Ausenco 2012 Preliminary Final Report

Ausenco Financial Report 2012
Contents
01 Directors report 24 Consolidated statement of comprehensive income 25 Consolidated balance sheet 26 Consolidated statement of changes in equity 27 Consolidated statement of cash flows 28 Notes to the consolidated financial statements 91 Directors declaration 92 Independent auditors report to the members 94 Alternative performance measures
Our strategy delivered excellent results in 2012 - we continued to diversify and grow, reporting strong financial returns. We strengthened leadership roles in key regions and enhanced our focus on adding value to our clients. Our reputation for ingenuity continues to drive our success and growth into 2013 on the back of our global diversity, comprehensive service offering and strong geographic presence.
Appendix 4E Preliminary final report
Appendix 4E
Preliminary final report
Name of entity
Ausenco Limited (ASX: AAX)

ABN
31 114 541 114
Current reporting period Previous corresponding period
31 December 2012 31 December 2011 A$000 Current period
Results for announcement to the market
Revenues from ordinary activities Profit from ordinary activities after tax attributable to members Net profit for the period attributable to members
Up Up Up
15.6% 57.1% 57.1%
To To To
$633,485 $41,395 $41,395
Dividends (distributions)
Amount per security
Franked amount per security at 30% tax

5.05 cents 2.4 cents
Final dividend paid in respect of the financial year ended 31 December 2012 Interim dividend declared subsequent to 30 June 2012 Previous corresponding period - Final - Interim Date the final dividend is payable
10.1 cents 10.0 cents
9.8 cents 3.1 cents 1 May 2013
3.4 cents 3.1 cents
Record date for determining 17 April 2013 entitlements to the final dividend There is no foreign conduit income attributed to the dividend.
Dividend reinvestment plan The DRP is suspended and not applicable to this dividend.
There is no conduit foreign income attributed to this dividend.
Appendix 4E Preliminary final report
NTA backing
Current reporting period $0.60
Net tangible asset backing per ordinary security
Previous corresponding period 31 December 2011 $0.61
Details of entities over which control has been gained or lost during the period are included in the audited financial statements under note 36. Details of associates and joint venture entities are included in the audited financial statements under note 26.
Date: 20/02/2013 Patrick OConnor Company Secretary

NOTES: The information contained in this report is for the full year ended 31 December 2012 and the previous corresponding period 31 December 2011. Australian Accounting Standards are utilised when compiling the report. The accounts have been audited and are not subject to dispute or qualification. For the full financial statements including commentary on the results, please refer to the financial report and press release.
Ausenco Limited Directors' report 31 December 2012
Directors' report
Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Ausenco Limited and the entities it controlled at the end of, or during, the year ended 31 December 2012. DIRECTORS The following persons were Directors of Ausenco Limited during the whole of the financial year and up to the date of this report: Wayne Goss Zimi Meka George Lloyd Greg Moynihan Mary Shafer-Malicki Bob Thorpe Hank Tuten PRINCIPAL ACTIVITIES During the year the principal continuing activities of the Group consisted of the provision of engineering design, project management, process controls and operations solutions to the following sectors: Energy Environment & Sustainability Minerals & Metals Process Infrastructure Program Management DIVIDENDS - AUSENCO LIMITED Dividends paid to members during the financial year were as follows: 2012 $'000 Interim ordinary dividend for the financial year ended 31 December 2012 of 10.0 cents per share paid on 27 September 2012 Final ordinary dividend for the financial year ended 31 December 2011 of 9.8 cents per share paid on 4 April 2012 Interim ordinary dividend for the financial year ended 31 December 2011 of 3.1 cents per share paid on 21 September 2011 12,380 12,070 24,450 2011 $'000 3,812 3,812
Subsequent to the end of the year the Directors have recommended the payment of a final dividend of 10.1 cents per fully paid ordinary share (2011: 9.8 cents), 50% franked based on tax paid at 30%. The aggregate amount proposed dividend expected to be paid on 1 May 2013 out of retained profits at 31 December 2012, but not recognised as a liability at the end of the year is $12,476,000. EARNINGS PER SHARE 2012 Cents 2011 Cents
