Financial Report 2008 - Leighton Holdings

Statements of Recognised Income and Expensefor the year ended 30 June 2008ConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Foreign exchange translation differences (net of tax) 20 (83,998) (30,909)Effective portion of changes in fair value of cash flow hedges 20 (69,611) 48,309(net of tax)Change in fair value of available-for-sale assets (net of tax) 20 11,044 14,837Change in value of associate’s equity 20 8,855 487Net gain/(loss) recognised directly in equity (133,710) 32,724 - -Profit for the year 609,091 455,236 328,515 246,214Total recognised income and expense for the year 475,381 487,960 328,515 246,214Attributable to:Members of the parent entity 474,178 482,766 328,515 246,214Minority interest 1,203 5,194Total recognised income and expense for the year 475,381 487,960 328,515 246,214The statements of recognised income and expense are to be read in conjunction with the notes to the financial statements.Leighton Holdings Limited Financial Report 2008 STATEMENTS OF RECOGNISED INCOME AND EXPENSE 2

Statements of Cash Flowsfor the year ended 30 June 2008ConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Cash flows from operating activitiesCash receipts in the course of operations (including GST) 11,151,102 10,892,988 - -Cash payments in the course of operations (including GST) (9,928,392) (9,607,966) (6,616) (5,424)Cash flows from operating activities 1,222,710 1,285,022 (6,616) (5,424)Dividends received 25,994 6,297 379,842 263,987Interest received 18,593 30,292 1,334 3,290Finance costs paid (134,953) (34,252) (16,478) (16,491)Income taxes (paid)/received (209,883) (86,334) 33,809 11,571Net cash from operating activities 27 922,461 1,201,025 391,891 256,933Cash flows from investing activitiesPayments for plant and equipment (705,497) (857,469) - -Payments for plant and equipment - major component parts (92,812) (142,298) - -Payments for other property, plant and equipment (34,330) (25,349) - -Proceeds from sale of property, plant and equipment 269,448 305,091 - -Proceeds from sale of investments in controlled entities and 28 35,351 - - -businessesPayments for investments in controlled entities and28 (87,955) (112,713) (474,419) (679)businessesPayments for other investments (1,247,603) (197,151) - (88,973)Proceeds from sale of other investments 26,002 115,122 - 101,719Net cash from investing activities (1,837,396) (914,767) (474,419) 12,067Cash flows from financing activitiesProceeds from share issues - 1,244 - 1,244Proceeds from borrowings 1,153,726 29,640 - -Repayment of borrowings - (39,892) - -Net payments on loans (to)/from related entities - - 434,089 (38,804)Distributions to minority interest (5,106) (1,436) - -Dividends paid (347,611) (239,133) (347,611) (239,133)Net cash from financing activities 801,009 (249,577) 86,478 (276,693)Net increase/(decrease) in cash held (113,926) 36,681 3,950 (7,693)Net cash at the beginning of the year 831,372 809,850 63,049 70,769Effects of exchange rate fluctuations on cash held (30,883) (15,159) (6) (27)Net cash at reporting date 686,563 831,372 66,993 63,049The statements of cash flows are to be read in conjunction with the notes to the financial statements.Leighton Holdings Limited Financial Report 2008 STATEMENTS OF CASH FLOWS 4

Notes to the Financial Statements continuedfor the year ended 30 June 20081. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUEDRevenue from mining contracts isrecognised on the basis of the valueof work completed. Expected lossesare recognised in full as soon as theybecome apparent.Property development revenueincludes sales of developmentproperties, rental and fee income.Revenue from the sale of propertydevelopments and land sales isrecognised when the significant risksand rewards of ownership have beentransferred. Rental income isrecognised on a straight line basisover the term of the lease. Otherproperty development revenue isrecognised as services are provided.Revenue from other services,including telecommunications,environmental and utilities services,is recognised as services areprovided.Expected losses on all contracts arerecognised in full as soon as theybecome apparent.Interest revenue is recognised on anaccruals basis.Dividend income is recognised whenthe dividend is declared.Non-derivative financialinstrumentsNon-derivative financial instrumentscomprise investments in equity anddebt securities, trade and otherreceivables, cash and cashequivalents, loans and borrowings,and trade and other payables.Non-derivative financial instrumentsare recognised initially at fair value.Subsequent to initial recognition nonderivativefinancial instruments aremeasured as described below.Cash and cash equivalentsCash and cash equivalents includecash on hand, cash at bank and calldeposits. For the purposes of thestatements of cash flows, net cashincludes cash on hand, at bank andshort term deposits at call, net ofbank overdrafts.Trade and other receivablesContract and trade debtors includeall net receivables from constructionand other services, and propertydevelopment. Included in contractdebtors is the progressive valuationof work completed. The valuation ofwork completed is made afterbringing to account a proportion ofthe estimated contract profits andafter recognising all known losses.Where payments received exceedthe revenue recognised, thedifference is recorded as a liability inthe balance sheet.Other amounts receivable generallyarise from transactions other thanthe provision of services and includeamounts in respect of sales of assetsand taxes receivable. Interest maybe charged at market rates based onindividual debtor arrangements.Contract and trade debtors arenormally settled within 60 days ofbilling. Recoverability is assessed atreporting date and provision madefor any doubtful debts.Prepayments represent the futureeconomic benefits receivable inrespect of economic sacrifices madein the current or prior reportingperiod.Available-for-sale financial assetsAvailable-for-sale assets are initiallyrecognised at cost, being the fairvalue of the consideration given andinclude acquisition costs.Subsequently, available-for-saleassets are measured at fair value.Changes in fair value are recognisedas a separate component of equity inthe fair value reserve. When theasset is sold, collected or otherwisedisposed, or if the asset isdetermined to be impaired, thecumulative gain or loss previouslyreported in equity is recognised inthe income statement.Interest bearing liabilitiesAll loans and borrowings are initiallyrecognised at fair value, being theamount received less attributabletransaction costs. After initialrecognition, interest-bearing liabilitiesare stated at amortised cost with anydifference between cost andredemption value being recognisedin the income statement over theperiod of the borrowings on aneffective interest basis.Trade and other payablesLiabilities are recognised for amountsto be paid for goods or servicesreceived. Trade payables arenormally settled within 60 days.Other non-derivative financialinstrumentsOther non-derivative financialinstruments are measured atamortised cost using the effectiveinterest method, less any impairmentlosses.Derivative financial instrumentsDerivative financial instruments arestated at fair value, with changes infair value recognised in the incomestatement. Where derivative financialinstruments qualify for hedgeaccounting, recognition of changes infair value depends on the nature ofthe item being hedged. Hedgeaccounting is discontinued when thehedging relationship is revoked, thehedging instrument expires, is sold,terminated, exercised, or no longerqualifies for hedge accounting.Cash flow hedgeChanges in the fair value ofdesignated and qualifying cash flowhedges are deferred in equity.Where it is expected that all or aportion of a loss recognised directlyin equity will not be recovered infuture periods, that loss isrecognised in the income statement.Amounts deferred are included inthe initial measurement of the costof the asset or liability where theforecast transaction being hedgedresults in the recognition of a nonfinancialasset or a non-financialliability.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 6

Notes to the Financial Statements continuedfor the year ended 30 June 20081. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUEDCash flow hedges relating tooperating activities are recognised inprofit or loss in the same period thehedged item is recognised in profitor loss. When a forecast transactionis no longer expected to occur, thecumulative gain or loss deferred inequity is recognised immediately inprofit or loss.Hedges of net investments in foreignoperationsGains or losses on the hedginginstrument are recognised in theforeign currency translation reserve.Gains and losses deferred in theforeign currency translation reserveare recognised in profit or loss upondisposal of the foreign operation.Fair value hedgeChanges in the fair value ofdesignated and qualifying fair valuehedges are recorded in profit orloss, together with any changes inthe fair value of the hedged item thatis attributable to the hedged risk.When hedge accounting isdiscontinued the adjustment to thecarrying amount of the hedged itemarising from the hedged risk isamortised to profit or loss from thatdate.The gain or loss relating to theineffective portion is recognisedimmediately in profit or loss as partof other expenses or other income.Share capitalOrdinary share capitalIssued and paid up capital isrecognised at the considerationreceived by the Company.DividendsProvision is not made for dividendsunless the dividend has beendeclared by the Directors on orbefore the end of the period and notdistributed at reporting date.Finance CostsFinance costs are recognised asexpenses in the period in which theyare incurred, except where they areincluded in the costs of qualifyingassets.The capitalisation rate used todetermine the amount of financecosts to be capitalised to qualifyingassets is the weighted averageinterest rate applicable to the entity’soutstanding borrowings during theperiod.Finance costs include interest onbank overdrafts and short-term andlong-term borrowings, amortisationof discounts or premiums relating toborrowings, amortisation of ancillarycosts incurred in connection with thearrangement of borrowings, financelease charges and certain exchangedifferences arising from foreigncurrency borrowings.Income TaxIncome tax expense on the profit orloss for the period comprises currentand deferred tax expense. Incometax expense is recognised in theincome statement except to theextent that it relates to itemsrecognised directly in equity, inwhich case it is recognised in equity.Current tax expense is the expectedtax payable on the taxable incomefor the period, using tax ratesenacted at the reporting date, andany adjustment to tax payable inrespect of previous years. TheGroup adopts the balance sheetliability method to provide fortemporary differences between thecarrying amounts of assets andliabilities for financial reportingpurposes and the amounts used fortaxation purposes.Temporary differences are notprovided for the initial recognition ofgoodwill. The amount of deferredtax provided is based on theexpected manner of realisation orsettlement of the carrying amount ofassets and liabilities, using tax ratesenacted at the balance sheet date.Deferred tax assets are recognisedfor deductible temporary differencesand unused tax losses only if it isprobable that future taxableamounts will be available to utilisethose temporary differences andlosses.The Company is the head entity inthe tax-consolidated groupcomprising the Australian whollyownedsubsidiaries. The head entityrecognises all of the current taxassets and liabilities and deferred taxassets in respect of tax losses of thetax-consolidated group (afterelimination of intra-grouptransactions). Deferred tax assetsand liabilities in respect of temporarydifferences are recognised in thesubsidiaries’ financial statements.The tax-consolidated group hasentered into a tax funding agreementthat requires wholly-ownedsubsidiaries to make contributions tothe head entity for current tax assetsand liabilities occurring after theimplementation of tax consolidation.Under the tax funding agreement,the contributions are calculated usingthe “group allocation” approach sothat the contributions are equivalentto the current tax balancesgenerated by transactions enteredinto by wholly-owned subsidiaries.The contributions are payable as setout in the agreement and reflect thetiming of the head entity’s obligationsto make payments for tax liabilities tothe relevant tax authorities. Theassets and liabilities arising underthe tax funding agreement arerecognised as intercompany assetsand liabilities with a consequentialadjustment to current income tax.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 7

Notes to the Financial Statements continuedfor the year ended 30 June 20081. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUEDInventoriesInventories are carried at the lower ofcost and net realisable value.Inventories comprise:Property developmentsCost includes the costs ofacquisition, development and holdingcosts such as rates, taxes andfinance costs. Holding costs onproperty developments not underactive development are expensed asincurred.Raw materials and consumablesCost is based on the first-in, first-outprinciple and includes expenditureincurred in acquiring the inventoriesand bringing them to their existingcondition and location.InvestmentsControlled entitiesInvestments in controlled entities arecarried at cost less impairment in theCompany’s financial statements.Equity accounted investmentsInvestments in entities over whichthe Group has the ability to exercisesignificant influence but not control,and jointly controlled entities areaccounted for using equityaccounting principles. Theseinvestments are carried at cost pluspost-acquisition changes in the netassets of the investment. Theconsolidated income statementreflects the Group’s share of theresult of these investments. Wherethere has been a change recogniseddirectly in equity, the Grouprecognises its share of that change.Property, plant and equipmentProperty, plant and equipment isstated at cost less accumulateddepreciation and any impairment invalue.Depreciation and amortisationDepreciation and amortisation iscalculated so as to write off the netbook value of property, plant andequipment over their estimatedeffective useful lives as follows: freehold buildings: straight linemethod - up to 40 years; major plant and equipment:cumulative number of hoursworked - up to 10 years; major plant and equipment -component parts: cumulativenumber of hours worked - up to 10years; leased plant and equipment:straight line method, over the termsof the leases - up to 10 years; waste management assets: straightline method, economic life of thewaste operations - up to 20 years; office and other equipment:diminishing value method - up to10 years; leasehold buildings andimprovements: straight linemethod, over the terms of theleases - up to 40 years.Subsequent costsSubsequent costs are included in thecarrying amount of property, plantand equipment only when it isprobable that the associated futureeconomic benefits will flow to theGroup. All other costs arerecognised in the income statement.Leased assetsLeases under which the Groupassumes substantially all the risksand benefits of ownership areclassified as finance leases. Otherleases are classified as operatingleases.Finance leasesA lease asset and a lease liabilityequal to the lower of the fair value ofthe leased property and the presentvalue of the minimum leasepayments is recorded at the inceptionof the lease. The finance leaseliability is the net present value offuture finance lease rentals andresiduals. Lease liabilities arereduced by repayments of principal.The interest components of the leasepayments are expensed. Contingentrentals, which are potentialincremental lease payments not fixedin amount as they relate to futurechanges, are expensed as incurred.Operating leasesPayments made under operatingleases are expensed on a straightline basis over the term of the lease.GoodwillGoodwill represents the excess of thecost of an acquisition over the fairvalue of the Group’s share of the netidentifiable assets of the acquiredcontrolled entity or business at thedate of acquisition. Goodwill onacquisitions of associates is includedin investments in associates.Goodwill acquired in businesscombinations is not amortised.Goodwill is allocated to related cashgeneratingunits and is tested forimpairment annually or morefrequently if events or changes incircumstances indicate that it mightbe impaired, and is carried at costless accumulated impairment losses.Negative goodwill arising on anacquisition is recognised in theincome statement.Acquisition of assetsAssets acquired are initially recordedat their cost of acquisition being thefair value of the consideration plusincidental costs directly attributable tothe acquisition.ImpairmentThe carrying amounts of the Group’sassets are reviewed at each reportingdate to determine whether there isany indication of impairment.If any such indication exists, theasset’s recoverable amount isestimated. The recoverable amountof goodwill is reviewed at eachreporting date irrespective of anindication of impairment.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 8

