0 (47.4) ‐ 370.0

Gain on sale of controlled entities and businesses

‐ 229.3 ‐ ‐ ‐ ‐ ‐ ‐ 229.3

Impairments (37.8) (0.3) (35.0) (50.0) ‐ ‐ (0.8) ‐ (123.9)

Segment result 24.0 492.3 25.0 (153.9) 135.2 1.0 (48.2) ‐ 475.4

Income tax (expense) / benefit

(130.5)

Profit / (loss) for the period 344.9

Other

Share of profit / (loss) of associates and joint venture entities

(170.0) (28.3) 20.0 (78.2) 14.1 1.1 3.5 ‐ (237.8)

Depreciation (221.8) (156.9) (41.7) ‐ (90.0) (0.5) (1.8) ‐ (512.7)

Other material non‐cash expenses

(37.8) (32.2) (35.0) (50.0) ‐ (0.6) (2.0) ‐ (157.6)

Assets and Liabilities

Reportable segment assets 1,602.9 2,000.9 998.4 1,118.0 1,512.1 903.1 2,433.0 ‐ 10,568.4

Reportable segment liabilities 1,637.6 1,142.3 1,003.0 20.3 615.6 278.1 3,104.6 ‐ 7,801.5

122


123

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 NOTE 5 SEGMENT INFORMATION – CONTINUED 12 months to June 2011

Thiess $m

Leighton Contractors $m

John Holland $m

Leighton Middle East & Africa $m

Leighton Asia, India & Offshore $m

Commercial & Residential $m

Corporate $m

Eliminations

$m Total $m

Revenue

Segment revenue before interest

6,619.4 6,178.8 3,672.5 846.9 1,888.4 132.5 23.1 (14.6) 19,347.0

Interest revenue 17.4 ‐ ‐ ‐ ‐ ‐ 12.3 ‐ 29.7

Segment revenue 6,636.8 6,178.8 3,672.5 846.9 1,888.4 132.5 35.4 (14.6) 19,376.7

Inter‐segment revenue ‐ 1.4 ‐ ‐ 13.2 ‐ ‐ (14.6) ‐

Segment joint venture and associate revenue

1,665.2 461.4 518.1 846.9 281.7 42.1 ‐ ‐ 3,815.4

External revenue 4,971.6 5,716.0 3,154.4 ‐ 1,593.5 90.4 35.4 ‐ 15,561.3

Result

Segment result before interest, gains on sale and acquisition and impairments

(316.8) 366.4 (243.8) (176.7) 137.3 (71.7) (85.3) ‐ (390.6)

Interest ‐ (39.9) (11.2) (28.8) (27.9) (21.5) (30.3) ‐ (159.6)

Segment result before gains on sale and acquisition and impairments

(316.8) 326.5 (255.0) (205.5) 109.4 (93.2) (115.6) ‐ (550.2)

Gain on sale of controlled entities and businesses

‐ ‐ ‐ 259.4 ‐ ‐ ‐ 259.4

Gain on acquisition of controlled entities

‐ ‐ ‐ ‐ ‐ ‐ 101.0 ‐ 101.0

Impairments (0.7) (4.0) ‐ (286.9) ‐ ‐ (9.5) ‐ (301.1)

Segment result (317.5) 322.5 (255.0) (492.4) 368.8 (93.2) (24.1) ‐ (490.9)

Income tax (expense) / benefit

85.2

Profit / (loss) for the period (405.7)

Other

Share of profit / (loss) of associates and joint venture entities

(486.3) 2.0 61.0 (155.7) 41.5 9.5 (1.4) ‐ (529.4)

Depreciation (367.3) (304.9) (83.4) ‐ (105.2) (0.4) (4.4) ‐ (865.6)

Other material non‐cash expenses

(0.7) (4.6) ‐ (286.9) ‐ (80.1) (9.5) ‐ (381.8)

Assets and Liabilities

Reportable segment assets 1,520.1 2,336.2 848.3 950.3 1,253.9 909.8 2,845.4 ‐ 10,664.0

Reportable segment liabilities 1,550.8 1,233.0 957.5 ‐ 742.5 291.9 3,568.4 ‐ 8,344.1

123

124


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CONCISE FINANCIAL REPORT continued NOTES continued NOTE 6 DIVIDENDS