Notes
Basic earnings per share attributable to the ordinary equity holders of the Company Diluted earnings per share attributable to the ordinary equity holders of the Company
9 9
33.5 32.8
21.5 21.3
Ausenco Limited Directors' report 31 December 2012 (continued) SAFETY The Groups safety performance for the 12 months to 31 December 2012 improved wi th a Lost Time Injury Frequency Rate (LTIFR) of 0.62 and a Total Recordable Injury Frequency Rate (TRIFR) of 2.55 per million hours worked. This represents a 23% improvement of lost time injuries over 2011. We continue to strive for our goal of zero harm. REVIEW OF OPERATIONS The Groups financial performance is explained using measures that are not defined under IFRS and are therefore termed non-IFRS measures. The non-IFRS financial information contained within this Directors' Report and Notes to the Financial Statements has not been audited in accordance with Australian Auditing Standards. The non-IFRS measures used to monitor group performance are EBITDA, net debt, net gearing ratio and EBITDA to total financing costs ratio. Business line or segment performance are monitored using adjusted EBITA. Each of these measures is discussed in more detail on page 94. Revenue from continuing operations for 2012 of $633.5 million was up 15.6% on the revenue of $547.9 million for the previous year. The Group recorded a net profit before tax for the year of $55.5 million, an earnings improvement of $21.9 million over the net profit before tax of $33.6 million achieved in the previous 12 months. Net profit after tax attributable to shareholders was $41.4 million, an increase of $15.0 million over the $26.4 million net profit after tax for the previous year. The improvement in net earnings was driven primarily by increased earnings from the Process Infrastructure and Minerals & Metals business lines and reduced corporate overheads. EBITDA for 2012 was $68.0 million, an increase of $21.1 million on the previous year EBITDA of $46.9 million. Basic earnings per share of 33.5 cents, an improvement of 12.0 cents per share over the earnings of 21.5 cents per share in 2011. The Groups EBITDA margin was 10.7% compared to a 8.6% margin in the previous year and the after tax margin of 6.5% was higher than the 4.8% margin reported in 2011. Net operating cash flow was $41.2 million, compared to $11.4 million in the previous year. The turnaround in operating cash flows was driven by improved business performance and an increased management focus on working capital management. The Groups gross cash position at 31 December 2012 was $52. 6 million (2011: 1 $67.7 million). Net debt increased from $1.4 million at 31 December 2011 to $11.8 million over the year as a 1 result of working capital movements and movements in foreign exchange rates. The net gearing ratio increased 1 to 4.1% from 0.6% while the EBITDA to total financing costs ratio was 19.4 times (2011: 10.1 times). Business Line Performance The Group measures business line performance by reference to revenue and Adjusted EBITA . The following table summarises business line performance:
1 1 1 1
Refer to Note 4.
Segment revenues 2012 $'000

Energy Environment & Sustainability Minerals & Metals Process Infrastructure Program Management Corporate Total 12,753 29,932 375,579 154,939 51,627 7,390 632,220
2011 $'000
2,099 36,214 309,957 144,892 47,972 6,321 547,455
Segment Adjusted EBITA 2012 2011 $'000 $'000

44 (888) 58,543 28,021 471 (26,631) 59,560 (1,152) 2,483 50,103 15,884 4,617 (31,929) ) 40,006
Energy In 2012, the Energy business line achieved improved results with a $10.7 million increase in revenues and an 1 increase in adjusted EBITA of $1.2 million. The acquisition in early 2012 of Reaction Consulting Inc., an oil sands specialist business in North America, greatly enhanced our energy portfolio and expanded our capabilities and has contributed to promising growth throughout North America, particularly in Calgary. As a result of our expanded offering we expect further growth in this area in 2013. Environment & Sustainability During 2012, revenues declined by 17.3% to $29.9 million. Adjusted EBITA was down from $2.5 million in 2011 to 1 an adjusted EBITA loss of $0.9 million. In October 2012, Peter Bokor was appointed President, Environment & Sustainability to drive the growth of the business globally and also implement a number of cost reduction strategies.