Notes to the Financial Statements continuedfor the year ended 30 June 20081. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUEDAn impairment loss is recognisedwhen the carrying amount of an assetexceeds its recoverable amount.Recoverable amount is the greater offair value less costs to sell and valuein use. In assessing value in use, theestimated future cash flows arediscounted to their present valueusing a pre-tax discount rate thatreflects current market assessmentsof the time value of money and therisks specific to the asset. Therecoverable amount for an asset thatdoes not generate largelyindependent cash flows is determinedfor the cash-generating unit to whichthe asset belongs.Impairment losses are recognised inthe income statement unless theasset has been previously revalued,in which case the impairment loss isrecognised as a reversal to theextent of that previous revaluationwith any excess recognised in theincome statement.Reversals of impairment losses otherthan in respect of goodwill andavailable-for-sale assets, arerecognised in the income statement.Any increase above original cost ofthe asset is treated as a revaluationincrease in equity.Employee benefitsLiabilities in respect of employeebenefits which are not expected to besettled within twelve months arediscounted using the rates attachingto national government securities atreporting date, which most closelymatch the terms of maturity of therelated liabilities.Wages, salaries, annual and longservice leaveThe provision for employeeentitlements to wages, salaries andannual and long service leaverepresents the amount which theGroup has a present obligation topay resulting from employees’services provided up to the reportingdate. Provisions have beencalculated based on expected wageand salary rates and include relatedon-costs. In determining the liabilityfor these employee entitlements,consideration has been given toestimated future increases in wageand rates, and the Group’sexperience with staff departures.Related on-costs have been includedin the liability.SuperannuationDefined benefit and definedcontribution superannuation plansexist to provide benefits for eligibleemployees or their dependants.Contributions by the Group areexpensed to the income statementas incurred. Actuarial gains andlosses may arise in relation todefined benefit superannuationplans. To the extent that anycumulative unrecognised actuarialgain or loss exceeds 10 per cent ofthe greater of the present value ofthe defined benefit obligation and thefair value of fund assets, that portionof the actuarial gain or loss isrecognised in the income statementover the expected average remainingworking lives of the active employeesparticipating in the fund. Otherwise,the actuarial gain or loss is notrecognised.Share-based payment transactionsOwnership based remuneration isprovided to employees via theLeighton Executive Share OptionPlan and the Leighton SeniorExecutive Share Option Plan.These shares are recognised whenthe options are exercised and theproceeds received are allocated toshare capital.Under the Leighton ManagementShare Plan, the Company ispermitted to grant selectedexecutives shares which theCompany acquires on market.Under the Leighton EmployeesShare Plan, the Company ispermitted to make an annual offer ofshares in the Company to eligibleemployees. The maximum value ofshares which may be offered to anyemployee in any one year is $1,000.These share offers are recognised asan expense at the time the sharesare granted.Retention arrangementsRetention arrangements are in placeranging from three years toretirement for certain key employeeswhich are payable upon completionof the retention period. Theprovisions are accrued on a pro-ratabasis during the retention period andhave been calculated based oncurrent salary rates, including relatedon-costs.Annual bonus and deferred incentivearrangementsAnnual bonuses and deferredincentives are provided at reportingdate and include related on-costs.The Group recognises a provisionwhere there is a contractual orconstructive obligation.Restoration provisionsProvisions for restoration representrestoration obligations in respect oflandfills. The provisions are the bestestimate of the present value of theexpenditure required to settle therestoration obligation at reportingdate, based on current legalrequirements and technology. Theamount of the provision for futurerestoration costs is capitalised as awaste management asset andamortised over the asset life.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 9

Notes to the Financial Statements continuedfor the year ended 30 June 20081. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUEDForeign currency translationFunctional and presentation currencyThe consolidated financialstatements are presented inAustralian dollars, which is LeightonHoldings Limited’s functional andpresentation currency.TransactionsForeign currency transactions aretranslated into the functionalcurrency using the exchange ratesprevailing at the dates of thetransaction. Foreign exchange gainsand losses resulting from thesettlement of such transactions andfrom the translation at period-endexchange rates of monetary assetsand liabilities denominated in foreigncurrencies are recognised in theincome statement. Non-monetaryitems that are measured in terms ofhistorical cost in a foreign currencyare translated using the exchangerate as at the date of the initialtransaction.Non-monetary items measured at fairvalue in a foreign currency aretranslated using the exchange ratesat the date when the fair value wasdetermined.Translation of controlled foreignentitiesAssets and liabilities of controlledforeign entities are translated into thepresentation currency at the rates ofexchange at reporting date and theincome statement is translated at therates approximating foreignexchange rates ruling at the dates ofthe transactions. The resultingexchange differences are takendirectly to the foreign currencytranslation reserve. Exchange gainsand losses on transactions whichform part of the net investments inforeign controlled entities togetherwith any related income tax effect arerecognised in the foreign currencytranslation reserve on consolidation.On disposal of a foreign entity, thedeferred cumulative amountrecognised in equity relating to thatparticular foreign entity is recognisedin the income statement as part ofthe gain or loss on sale.Earnings per shareBasic earnings per shareBasic earnings per share isdetermined by dividing profitattributable to members of the parententity, excluding any costs ofservicing equity other than ordinaryshares, by the weighted averagenumber of ordinary sharesoutstanding during the period,adjusted for bonus elements inordinary shares issued during theperiod.Diluted earnings per shareDiluted earnings per share adjuststhe figures used in the determinationof basic earnings per share to takeinto account the after income taxeffect of interest and other financingcosts associated with dilutivepotential ordinary shares and theweighted average number of sharesassumed to have been issued for noconsideration in relation to dilutivepotential ordinary shares.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 10

Notes to the Financial Statements continuedfor the year ended 30 June 20082. REVENUEConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Construction contracting services 5,708,117 5,603,448Mining contracting services 3,478,105 3,361,050Property development revenue 424,323 312,361Other services revenue 658,578 690,181Revenue from external customers 10,269,123 9,967,040 - -Interest- Related parties 35 277 1,042 5,010 7,681- Other parties 26,311 36,913 1,334 3,290Dividends/distributions- Wholly-owned controlled entities 35 - - 315,000 206,571- Partly-owned controlled entities 35 - - 64,842 56,000- Other parties 25,994 6,297 - 1,416Other revenue from related parties 35 - - 1,266 1,622Other revenue 52,582 44,252 387,452 276,580Total revenue 10,321,705 10,011,292 387,452 276,580The Group’s share of revenue from joint ventures and associates is excluded from Revenue noted above and from the incomestatements in accordance with Accounting Standards. The delivery of a number of projects by the Group is through various jointventure and associate arrangements. Details of the Group’s share of joint ventures and associates’ revenue are provided asadditional information below as Revenue - Group, joint ventures and associates. Revenue - joint ventures and associatesrepresents the Group’s share of the operations of the joint venture or associated entity.Revenue – Group, joint ventures and associatesRevenue - Group 10,321,705 10,011,292Revenue - joint ventures and associates 4,220,513 1,880,197Revenue - Group, joint ventures and associates 14,542,218 11,891,489 - -Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 11

Notes to the Financial Statements continuedfor the year ended 30 June 20083. EXPENSESConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Materials 2,545,354 2,360,707 - -Subcontractors 2,283,902 2,836,025 - -Plant costs 920,622 885,195 - -Depreciation of property, plant and equipment 4 442,480 426,681 - -Personnel 2,623,609 2,357,449 2,890 2,047Operating lease payments - plant and equipment 249,216 235,683 - -Operating lease payments - other 64,766 31,550 - -Professional and management fees 212,258 157,439 71,875 66,584Foreign exchange (gains)/losses (2,171) 4,066 50 74Net gain on sale of controlled entities 28 (210,721) - - -Net gain on the sale of other investments (37,981) (24,284) - (15,101)Impairment of investments in infrastructure toll road142,003 - - -companies*Net gain on the sale of land and buildings (38,401) - - -Net gain on the sale of plant and equipment (28,398) (24,209) - -Cost of development properties sold 328,371 13,446 - -Other expenses 267,734 245,771 2,134 1,222Total expenses 9,762,643 9,505,519 76,949 54,826* A further impairment loss on investments in infrastructure toll road companies of $91,328 was incurred through our associatecompany JF Infrastructure Pty Ltd and is included in the share of profits of associates and joint venture entities in the incomestatement.4. PROFIT BEFORE TAXProfit before tax includes the following expenses:Finance costs- Related parties 35 21 81 13,542 -- Other parties 134,715 34,174 16,560 16,491Total finance costs 134,736 34,255 30,102 16,491Depreciation of property, plant and equipment- Buildings 1,824 1,220- Plant and equipment 301,187 263,919- Plant and equipment - major component parts 127,291 153,781- Leasehold land, buildings and improvements 8,848 4,676- Waste management assets 3,330 3,085Total depreciation 442,480 426,681 - -Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 12

Notes to the Financial Statements continuedfor the year ended 30 June 20085. AUDITOR’S REMUNERATIONConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Assurance services - audit and review of financial reportsAuditors of the Company - KPMG Australia 2,581 2,374Auditors of the Company - related overseas firms 885 934Audit services - KPMG 3,466 3,308 - -Other auditors 408 446Total remuneration for audit services 3,874 3,754 - -Other servicesAuditors of the Company - KPMG Australia- Corporate finance - 553- Due diligence 137 -- Other services 140 200Auditors of the Company - related overseas firms 479 45Other services - KPMG 756 798 - -Other auditors 841 457Total remuneration for other assurance services 1,597 1,255 - -Taxation services*Auditors of the Company - KPMG Australia 2,637 2,011Auditors of the Company - related overseas firms 88 159Taxation services - KPMG 2,725 2,170 - -Other auditors 1,499 1,993Total remuneration for taxation services 4,224 4,163 - -The Group may use KPMG on assignments in addition to their statutory audit duties to leverage their experience and expertisewith the Group. These assignments are primarily tax advice and due diligence reporting on acquisitions, or where theassignment is awarded on a competitive basis.* Taxation services include work performed in relation to research and development claims.All amounts payable to the auditors of the Company were paid by a controlled entity of the Company.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 13

Notes to the Financial Statements continuedfor the year ended 30 June 20086. INCOME TAX EXPENSEConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Income tax expense recognised in the income statementsCurrent tax expense/(benefit) 211,295 196,440 (47,847) (39,747)Deferred tax expense/(benefit) (44,728) (68,684) (105) 136Under/(over) provision in prior years (7,710) 1,104 (162) (1,340)Total income tax expense/(benefit) in income statement 158,857 128,860 (48,114) (40,951)Deferred tax recognised directly in equityRevaluation of cash flow hedges (37,587) 20,714Revaluation of available-for-sale assets 3,491 5,079Total deferred tax expense/(benefit) recognised in equity (34,096) 25,793 - -Reconciliation of prima facie tax to income tax expenseProfit before tax 767,948 584,096 280,401 205,263Prima facie income tax expense at 30% (2007: 30%) 230,384 175,229 84,120 61,579The following items have affected income tax expense for theyear:- Entertainment and other non-allowable items 6,394 3,626 133 76- Depreciation and amortisation not allowable for tax 1,525 786 - -- Franked and exempt dividends (4,493) - (113,951) (78,903)- Recoupment of losses previously not recognised (9,378) (4,920) (4,972) -- Overseas income tax differential (2,325) (432) - -- Movement in provision for withholding tax on retained4,708 329 - -earnings of controlled entities- Research and development credit 12 - (43,722) (13,282) (22,381)- Equity-accounted income not subject to tax (86,985) (5,351) -- Capital losses not recognised 27,398 - - -- Other (661) 2,211 - 18Current year income tax expense 166,567 127,756 (47,952) (39,611)Under/(over) provision in prior year (7,710) 1,104 (162) (1,340)Income tax expense/(benefit) 158,857 128,860 (48,114) (40,951)Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 14

Notes to the Financial Statements continuedfor the year ended 30 June 20087. CASH AND CASH EQUIVALENTSConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Funds on deposit 318,099 624,559 - -Cash at bank and on hand 368,464 206,813 66,993 63,049686,563 831,372 66,993 63,0498. TRADE AND OTHER RECEIVABLESContract debtors 1,152,727 1,223,058 - -Trade debtors 351,424 287,910 - -Other amounts receivable 162,536 89,064 1,255 1,457Prepayments 20,222 15,789 - -Derivative financial assets 33 1,374 85,114 - -Loans - secured related parties 35 809 26,184 - -Amounts receivable from controlled entities 35 - - 191,780 328,0511,689,092 1,727,119 193,035 329,508Progressive value of work completed on contracts inprogress at reporting date25,919,340 20,622,855Net contract debtors excluding retentions 820,162 985,125Retentions 5,948 12,803Net contract debtors 826,110 997,928 - -Cash received to date 25,093,230 19,624,927Total progressive value 25,919,340 20,622,855 - -Amounts due from customers - contract debtors 1,152,726 1,223,058Amounts due to customers - trade creditors (326,616) (225,130)Net contract debtors 826,110 997,928 - -Receivables expected to be realised more than 12 months after reporting date: Group $71,568 (2007: $1,810), Company $nil(2007: $150,684).Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 15

Notes to the Financial Statements continuedfor the year ended 30 June 20089. INVENTORIESConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Property developmentsCost of acquisition 161,421 124,405Development expenses capitalised 60,954 11,176Rates, taxes, finance and other costs capitalised 18,254 18,128240,629 153,709 - -Other inventoriesRaw materials and consumables at cost 130,698 78,108371,327 231,817 - -Property developments expected to be realised more than 12 months after reporting date: $98,805 (2007: $107,569). Financecosts capitalised to property developments during the year: $11,850 (2007: $2,846). Property developments pledged assecurity for interest-bearing liabilities $6,055 (2007: $13,555).10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHODAssociates 24 1,181,918 137,085Joint venture entities 25 315,611 123,0211,497,529 260,106 - -11. OTHER INVESTMENTSEquity and stapled securities available-for-sale- Listed 347,053 3,636 - -- Unlisted 64,073 176,414 - -Investments in controlled entities - cost - - 1,238,849 764,430411,126 180,050 1,238,849 764,430Investments expected to be realised more than 12 months after reporting date: Group $71,568 (2007: $180,050), Company$1,238,849 (2007: $764,430).Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 16

Notes to the Financial Statements continuedfor the year ended 30 June 200812. DEFERRED TAX ASSETSConsolidatedCompany2008$’000Note2008$’0002007$’0002007$’000Recognised deferred tax assetsDeferred tax assets are attributed to the following:- Contract debtors 27,286 44,494 - -- Property developments (11,870) (7,868) - -- Other inventories (3,805) (7,784) - -- Property, plant and equipment 80,236 81,107 - -- Employee benefits 109,750 97,412 880 775- Contract profit differential (46,300) (33,354) - -- Withholding tax on retained earnings of non-resident(14,784) (10,076) - -controlled entities- Investment revaluations 37,822 (31,181) - -- Foreign exchange (969) - - -- Deferred research and development benefit (40,572) - - -- Creditors, accruals and other 47,242 6,558 - -184,036 139,308 880 775Unrecognised deferred tax assetsDeferred tax assets which have not been recognised inrespect of tax losses3,907 7,224 - 4,972Tax losses not recognised: $3,907 (2007: $7,224) include overseas losses and capital losses. Unrecognised losses with noexpiry date $2,946 (2007: $6,298), the balance have a three to five year expiry date. Deferred tax assets have not beenrecognised in respect of these tax losses because it is not probable that future taxable profit will be available against which theGroup can utilise the benefits. The benefit of tax losses not recognised will be utilised only if the relevant entities earn sufficientprofit or capital gains in the future, continue to comply with the provisions of the relevant tax legislation relating to the deductionof carried forward tax losses and there are no changes in tax legislation adversely affecting the Group in realising the benefit.The Group is subject to taxation audits and reviews by relevant revenue authorities in each jurisdiction in which it hasoperations. In particular, annual tax audits are undertaken in various overseas jurisdictions where the Group claims a refund ofprepaid revenue and withholding taxes. The Australian Tax Office is undertaking a review of the Group’s Australian operationsincluding deductions relating to research and development (“R&D”). The Group has deferred its current year R&D creditfollowing the issue by the ATO of a discussion paper challenging the entitlement to R&D concessions for the generalconstruction industry. The Group has professional advice confirming its entitlement to the R&D concessions to date.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 17