Cents per share $m

2011 final dividend Subsequent to reporting date the Company announced an unfranked final dividend in respect of the period ended 31 December 2011. The dividend is payable on 30 March 2012. This dividend has not been provided for in the balance sheet

60.0 202.3

Dividends recognised in the reporting period to 31 December 2011 No final dividend was declared by the Company in respect of the period ended 30 June 2011 nil nil

Dividends recognised in the reporting period to 30 June 2011 2011 interim ordinary dividend 100% franked paid on 31 March 2011 60.0 181.72010 final ordinary dividend 100% franked paid on 30 September 2010 85.0 255.6

437.3

124


125

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 NOTE 7 INTEREST BEARING LIABILITIES

December 2011 $m

June 2011 $m

Current Interest bearing loans 460.4 68.6Finance lease liabilities 155.6 68.8Interest bearing liabilities ‐ limited recourse loans 53.8 133.9

Total current liabilities 669.8 271.3

Non‐current Interest bearing loans 914.0 1,152.2Finance lease liabilities 418.5 275.2Interest bearing liabilities ‐ limited recourse loans 141.4 127.8

Total non‐current liabilities 1,473.9 1,555.2

Total interest bearing liabilities 2,143.7 1,826.5

Interest Bearing Loans

Syndicated Loans On 10 October 2008, Leighton Finance Limited, a wholly owned subsidiary of the Company, entered into a syndicated bank facility for $520.0 million, maturing on 10 October 2011. On 8 December 2010, the syndicated bank facility was amended and restated to $600.0 million, maturing on 8 December 2013. Carrying amount at 31 December 2011: $nil (30 June 2011: $nil). LMENA No.1 Pty Limited, a wholly owned subsidiary of the Company, has a syndicated bank loan for US$368.2 million which is guaranteed by the Group. Carrying amount at 31 December 2011: US$312.3 million (30 June 2011: US$331.6 million) equivalent to $312.3 million (30 June 2011: $309.9 million), of which all is due for repayment within twelve months of the reporting date. Guaranteed Senior Notes On 15 October 2008, Leighton Finance Limited, a wholly owned subsidiary of the Company, issued a total of US$280.0 million Guaranteed Senior Notes in three series: Series A Notes: US$111.0 million Guaranteed Senior Notes at the rate of 6.91% maturing on 15 October 2013 Series B Notes: US$90.0 million Guaranteed Senior Notes at the rate of 7.19% maturing on 15 October 2015 Series C Notes: US$79.0 million Guaranteed Senior Notes at the rate of 7.66% maturing on 15 October 2018 Interest on the above notes is paid semi-annually on the 15th day of April and October in each year. Carrying amount at 31 December 2011: US$278.9 million (30 June 2011: US$278.5 million) equivalent to $278.9 million (30 June 2011: $260.3 million).

125

126


LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 CONCISE FINANCIAL REPORT continued NOTES continued NOTE 7 INTEREST BEARING LIABILITIES - CONTINUED On 21 July 2010, Leighton Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, issued a total of US$350.0 million Guaranteed Senior Notes in three series: Series A Notes: US$90.0 million Guaranteed Senior Notes at the rate of 4.51% maturing on 21 July 2015 Series B Notes: US$145.0 million Guaranteed Senior Notes at the rate of 5.22 % maturing on 21 July 2017 Series C Notes: US$115.0 million Guaranteed Senior Notes at the rate of 5.78 % maturing on 21 July 2020 Interest on the above notes is paid semi-annually on the 21st day of January and July in each year. Carrying amount at 31 December 2011: US$348.6 million (30 June 2011: US$348.4 million) equivalent to $348.6 million (30 June 2011: $325.6 million). Medium Term Notes Leighton Finance Limited, a wholly owned subsidiary of the Company, issued a total of $280.0 million Medium Term Notes on the following dates: 28 July 2009: $230.0 million 12 August 2009: $50.0 million The Notes bear interest at the rate of 9.5% paid quarterly and mature on 28 July 2014. Bilateral Loans On 4 August 2011, Leighton Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, entered into a bilateral bank facility with The Hong Kong and Shanghai Banking Corporation Limited for US$110.0 million, maturing on 31 July 2012. Carrying amount at 31 December 2011: US$110.0 million (30 June 2011: US$nil) equivalent to $110.0 million (30 June 2011: $nil). Other Unsecured Loans Other unsecured loans outstanding as at 31 December 2011: $44.6 million (30 June 2011: $45.0 million). Other unsecured loans expected to be settled more than twelve months after reporting date: $6.5 million (30 June 2011: $7.8 million). Finance Lease Liabilities The Group has leased mining plant and equipment in Indonesia, Mongolia and Australia under finance leases that expire within five years of the reporting date. Limited Recourse Loans The Group has limited recourse property development loans secured against certain property development assets of the Group. Carrying amount at 31 December 2011: $195.2 million (30 June 2011: $261.7 million).