1
This performance measure is discussed in detail on page 94
Ausenco Limited Directors' report 31 December 2012 (continued)
REVIEW OF OPERATIONS (continued) Minerals & Metals 1 The Minerals & Metals business line operating revenue was up 21.2% to $375.6 million in 2012. Adjusted EBITA increased to $58.5 million compared with $50.1 million in 2011. The strong 2012 performance was underpinned by the delivery of a number of significant Create phase projects including the Constancia copper project in Peru, the Aktogay and Bozshakol copper projects in Kazakhstan, the Goldstrike gold project in the United States and the Kestrel coal project in Australia. The business expects continued growth in 2013 across diverse regions and commodities from the Americas to the Middle East and North Africa in gold, copper and mineral sands. Process Infrastructure In 2012 the Process Infrastructure business had an exceptional year with reported revenues up $10.0 million from 1 $144.9 million in 2011 to $154.9 million in 2012. Adjusted EBITA increased significantly from $15.9 million in 2011 to $28.0 million in 2012. Adjusted EBITA margin improved from 11.0% in 2011 to 18.1% in 2012. As an outcome of its strategic initiatives the business won several Create phase projects including chemical projects with Cytec Industries in Canada and an upgrade of rail and port infrastructure at Tizirs Grand Cote Operations mineral sands project in Senegal. The business is committed to securing a greater portion of recurring revenue assignments in 2013 with growth expected to come from the commodities of coal, copper, potash, iron ore as well as in chemicals and pharmaceuticals. Program Management 1 Program Management's revenue increased from $48.0 million in 2011 to $51.6 million in 2012. Adjusted EBITA decreased to $0.5 million in 2012 compared with the $4.6 million in 2011. Adjusted EBITA was impacted by the completion of two Optimise phase contracts in Sierra Leone. The business expanded its service offering through the strategic acquisition of business improvement and asset management specialist, The Rylson Group. A number of significant longer-term new Optimise phase contracts were awarded in 2012 including a four year alliance-style contract for Oricas Kooragang Island Chemical Plant in Australia and a four year contract for Vales/Sumitomos Isaac Plains coal project in Australia. The business is focused on increasing recurring revenue in 2013 through its expanded offering and expanding its footprint in the Americas, Middle East and Northern Africa. Corporate The Corporate adjusted EBITA was a loss of $26.6 million in 2012, an improvement over a loss of $31.9 million in 2011. SIGNIFICANT CHANGES TO THE STATE OF AFFAIRS Other than matters mentioned in this report, no significant changes in the state of affairs have occurred during the year ended 31 December 2012. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR Effective 1 January 2013, the Group has restructured its reporting segments internally. A full analysis of the impact on segment reporting disclosures and re-allocation of assets will be carried out during 2013. No other matter or circumstance has arisen since 31 December 2012 that has significantly affected, or may significantly affect: (a) the Group's operations in future financial years, or (b) the results of those operations in future financial years, or (c) the Group's state of affairs in future financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Likely developments in and expected results of the operations of the Group have been discussed generally in the annual report. Further information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Group. ENVIRONMENTAL REGULATION The Group does not carry out environmentally sensitive activities in its own right. The Group's principal exposure to environmental risk lies in failing to perform services to the appropriate standard of care, resulting in environmental damage. Assessment and management of such risks forms part of Ausenco's risk management and quality assurance systems. The Directors are not aware of any breaches of environmental regulations as a result of the activities of the consolidated entity.