Notes to the Financial Statements continuedfor the year ended 30 June 200813. PROPERTY, PLANT AND EQUIPMENTConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Land 18,235 22,830 - -Buildings 53,471 37,530Accumulated depreciation (9,409) (8,147)44,062 29,383 - -Leasehold land, buildings and improvements 82,808 61,595Accumulated depreciation (23,254) (15,502)59,554 46,093 - -Waste management assets 49,438 48,808Accumulated depreciation (27,144) (23,814)22,294 24,994 - -Plant and equipment 2,647,481 2,299,689Accumulated depreciation (1,330,134) (1,164,370)1,317,347 1,135,319 - -26 1,461,492 1,258,619 - -Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 18

Notes to the Financial Statements continuedfor the year ended 30 June 200814. GOODWILLConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Carrying valueBalance at beginning of reporting period 87,680 54,898Acquisitions through business combinations 28 40,102 32,782Adjustments to the fair value of business combinations in(1,463) -previous reporting periodsDisposals (5,899) -Balance at reporting date 120,420 87,680 - -Reconciliation of carrying valueCost 121,661 88,921Impairment (1,241) (1,241)Balance at reporting date 120,420 87,680 - -Impairment tests for cash-generating units containinggoodwillThe following cash generating units have significant carryingamounts of goodwill:- Leighton Asia Group 14,836 14,836- John Holland Group 37,202 40,947- Leighton Contractors Group 59,327 31,897- Thiess Group 9,055 -120,420 87,680 - -The recoverable amount of all cash-generating units is based on value in use calculations, using 5-year cash flow projectionsbased on actual operating results and the Leighton Holdings Group Business Plan. A pre-tax discount rate of 11.3% (2007:11.3%) has been used in discounting the projected cash flows. The recoverable amount of each cash-generating unit exceedsits carrying amount.The key assumptions and the approach to determining the recoverable amount of all cash-generating units in the current andprevious year are:AssumptionMarket/segment growthCommodity price stabilityInflation/CPI rates and foreign currency ratesHow determinedEconomic forecasts, taking into account the Group’s participation in each marketAnalysis of price forecasts, adjusted for actual experienceWorld economic forecastsLeighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 19

Notes to the Financial Statements continuedfor the year ended 30 June 200815. TRADE AND OTHER PAYABLESConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Trade creditors and accruals 2,437,431 2,157,689 1,569 1,537Other creditors 143,840 92,686 - -Derivative financial liabilities 60,310 16,434 - -Amounts payable to related parties 35 243,656 238,159 - -Amounts payable to controlled entities 35 - - 434,207 52,7282,885,237 2,504,968 435,776 54,265Trade creditors expected to be settled more than 12 months after reporting date: Group $213,954 (2007: $235,246), Company$434,207 (2007: $52,728).16. CURRENT TAX LIABILITIESIncome tax provision 162,644 177,219 129,978 150,748Income tax payable represents the amounts payable in respect of current and prior periods. The Company’s income taxpayable includes amounts payable on behalf of controlled entities that are part of the tax-consolidated group.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 20

Notes to the Financial Statements continuedfor the year ended 30 June 200817. PROVISIONSConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Employee benefitsBalance at beginning of reporting period 331,372 312,099 2,582 3,036Provisions made during the reporting period 293,523 254,947 350 376Acquisitions through business combinations 504 640 - -Provisions used during the reporting period (249,328) (233,179) - (830)Effect of movements in foreign exchange (2,895) (3,135) - -Balance at reporting date 373,176 331,372 2,932 2,582Site restorationBalance at beginning of reporting period 14,934 8,835Provisions made during the reporting period 4,943 6,099Balance at reporting date 19,877 14,934 - -393,053 346,306 2,932 2,582Provisions expected to be settled more than 12 months after reporting date: Group $201,823 (2007: $170,941), Company$2,651 (2007: $2,582). The provision for employee benefits relates to wages and salaries, annual leave, long service leave,retirement benefits and deferred bonuses. The provision for site restoration represents restoration obligations in respect oflandfills, based on the Group’s best estimate of the present value of the expenditure required to settle the restoration obligation.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 21

Notes to the Financial Statements continuedfor the year ended 30 June 200818. INTEREST BEARING LIABILITIESConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Interest-bearing loans - secured 4,591 6,216Interest-bearing loans - unsecured 768,411 26,482Interest-bearing loans 33 773,002 32,698 - -Limited recourse loan 33 449,288 -Leighton Finance International Notes 33 115,789 129,412Interest-bearing limited recourse loans 565,077 129,412 - -Leighton Notes 33 200,000 200,000 200,000 200,000Interest-bearing liabilities expected to be settled more than 12 months after reporting date: Group $983,868 (2007: $32,698),Company $nil (2007: $200,000).The secured loans are non-recourse property development loans secured against certain property development assets of theGroup.There was no difference between the face values and the carrying values of the interest bearing liabilities other than in respectof the limited recourse loans where the face value was $572,631 (2007: $129,412).Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 22

Notes to the Financial Statements continuedfor the year ended 30 June 200819. EQUITYCompany2008 2007Issued and fully paid share capitalBalance at beginning of reporting period 278,088,067 277,974,567Share options exercised - 113,500Balance at reporting date 278,088,067 278,088,067Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per shareat shareholders’ meetings. In the event of winding up of the Company ordinary shareholders rank after creditors and are fullyentitled to any proceeds of liquidation.ConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Share capitalBalance at beginning of reporting period 480,988 479,744 480,988 479,744Contributions of equity - 1,244 - 1,244Balance at reporting date 480,988 480,988 480,988 480,988Subsequent to reporting date, the Group announced a 1 for 14 Accelerated Pro-rata Entitlement Offer of approximately 19.8million new shares at an offer price of $35.35 per new share to raise approximately $700 million.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 23

Notes to the Financial Statements continuedfor the year ended 30 June 200820. RESERVESConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Foreign currency translation reserveBalance at beginning of reporting period (51,058) (20,149)Total included in statement of recognised income and expense (83,998) (30,909)Balance at reporting date (135,056) (51,058) - -Hedging reserveBalance at beginning of reporting period 48,514 205Total included in statement of recognised income and expense (69,611) 48,309Balance at reporting date (21,097) 48,514 - -Fair value reserveBalance at beginning of reporting period 23,831 8,994Total included in statement of recognised income and expense 11,044 14,837Balance at reporting date 34,875 23,831 - -Associates equity reserveBalance at beginning of reporting period 11,145 10,658Total included in statement of recognised income and expense 8,855 487Balance at reporting date 20,000 11,145 - -Share based payments reserveBalance at beginning of reporting period 2,695 -Total included in income statement 7,951 2,695Balance at reporting date 10,646 2,695 - -Total reserves at reporting date (90,632) 35,127 - -Nature and purpose of reservesForeign currency translation reserveThe foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financialstatements of foreign operations where their functional currency is different to the presentation currency of the Group, as well asfrom the translation of liabilities that hedge the Company’s net investment in foreign operations.Hedging reserveThe hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedginginstruments relating to future transactions. The reserve includes cash flow hedges relating to capital commitments for equityinvestments.Fair value reserveThe fair value reserve includes the cumulative net change in the fair value of available-for-sale assets until the asset is realisedor impaired.Associates equity reserveThe associates equity reserve is used to record the Group’s share of the post-acquisition increases in the reserves ofassociates.Share based payments reserveThe fair value of equity settled share based compensation is recognised in the income statement and revenue over the vestingperiod of the underlying grant.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 24

Notes to the Financial Statements continuedfor the year ended 30 June 200821. RETAINED EARNINGSConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Balance at beginning of reporting period 834,358 623,449 269,179 262,098Total included in statement of recognised income and expense 607,888 450,042 328,515 246,214Dividends paid (347,611) (239,133) (347,611) (239,133)Balance at reporting date 1,094,635 834,358 250,083 269,17922. DIVIDENDSConsolidatedCents pershare$’0002008 final dividendSubsequent to reporting date the Company announced a final dividend in respect of the yearended 30 June 2008 fully franked at a tax rate of 30%. The dividend is payable on 30 September2008. This dividend has not been provided for in the balance sheet. The declaration andsubsequent payment of this dividend has no income tax consequences for the Company.85.0 236,375Dividends recognised in the reporting period to 30 June 2008- 2008 interim ordinary dividend 50% franked at a tax rate of 30% paid on 31 March 2008 60.0 166,854- 2007 final ordinary dividend 50% franked at a tax rate of 30% paid on 28 September 2007 65.0 180,757347,611Dividends recognised in the reporting period to 30 June 2007- 2007 interim ordinary dividend unfranked paid on 30 March 2007 45.0 125,136- 2006 final ordinary dividend 50% franked at a tax rate of 30% paid on 29 September 2006 41.0 113,997239,133Company2008$’0002007$’000Dividend franking accountBalance of the franking account, adjusted for franking credits which arise from the payment ofincome tax provided for in the financial statements233,689 115,816The impact of the 2008 final dividend, declared after reporting date, on the dividend franking account will be a reduction of$101,304 (2007: $38,734).Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 25

Notes to the Financial Statements continuedfor the year ended 30 June 200823. EARNINGS PER SHAREConsolidated2008 2007Basic earnings per share 218.6 ¢ 162.3 ¢Diluted earnings per share 216.1 ¢ 162.0 ¢Profit attributable to members of the parent entity used inthe calculation of basic and diluted earnings per share($000’s)607,888 450,042Weighted average number of shares used as thedenominatorWeighted average number of ordinary shares used as thedenominator in calculating basic earnings per share278,088,067 277,291,890Weighted average effect of share options on issue 3,246,715 555,325Weighted average effect of share options converted to- 82,288ordinary sharesWeighted average number of ordinary shares and potentialordinary shares used as the denominator in calculatingdiluted earnings per share281,334,782 277,929,503Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 26

Notes to the Financial Statements continuedfor the year ended 30 June 200824. ASSOCIATESThe Group has the following investments in associates:ConsolidatedOwnership InterestPrincipal Activity Country 2008 % 2007 %Al Habtoor Engineering Enterprises LLC Construction UAE 45 -Brisbane Motorway Services Pty Limited Facilities management Australia 50 50Defence Maintenance Management Pty Limited Maintenance Australia 50 50Devine Limited Property development Australia 42 40Gateway Motorway Services Pty Limited Facilities management Australia 50 50James Fielding Infrastructure Pty Limited Infrastructure Australia 50 50Newood Holdings Pty Limited Timber processing Australia - 50Ngarda Civil and Mining Pty Limited Mining Australia 50 50Praeco Holdings Limited Property development Australia 50 50Promet Engineers Pty Limited Design Australia 50 50Sedgman Limited Design Australia 38 38Silcar Pty Limited Telecommunications Australia 50 50Thiess Kentz Pty Limited Construction Australia 50 50Thiess Leighton India Pvt Ltd Construction India 50 -Westlink Services Pty Limited Facilities management Australia 50 50Where the Group has an ownership interest in an associate of greater than 50% but does not have the power to govern theassociate’s financial and operating policies, the associate is not consolidated.The Group’s share of associates’ results, assets and liabilities is as follows:Consolidated2008$’0002007$’000Revenue 1,362,769 382,486Expenses (1,347,983) (358,586)Profit before tax 14,786 23,900Income tax expense (13,478) (7,218)Profit for the year 1,308 16,682Assets 2,406,885 436,550Liabilities (1,224,967) (299,465)Equity accounted associates at end of reporting period 1,181,918 137,085All associates have a reporting date of 30 June. The fair value of investments in associates for which there are published pricequotations at reporting date was $270,261 (2007: $340,088).Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 27

Notes to the Financial Statements continuedfor the year ended 30 June 200824. ASSOCIATES CONTINUEDThe movement in carrying amounts of the Group’s investments in associates is as follows:Consolidated2008$’0002007$’000Carrying amount at beginning of reporting period 137,085 30,444Share of net profit 1,308 16,682Investments in associates acquired during the reporting period 1,091,350 95,578Distributions (56,680) (6,106)Change in associates’ equity value 8,855 487Carrying amount at end of reporting period 1,181,918 137,08525. JOINT VENTURE ENTITIESConsolidatedOwnership InterestPrincipal activity Country 2008 % 2007 %145 Ann Street Trust Property development Australia 50 -233 Castlereagh Street joint venture Property development Australia - 50400 George Street (Qld) Pty Limited Property development Australia - 50400 George Street Development Trust Property development Australia - 50400 George Street Partnership Property development Australia 50 -Abigroup Leighton joint venture Construction Australia - 50ADrail joint venture Construction Australia 20 20Anvil Hill Infrastructure Alliance Construction Australia - 50Bac Devco Pty Limited Property development Australia 33 33Bayview Noosa partnership Property development Australia 50 50Beenyup Alliance Construction Australia 47 47† BJB joint venture Maintenance Australia 38 38China State – Leighton Joint Venture Construction Hong Kong 50 -Cockatoo Iron Ore joint venture Mining Australia 50 50Complete joint venture Construction Australia 50 50Cotter Googong Bulk Transfer joint venture Construction Australia 50 50Dam Improvement Services joint venture Construction Australia 40 40Devine Hamilton Unit Trust Property development Australia 50 -Folkestone/Leighton JV Pty Limited Property development Australia 50 50Freeway Business Park Trust Property development Australia - 50Hassall Street Trust Property development Australia 50 -Holland York joint venture Construction Australia 50 50HPAL Freehold Pty Limited Property development Australia 50 50Infocus Infrastructure Management Pty Limited Facilities management Australia 50 50Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 28

Notes to the Financial Statements continuedfor the year ended 30 June 200825. JOINT VENTURE ENTITIES CONTINUEDConsolidatedOwnership InterestPrincipal activity Country 2008 % 2007 %JM joint venture Construction Australia 50 50JM JV SIA joint venture Construction Australia 80 80† John Holland Asia Limited/NamprasertProcess engineering Thailand 50 50Construction Company Limited joint venture† John Holland Barclay Mowlem joint venture Construction Australia 50 50John Holland BRW joint venture Construction Australia 50 50John Holland Colin Joss joint venture Construction Australia 50 50John Holland Downer EDI joint venture Construction Australia 60 60John Holland Downes Graderway joint venture Construction Australia 50 50John Holland Fairbrother joint venture Construction Australia 50 50John Holland Lahey joint venture Construction Australia 50 50John Holland Macmahon joint venture (Bell Bay) Construction Australia 80 80John Holland Macmahon joint ventureConstruction Australia 50 50(Roe and Tonkin Highways)John Holland Macmahon joint ventureConstruction Australia 50 50(Ross River Dam)John Holland McConnell Dowell joint venture Construction Australia 50 50John Holland MVM joint venture Construction Australia 50 50John Holland Tenix Alliance joint venture Construction Australia 50 50John Holland Thames Water joint venture Construction Australia 50 50John Holland United Group Infrastructure joint venture Construction Australia 47 -John Holland Veolia Water Australia joint venture Construction Australia 65 65(Gold Coast Desalination Plant)John Holland Veolia Water Australia joint venture Construction Australia 63 -(Blue Water)Leighton Abigroup joint venture Construction Australia 50 50Leighton China State John Holland joint venture Construction Macau 70 70(City of Dreams)Leighton China State joint venture (Wynn Resort) Construction Macau 50 50Leighton China State-Van Oord joint venture Construction Hong Kong 45 45Leighton Contractors & Baulderstone Hornibrook Construction Australia 50 50Bilfinger Berger joint venture* Leighton Construction India Pvt Limited Construction India 50 50Leighton Hsin Chong joint venture Construction Hong Kong 50 50Leighton-Kier joint venture Construction UAE 50 50Leighton Kumagai joint venture Construction Australia 55 55Leighton Kumagai joint ventureConstruction Hong Kong 51 51(Route 9-Eagle’s Nest Tunnel)Leighton Kumagai joint ventureConstruction Hong Kong 51 51(Wanchai East & North Point Trunk Sewers)Leighton-Lama joint venture Construction Malaysia - 54Leighton-Oriental Structural Engineers joint venture Construction India 50 50Link 200 joint venture Construction Hong Kong 48 48Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 29