126


127

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 NOTE 8 CONTINGENT LIABILITIES Bank guarantees, insurance bonds and letters of credit Contingent liabilities under indemnities given on behalf of controlled entities in respect of:

December 2011 $m

June 2011 $m

Bank guarantees 2,531.2 2,550.4Insurance, performance and payment bonds 586.7 472.4Letters of credit 437.8 498.4

Letters of credit include those provided for the Group’s capital commitments totalling $315.3 million (30 June 2011: $275.2 million) and those provided to HLG totalling $40.0 million (30 June 2011: $37.4 million). Other contingencies i) The Company is called upon to give, in the ordinary course of business, guarantees and indemnities in respect of the

performance by controlled entities, associates and related parties of their contractual and financial obligations. The value of these guarantees and indemnities is indeterminable in amount.

ii) There exists in some members of the Group the normal design liability in relation to completed design and construction projects.

iii) Certain members of the Group have the normal contractor’s liability in relation to construction contracts. This liability may include litigation by or against the Group and / or joint venture arrangements in which the Group has an interest. It is not possible to estimate the financial effect of these claims should they be successful. The Directors are of the opinion that adequate allowance has been made and that disclosure of any further information about the claims would be prejudicial to the interests of the Group.

iv) Controlled entities have entered into joint venture arrangements under which the controlled entity may be jointly and severally liable for the liabilities of the joint venture arrangement.

v) Under the terms of the Class Order described in the Leighton Holdings Financial Report 31 December 2011, note 37: Leighton Holdings Limited and controlled entities, the Company has entered into approved deeds of indemnity for the cross-guarantee of liabilities with participating Australian subsidiary companies.

vi) On 13 February 2012, the Company announced to the Australian Securities Exchange that it had reported to the Australian Federal Police (“AFP”) a possible breach of its Code of Ethics that, if substantiated, may contravene Australian laws. The possible breach related to payments that may have been made by a subsidiary company Leighton Offshore Pte. Limited in connection with work to expand offshore loading facilities for Iraq's crude oil exports. At this stage it is not known whether there has been any wrongful or illegal conduct, or whether there will be any adverse financial consequences for the Company. The AFP investigation is at an early stage and, accordingly, the Company is not in a position to make any further comment.

NOTE 9 EVENTS SUBSEQUENT TO REPORTING DATE Subsequent to reporting date the Group: declared an unfranked final dividend of 60 cents; provided a further $13.6 million in cash collateral for amounts drawn by HLG on a loan facility; and provided a further interest bearing loan of $20.4 million to HLG under the same terms as the loans provided at the

reporting date. The Directors approved the financial report on 13 February 2012.

127

Zayed universityUnited Arab EmiratesHabtoor Leighton Group


STATUTORY STATEMENTS AND SHAREHOLDER INfORMATION

128

130



STATUTORY STATEMENTS DIRECTORS’ DECLARATION In the opinion of the Directors of Leighton Holdings Limited, the accompanying concise financial report of the Consolidated Entity, comprising Leighton Holdings Limited and the entities it controlled, for the 6 month financial period ended 31 December 2011 set out on pages 113 to 127: a) has been derived from, or is consistent with, the

full financial report for the financial period ended 31 December 2011; and

b) complies with Accounting Standard AASB 1039

Concise Financial Reports. Signed for and on behalf of the Board in accordance with a resolution of the Directors: S P Johns H G Tyrwhitt Chairman Chief Executive Officer Dated at Sydney this 13th day of February 2012