1
1
This performance measure is Discussed in detail on page 94
MEETINGS OF DIRECTORS The numbers of meetings of the Company's board of Directors and of each board committee held during the year ended 31 December 2012, and the numbers of meetings attended by each Director were: Board Meetings Number held while a Attended Director Wayne Goss Zimi Meka George Lloyd Greg Moynihan Mary Shafer-Malicki Bob Thorpe Hank Tuten 11 11 11 11 11 11 11 11 11 11 11 11 11 11 Audit Committee Meetings Number held while a Attended Director 6 6 6 6 6 6 6 6 Remuneration Committee Meetings Number held while a attended Director 4 4 4 4 4 4
INFORMATION ON DIRECTORS Wayne Goss LLB, MBA. FAICD Chairman / Non-Executive Director Wayne was appointed as Chairman in 2002. He is Chairman of the National Board of Deloitte and is a former director of a number of companies including, Igneus Limited, WebCentral Group Limited, Lincolne Scott Limited, Peplin Limited and Brisbane Broncos Limited. Wayne is also a former Chairman of the Board of Trustees of the Queensland Art Gallery, Free TV Australia Limited, the Government Reform Commission, South Australian Government and the Advisory Council, Graduate School of Government, and University of Sydney. Wayne was admitted as a solicitor of the Supreme Court of Queensland in 1973 and was elected Premier of Queensland in 1989 and served in that capacity until 1996. He is also a Fellow of the Australian Institute of Company Directors and an Adjunct Professor, School of Business at The University of Queensland. Zimi Meka B Eng (Hons) Mech, MIE Aust MAICD, RPEQ Chief Executive Officer and Managing Director Zimi Meka is one of the founding directors of Ausenco Limited and was appointed as Chief Executive Officer / Managing Director in 1999. Zimis background includes senior roles in engineering and operations companies prior to the formation of Ausenco in 1991. He has over 25 years experience in the design, constructi on and operation of a wide range of processing plants and infrastructure in the minerals industry in Australia and internationally. He is the Queensland University of Technologys 2008 Alumnus of the Year, was awarded the Australian Institute of Mining and Metallurgys 2009 Institute Medal and is one of Australias top 100 most influential engineers as awarded by Engineers Australia. He is a Fellow of Engineers Australia, a Fellow of the Australian Institute of Mining and Metallurgy and a Member of the Australian Institute of Company Directors. George Lloyd MBA, B Eng Sc (Industrial), FAICD, FAusIMM Non-Executive Director George Lloyd has over 30 years resource industry experience and has served as a senior executive and board member of a number of listed and unlisted Australian resource companies with interests in minerals, energy and industry services. He is Chairman of AWR Lloyd Limited, an Asian based firm providing mergers and acquisitions, corporate strategy, industrial research and investor relations advisory services to the mining and energy industries in Asia and Australia. He is also Chairman of Pryme Energy Limited (since 2008), and Chairman of Cape Alumina Limited (since 2009). In addition, he is involved in a number of early stage resource project initiatives in several countries.
INFORMATION ON DIRECTORS (continued) Greg Moynihan B Com, Grad Dip SIA, CPA, Fellow FINSIA, MAICD Non-Executive Director Greg Moynihan has spent most of his career within the broad finance sector and is a former Chief Executive Officer of Metway Bank Limited. He has held senior executive positions in Citibank Australia, Metway and Suncorp Metway covering a range of disciplines including financial and capital management, investment management, and corporate strategy. Since leaving Suncorp Metway in 2003, he has pursued a number of business interests, primarily in the investment management and private equity sectors. Greg has held past directorships with a range of companies including Cashcard Australia Ltd, LJ Hooker Ltd, RACQ Insurance Ltd, HFA Limited and various subsidiaries of Suncorp Metway Ltd. He is currently a director of Sunwater Limited (since 2007), Urban Art Projects Pty Ltd (since 2008), Corporate Travel Management Limited (since 2010) and several private investment companies. Bob Thorpe B Tech (Mech) Non-Executive Director Bob Thorpe was Ausenco's founding Managing Director until retiring from the role in 1999. Prior to the formation of Ausenco in 1991, Bob held Director and General Manager positions in engineering and operations management companies in Queensland and Western Australia. Bob has more than 35 years experience in design, engineering, project management, construction, operation and maintenance of large scale processing plants in Australia and internationally. He also has significant experience in contractual and commercial management, estimating systems and corporate risk management. Hank Tuten BA Econ Non-Executive Director Hank Tuten is a partner in and chairs the Investment Committee of Resource Capital Funds, a United States based investment fund. Prior to this, Hank spent more than 15 years with the N M Rothschild and Sons Group. During that period he was progressively, the Chief Executive Officer of Rothschild Australia Limited, Rothschild North America Inc. and Continuation Investments, the Rothschild Groups private equity arm. Hank has also had experience as a commercial banker with the Philadelphia National Bank. He also served as a non executive director of Australian Solomons Gold Limited (2004 - 2009) and St. Barbara Mines Limited (2002 - 2008).