Notes to the Financial Statements continuedfor the year ended 30 June 200825. JOINT VENTURE ENTITIES CONTINUEDConsolidatedOwnership InterestPrincipal Activity Country 2008 % 2007 %Link 200 Station joint venture Construction Hong Kong 60 60Manukau Motorway Construction New Zealand 50 50Ngarda Civil and Mining Pty Limited andConstruction Australia 50 50Leighton Contractors Pty LimitedNorthern Gateway Alliance Construction New Zealand 50 50Norton Street Investments Pty Ltd Property development Australia 45 45Rail Link joint venture Construction Australia 65 65River Links Unincorporated joint venture Construction Australia 18 18Roche Thiess Linfox joint venture Mobile plant /Australia 44 44earthmovingSafelink Alliance Construction Australia 50 50Section 63 Trust Property development Australia 50 -Southern Gateway Alliance Construction Australia 70 70St Ives Gold Project joint venture Construction Australia 50 50† Taiwan Track Partners joint venture Construction Taiwan 28 28Thiess Alstom joint venture Construction Australia 50 50Thiess Black and Veatch joint venture Construction Australia 50 50Thiess Hochtief joint venture Construction Australia 50 50Thiess Sedgman joint venture Construction Australia 50 50Thiess United Group joint venture Construction Australia 50 50Townsville City Project Trust Property development Australia 50 -Universal Portfolio Services Pty Limited Property development Australia 50 50Viridian Noosa Pty Limited Property development Australia 50 50Viridian Noosa Trust Property development Australia 50 50Wedgwood Road Hallam Trust Property development Australia 50 -All joint venture entities have a reporting date of 30 June with the following exceptions:† entities have a 31 December reporting date* entities have a 31 March reporting dateThese entities have different reporting dates to the Group as they are aligned with the joint venture partners’ reporting dateand/or the reporting date is prescribed by local statutory requirements.Where the Group has an ownership interest in a joint venture entity greater than 50% but does not have the power to govern thejoint venture’s financial and operating policies, the joint venture is not consolidated.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 30

Notes to the Financial Statements continuedfor the year ended 30 June 200825. JOINT VENTURE ENTITIES CONTINUEDThe Group’s share of joint venture entities’ results, assets and liabilities is as follows:Consolidated2008$’0002007$’000Revenue 2,857,744 1,497,711Expenses (2,515,430) (1,401,815)Profit before tax 342,314 95,896Income tax expense - -Profit for the year 342,314 95,896Current assets 879,220 473,353Non current assets 182,682 136,121Total assets 1,061,902 609,474Current liabilities 708,435 453,256Non current liabilities 37,856 33,197Total liabilities 746,291 486,453The Group’s share of joint ventures’ net assets 315,611 123,021The movement in carrying amounts of the Group’s investments in joint ventures is as follows:Consolidated2008$’0002007$’000Carrying amount at beginning of reporting period 123,021 145,425Share of net profit 342,314 95,896Contributions to joint venture entities 680,831 415,554Drawings from joint venture entities (830,555) (533,854)Equity accounted joint venture entities at end of reporting period 315,611 123,021Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 31

Notes to the Financial Statements continuedfor the year ended 30 June 200826. RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT CARRYING VALUESLand$’000Buildings$’000Leasehold land,buildings &improvements$’000Wastemanagementassets$’000Plant andequipment$’000Total property,plant andequipment$’0002008 ConsolidatedCarrying amount at the beginningof the reporting period 22,830 29,383 46,093 24,994 1,135,319 1,258,619Additions 1,646 21,757 23,965 630 761,847 809,845Additions through acquisition ofcontrolled entities and businesses - - 167 - 58,730 58,897Disposals (6,241) (5,254) (927) - (189,675) (202,097)Depreciation - (1,824) (8,848) (3,330) (428,478) (442,480)Effects of exchange rate fluctuations - - (896) - (20,396) (21,292)Carrying amount at reporting date 18,235 44,062 59,554 22,294 1,317,347 1,461,49227. RECONCILIATION OF PROFIT FOR THE YEAR TO NET CASH FROM OPERATING ACTIVITIESConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Profit for the year 609,091 455,236 328,516 246,214Adjustments for:Depreciation 442,480 426,681 - -Amounts set aside to provisions 296,984 262,307 350 376Share of profits of associates 23,179 (14,734) - -Impairment of investments 142,003 - - -Foreign exchange losses 13,044 3,331 33 52Gains on sale of assets (316,407) (48,493) - (15,101)Non-cash intercompany transactions - - 73,516 55,220Net changes in assets/liabilities:Decrease/(increase) in receivables 4,209 (184,563) 3,750 342Decrease/(increase) in joint ventures (195,730) 21,384 - -Decrease/(increase) in inventories (139,771) (111,036) - -Increase/(decrease) in payables 343,733 581,566 31 39Increase/(decrease) in provisions (249,328) (233,179) - (830)Current and deferred income tax movement (51,026) 42,525 (14,305) (29,379)Net cash from operating activities 922,461 1,201,025 391,891 256,933Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 32

Notes to the Financial Statements continuedfor the year ended 30 June 200828. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSESDetails of the controlled entities and businesses acquired are contained in the Leighton Holdings Limited and controlled entitiesnote. Goodwill has arisen on these acquisitions as a premium was paid above the acquired net assets for the benefit of theanticipated synergies, gaining entrance to new markets and acquiring skilled workforces. The acquisitions of controlled entitiesand businesses had the following effect on the Group’s assets and liabilities at the respective acquisition dates.Acquisitions2008Carrying amountsbefore acquisition$’000Fair valueadjustments$’000Recognisedvalues$’000Cash and cash equivalents 1,425 - 1,425Trade and other receivables 13,681 - 13,681Inventories 1,020 - 1,020Property, plant and equipment 56,660 237 56,897Intangible assets (50) - (50)Trade and other payables (23,241) - (23,241)Provisions (504) - (504)Net identifiable assets and liabilities 48,991 237 49,228Goodwill on acquisition 40,102Total purchase consideration, including acquisition costs of $0.88 million 89,330Cash acquired (1,375)Net cash outflow 87,9552007Cash and cash equivalents 58 - 58Trade and other receivables 1,156 1,405 2,561Inventories 6,865 - 6,865Deferred tax assets - 109 109Property, plant and equipment 72,815 - 72,815Trade and other payables ( 1,779) - ( 1,779)Provisions ( 640) - ( 640)Net identifiable assets and liabilities 78,475 1,514 79,989Goodwill on acquisition 32,782Total purchase consideration, including acquisition costs of $4.6 million 112,771Cash acquired (58)Net cash outflow 112,713Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 33

Notes to the Financial Statements continuedfor the year ended 30 June 200828. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUEDDisposalsDisposals of controlled entities and businesses had the following effect on the Group’s assets and liabilities:ConsolidatedCompanyNote2008$’0002007$’0002008$’0002007$’000Consideration receivedCash consideration 36,371 -Non cash consideration* 35 198,819 -Carrying amount on disposal (24,469) -Profit on disposal 210,721 - - -Carrying value of net assets of entities and businessesdisposedCash and cash equivalents 1,020 -Receivables 123,149 -Deferred tax assets 1,038 -Other assets 14,662 -Payables and provisions (4,021) -Financial liabilities (111,379) -Net assets disposed 24,469 - - -Cash flows resulting from saleCash consideration 36,371 -Cash disposed (1,020) -Net inflows of cash 35,351 - - -* Non cash consideration relates to the disposal of the Leighton Gulf operations to Al Habtoor Engineering LLC.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 34

Notes to the Financial Statements continuedfor the year ended 30 June 200829. SEGMENT INFORMATIONGeographical segmentsThe Group comprises the following significant geographical segments based on its management reporting system:Australia/Pacific - operations throughout Australia, New Zealand and the Pacific region in all business segments.Asia - operations predominantly in Hong Kong and Macau, Indonesia, Malaysia, India, the Gulf and the Philippines. Theprincipal activities undertaken in this region are construction, contract mining, property development and other services(including environmental, telecommunications and operations and maintenance).Segment revenues, expenses, assets and liabilities are based on the geographical location of the assets.Business segmentsThe Group operates in the infrastructure, resources and property markets. These markets represent the business segments ofthe Group.Details of total revenue including the Group’s share of joint ventures and associates revenue are provided as additionalinformation.All transactions with related parties are made on normal commercial terms and conditions and the aggregate of related partytransactions are not material in the overall operations of the Group.The allocation of the profit for the year and assets and liabilities into business and geographic segments has been ascertainedby reference to direct identification of assets and revenue/cost centres. Other expenses, assets and liabilities which cannot beallocated to a business segment are reported as unallocated.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 35

Notes to the Financial Statements continuedfor the year ended 30 June 200829. SEGMENT INFORMATION CONTINUEDPrimary Segment – Geographical2008Australia/Pacific$’000Asia$’000Eliminations$’000Total$’000Revenue - Group, joint ventures and associates 12,381,913 2,160,305 - 14,542,218Segment revenue 9,219,037 1,076,080 - 10,295,117Interest revenue 26,588Revenue 10,321,705Segment result 278,319 254,155 - 532,474Share of profit of associates and joint venture entities 251,912 91,710 - 343,622530,231 345,865 - 876,096Interest revenue 26,588Finance costs (134,736)Profit before tax 767,948Income tax expense (158,857)Profit for the year 609,091Depreciation of property, plant and equipment 354,793 87,687 - 442,480Other non-cash expenses 259,064 24,876 - 283,940Segment assets 4,516,798 751,058 (527,836) 4,740,020Investments accounted for using the equity method 502,214 995,315 - 1,497,529Current tax assets 42,642Deferred tax assets 184,036Total assets 6,464,227Acquisition of segment assets 744,522 138,674 - 883,196Segment liabilities 2,694,802 897,630 (314,142) 3,278,290Interest-bearing liabilities, Notes and Limited recourse debt 1,538,079Current tax liabilities 162,644Total liabilities 4,979,013Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 36

Notes to the Financial Statements continuedfor the year ended 30 June 200829. SEGMENT INFORMATION CONTINUEDPrimary Segment - Geographical2007Australia/Pacific$’000Asia$’000Eliminations$’000Total$’000Revenue - Group, joint ventures and associates 10,247,933 1,643,556 - 11,891,489Segment revenue 8,604,268 1,369,069 - 9,973,337Interest revenue 37,955Revenue 10,011,292Segment result 415,774 52,044 - 467,818Share of profit of associates and joint venture entities 100,028 12,550 - 112,578515,802 64,594 - 580,396Interest revenue 37,955Finance costs (34,255)Profit before tax 584,096Income tax expense (128,860)Profit for the year 455,236Depreciation of property, plant and equipment 354,267 72,414 - 426,681Other non-cash expenses 232,154 33,485 - 265,639Segment assets 4,008,193 798,570 (490,106) 4,316,657Investments accounted for using the equity method 230,274 29,832 - 260,106Current tax assets 29,131Deferred tax assets 139,308Total assets 4,745,202Acquisition of segment assets 870,202 173,285 - 1,043,487Segment liabilities 2,538,702 588,126 (275,554) 2,851,274Interest-bearing liabilities, Notes and Limited recourse debt 362,110Current tax liabilities 177,219Total liabilities 3,390,603Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 37

Notes to the Financial Statements continuedfor the year ended 30 June 200829. SEGMENT INFORMATION CONTINUEDSecondary Segment - Business2008Infrastructure$’000Resources$’000Building$’000Unallocated$’000Total$’000Revenue -Group, joint ventures and associates 8,156,146 3,675,274 2,710,798 - 14,542,218Segment revenue 4,683,922 3,485,881 2,125,314 - 10,295,117Segment assets 2,394,690 1,491,961 513,524 339,845 4,740,020Acquisition of segment assets 405,440 377,616 79,884 20,256 883,1962007Revenue -Group, joint ventures and associates 7,645,447 3,479,796 766,246 - 11,891,489Segment revenue 6,094,974 3,294,495 583,868 - 9,973,337Segment assets 2,099,575 1,246,593 404,408 566,081 4,316,657Acquisition of segment assets 478,190 431,787 132,495 1,015 1,043,487Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 38

Notes to the Financial Statements continuedfor the year ended 30 June 200830. COMMITMENTSOperating leasesThe Group leases plant and equipment used in contract mining and civil engineering activities and property for the purposes ofoffice accommodation under operating leases. Operating leases generally provide the Group with a right of renewal. Undercertain property operating leases, contingent rentals may be payable for periodic rent reviews. The Group’s leasingarrangements impose no restrictions on any of its financial arrangements.ConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Expenditure commitments in relation to operating leases contractedat the reporting date but not recognised as liabilities, are payable asfollows:- within one year 325,837 286,639- later than one year but not later than five years 714,271 780,678- later than five years 110,795 134,3711,150,903 1,201,688 - -Representing:Cancellable operating leasesPlant and equipment 808,254 900,911Property 84,827 92,980Non-cancellable operating leasesPlant and equipment- within one year 41,396 44,385- later than one year but not later than five years 53,105 57,480Property- within one year 32,768 27,986- later than one year but not later than five years 88,311 59,119- later than five years 42,242 18,8271,150,903 1,201,688 - -Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 39

Notes to the Financial Statements continuedfor the year ended 30 June 200830. COMMITMENTS CONTINUEDCapital commitmentsCapital expenditure contracted for at reporting date but not recognised as liabilities is as follows:ConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Property, plant and equipmentPayable:- within one year 1,110,114 389,497- later than one year but not later than five years 123,173 -- later than five years - -1,233,287 389,497 - -InvestmentsPayable:- within one year - 314,100- later than one year but not later than five years 80,000 84,950- later than five years - -80,000 399,050 - -Joint venture commitments- property, plant and equipmentPayable:- within one year 651 34,304- later than one year but not later than five years - -- later than five years - -651 34,304 - -Share of associates’ commitments - investmentsPayable:- within one year - -- later than one year but not later than five years 37,500 -- later than five years - -37,500 - - -Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 40