130

STATUTORY STATEMENTS

131

LEIGHTON CONCISE ANNUAL REPORT DECEMBER 2011 KPMG INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF LEIGHTON HOLDINGS LIMITED Report on the concise financial report We have audited the accompanying concise financial report of Leighton Holdings Limited (the “Company”) which comprises the Consolidated Balance Sheet as at 31 December 2011, the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the 6 month period then ended and related notes 1 to 9 derived from the audited financial report of Leighton Holdings Limited for the 6 month period ended 31 December 2011. The concise financial report does not contain all the disclosures required by Australian Accounting Standards and accordingly, reading the concise financial report is not a substitute for reading the audited financial report. Directors’ responsibility for the concise financial report The directors of the Company are responsible for the preparation and presentation of the concise financial report in accordance with Australian Accounting Standard AASB 1039 Concise Financial Reports and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the concise financial report. Auditor’s responsibility Our responsibility is to express an opinion on the concise financial report based on our audit procedures which were conducted in accordance with Auditing Standard ASA 810 Engagements to Report on Summary Financial Statements. We have conducted an independent audit, in accordance with Australian Auditing Standards, of the financial report of Leighton Holdings Limited for the 6 month period ended 31 December 2011. We expressed an unmodified audit opinion on the financial report in our report dated 13 February 2012. The Australian Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report for the period is free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the concise financial report. The procedures selected depend on the auditor’s judgement, including the risk of material misstatement of the concise financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the concise

financial report in order to design procedures, that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our procedures included testing that the information in the concise financial report is derived from, and is consistent with, the financial report for the year, and examination on a test basis, of evidence supporting the amounts and other disclosures which were not directly derived from the financial report for the year. These procedures have been undertaken to form an opinion whether, in all material respects, the concise financial report complies with Australian Accounting Standard AASB 1039 Concise Financial Reports and whether the discussion and analysis complies with the requirements laid down in Australian Accounting Standard AASB 1039 Concise Financial Reports. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion In our opinion, the concise financial report of Leighton Holdings Limited for the 6 month period ended 31 December 2011 complies with Australian Accounting Standard AASB 1039 Concise Financial Reports. Report on the Remuneration Report We have audited the Remuneration Report included in pages 75 to 112 of the Directors’ Report for the 6 month period ended 31 December 2011. The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards. Auditor’s opinion In our opinion, the Remuneration Report of Leighton Holdings Limited for the 6 month period ended 31 December 2011, complies with Section 300A of the Corporations Act 2001. KPMG A W Young Partner Sydney, 13 February 2012

131

132



SHAREHOLDINGS Information as to shareholdings on 9 March 2012 is as follows: SUBSTANTIAL SHAREHOLDINGS The names of the substantial shareholders and the numbers of equity securities in which they have a relevant interest, as disclosed in substantial holding notices given to the company, are: Name No. of shares

HOCHTIEF Australia Holdings Limited 163,844,626

The following companies hold a relevant interest in these shares:

– HOCHTIEF Asia Pacific GmbH (the parent company of HOCHTIEF Australia Holdings Limited)

– HOCHTIEF Aktiengesellschaft (the ultimate holding company of HOCHTIEF Australia Holdings Limited)

– Cariátide SA (the parent company of HOCHTIEF Aktiengesellschaft) which has also lodged a substantial holding notice with the company

– Actividades de Construcción y Servicios, SA (the parent company of Cariátide SA)

SHARE CLASSES AND DISTRIBUTION SCHEDULE As at 9 March 2012, the company had 337,087,596 ordinary shares on issue, and had no other class of shares on issue as at that date. The distribution of shareholders on that date was as follows: Size of shareholding

No. of shareholders

Ordinary shares held2

% of issued capital

1 – 1,0001 47,613 15,139,987 4.49

1,001 – 5,000 13,464 27,129,197 8.05

5,001 – 10,000 1,322 9,027,460 2.68

10,001 – 100,000 652 14,203,238 4.21

100,001 and over 38 271,587,714 80.57

Total 63,089 337,087,596 100.00 1 There were 1,304 shareholders with less than a marketable parcel

(22 shares), based on the market price of $23.49 as at 9 March 2012. 2 The voting rights for ordinary shares are as follows: On a show of hands

every member present in person or by proxy or attorney or duly appointed representative has one vote and on a poll every member so present has one vote for every fully paid share held by that member.

