Preliminary Final Report - Financial Review

engineering and construction competencies into Asia, theMiddle East and emerging markets.GovernanceHamish Tyrwhitt was appointed CEO and ManagingDirector of Leighton Holdings Limited on 24 August 2011succeeding David Stewart in the role. Hamish waspreviously Managing Director of Leighton Asia, India andOffshore (LAIO). Currently, Bob Cooke is acting ManagingDirector of LAIO until a formal appointment is made, whichis expected in the first half of 2012. Bruce Munro wasformally appointed Managing Director of Thiess inSeptember 2011 after a brief period as acting ManagingDirector of that business. Subsequent to the reportingperiod, Dharma Chandran was appointed Chief HumanResource Officer of Leighton Holdings.The Group Executive now comprises Hamish Tyrwhitt,Chief Executive Officer; Peter Gregg, Chief FinancialOfficer; Craig van der Laan, Chief Risk Officer and GroupGeneral Counsel; Dharma Chandran, Chief HumanResource Officer; Craig Laslett, Managing Director ofLeighton Contractors; Bruce Munro, Managing Director ofThiess; Glenn Palin, Managing Director of John Holland;Bob Cooke, acting Managing Director of LAIO; LaurieVoyer, Managing Director of Leighton Middle East andAfrica (LMEA); and Mark Gray, Managing Director ofLeighton Properties.At Board level, Stephen Johns was elected to succeedDavid Mortimer as Chairman following his resignation fromthe Board on 24 August 2011. Dr Burkhard Lohr alsoresigned from the Board during the period. ManfredWennemer, Chairman of the Supervisory Board and theStrategy Committee of HOCHTIEF AG, was appointed aNon-executive Director on 6 October 2011. PeterSassenfeld, CFO of HOCHTIEF AG, was appointed a NonexecutiveDirector on 29 November 2011. Paula Dwyerwas appointed a Non-executive Director and Chairman ofthe Audit Committee effective 1 January 2012. As at 13February 2012, the Board comprises four HOCHTIEFdirectors, two Leighton executive directors, and sixindependent directors including the Chairman, StephenJohns.RemunerationThe Board has conducted a comprehensive review ofexecutive remuneration and incentives over recent months.The review has included consultation with shareholders,external stakeholders and independent advisers.The revised remuneration and incentive scheme isunderpinned by a number of principles which include:• an increase in variable rather than fixed remunerationbased on performance, including the forfeiture ofunvested incentives in appropriate circumstances;• an increased focus on long term rather than short termincentives;• a greater proportion of total remuneration to be paid inshares rather than cash; and• alignment of total remuneration with the market so thatwe can continue to attract and retain the highestquality executives.The revised remuneration and incentive scheme reflects abest practice approach. It achieves the objective ofensuring that the Group has in place a remuneration andincentive framework to drive performance and behavioursaligned to the long term interests of its shareholders, whileproviding appropriate rewards for its executives in acompetitive environment.Risk ManagementIdentifying, analysing, treating and continually monitoringrisks are essential in the risk management process. In mostcases the Group has managed risk extremely well;however, as the events of last year demonstrated, there isalways more that can be done.As a result of a review we have refined our processes forrisk selection, further strengthened the Work ProcurementGuidelines and revised delegations for the negotiation oftenders prior to the award of contracts.Safety, Workforce and EnvironmentAt 31 December 2011, the Group directly employed 53,920people (up from 51,281 at 30 June 2011) including 548graduates and 558 trainees/apprentices.Female participation in the Australian OperatingCompanies has increased slightly from 16% at 30 June2011 in the 6 months 17% at 31 December 2011. AtLeighton Holdings, female participation at the executiveand senior management level continues to improve, withan increase from 15% at 30 June 2011 to 22% at 31December 2011.Indigenous participation remains a continued focus for theGroup. In those areas of operations with a high aboriginalpopulation, Group companies continue to invest inemploying indigenous persons in their workforce. TheGroup currently employs 1.3% of Aboriginal and TorresStrait Islanders in its domestic workforce.Safety is a core value that is demonstrated through theGroup’s commitment to the elimination of fatalities andpermanent disabling injuries (class 1 injuries) and thesystematic reduction of all other injuries across ouroperations. This is achieved through the Leighton HoldingsSafety Framework which outlines the Group’s safetystandards and places an uncompromising emphasis onhazard identification, risk assessment and riskmanagement.The Leighton Group believes that all participants in theconstruction procurement chain (including clients,designers, contractors and employees) should play a rolein ensuring workplace safety, and that only throughcollaboration and co-operation can Class 1 injuries beentirely eliminated.In the six-month transitional financial year to 31 December2011, the Group recorded three fatalities. Two of theseoccurred within the Group’s Australian operations and oneoccurred within the Group’s international operations. Thefatalities that occurred during the period are highlydistressing and additional strategies and actions have beeninitiated to seek to eliminate Class 1 injuries and wherepossible apply “hard” engineering controls to preventreoccurrences.There were five Class 1 injuries in the 6 months to 31December 2011 compared to nine Class 1 injuries in the 12months to 30 June 2011. This class of injury is a continuingpriority for the Group. As a leading indicator, the Groupmonitors potential Class 1 incidents, which totalled 214 inthe 6 months ending 31 December 2011 in its Australianoperations compared to 452 in the 12 months ending 30Leighton Holdings Limited DECEMBER 2011 UPDATE Page 37