Notes to the Financial Statements continuedfor the year ended 30 June 200831. CONTINGENT LIABILITIESBank guarantees, insurance bonds and letters of creditContingent liabilities under indemnities given on behalf of controlled entities in respect of:Consolidated2008$’000Company2008$’0002007$’0002007$’000Bank guarantees 2,241,780 1,580,420 2,241,780 1,580,420Insurance, performance and payment bonds 64,870 81,236 64,870 81,236Letters of credit 304,838 483,174 304,838 483,174Letters of credit include those provided for the Group’s capital commitments totalling $80,000 (2007: $363,624).Other contingencies(i) The Company is called upon to give, in the ordinary course of business, guarantees and indemnities in respect of theperformance by controlled entities, associates and related parties of their contractual and financial obligations. The value ofthese 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 constructionprojects.(iii) Certain members of the Group have the normal contractor’s liability in relation to construction contracts. This liability mayinclude litigation by or against the Group and/or joint venture arrangements in which the Group has an interest. It is notpossible to estimate the financial effect of these claims should they be successful. The Directors are of the opinion thatadequate allowance has been made and that disclosure of any further information about the claims would be prejudicial tothe interests of the Group.(iv) Controlled entities have entered into joint venture arrangements under which the controlled entity may be jointly andseverally liable for the liabilities of the joint venture arrangement.(v) Under the terms of the Class Order described in the note on Leighton Holdings Limited and controlled entities, theCompany has entered into approved deeds of indemnity for the cross-guarantee of liabilities with participating Australiansubsidiary companies.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 41

Notes to the Financial Statements continuedfor the year ended 30 June 200832. CAPITAL RISK MANAGEMENTCapital planning forms part of the business and strategic plans of the Group. Decisions relating to obtaining and investingcapital are made following consideration of the Group’s key financial objectives including, return on revenue, return on equity,earnings growth, liquidity and borrowing capacity. The Group has access to numerous sources of capital both domestically andinternationally, including cash balances, equity, bank debt, capital markets, insurance, hybrid debt and lease facilities.33. FINANCIAL INSTRUMENTSThe Group operates across the Asia Pacific region in the infrastructure, resources and property markets. The activities of theGroup comprise mainly construction, contract mining, services and property development. The activities of the Group result inexposure to credit, liquidity and market risk (equity price, interest rate and foreign currency risk).a) Credit RiskCredit risk represents the risk that a counterparty will not complete its obligations under a financial instrument resulting in afinancial loss to the Group. The Group has a credit policy in place and exposure to credit risk is monitored on an ongoing basis.The Group minimises concentrations of credit risk by undertaking transactions with a large number of customers in variouscountries. Derivative counterparties are limited to high credit quality financial institutions. At the reporting date there were nosignificant concentrations of credit risk. The Group’s maximum exposure to credit risk is represented by the carrying amount ofeach financial asset, including derivate financial instruments, in the balance sheet. The Group’s maximum exposure to creditrisk for receivables at the reporting date by geographic region was: Australia Pacific $1,240,131 (2007: $1,278,290) Asia$428,739 (2007: $433,040). The Company’s maximum exposure to credit risk for receivables at the reporting date bygeographic region was: Australia Pacific $193,916 (2007: $329,508).The ageing of the Group’s receivables at the reporting date was: not past due: $1,414,397 (2007: $1,448,510); past due:$254,473 (2007: $262,820). Past due is defined under AASB to mean any amount outstanding for one or more days after thecontractual due date. Past due receivables aged greater than 90 days: 6% (2007: 8%). The Company has no receivablesconsidered past due (2007: nil).Consolidated2008$’000Company2008$’0002007$’0002007$’000Provision for impairment of receivablesBalance at beginning of reporting period (3,971) (3,971)Provided during the reporting period (2,686) -Balance at reporting date (6,657) (3,971) - -The impairment provision relates to specific loans and receivables identified as being impaired. The Group did not obtainfinancial or non financial assets as collateral during the period as a result of default by a counterparty (2007: $nil).Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 42

Notes to the Financial Statements continuedfor the year ended 30 June 200833. FINANCIAL INSTRUMENTS CONTINUEDb) Liquidity RiskLiquidity risk is the risk of having insufficient funds to settle financial liabilities as and when they fall due. This includes havinginsufficient levels of committed credit facilities. The Group’s objective is to maintain efficient use of cash and debt facilities inorder to balance the cost of borrowing and while ensuring sufficient availability of credit facilities, to meet forecast. The Groupadopts a prudent approach to cash management which ensures sufficient levels of cash are maintained to meet working capitalrequirements. Liquidity is reviewed continually by the Group’s treasury departments through daily cash monitoring, review ofavailable credit facilities and forecasting and matching of cash flows.Contractual maturities of financial liabilities as at 30 June 2008:Consolidated $’000CarryingamountContractualcash flowsLess than1 Year 1-5 yearsMore than5 yearsNon-derivative financial liabilitiesLoans - secured (non-recourse) 4,591 (4,761) (4,761) - -Loans - unsecured 768,411 (836,533) (314,664) (521,869) -Limited recourse debt 449,288 (590,392) (132,451) (457,941) -Leighton Finance International Notes 115,789 (141,871) (8,994) (132,877) -Leighton Notes* 200,000 (1,816,900) (17,020) (68,080) (1,731,800)Trade and other payables 2,824,927 (2,824,927) (2,610,973) (213,954) -Derivative financial liabilitiesForward exchange contracts used for foreigncurrency hedging:- Outflow 6,395 (51,510) (45,553) (5,957) -- Inflow (1,374) 47,002 46,131 871 -Other cash flow hedges:- Outflow 53,915 (53,915) - (53,915) -4,421,942 (6,273,807) (3,088,285) (1,453,722) (1,731,800)* The Leighton Notes have a maturity date of October 2103. Subsequent to reporting date the Group announced it wouldredeem all of the Leighton Notes on the reset date of 1 December 2008.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 43

Notes to the Financial Statements continuedfor the year ended 30 June 200833. FINANCIAL INSTRUMENTS CONTINUEDb) Liquidity Risk continuedContractual maturities of financial liabilities as at 30 June 2007:Consolidated $’000CarryingamountContractualcash flowsLess than1 Year 1-5 yearsMore than5 yearsNon-derivative financial liabilitiesLoans - secured (non-recourse) 6,216 (6,914) (492) (6,422) -Loans - unsecured 26,482 (26,482) - (26,482) -Limited recourse debt - - - - -Leighton Finance International Notes 129,412 (158,562) (10,052) (148,510) -Leighton Notes 200,000 (1,745,645) (16,020) (64,080) (1,665,545)Trade and other payables 2,488,534 (2,488,534) (2,253,288) (235,246) -Derivative financial liabilitiesForward exchange contracts used for foreigncurrency hedging:- Outflow 4,152 (49,762) (32,529) (17,233) -- Inflow (85,114) 85,114 85,114 - -Other cash flow hedges:- Outflow 12,282 (12,282) (382) (11,900) -2,781,964 (4,403,067) (2,227,649) (509,873) (1,665,545)Contractual maturities of financial liabilities - Company:Leighton Notes - details are the same as for the Group. Trade and other payables - carrying amount and contracted cash flowsless than 1 year: $434,207 (2007: $52,728).c) Equity Price RiskEquity price risk is the risk that the fair value of either a traded or non-traded equity investment, derivative equity instrument, ora portfolio of such financial instruments decreases in the future. The Group is exposed to equity price risk on all listed andunlisted investments measured at fair value. The Group invests in equity investments though its participation in major publicprivate partnership infrastructure projects. Investments may also be made as part of its strategic plans to form alliances or toinvest in specialised but complementary businesses to access specialised skills, markets, or additional capacity. Equityinvestments are not made for trading or speculative purposes.The fair values of listed investments are determined on an active market valuation basis using observable market data such ascurrent bid prices.The fair values of unlisted investments are determined by the use of internal valuation techniques using discounted cash flows.Where practical the valuations incorporate observable market data. Assumptions are generally required with regard to futureexpected revenues and discount rates.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 44

Notes to the Financial Statements continuedfor the year ended 30 June 200833. FINANCIAL INSTRUMENTS CONTINUEDc) Equity Price Risk continuedSensitivity Analysis - ConsolidatedListed investmentsChange in valuation on listed investments in relation to a 5% change in the value of the ASX 200 index: $14,646 (2007: $39)Unlisted InvestmentsChange in value of unlisted investments due to a 5% movement in discount rates $2,406 (2007: $7,689). Change in value ofunlisted investments due to a 5% movement in revenue forecasts $6,822 (2007: $19,534).The Company has no listed or unlisted investments other than controlled entities.d) Foreign Currency RiskForeign currency risk is the risk that the value of a financial commitment, a recognised asset or liability will fluctuate due tochanges in foreign currency rates. The Group’s foreign currency risk arises primarily from net investments in foreign operations.The Group uses non derivative financial instruments, such as borrowings in the foreign currencies, to hedge its investments inforeign operations. Foreign currency gains and losses arising from translation of net investments in foreign operations arerecognised in the Foreign Currency Translation Reserve until realised.Members of the Group are exposed to foreign currency risk on project receipts and expenditure on plant and equipmentdenominated in currencies other than their functional currency. Where this foreign currency risk is considered to be significant,members of the Group enter into forward exchange contracts to hedge their foreign currency risk. These hedges are classifiedas cash flow hedges and measured at fair value.Cash Flow HedgesThe Group’s cash flow hedges protect against foreign exchange rate fluctuations on highly probable forecast transactions usingforeign exchange forward contracts. As at reporting date the fair value of these outstanding designated derivatives recognised inequity is $5,021. It is expected that the current hedged forecast transactions will occur during the financial year ending 2009and will affect the income statement in the same period. There are no gains or losses recognised in the income statementduring the period due to hedge ineffectiveness.Exposure to foreign currency riskThe most significant foreign currency the Group is exposed to is the United States dollar (USD) or currencies pegged to theUSD. The Group's exposure to foreign currency risk at balance date was: Assets USD1,659,054 (2007: USD704,142); liabilitiesUSD852,748 (2007: USD499,907).Sensitivity analysisA movement in the Australian dollar (AUD) against the United States dollar at reporting date would have increased (decreased)equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates,remain constant. The analysis is performed on the same basis for 2007.Equity2008$’000Profit or Loss2008$’0002007$’0002007$’00030 June 2008USD +5% (33,999) (9,902) (14,822) (2,399)USD -5% 48,388 20,845 16,382 2,652Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 45

Notes to the Financial Statements continuedfor the year ended 30 June 200833. FINANCIAL INSTRUMENTS CONTINUEDe) Interest RateInterest rate risk is the risk that the value of a financial instrument or cash flow associated with the instrument will fluctuate dueto changes in the market interest rates. The Group uses derivative financial instruments to assist in managing its interest rateexposure. Speculative trading is not undertaken.At reporting date it is estimated that an increase of one percentage point in floating interest rates would have decreased theGroup’s profit after tax and retained earnings by $4,565 (2007: increased by $2,860). A one percentage point decrease ininterest rates would have an equal and opposite effect. The Group’s exposure to interest rate risk and the effective weightedaverage interest rate for classes of financial assets and financial liabilities are set out below:Fixed rate, maturing in:2008Weightedaveragerate%Floatingrate$’0001 yearor less$’000Over 1year to5 years$’000Morethan5 years$’000Noninterestbearing$’000Total$’000GroupFinancial assetsCash and cash equivalents 5.11 686,563 - - - - 686,563Trade and other receivables 7.70 3,402 - - - 1,685,690 1,689,092Other investments - - - - - 411,126 411,126689,965 - - - 2,096,816 2,786,781Financial liabilitiesTrade and other payables - - - - - 2,885,237 2,885,237Interest-bearing loans 8.17 750,473 - 22,529 - - 773,002Interest bearing limited recourse loans 7.67 - 104,211 460,866 - - 565,077Leighton Notes 8.51 200,000 - - - - 200,000950,473 104,211 483,395 - 2,885,237 4,423,316Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 46

Notes to the Financial Statements continuedfor the year ended 30 June 200833. FINANCIAL INSTRUMENTS CONTINUEDFixed rate, maturing in:2007Weightedaveragerate%Floatingrate$’0001 yearor less$’000Over 1year to5 years$’000Morethan5 years$’000Noninterestbearing$’000Total$’000GroupFinancial assetsCash and cash equivalents 5.58 823,632 - - - 7,740 831,372Trade and other receivables 8.43 25,346 - - - 1,701,773 1,727,119Other investments 10.65 - - - 68,600 111,450 180,050848,978 - - 68,600 1,820,963 2,738,541Financial liabilitiesTrade and other payables - - - - - 2,504,968 2,504,968Interest-bearing loans 8.08 - - 32,698 - - 32,698Interest bearing limited recourse loans 7.88 - - 129,412 - - 129,412Leighton Notes 8.01 200,000 - - - - 200,000200,000 - 162,110 - 2,504,968 2,867,078f) Net fair values of financial assets and liabilitiesGroupLeighton Notes fair value: $201,000; carrying value $200,000 (2007: fair value $204,200; carrying value $200,000). LeightonFinance International Notes fair value: $118,117; carrying value: $115,789 (2007: fair value $130,706; carrying value $129,412).The carrying amounts of other financial assets and liabilities in the Group’s balance sheet approximate fair values.CompanyOther than the Leighton Notes referred to above, the carrying amounts of financial assets and liabilities in the Company’sbalance sheet approximate fair values.g) Leighton NotesThe Company issued 2,000,000 Convertible Unsecured Subordinated Resettable Notes (“Leighton Notes”) at $100 each on 9December 2003, maturing in October 2103. The notes are convertible to ordinary shares at the option of the Company or theNoteholder in accordance with the terms and conditions as detailed below.Conversion by LeightonLeighton may convert all (but not some only) Leighton Notes to Ordinary Shares where a Tax Event 1 or Regulatory Event 2occurs.Conversion by NoteholdersSubject to Leighton’s redemption right, Noteholders may request conversion of some or all of their Leighton Notes on a ResetDate 5 or earlier if a Trigger Event 3 occurs.If a Noteholder requests conversion, Leighton retains an overriding right to redeem each Leighton Note the Noteholder wishesto convert for the Redemption Amount plus Outstanding Interest or arrange for a third party to acquire each of those LeightonNotes for Face Value plus Outstanding Interest.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 47