TWENTY LARGEST SHAREHOLDERS – 9 MARCH 2012 The percentage of the total holding of the 20 largest shareholders, as shown in the company’s Register of Shareholders, is 79.75% and their names and number of shares held are as follows: Name No. of shares % of issued

capital

HOCHTIEF Australia Holdings Limited

180,101,517 53.43

HSBC Custody Nominees (Australia) Limited

22,607,026 6.71

J P Morgan Nominees Australia Limited

20,808,962 6.17

National Nominees Limited 15,951,104 4.73

JP Morgan Nominees Australia Limited <Cash Income A/C>

11,236,806 3.33

Citicorp Nominees Pty Limited 9,967,806 2.96

Cogent Nominees Pty Limited 1,336,258 0.40

Citicorp Nominees Pty Limited <Colonial First State INV A/C>

1,238,989 0.37

Milton Corporation Limited 717,465 0.21

Gwynvill Investments Pty Limited

683,500 0.20

AMP Life Limited 611,548 0.18

Argo Investments Limited 583,572 0.17

Navigator Australia Ltd <MLC Investment Sett A/C>

473,780 0.14

Equity Trustees Limited <SGH20> 440,000 0.13

UBS Wealth Management Australia Nominees Pty Ltd

421,308 0.12

M F Custodians Ltd 412,240 0.12

Cogent Nominees Pty Limited <SL Non Cash Collateral A/C>

395,000 0.12

Queensland Investment Corporation

345,008 0.10

Bond Street Custodians Limited <Macquarie Alpha Opport A/C>

278,619 0.08

Nulis Nominees (Australia) Limited <Navigator Mast Plan Sett A/C>

271,855 0.08

Total 268,882,363 79.75

Total shares on issue 337,087,596

132

SHAREHOLDINGS

133


SHAREHOLDER INFORMATION REQUEST A COPY OF THE DECEMBER 2011 FULL FINANCIAL REPORT A copy of the Group’s December 2011 Full Financial Report, including the independent Audit Report, is available to all shareholders, and will be sent to shareholders without charge upon request. The December 2011 Full Financial Report can be requested by telephone from our Public Information Coordinator on (02) 9925 6636 and is available on our website at www.leighton.com.au. ENQUIRIES If you have any questions about your shareholding, dividend payments, tax file number, change of address or any other enquiry, you should contact our Shareholder Enquiry Line at Computershare Investor Services Pty Limited: by phone on 1300 855 080 (local) or +61 3 9415 4000

(international) by fax on 03 9473 2500 (local) or +61 3 9473 2500

(international) by email at www.investorcentre.com/contact in writing to:

Computershare Investor Services Pty Limited GPO Box 2975 Melbourne VIC 3001 Australia

DIVIDEND PAYMENT The final dividend payment of 60 cents per share will be paid on 30 March 2012 and will be unfranked. DIRECT DIVIDEND DEPOSIT INTO BANK ACCOUNTS If you are an Australian resident shareholder, any dividends will be paid directly into your nominated bank, building society or credit union account in Australia on the dividend payment date. Details of dividend payments will be confirmed either by an advice mailed or emailed to you on that date. If you have not provided your bank account details you will not receive your dividend until you do so. You can provide your bank account details by contacting the Share Registrar, Computershare Investor Services Pty Limited. If you subsequently change your bank account details, please promptly notify the Registrar in writing quoting your old bank account number as an added security check.

TAX FILE NUMBERS Since 1 July 1991, all companies have been obliged to deduct tax at the top marginal rate from unfranked dividends paid to investors, resident in Australia, who have not supplied them with a tax file number or exemption particulars. Tax will not be deducted from the franked portion of a dividend. If you have not already done so, a Tax File Number Notification form or Tax File Number Exemption form should be completed for each holding and returned to our Share Registrar, Computershare Investor Services Pty Limited. Please note you are not required by law to provide your tax file number if you do not wish to do so. SECURITIES EXCHANGE LISTINGS Leighton Holdings is listed on the Australian Securities Exchange (ASX). The home branch is Sydney. SHAREHOLDING INFORMATION Information regarding substantial shareholders, twenty largest shareholders and the distribution schedule is on page 132 of this Concise Annual Report. SHARE BUY-BACK We do not have a current on-market buy-back program. OTHER AVAILABLE PUBLICATIONS In addition to the Concise Annual Report we distribute Shareholder Updates to all shareholders who have indicated their preference to receive publications. Other interested parties wishing to receive publications should contact the Public Information Coordinator on (02) 9925 6636. FINANCIAL CALENDAR A current financial calendar is available on our website. Please note that timing of events can be subject to change.