Mary Shafer-Malicki
B Sc (Chem Eng) Non-Executive Director Mary Shafer-Malicki has held a number of senior executive leadership roles in her 25 year career, including over 15 years with BP Group, during which time she was Chief Executive Officer of BP Angola and Director General of BP Vietnam. Marys extensive experience includes operations, strategy, commercial, safety and supply chain management. Her international exposure includes North America, Netherlands, United Kingdom, West Africa and Vietnam. She is currently a Director of John Wood Group plc (since 2012), McDermott International Inc. (since 2011), and several non-profit organisations. INFORMATION ON COMPANY SECRETARY Patrick O'Connor BA LLB, ACIS Patrick O'Connor was appointed to the position of Company Secretary on 16 May 2011 and is responsible for all Company Secretarial functions. Patrick is a member of the Chartered Institute of Secretaries (Australia) and has over 12 years commercial and corporate governance experience working in legal financial and regulatory roles in Australia and the United Kingdom.
INFORMATION ON DIRECTORS (continued) Craig Allen MBA, B Com, LLB, Dip Fin, CA, F Fin Craig Allen was appointed to the position of Company Secretary on 11 March 2011. Craig has been with Ausenco since 2004 and in his role as Chief Financial Officer is responsible for the management of Ausenco's group finances, including finance, corporate strategic planning, treasury, taxation, company secretarial, investment evaluation and investor relations. He has an extensive financial, advisory and commercial background in the resource and energy industries as well as experience working on a number of large scale resource and energy mergers and acquisitions. INSURANCE OF OFFICERS During the financial year, the Group paid a premium to insure the Directors and officers of the Company and Group entities. The contract of insurance prohibits the disclosure of the premiums paid and limits purchased. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings, plus applicable court awards or settlements in connection with such proceedings, brought against the Directors and/or officers of entities in the consolidated entity, other than where such liabilities arise out of conduct involving a wilful breach of duty by the Directors and/or officers; the improper use by the Directors and/or officers of their position or where privileged information is used to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. NON-AUDIT SERVICES The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Group is important. Details of the amounts paid or payable to the auditor (PwC) for audit and non-audit services provided during the year are set out below. The Board of Directors has considered the position and, in accordance with advice received from the Audit and Risk Management Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: all non-audit services have been reviewed by the Audit and Risk Management Committee to ensure they do not impact the impartiality and objectivity of the auditor none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.
During the year the following fees were paid or payable for non-audit services provided by the auditor of the Company and its related practices: Consolidated 2012 $ $ $ 7,178 17,542 31,904 56,624 2011 $ $ 4,600 11,039 15,639
OTHER ASSURANCE SERVICES PwC Australia Other accounting services Network firms of PwC Australia Non- PwC Australia audit firm Total remuneration for other assurance services TAXATION SERVICES PwC Australia Tax compliance services Network firms of PwC Australia Non- PwC Australia audit firm Total remuneration for other services Total remuneration for non-audit services
12,722 135,137 87,338 235,197 291,821
19,080 124,519 46,782 190,381 206,020
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT EXECUTIVE SUMMARY Ausenco's remuneration strategy is designed to drive superior shareholder returns over the long term by aligning the short and long term interests of our people and our shareholders and by attracting and retaining high quality people. This strategy has been in place since Group inception and continues to evolve to ensure that it meets its objectives. The Ausenco Board (the Board) believes that Ausencos remuneration strategy made an important contribution to improved business performance in 2012 and that this will continue. The 2012 net profit after tax has positively impacted the Groups five year profit performance, earnings per share, and total sharehold er return measures. Ausenco's performance over the 5 years:
2008
Earnings - NPAT - Basic EPS (cps) Return on capital employed Total shareholder returns - Dividend interim and final (cps) - Share price at 31 December 2012 - Annual Total Shareholder Return (%) a
a
2009
20.1 19.0 6% 9.5 4.56 117%
2010
(10.7) (8.8) (5%) 3.08 (32%)
2011
26.4 21.5 8% 12.9 2.47 (16%)
2012
41.3 33.5 13% 20.1 3.19 37%
56.3 62.7 26% 31.8 2.19 (84%)
Total Shareholder Return (TSR) represents the accumulated share price when all cash dividend are reinvested at the ex-dividend date
REMUNERATION COMMITTEE The Remuneration Committee (Committee) was established as a sub -committee of the Board in April 2006. The Committee is governed by its charter, which sets out the membership, responsibilities, authority and activities of the Committee. The Charter is available in the Investor Relations section of the Groups website www.ausenco.com. The Committee met four times during the financial year. Attendance at tho se meetings is detailed in this Directors Report. The following Directors were members of the Committee during the year: Name Hank Tuten Wayne Goss George Lloyd Position Chairman Member Member Duration From April 2006 From April 2006 From April 2006
The Committee invites members of management to assist in its deliberations (except concerning their own remuneration). During the year neither the Committee nor Management engaged Remuneration Consultants for advice in relation to the remuneration of Key Management Personnel (KMP).