Notes to the Financial Statements continuedfor the year ended 30 June 200833. FINANCIAL INSTRUMENTS CONTINUEDg) Leighton Notes continuedConversion ratioThe number of Ordinary Shares issued on conversion of each Leighton Note will be calculated by dividing:- the Face Value plus Outstanding Interest, by- the average of the daily volume weighted average sale prices of Ordinary Shares sold on ASX during the 20 Business Daysimmediately before the Conversion Date, reduced by the Conversion Discount.1. Tax Event means:(a) if in the opinion of the Directors (having obtained an opinion from reputable legal counsel or tax adviser):(i) a change in any taxation law, interpretation or ruling issued by any relevant Governmental Agency has occurred (or isannounced) and that as a result there is more than an insubstantial risk that the Issuer would be exposed to more than anegligible increase in costs or effective cost of funds having regard to the taxation treatment of interest paid or payableon the Leighton Notes and the timing of any available deductions, in relation to the Leighton Notes or as a result of theLeighton Notes being on issue (having regard to any tax consequences impacting the Issuer or any increased chargesor civil liabilities); or(ii) the Issuer will or there is more than an insubstantial risk that the Issuer would be denied deductibility of the interestpayable on the Leighton Notes; or(b) the Issuer is denied deductibility of the interest payable on the Leighton Notes.2. Regulatory Event means in the opinion of the Directors (having obtained an opinion from reputable legal counsel) there ismore than an insubstantial risk that the Issuer will be exposed to additional costs or the imposition of additional requirementswhich the Directors determine at their sole discretion to be unacceptable, as a result of the occurrence of any of the following onor after the Issue Date:(a) the introduction, enactment, amendment, change, repeal, replacement or revocation of any law or regulation affectingsecurities or any amendment or change to the Listing Rules, or the announcement (including on a prospective basis) of anyof the foregoing by a Governmental Agency or ASX; or(b) any pronouncement, action or decision of a Governmental Agency or ASX interpreting or applying any such law orregulation or the Listing Rules.3. Trigger Event means each and any of the following events:(a) the Issuer sends a notice to its shareholders convening a meeting to consider a special resolution to wind up the Issuer;(b) the appointment of a provisional liquidator to the Issuer;(c) the making of an order by a Court for the winding up of the issuer (other than to effect a solvent reconstruction);(d) an administrator of the Issuer is appointed under sections 436A, 436B or 436C of the Corporations Act;(e) the Issuer executes a deed of company arrangement;(f) official quotation of the Ordinary Shares or Leighton Notes is either suspended by ASX for more than 20 consecutiveBusiness Days or ended by ASX;(g) the Issuer sends a notice to its shareholders convening a meeting to consider an ordinary resolution to dispose of its mainundertaking (as defined in the Listing Rules);(h) a Takeover Event occurs; or(i) the aggregate Face Value of the Leighton Notes on issue falls below $50 million after the Issue Date.4. A Scheme Event occurs if a Court approves a scheme of arrangement by Leighton, as defined in clause 21.2 of the Terms ofIssue.5. Reset Date means 1 December 2008 or thereafter as reset by Leighton in accordance with the Terms of Issue. On a ResetDate, Leighton may reset certain terms including the next Reset Date, the method of calculating the Interest Rate, the timing ofinterest payments and the conversion terms.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 48

Notes to the Financial Statements continuedfor the year ended 30 June 200833. FINANCIAL INSTRUMENTS CONTINUEDg) Leighton Notes continuedRedemption by Leighton- On a Reset Date or occurrence of a Trigger Event, a Tax Event or a Regulatory Event; Leighton may redeem LeightonNotes;- On occurrence of a Scheme Event 4 or in October 2103, Leighton must redeem Leighton Notes; and- On redemption, Noteholders will generally receive the Face Value plus Outstanding interest.Subsequent to reporting date the Company notified Noteholders that it will redeem all of the Leighton Notes on the Reset Dateof 1 December 2008 at the face value of $100 per Leighton Note. Entitled holders will be paid interest, calculated in accordancewith the terms of the Leighton Notes and at the rate of 8.51% pa in respect to the period from 31 May 2008 to 30 November2008 (both dates included). A timetable in relation to this process, including the expected record dates for payment of theseamounts and cessation of trading, will be published by the Company before 1 December 2008.h) Leighton Finance International NotesOn 16 May 2006, Leighton Finance International Limited (the “Issuer”), a wholly-owned subsidiary of the Company, issuedUS$110 million of 5-Year Fixed-Rate Guaranteed Notes (“Leighton Finance International Notes”).Leighton Finance International Notes bear interest from 16 May 2006 at the rate of 7.875% pa, payable semi-annually in arrearson 16 May and 16 November each year, commencing on 16 November 2006. Payments of interest will be made in US Dollarswithout deduction for or on account of taxes imposed or levied by Australia or Indonesia.Leighton Finance International Notes will mature on 16 May 2011 unless previously redeemed or purchased and cancelled andare subject to redemption in whole at their principal amount at the option of the Issuer at any time in the event of certainchanges affecting taxation in Australia or Indonesia.Leighton Finance International Notes are listed and quoted on the Official List of the Singapore Exchange Securities TradingLimited (SGX-ST) and are traded on the SGX-ST in minimum board lot size of S$200,000 (or the equivalent in foreigncurrencies).Leighton Finance International Notes are in registered form in the denomination of US$100,000 and may be held andtransferred in the principal amount of US$100,000 and integral multiples of US$1,000 in excess thereof.Leighton Finance International Notes have been rated BB by Standard and Poor’s rating group, a division of McGraw-HillCompanies Inc. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension,reduction or withdrawal at any time by the assigning rating agency.PT Thiess Contractors Indonesia and PT Leighton Contractors Indonesia, both wholly-owned subsidiaries of the Company,jointly and severally guarantee the obligations of Leighton Finance International Limited and Noteholders have no recourse toother Group companies.For the purpose of determining Noteholders entitlements to the payment of interest on 17 November 2008, only those personswho are registered as Noteholders at the opening of business on 31 October 2008 (“Record Date”) shall be entitled to receivethe payment.i) Interest bearing limited recourse loanOn 14 September 2007 LMENA No.1 Pty Limited, a wholly-owned subsidiary of the Company, entered into a syndicated bankloan for US$434 million loan maturing on 30 September 2012. The loan is recourse only to the investment in Al HabtoorEngineering Enterprises LLC. The loan has a 7.41% fixed interest rate.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 49

Notes to the Financial Statements continuedfor the year ended 30 June 200834. EMPLOYEE BENEFITSDefined contribution superannuation fundsDuring the year, the Group recognised $164,518 of defined contribution expenses. The Company recognised $239 of definedcontribution expenses.Defined benefit superannuation fundsThe Group makes contributions to the Leighton Superannuation Plan and the AMEC Superannuation Fund. These fundsprovide defined benefits to employee members upon retirement. The Company makes no contributions to defined benefit plans.The Group and the Company have used the AASB 1.20A exemption and disclosed amounts required under AASB 119.120A(p)for each annual reporting period prospectively from the date of transition to AIFRS.ConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Defined benefit obligationsPresent value of wholly unfunded obligations - -Present value of funded obligations (24,167) (30,633)Fair value of fund assets – funded 26,089 32,758Present value of net obligations 1,922 2,125 - -Less unrecognised actuarial gains 3,185 (2,009)Recognised asset for defined benefit obligations 5,107 116 - -Movements in the net asset/(liability) for defined benefitobligations recognised in the balance sheetNet asset/(liability) for defined benefit obligations at 1 July 116 1,390Contributions received 4,366 5,486Expense recognised in the income statement 625 (6,760)Net asset for defined benefit obligations at 30 June 5,107 116 - -Changes in the present value of the defined benefit obligationOpening defined benefit obligation (30,633) (33,151)Service cost (1,379) (7,741)Interest cost (700) (1,487)Contributions by plan participants (378) (395)Actuarial gains/ (losses) (1,448) (5,300)Benefits paid 8,606 17,441Settlements 1,765 -Closing defined benefit obligation (24,167) (30,633) - -Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 50

Notes to the Financial Statements continuedfor the year ended 30 June 200834. EMPLOYEE BENEFITS CONTINUEDDefined benefit superannuation funds continuedConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Changes in the fair value of fund assetsOpening fair value of fund assets 32,758 38,283Expected return 2,492 2,437Contributions by employer 3,988 5,093Contributions by plan participants 378 395Actuarial gains (3,669) 3,598Settlements (1,630) -Benefits paid (8,228) (17,048)Closing fair value of fund assets 26,089 32,758 - -Experience adjustments on fund liabilities - gains (1,668) (6,190)Experience adjustments on fund assets - gains (3,669) 3,598The major categories of fund assets as a percentage of total fundassets are as follows:Equity securities 54.7% 66.4%Debt securities 15.0% 18.5%Property securities 30.3% 15.1%Other securities - -Current service costs 1,379 7,741Interest on obligation 700 1,487Recognised actuarial gain (40) (31)Expected return on fund assets (2,492) (2,437)(453) 6,760 - -Actual return on fund assets (1,173) 6,037The Group expects to contribute $1,500 (2007: $4,366) to its defined benefit superannuation funds in the 2008 reporting period.Principal actuarial assumptions at reporting date:Discount rate (net of tax) 5.6% 5.4%Expected return on fund assets (net of tax) 8.3% 8.3%Future salary increases 4.0% 4.0%Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 51

Notes to the Financial Statements continuedfor the year ended 30 June 200834. EMPLOYEE BENEFITS CONTINUEDShare based paymentsLeighton Employee Share PlanShareholder approval was obtained at the Annual General Meeting on 5 November 1998 to establish the Leighton EmployeesShare Plan (“LESP”). Subject to certain eligibility criteria, all permanent employees of the Group are entitled to participate inLESP. The rules of LESP permit the Company to make an annual offer of shares in the Company to eligible employees. Themaximum value of shares which may be offered to any employee in any one year is $1,000. During the year, the Companypurchased 81,690 shares on-market and offered these shares to employees (2007: 244,850). An expense of $5,263,227 wasrecognised during the year for the cost of these shares (2007: $4,873,000). No new shares were issued under LESP during theyear (2007: nil).Leighton Executive Share Option PlanShareholder approval was obtained at the Annual General Meeting on 5 November 1998 to establish the Leighton ExecutiveShare Option Plan (“LESOP”). The rules of LESOP allow the Company to offer selected executives options over unissuedordinary shares in the Company. All options issued expire on the earlier of their expiry date or termination of the individual’semployment except in the case of retirement. Not more than 50% of the options may be exercised before the third anniversaryof the date of grant. 100% of options must be exercised before the fifth anniversary of the date of grant. All of the LESOPoptions on issue during the period had passed their third anniversary date.In addition to a continuing employment service condition, the ability to exercise LESOP options is conditional on the Groupachieving a performance hurdle. The performance hurdle requires that the increase in the Group’s shareholder returns (i.e.growth in share price plus dividends reinvested) during the period of two years ending 28 days before the proposed exercise ofthe option equals or exceeds the percentage increase in either the ASX 100 Industrials Accumulation Index or the ASXIndustrials Accumulation Index during the same two year period.5,980,000 options were granted on 27 March 2002 to 276 employees at an exercise price of $10.96 per option, with an expirydate of 27 March 2007. At the beginning of the year, nil options were unexercised (2007: 323,500). During the period niloptions were exercised (2007: 113,500) and nil options lapsed (2007: 210,000), leaving a balance of nil options unexercised atreporting date (2007: nil).Leighton Senior Executive Share Option PlanShareholder approval was obtained at the Annual General Meeting on 9 November 2006 to establish the Leighton SeniorExecutive Share Option Plan (“LSESOP”). The rules of LSESOP allow the Company to offer selected executives options overunissued ordinary shares in the Company. All options issued expire on the earlier of their expiry date or termination of theindividual’s employment except in certain special circumstances. Not more than 50% of the options may be exercised before thefourth anniversary of the date of grant. 100% of options must be exercised before the fifth anniversary of the date of grant.In addition to a continuing employment service condition, the ability to exercise options is conditional on the Group achievingTotal Shareholder Return (“TSR”) (i.e. growth in share price plus dividends reinvested) or Earnings Per Share (“EPS”) (i.e. asdefined in AASB 133) performance hurdles, as follows: 50% of each grant of options will be subject to a TSR performance hurdle (parcel A). The TSR hurdle requires totalshareholder return of the Company compared to the ASX 100 over the performance period (from grant date to test date) tobe at least at the 50 th percentile before any parcel A options are exercisable (50% exercisable at threshold) and at the 75 thpercentile before all parcel A options are exercisable; and 50% of each grant of options will be subject to an EPS hurdle (parcel B). Annual compound earnings per share growth overthe performance period must be at least 8% per annum before any parcel B options are exercisable (20% exercisable atthreshold) and at 12% per annum before all parcel B options are exercisable.5,410,000 options were granted on 15 December 2006 to 62 employees at an exercise price of $20.42 per option, with an expirydate of 15 December 2011. During the period nil options were exercised and no options lapsed, leaving a balance of 5,410,000options unexercised at reporting date, of which 200,000 were exercisable.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 52

Notes to the Financial Statements continuedfor the year ended 30 June 200834. EMPLOYEE BENEFITS CONTINUEDShare based payments continuedLeighton Senior Executive Share Option Plan continued1,461,000 options were granted on 25 January 2008 to 157 employees at an exercise price of $46.06 per option, with an expirydate of 25 January 2013. During the period nil options were exercised and no options lapsed, leaving a balance of 1,461,000options unexercised at reporting date, of which nil were exercisable.Leighton Management Share PlanShareholder approval was obtained at the Annual General Meeting on 9 November 2006 to establish the Leighton ManagementShare Plan (“LMSP”). The rules of LMSP allow the Company to grant selected executives shares which the Company acquireson market should the Group achieve an increase in profit during the preceding reporting period in excess of specifiedthresholds. Recipients under the LMSP forfeit their shares if they do not remain in employment with the Group for at least 3years from date of grant.During the year the Company purchased 76,025 shares on market which were granted on 8 April 2008 to 312 participants. Anexpense of $3,327,742 was recognised during the year for the cost of these shares (2007: $2,978,500).The average Leighton Holdings Limited share price during the year was $49.94. The share price at 30 June 2008 was $50.85.All offers under the LESP, LESOP, LSESOP and LMSP plans are at the discretion of the Company.All offers under the LESOP, LSESOP and LMSP plans are subject to pre-conditions of issue and achieving certain performancehurdles prior to exercise of options which are contained in the Plan rules.35. RELATED PARTY DISCLOSURESKey management personnelKey management personnel compensation included in personnel costs:ConsolidatedCompany2008$’0002008$’0002007$’0002007$’000Short-term employee benefits 31,600 26,717 2,290 1,595Post-employment benefits 1,219 1,392 470 417Long-term benefits 11,741 14,169 - -Termination benefits - 8,409 - -Share-based payments 2,144 1,170 - -46,704 51,857 2,760 2,012Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 53

Notes to the Financial Statements continuedfor the year ended 30 June 200835. RELATED PARTY DISCLOSURES CONTINUEDLoans to key management personnelDetails of loans made to key management personnel, including their personally related entities, are set out below.Balanceat the start of the year$Interest paid/payablefor the year$Interest notcharged$Loan repayment$Balance at theend of the year$2008 - Nil - - - - -Equity holdings and transactionsThe movement during the year in the number of ordinary shares of the Company held, directly, indirectly or beneficially, by eachDirector or Specified Executive, including their personally-related entities is as follows:2008Held at1 July2007 PurchasesReceivedonexerciseof options Sales Gift sharesHeld at30 June2008DirectorsD Adamsas 327,860 (60,000) 267,860M Albrecht 190,000 190,000A Drescher 6,000 6,000P Gregg 1,200 1,200R Humphris 6,500 3,500 10,000H-P Keitel * 1,560 * 1,560W King 226,960 (100,000) 126,960H Lütkestratkötter * 1,000 * 1,000I Macfarlane 2,000 1,000 3,000D Mortimer 26,000 26,000P Noé * 2,305 * 2,305D Robinson 1,250 1,250Specified ExecutivesS Charlton 100 15 115J Dujmovic 109 15 124M Gray 292 15 307P McMorrow 1,109 (1,000) 15 124D Savage 109 15 124D Saxelby 98,342 (50) 15 98,307D Stewart 292 15 307H Tyrwhitt - 15 15W Wild 242 65 307893,230 4,500 - (161,050) 185 736,865* Held non beneficiallyLeighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 54