133

SHAREHOLDER INfORMATION

134



5 YEAR STATISTICAL SUMMARY December

2011# June 2011

June 2010

June 2009

June 2008

Summary of financial position

Share capital 2,027.2 2,016.2 1,232.9 1,171.8 481.0

Total equity attributable to equity holders of the parent 2,684.1 2,236.7 2,564.7 2,339.3 1,485.0

Total equity 2,766.9 2,319.9 2,568.1 2,338.6 1,485.2

Total liabilities 7,133.5 7,480.3 6,197.7 5,353.7 4,979.0

Total assets 9,900.4 9,800.2 8,765.8 7,692.3 6,464.2

Summary of financial performance

Revenue ‐ Group, joint ventures and associates 12,176.9 19,376.7 18,642.1 18,315.3 14,542.2

Profit before finance costs and tax 565.9 (331.3) 1,022.7 744.8 902.7

Profit / (loss) before tax 475.4 (490.9) 842.6 585.2 768.0

Income tax (expense) / benefit (130.5) 85.2 (227.5) (146.0) (158.9)

Profit / (loss) for the period 344.9 (405.7) 615.1 439.2 609.1

Profit / (loss) for the period attributable to members of the parent entity

340.0 (408.8) 612.0 440.0 607.9

Financial statistics

Dividends per ordinary share 60.0¢ 60.0¢ 150.0¢ 115.0¢ 145.0¢

Earnings per ordinary share ‐ basic

101.0¢

(133.1¢)

204.6¢

149.5¢

218.6¢

‐ diluted 101.0¢ (133.1¢) 201.9¢ 149.0¢ 216.1¢

Return on average equity attributable to members of the parent entity

13.8% (17.0%) 25.0% 23.0% 42.9%

Return on total assets 3.4% (4.2%) 7.0% 5.7% 9.4%

Profit before finance costs and tax to total revenue 4.7% (1.7%) 5.5% 4.1% 6.2%

Profit for the period attributable to members of the parent entity to total revenue

2.8% (2.1%) 3.3% 2.4% 4.2%

Dividend times covered 1.7 (2.2) 1.4 1.3 1.5

Dividend payout ratio 59.4% (45.1%) 73.3% 77.9% 66.3%

Interest times covered 6.3 (2.1) 5.7 4.7 6.7

Net tangible assets per ordinary share $7.41 $6.43 $8.13 $7.43 $4.91

Current ratio 0.9 0.9 1.0 1.0 0.8

Total equity to total assets 28.0% 23.7% 29.3% 30.4% 23.0%

Total equity to total liabilities 38.8% 31.0% 41.4% 43.7% 29.8%

Gross borrowings to total equity 77.5% 78.7% 65.0% 54.7% 103.6%

# The current financial year of the company is the 6 month period from 1 July 2011 to 31 December 2011, and as such the information presented above is not

entirely comparable.

134

5 YEAR STATISTICAL SUMMARY

135


December

2011# June 2011 June 2010 June 2009 June 2008

Safety statistics˄

Fatalities (Australia) 2 1 2 4 1

Fatalities (International) 1 3 2 6 5

TRIFR (Australia)1 14.4 15.6 15.7 19.0 19.5

TRIFR (International)1 3.2 3.0 2.9 3.3 2.7

LTIFR (Australia)2 1.6 1.8 1.6 2.5 2.2

LTIFR (International)2 0.4 0.6 0.8 0.9 0.8

LTISR (Australia)3 21.9 28.8 27.7 39.1 36.2

LTISR (International)3 18.3 33.4 43.4 46.3 38.2

Potential class 1 (Australia)4 200 454 615 636 232

Potential class 1 (International)4 49 100 73 85 52

Actual class 1 (Australia) 2 2 5 10 2

Actual class 1 (International) 3 7 6 8 4

Workforce statistics˄

Number of employees 53,113 51,281 45,340 39,327 37,112

Female participation (Australia) 17% 16% 15% 18% 16%

Indigenous participation (Australia) 1.3% 1.5% 1.6% ‐* ‐*

Environment statistics**

EIFR (Australia)5 0.28 0.43 0.25 0.27 0.31

EIFR (International)5 0.02 0.05 0.03 0.11 0.04

Scope 1 and 2 emissions6 N/A7 963,328 tCO2‐e

928,246 t CO2‐e

593,229 tCO2‐e

‐*

Community statistics

Corporate Community Investment $2.64m $7.89m $4.64m $5.21m $3.81m # The current financial year of the company is the 6 month period from 1 July 2011 to 31 December 2011, and as such the information presented above is not

