AJ Lucas Group Limited Annual Report 1999

Chief Executive’s reviewThe year was a big one for Lucas.Three major elements of our strategycame to fruition: the AGL Alliance,listing on the Australian Stock Exchangeand the successful establishment of LucasNetworks, winning two significant contractswith Telstra and one with AGL.Our initial public offeringThe August stockmarket listing was anessential step in developing Lucas’ business.It gave us additional capital for our expansionplans, plus the ability to seek more ifrequired. It demonstrates our credibility. Itwill help us attract and retain the very bestpeople at all levels. It will help us continueto grow fast.Before our IPO, we spent 18 months developingour strategy and reviewing systems,business practices and structure. Preparationfor the public listing put these undera microscope. All passed the scrutiny of ourfinancial and legal advisers, the regulators,the investment community and the public.We’re confident we have the processes, thepeople and the capital in place to continueour development as a key player in infrastructureoutsourcing in Australia.Alliances as a business strategyWe’ve always striven to see things from ourclients’ perspective, to focus on the objectivesof a project, rather than just our part ofit. By thinking like our clients, we believewe’ll deliver the results they need.This isn’t new-age sensitivity, it’s good business.Every new project gives us an insightinto our client’s business and its needs, andhelps consolidate our relationship.Alliances are the logical extension of this.And for major infrastructure projects,alliances have a lot of benefits. The old-fashionedapproach pits contractors against oneanother to win the job and, too often, endsup with client pitted against contractor.By opening the books and sharing risks andrewards, alliances eliminate many potentiallyadversarial situations from a majorproject. If we can find a way to get the jobdone better, we all benefit. If weather, conditionsor foreign exchange goes against theproject, the costs are shared. And becausewe don’t have to predict every element of theproject at the outset, we can start while laterelements are still being developed.So we jumped at the invitation from our clientAGL to present an alliance proposal. This wassuccessful, and led to the AGL Alliance; effectivelymaking us, in joint venture with CloughEngineering, AGL’s preferred constructionpartner for pipelines and gas facilities overthe next five years.With AGL’s first two projects completedahead of schedule and on budget, the benefitsof the Alliance have been confirmed.Technology investment1999 has seen a major upgrade of our computerand communications networks,including the establishment of an Internet siteand new project management and CAD systems.This is steadily improving managementinformation and communication – internally,and with our clients and suppliers.We’ve continued to invest in developing ourproject management skills and supportingtechnology. Our new Internet-based projectmanagement system will make up-to-dateproject data securely accessible to managementand clients from anywhere.SafetyNothing is more important than the safety ofall our people. Our Group-wide reviewincluded a careful evaluation of our safetyprocedures. We work closely with all jointventure and alliance partners, as well ascontractors, to make sure safety proceduresare consistent across the whole team.1999 ended with only a single safety incidentin 355,102 man-hours worked.Environmental andcultural protectionLike all companies working on public andother people’s land, we have an obligation toprotect the environment.As Australia’s leader in directional drilling,a technology which inherently minimisesimpact on the environment, we are veryPAGE 2