Notes to the Financial Statements continuedfor the year ended 30 June 200835. RELATED PARTY DISCLOSURES CONTINUEDEquity holdings and transactions continuedThe movement during the prior year in the number of ordinary shares of the Company held, directly, indirectly or beneficially, byeach Director or Specified Executive, including their personally-related entities is as follows:2007Held at1 July2006 PurchasesReceivedonexerciseof options Sales Gift sharesHeld at30 June2007DirectorsD Adamsas 323,060 42,800 (38,000) 327,860M Albrecht 210,000 30,000 (50,000) 190,000G Ashton 5,500 5,500A Drescher 11,960 (5,960) 6,000P Gregg 1,200 1,200R Humphris 6,500 6,500H-P Keitel * 1,560 * 1,560W King 206,860 20,000 226,860T Leppert * 1,000 * (1,000) -H Lütkestratkötter * 1,000 * 1,000I Macfarlane 2,000 2,000D Mortimer 26,000 26,000P Noé * 2,305 * 2,305D Robinson 1,250 1,250Specified ExecutivesJ Dujmovic 59 50 109P McMorrow 1,059 50 1,109D Savage 59 50 109D Saxelby 123,292 (25,000) 50 98,342D Stewart 50,242 (50,000) 50 292R Trundle 20,059 (10,000) 50 10,109V Vella 259 50 309W Wild 242 242Total 992,466 95,800 - (179,960) 350 908,656* Held non beneficiallyLeighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 55

Notes to the Financial Statements continuedfor the year ended 30 June 200835. RELATED PARTY DISCLOSURES CONTINUEDDirectors’ transactionsThe terms and conditions of transactions with Directors and their Director-related entities were no more favourable than thoseavailable, or which might reasonably be expected to be available, on similar transactions to non-Director related entities on anarm’s length basis.During the year dividends were paid to Directors on their shareholdings on the same basis as other shareholders.D. S. Adamsas is the principal of Frenjune Pty Limited which provided the Group with strategic consultancy services during theperiod at a cost of $1,828,978. Following advice received from independent expert consultants, the terms of the consultingcontract were approved by the Board as reasonable in the circumstances and no more favourable than if the Company and MrAdamsas were dealing at arm’s length.DP Robinson is a principal in the firm of chartered accountants, Harveys, which receives fees from Hochtief Australia HoldingsLimited for services provided to that company, which is a related party.R Seidler is a partner in the law firm Blake Dawson Waldron which provided legal services to the Company in relation toremuneration and employment conditions and in relation to Mr Seidler's membership of Board committees. Fees totalling$58,008 (2007: $27,000) were billed based on normal market rates for such services and, in relation to membership ofcommittees, an amount equivalent to fees paid to other committee members was charged. Fees were due and payable undernormal payment terms.Prior to being appointed a director of the Company from 1 June 2007, I Macfarlane received consultancy fees for servicesprovided to the Board. Total fees paid by the Company during the period for these consultancy services was nil (2007:$24,525).Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 56

Notes to the Financial Statements continuedfor the year ended 30 June 200835. RELATED PARTY DISCLOSURES CONTINUEDTransactions with other related partiesTransactions with other related parties are made on normal commercial terms and conditions. The aggregate of the relatedparty transactions was not material in the overall operations of the Group, other than the sale of the Leighton Gulf operations toassociate company Al Habtoor Engineering LLC.ConsolidatedCompany2008$’0002007$’0002008$’0002007$’000Aggregate amounts receivable from related partiesat reporting dateAssociates 809 26,184 - -Wholly-owned controlled entities - - 191,780 328,051Aggregate amounts payable to related parties at reporting dateAssociates 10,731 15,371 - -Joint venture entities 232,925 222,788 - -Wholly-owned controlled entities - - 434,207 52,728Interest received / receivable from related partiesAssociates 277 1,042 - -Wholly-owned controlled entities - - 5,010 7,681Interest paid / payable to related partiesJoint venture entities 21 81 - -Wholly owned controlled entities - - 13,542 -OtherFees charged to wholly-owned controlled entities - - 1,266 1,622Dividends from wholly-owned controlled entities - - 315,000 206,571Dividends from partly-owned controlled entities - - 64,842 56,000Sale of controlled entities to an associate company 198,819 - - -Other expensesFees paid to wholly-owned controlled entities - - 70,000 65,000Number of employeesNumber of employees at reporting date 37,112 27,834 10 10Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 57

Notes to the Financial Statements continuedfor the year ended 30 June 200835. RELATED PARTY DISCLOSURES CONTINUEDCompany informationLeighton Holdings Limited is domiciled in Australia and is a company listed on the Australian Stock Exchange. The Companywas incorporated in Victoria, Australia. The address of the registered office is 472 Pacific Highway, St Leonards, NSW,Australia, 2065. The Group operates in the infrastructure, resources and property markets. Principal activities of the Groupwithin these markets are construction, contract mining, property development and other services (including environmental,telecommunications and operations and maintenance).Ultimate parent entityThe ultimate Australian parent entity is Hochtief Australia Holdings Limited and the ultimate parent entity is Hochtief AG,incorporated in Germany. Leighton Holdings Limited Directors H Lütkestratkötter, P Noé, and D Robinson were also Directorsof Hochtief Australia Holdings Limited during the year.During the year Hochtief Australia Holdings Limited acquired nil shares in the Company (2007: 6,668,239 shares) giving ashareholding at reporting date of 152,916,784 (2007: 152,916,784) shares.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 58

Notes to the Financial Statements continuedfor the year ended 30 June 200836. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIESInterestheldPlace ofincorporation† Leighton Holdings Limited (4) Vic* Adelaide Terrace Investments Pty Ltd (4) 100% SAAusindo Holdings Pte Ltd 100% SingaporeBOS Australia Pty Ltd (4) 100% WABroad Construction Services (NSW) Pty Ltd 90% WABroad Construction Services (NT) Pty Ltd 90% WABroad Construction Services (QLD) Pty Ltd 90% QldBroad Construction Services (SA) Pty Ltd 90% SABroad Construction Services (VIC) Pty Ltd 90% WABroad Construction Services (WA) Pty Ltd 90% WABroad Group Holdings Pty Ltd 90% WAEwenissa Pty Ltd (4) 100% ACTGiddens Investment Ltd 100% Hong KongGreen Construction Company 100% USAGridComm Pty Ltd (4) 100% VicHunter Valley Earthmoving Co Pty Ltd (4) 100% NSW† HWE Cockatoo Pty Ltd (4) 100% NT* HWE Maintenance Services Pty Ltd(2) 100% WA(formerly Australian Mine Services Pty Ltd)† HWE Mining Pty Ltd (4) 100% Vic† HWE Newman Assets Pty Ltd (4) 100% Vic† HWE Newman Mining Pty Ltd (4) 100% Vic† HWE Newman Services Pty Ltd (4) 100% VicIndustrial & Technical Services Pty Ltd (4) 100% QldInfoplex Pty Ltd (4) 100% NSWITS Holdings Pty Ltd (4) 100% QldITS Lube Services Pty Ltd (4) 100% QldJarrah Wood Pty Ltd 90% WAJH Rail Holdings Pty Ltd (2) 100% VicJH Rail Investments Pty Limited (2) 100% VicJH Rail Operations Pty Limited (2) 100% VicJoetel Pty Limited (2) 100% ACTJohn Holland AD Holdings Pty Ltd (4) 100% VicJohn Holland AD Investments Pty Ltd (4) 100% VicJohn Holland AD Operations Pty Ltd (4) 100% VicJohn Holland Aviation Services Pty Ltd (4) 100% VicJohn Holland Development & Investment Pty Ltd (4) 100% VicJohn Holland Engineering Pty Ltd (4) 100% VicJohn Holland Group Pty Ltd (4) 100% VicJohn Holland Infrastructure Nominees Pty Ltd (3) 100% VicJohn Holland Infrastructure Pty Ltd (4) 100% VicLeighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 59

Notes to the Financial Statements continuedfor the year ended 30 June 200836. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUEDInterestheldPlace ofincorporationJohn Holland Infrastructure Trust 100% N/AJohn Holland Investment Pty Ltd (4) 100% VicJohn Holland Mining Pty Ltd (4) 100% ACTJohn Holland (NZ) Ltd (4) 100% New ZealandJohn Holland Pty Ltd (4) 100% VicJohn Holland Rail Pty Ltd (4) 100% WAJohn Holland Services Pty Ltd (4) 100% VicJohn Holland Services No. 1 Pty Ltd (4) 100% VicKingscliff Resort Trust (2) 100% Qld† Leighton Admin Services Pty Ltd (4) 100% NSWLeighton Asia (Hong Kong) Holdings (No. 2) Limited 100% Hong KongLeighton Asia Ltd 100% Hong KongLeighton Asia Southern Pte Ltd 100% SingaporeHong Kong Telecommunications (Australia) Pty Ltd (2) 100% VicLMENA Pty Ltd (2) 100% VicLMENA No. 1 Pty Ltd (2) 100% VicLeighton Contractors Asia (Vietnam) Ltd (2) 100% VietnamLeighton Contractors (Asia) Ltd 100% Hong KongLeighton Contractors (China) Ltd 100% Hong KongLeighton Contractors Inc. 100% USALeighton Contractors (India) Private Ltd 100% IndiaLeighton Contractors (Indo-China) Ltd 100% Hong KongLeighton Contractors Infrastructure Nominees Pty Ltd (3),(4) 100% VicLeighton Contractors Infrastructure Pty Ltd (4) 100% VicLeighton Contractors Infrastructure Trust (4) 100% NSWLeighton Contractors Lanka (Private) Ltd 100% Sri LankaLeighton Contractors (Laos) Co Ltd 100% LaosLeighton Contractors (Malaysia) Sdn Bhd 100% MalaysiaLeighton Contractors (Mauritius) Ltd 100% MauritiusLeighton Contractors (Philippines) Inc (1) 40% Philippines† Leighton Contractors Pty Ltd (4) 100% NSWLeighton Contractors (Singapore) Pte Ltd 100% Singapore† Leighton Finance Ltd (4) 100% NSWLeighton Finance International Ltd (4) 100% NSWLeighton Foundation Engineering (Asia) Ltd 100% Hong KongLeighton Foundation Engineering Ltd 100% Hong Kong* Leighton Funds Management Pty Ltd (4) 100% QldLeighton Geotech Ltd (1) 49% ThailandLeighton Harbour Trust (3) 100% Qld* Leighton Holdings Infrastructure Nominees Pty Ltd (3),(4) 100% Vic* Leighton Holdings Infrastructure Pty Ltd (4) 100% VicLeighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 60

Notes to the Financial Statements continuedfor the year ended 30 June 200836. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUEDInterestheldPlace ofincorporationLeighton Holdings Infrastructure Trust (4) 100% N/ALeighton Holdings Investments Pty Ltd (2) 100% VicLeighton Industrial Services Pty Ltd (2) 100% Qld† Leighton Infrastructure Investment Pty Ltd 100% NSWLeighton International (Australia) Pty Ltd (4) 100% VicLeighton International FZ LLC (2) 49% UAELeighton International Ltd 100% Cayman IslandsLeighton Investments Malaysia (L) Ltd 100% LabuanLeighton Investments Mauritius Ltd 100% MauritiusLeighton Investments Mauritius Ltd No. 2 100% MauritiusLeighton Motorway Investments No. 2 Pty Ltd (4) 100% VicLeighton Portfolio Services Pty Ltd (4) 100% ACTLeighton Projects Consulting (Shanghai) Limited 100% China† Leighton Properties (Brisbane) Pty Ltd (4) 100% Qld† Leighton Properties Pty Ltd (4) 100% Qld† Leighton Properties (Vic) Pty Ltd (4) 100% Vic* Leighton Property Development Pty Ltd (4) 100% NSW* Leighton Property Funds Management Limited (4) 100% NSW* Leighton Property Management Pty Ltd (4) 100% NSWLeighton Residential Investments Pty Ltd (4) 100% VicLeighton SEA Sdn Bhd (2) 100% MalaysiaLeighton Services Australia Pty Ltd (4) 100% NSWLeighton Staff Shares Pty Ltd (3),(4) 100% VicLeighton Superannuation Pty Ltd (3),(4) 100% NSWLewis Scott Enterprises Pty Ltd (4) 100% NSWLeighton USA Inc. 100% USALMI Westlink Partner Holding No. 1 Pty Ltd (4) 100% VicLMI Westlink Partner Holding No. 2 Pty Ltd (4) 100% VicLMI Westlink Partner No. 1 Pty Ltd (4) 100% NSWLMI Westlink Partner No. 2 Pty Ltd (4) 100% VicLMI WSO Holding No. 1 Pty Ltd (4) 100% VicLMI WSO Holding No. 2 Pty Ltd (4) 100% VicLondon Circuit No. 1 Trust (4) 100% N/ALSE Antenna Services Pty Ltd (4) 100% Qld* LSE Technology (Australia) Pty Ltd (4) 100% NSWLSE Technology Pty Ltd (4) 100% NSWLucon Pty Ltd (4) 100% VicMartox Pty Limited (2) 100% NSW† Mayfield Engineering Pty Ltd (4) 100% NSW# MCA Joint Venture Subic Inc 66% PhilippinesMetro Developments Australia Pty Ltd 90% WALeighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 61

Notes to the Financial Statements continuedfor the year ended 30 June 200836. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUEDInterestheldPlace ofincorporationMetronode Pty Ltd (4) 100% VicMoorabbin Trust (4) 100% N/ANestdeen Pty Ltd (4) 100% QldNextgen Networks Pty Ltd 100% ACTNextgen Pure Data Pty Ltd 100% VicNexus Point Solutions Pty Ltd (4) 100% NSWOnopthic Pty Ltd (4) 100% NSWOpal Insurance (Singapore) Pte Ltd 100% SingaporePlant & Equipment Leasing Pty Ltd (4) 100% NSW† Portside Fabrication Pty Ltd 100% VicPT Leighton Contractors Indonesia 99% IndonesiaPT Thiess Contractors Indonesia 100% IndonesiaQuantum Explosives Pty Ltd (4) 100% QldQuintelgic Pty Ltd (4) 100% NSW* Ridgewood Development Pty Ltd (4) 100% QldSilk Telecom Pty Limited 100% WASilverton Group (Aust) Pty Ltd 59% WASilverton Group Pty Ltd 59% WASMgP Construction Services Pty Ltd (4) 100% NSWSwan Water Services Pty Ltd (4) 100% NSWTechnical Resources Pty Ltd (4) 100% NSWTelecommunication Infrastructure Pty Ltd (4) 100% VicTensacciai Pty Ltd (4) 100% WAThai Leighton Ltd (1) 49% ThailandThiess Contractors (Malaysia) Sdn Bhd 100% MalaysiaThiess Contractors (PNG) Ltd 100% Papua New GuineaThiess India Pvt Ltd 100% IndiaThiess Infraco (Bayside) Pty Ltd (4) 100% VicThiess Infraco Pty Ltd (2) 100% QldThiess Infraco (Swanston) Pty Ltd (4) 100% VicThiess Infrastructure Nominees Pty Ltd (3),(4) 100% VicThiess Infrastructure Pty Ltd (4) 100% VicThiess Infrastructure Trust (4) 100% N/AThiess Investments Pty Ltd (4) 100% QldThiess John Holland joint venture (EastLink) 100% N/AThiess John Holland joint venture (Lane Cove Tunnel) 100% N/AThiess Mauritius Pty Ltd 100% MauritiusThiess Mines India Pvt Ltd 90% IndiaThiess NC 100% New CaledoniaThiess NZ Ltd 100% New ZealandThiess Pty Ltd (4) 100% QldLeighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 62