entirely comparable. * Data not collected. ˄ Excludes LMEA (comprising HLG, Leighton Africa and Thiess Services). ** Excludes HLG. 1 Total recordable injury frequency rate (per million hours worked). 2 Lost time injury frequency rate (per million hours worked). 3 Lost time injury severity rate (per million hours worked). 4 Class 1 risks are those which could cause a fatality or permanent disabling injury. 5 Environmental incident frequency rate (Level 1 and 2) per million hours worked. 6 Direct and indirect greenhouse gas emissions for Australian operations for which Operating Companies have operational control as reported under the National

Greenhouse and Energy Reporting Act 2007. 7 Data to be reported on a 12 month basis from 1 July 2011 to 30 June 2012.

135

136



DIRECTORY AND OFFICES LEIGHTON HOLDINGS LIMITED Principal Registered Office in Australia Leighton Holdings Limited ABN 57 004 482 982 Head Office 472 Pacific Highway St Leonards NSW 2065 Australia T: +61 2 9925 6666 F: +61 2 9925 6000 www.leighton.com.au E: [email protected]

Board of Directors Stephen Paul Johns Hamish Gordon Tyrwhitt Peter Allan Gregg Achim Drescher Paula Jane Dwyer Robert Douglas Humphris OAM Ian John Macfarlane AC Wayne Geoffrey Osborn David Paul Robinson Peter‐Wilhelm Sassenfeld Dr Frank Stieler Manfred Heinrich Wennemer

Alternate Directors Robert Leslie Seidler AM

Associate Directors Mark Charles Gray Craig Allen Laslett Bruce Alwin Munro Glenn Michael Palin Laurie William Voyer

Company Secretaries Ashley John Moir Vanessa Robyn Rees

Principal Bankers Australia and New Zealand Banking Group Limited Level 1, 20 Martin Place Sydney NSW 2000 Australia

Commonwealth Bank of Australia 48 Martin Place Sydney NSW 2000 Australia

National Australia Bank Limited 255 George Street Sydney NSW 2000 Australia Auditor KPMG The KPMG Centre 10 Shelley Street Sydney NSW 2000 Australia Share Registrar Office Computershare Investor Services Pty Limited Level 4 60 Carrington Street Sydney NSW 2000 Australia T: 1300 855 080 (local) T: +61 3 9415 4000 (international)

LEIGHTON GROUP OPERATING COMPANIES Australia/Pacific Leighton Contractors Pty Limited ABN 98 000 893 667 Head Office Level 8, Tower 1 495 Victoria Avenue Chatswood NSW 2067 Australia T: +61 2 8668 6000 F: +61 2 8668 6666 www.leightoncontractors.com.au E: [email protected]

Thiess Pty Ltd ABN 87 010 221 486 Head Office Thiess Centre 179 Grey Street South Bank Qld 4101 Locked Bag 2009 South Brisbane Qld 4101 Australia T: +61 7 3002 9000 F: +61 7 3002 9009 www.thiess.com.au

John Holland Group Pty Ltd ABN 37 050 242 147 Head Office 70 Trenerry Crescent Abbotsford Vic 3067 Australia T: +61 3 9934 5209 F: +61 3 9934 5275 www.johnholland.com.au E: [email protected]

Leighton Properties Pty Limited ABN 41 009 765 379 Head Office 472 Pacific Highway St Leonards NSW 2065 Australia T: +61 2 9925 6666 F: +61 2 9925 6003 www.leightonproperties.com.au E: [email protected]

Asia/India/Offshore Leighton Asia Limited Leighton Welspun Contractors Pvt Ltd Leighton Offshore Head Office Level 23 Three Pacific Place 1 Queen's Road East Hong Kong T: +852 3973 1111 F: +852 3973 1188 www.leightonasia.com E: [email protected] Middle East and Africa Al Habtoor Leighton LLC Leighton Africa PO Box 10869 Airport Road, Rashidiya Dubai United Arab Emirates T: +971 4 285 7551 F: +971 4 285 7479 www.hlgroup.com

DIRECTORY AND OffICES

137

Cape Lambert Port b ExpansionWestern AustraliaJohn Holland

agm notice of meeting and proxy form - asx april 2012 company announcements office australian...

Documents