Notes to the Financial Statements continuedfor the year ended 30 June 200836. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUEDInterestheldPlace ofincorporationThiess Q Pty Ltd (4) 100% QldThiess S.A. Pty Ltd (4) 100% QldThiess Services Ltd 100% New ZealandThiess Services Pty Ltd (4) 100% QldThiess Southland Pty Ltd (4) 100% NSWThiess Superannuation Nominees No. 2 Pty Ltd (4) 100% QldThiess Superannuation Nominees Pty Ltd (4) 100% Qld* Vision Hold Pty Ltd (4) 100% NSW* Visionstream Australia Pty Ltd (4) 100% NSW† Visionstream Pty Ltd (4) 100% Qld* Visionstream Services Pty Ltd (4) 100% NSWVytel Admin Pty Ltd (4) 100% NSWVytel Investments Pty Ltd (4) 100% NSW† Vytel Pty Ltd (4) 100% NSWYandina Ethanol Pty Ltd (4) 100% Vic* Yifta Pty Ltd (4) 100% ACTYoltax Pty Limited (2) 100% NSWZanofile Trust (4) 100% N/AZelmex Pty Limited (2) 100% NSW512 Wickham Street Pty Ltd (3),(4) 100% NSW512 Wickham Street Trust (4) 100% N/A(1) Entities controlled under shareholder agreements(2) Incorporated/established in 2008 reporting period(3) Trustee company(4) Entities included in tax-consolidated group# Entity has a 31 December balance date† These companies (Leighton Holdings Limited (LHL) Class Order Companies) have the benefit of an ASIC Class Order98/1418.* These companies are parties to the Deed of Cross Guarantee but do not have the benefit of ASIC Class Order 98/1418 at30 June 2008, as they are small proprietary companies.During the reporting period to 30 June 2008 the Group made the following acquisitions - proportion acquired 100%: Australian Mine Services Pty LtdOn 1 February 2008 the Group acquired all the shares in Australian Mine Services Pty Ltd (AMS) for $12.7 million in cashincluding acquisition costs. In the five months to 30 June 2008, AMS contributed a net profit after tax of $0.7 million to theconsolidated net profit for the year. Silk Telecom Pty LtdOn 1 June 2008 the Group acquired all the shares in Silk Telecom Pty Ltd (Silk) for $53.5 million in cash, includingacquisition costs. In the one month to 30 June 2008, Silk contributed a net profit after tax of $0.3 million to theconsolidated net profit for the year.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 63

Notes to the Financial Statements continuedfor the year ended 30 June 200836. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUEDIMS InnsolOn 1 April 2008 the Group acquired selected assets and liabilities of IMS Innsol for $2.4 million in cash, includingacquisition costs. In the three months to 30 June 2008, IMS Innsol contributed a net profit after tax of $0.05 million to theconsolidated net profit for the year.Southwest EnergyOn 3 September 2007 the Group acquired selected assets and liabilities of Southwest Energy for $4.9 million in cash,including acquisition costs. It is impracticable to determine the net profit or loss that Southwest Energy contributed to theconsolidated net profit for the year. The acquired business is not segregated and was integrated into an existing operatingunit. It is impracticable to determine the consolidated net profit and revenue if the combination had taken place on 1 July2007.MinipickersOn 3 September 2007 the Group acquired selected assets and liabilities of Minipickers for $4.7 million in cash, includingacquisition costs. In the ten months to 30 June 2008, Minipickers contributed a net loss after tax of $0.2 million to theconsolidated net profit for the year.Champ ConstructionsOn 1 October 2007 the Group acquired selected assets and liabilities of Champ Constructions for $5.7 million in cash,including acquisition costs. In the nine months to 30 June 2008, Champ Constructions contributed a net profit after tax of$0.1 million to the consolidated net profit for the year.OzboreOn 7 April 2008 the Group acquired selected assets and liabilities of Ozbore for $5.3 million in cash, including acquisitioncosts. In the three months to 30 June 2008, Ozbore contributed a net profit after tax of $0.1 million to the consolidated netprofit for the year.As some of the businesses acquired by the Group were integrated into existing operating businesses, it is not practicable todetermine the Group’s total revenue and profit had the acquisitions occurred on 1 July 2007. The total estimated profit after taxof the non integrated acquisitions would have been $6.25 million.Details of acquisitions for the reporting period ended 30 June 2007: CE Marshall & Sons EarthmovingOn 28 February 2007 the Group acquired selected assets and liabilities of CE Marshall & Sons Earthmoving Pty Limited(“Marshall’s”) for $99.3 million cash, including acquisition costs. In the four months to 30 June 2007, Marshall’s contributednet loss after tax of $1.5 million to the consolidated net profit for the year. ITSOn 1 July 2006, the Group acquired all the shares in Industrial & Technical Services Pty Limited, ITS Holdings Pty Limitedand ITS Lube Services Pty Limited (together “ITS”) for $3.4 million cash, including acquisition costs. In the year to 30 June2007, these companies contributed net profit after tax of $0.2 million to the consolidated net profit for the year. Ansett Aviation Engineering ServicesOn 1 June 2007, the Group acquired selected assets and liabilities of Ansett Aviation Engineering Services (“AAES”) for$10.0 million cash, including acquisition costs. In the one month to 30 June 2007, AAES contributed net loss after tax of$0.2 million to the consolidated net profit for the year.As some of the businesses acquired by the Group were in administration, it is not practicable to determine the Group’s revenueand profit had the acquisitions occurred on 1 July 2006.During the year to 30 June 2008 the Group disposed of the following controlled entities: Gulf Leighton LLC Leighton Contracting (Abu Dhabi) LLC Leighton Contracting (Qatar) WLL Metlabs Pty LimitedLeighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 64

Notes to the Financial Statements continuedfor the year ended 30 June 200836. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUEDDeed of Cross GuaranteePursuant to ASIC Class Order 98/1418 dated 13 August 1998, relief was granted to the LHL Class Order Companies from theCorporations Act 2001 requirements for preparation, audit and publication of financial statements. The Company and each ofthe LHL Class Order Companies are party to a Deed of Cross Guarantee dated 10 June 2008 (2007: Class Order dated 9 June1994). The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt of a LHL Class OrderCompany in the event of its winding up under certain provisions of the Corporations Act 2001. If a winding up occurs underother provisions of the Law, the Company will only be liable in the event that after six months any creditor has not been paid infull. The LHL Class Order Companies have also given similar guarantees in the event that the Company or other LHL ClassOrder Companies party to the Deed of Cross Guarantee are wound up.A consolidated income statement and balance sheet, comprising the Company and controlled entities which are a party to theDeed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2008 is set out below:2008$’0002007$’000Income statementProfit before tax 536,908 274,934Income tax (expense)/benefit (16,996) 7,429Profit for the year 519,912 282,363Retained earnings b/fwd 345,311 259,571Retained earnings b/fwd – adjustment for new entities party to the deed of Cross Guarantee (43,230) -Dividends provided for or paid (347,610) (239,133)Retained earnings at reporting date 474,383 302,801Balance sheetAssetsCash and cash equivalents (244,400) 89,363Trade and other receivables 1,305,454 1,065,755Current tax assets 8,563 28,968Inventories 336,482 194,489Investments accounted for using the equity method 183,389 41,704Other investments 1,244,583 578,395Deferred tax assets 103,686 36,789Property, plant and equipment 482,665 243,837Total assets 3,420,422 2,279,300LiabilitiesTrade and other payables 1,259,064 1,070,407Provisions 166,531 100,568Interest-bearing loans 801,244 113,672Leighton Notes 200,000 200,000Total liabilities 2,426,839 1,484,647Net assets 993,583 794,653EquityShare capital 480,988 480,988Reserves 38,212 10,864Retained earnings 474,383 302,801Total equity 993,583 794,653Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 65

Notes to the Financial Statements continuedfor the year ended 30 June 200837. NEW ACCOUNTING STANDARDSThe following standards, amendments to standards and interpretations have been identified as those which may impact theGroup in the period of initial application. They are available for early adoption at 30 June 2008, but have not been applied inpreparing this finance report. The Group’s assessment of these new standards and interpretations is set out below:Revised AASB 3 ‘Business Combinations’ and AASB 2008-3 ‘Amendments to Australian Accounting Standards arising fromAASB 3 and AASB 127’Key changes include the immediate expensing of all transactions costs; measurement of contingent consideration atacquisition date with subsequent changes through the income statement; measurement of non-controlling (minority)interests at full fair value or the proportionate share of the fair value of the underlying net assets.The revised standard becomes mandatory for the Group’s 30 June 2010 financial statements. The Group has not yetdetermined the potential effect of the revised standard on the Group’s financial report. AASB 8 ‘Operating Segments’ and AASB 2007-3 ‘Amendments to Australian Accounting Standards arising from AASB 8These standards replace the presentation requirements of segment reporting in AASB 114 ‘Segment Reporting’ and mayresult in different segments, segment results and different types of information being reported and will become mandatoryfor the Group’s 30 June 2010 financial statements. These standards affect disclosure in the financial report and as suchwill not impact the financial results of the Group.Revised AASB 101 ‘Presentation of Financial Statements’ (September 2007) and AASB 2007-8 ‘Amendments to AustralianAccounting Standards arising from AASB 101’These standards introduce the statement of comprehensive income and make changes to the statement of changes inequity and will become mandatory for the Group’s 30 June 2010 financial statements. These standards affect disclosurein the financial report and as such will not impact the financial results of the Group.Revised AASB 123 ‘Borrowing Costs’ and AASB 2007-6 ‘Amendments to the Australian Accounting Standards arising fromAASB 123’These standards remove the option to expense borrowing costs and require borrowing costs directly attributable to theacquisition, construction or production of a qualifying asset to be capitalised will become mandatory for the Group’s 30 June2010 financial statements. The potential effect of these standards on the Group’s future earnings is yet to be determined.Revised AASB 127 ‘Consolidated and Separate Financial Statements’ and AASB 2008-3 ‘Amendments to AustralianAccounting Standards arising from AASB 3 and AASB 127’Revised AASB 2008-1 ‘Amendments to Australian Accounting Standard - Share-based Payments: Vesting Conditions andCancellations’The standard changes the measurement of share-based payments that contain non-vesting conditions will becomemandatory for the Group’s 30 June 2010 financial statements. The potential effect of this standard on the Group’s financialstatements is yet to be determined.AASB Interpretation 12 ‘Service Concession Arrangements’The Interpretation addresses the accounting for service concession operators, but not grantors, for public to private serviceconcession arrangements and will become mandatory for the Group’s 30 June 2009 financial statements. The Group hasnot yet quantified the expected effect of the adoption of the Interpretation.AASB Interpretation 14 - AASB 119 – ‘The Limit on a Defined Benefit Asset, Minimum Funding Requirements’AASB Interpretation 14 - AASB 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and theirInteraction clarifies when refunds or reductions in future contributions in relation to defined benefit assets should beregarded as available and provides guidance on the impact of minimum funding requirements (MFR) on such assets. Italso addresses when a MFR might give rise to a liability. The interpretation will become mandatory for the Group’s 30 June2009 financial statements, with retrospective application required. The Group has not yet determined the potential effect ofthe interpretation.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 66

Notes to the Financial Statements continuedfor the year ended 30 June 200838. EVENTS SUBSEQUENT TO BALANCE DATESubsequent to reporting date, the Group: declared a final dividend of 85.0 cents fully franked at a tax rate of 30% per share; announced a 1 for 14 Accelerated Pro-rata Entitlement Offer of approximately 19.8 million new shares at an offer price of$35.35 per new share to raise approximately $700 million; and announced it would redeem all of the Leighton Notes on the reset date of 1 December 2008.The Directors approved the financial report on 1 September 2008.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 67

Statutory StatementsDirectors’ Declaration1. In the opinion of the Directors of Leighton Holdings Limited:(a) The financial statements and notes, set out on pages 1 to 67 are in accordance with the Corporations Act 2001,including:(i)giving a true and fair view of the financial position of the Company and Consolidated Entity as at 30 June 2008 andof their performance, as represented by the results of their operations and their cash flows, for the year ended onthat date; and(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and theCorporations Regulations 2001;(b)the financial report also complies with International Financial Reporting Standards as disclosed in note 1; and(c)there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become dueand payable.2. There are reasonable grounds to believe that the Company and the controlled entities identified in note 36 will be able tomeet any obligations or liabilities to which they are or may become subject by virtue of the Deed of Cross Guaranteebetween the Company and those controlled entities pursuant to ASIC Class Order 98/1418.3. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the ChiefExecutive Officer and Chief Financial Officer for the year ended 30 June 2008.Dated at Sydney this 1st day of September 2008.Signed in accordance with a resolution of the Directors:D A Mortimer AOChairmanW M King AOChief Executive OfficerLeighton Holdings Limited Financial Report 2008 STATUTORY STATEMENTS 68

Statutory Statements continuedIndependent Auditor’s Report to the Members of Leighton Holdings LimitedReport on the financial reportWe have audited the accompanying financial report of Leighton Holdings Limited (“the Company”) and Leighton Holdings Limitedand its controlled entities (the “Consolidated Entity”), which comprises the balance sheets as at 30 June 2008, and the incomestatements, statements of recognised income and expense and statements of cash flows for the year ended on that date, asummary of significant accounting policies and other explanatory notes 1 to 38 and the directors’ declaration set out on pages 1to 68 of the Consolidated Entity comprising the Company and the entities it controlled at the year’s end or from time to timeduring the financial year.Directors’ responsibility for the financial reportThe directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance withAustralian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. Thisresponsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of thefinancial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that are reasonable in the circumstances. In note 1, the directors alsostate, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financialreport of the Company and Consolidated Entity, comprising the financial statements and notes, complies with InternationalFinancial Reporting Standards.Auditor’s responsibilityOur responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance withAustralian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating toaudit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free frommaterial misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. Theprocedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of thefinancial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant tothe entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bythe directors, as well as evaluating the overall presentation of the financial report.We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance withthe Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a viewwhich is consistent with our understanding of the Company’s and the Consolidated Entity’s financial position and of theirperformance.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.IndependenceIn conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.Auditor’s opinionIn our opinion:(a) the financial report of Leighton Holdings Limited is in accordance with the Corporations Act 2001, including:(i) giving a true and fair view of the Company’s and the Consolidated Entity’s financial position as at 30 June 2008 and oftheir performance for the year ended on that date; and(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and theCorporations Regulations 2001.(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1.KPMGSydney, 1 September 2008S A GattPartnerLeighton Holdings Limited Financial Report 2008 STATUTORY STATEMENTS 69