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) REMUNERATION POLICY AND STRUCTURE The Committee is responsible for ensuring that the Group has coherent remuneration policies and practices that enable it to attract and retain executives, and employees who will generate sustained business performance, create value for shareholders and support the Groups goals and values. The Board has adopted the Committee recommended remuneration policies that are designed to: Enable review of and, where appropriate, reflect market practices and remuneration trends Facilitate recommendations to the Board in relation to the Groups remuneration policies and procedures Enable monitoring of Director, Non-Executive Director and senior management performance and Facilitate recommendations to the Board in relation to the remuneration of senior management and Non-Executive Directors.
The executive remuneration and reward framework provides a mix of fixed and variable remuneration, including a blend of short and long term incentives. As an executives impact on business performance increases in the Group, the balance of this mix shifts to a higher proportion of at risk rewards. The framework has three components comprising the executives total remuneration: 1. 2. 3. Fixed remuneration and benefits set by reference to market data and not directly related to the Group's financial performance. Short term performance incentives set by reference to market data and not wholly related to the Group's financial performance. Long term performance incentives aligned with those drivers which the Board believes will underpin sustainable long term growth in shareholder value.
KEY MANAGEMENT PERSONNEL AND OTHER EXECUTIVES' REMUNERATION The Remuneration Report shows remuneration information for the Key Management Personnel (KMP) of Ausenco and the Company as defined in AASB 124 Related Party Disclosures. The remuneration structure provides for a fixed remuneration component only. The structure for Senior Executive personnel incorporates at risk components as part of the Group's short and long term incentive plans in addition to fixed remuneration. The remuneration arrangements for each of these groups are discussed separately in this report, with KMP individuals divided into three separate groups for the ease of reference: NON-EXECUTIVE DIRECTORS, being those individuals listed on pages 4 to 5 of the Financial Report. EXECUTIVE DIRECTOR, being Mr Zimi Meka - Chief Executive Officer and Managing Director.
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) KEY MANAGEMENT PERSONNEL AND OTHER EXECUTIVES' REMUNERATION (continued) OTHER SENIOR EXECUTIVES, being those individuals who report directly to the Chief Executive Officer and have the requisite authority and responsibility for planning, directing and controlling the activities of the Group and the Company. These individuals are listed below. They are all KMP of the Group and the Company: Mr Craig Allen - Chief Financial Officer Mr Nick Bell - Chief Operating Officer Mr Greg Chrisfield - Chief Sustainability Officer (Ceased on 17 March 2012) Ms Jean Kowalski - Chief Commercial Officer (Ceased on 1 July 2012) Mr Frank Mellish - Chief Marketing Officer Mr Neil Trembath - Chief People Officer (to 15 March 2012), Chief People and Sustainability Officer (from 16 March 2012) Mr Paul Young - Chief Information Officer
SENIOR EXECUTIVE REMUNERATION POLICY The Group's Senior Executive remuneration and reward structure is designed to: Demonstrate a clear relationship between the Group's and Executive's performance and remuneration Provide sufficient and reasonable rewards to ensure the Group attracts and retains suitably qualified executives for key roles on a global, regional and local basis Apply quantifiable and measurable performance targets that are aligned to the Group's strategic plan, within an appropriate control framework Measure and reward executive performance using financial and non-financial key performance indicators which are structured to include both lead and lag indicators of performance.
The Board recognises that it is necessary for remuneration packages of Senior Executives to include both a fixed component and an incentive or performance related component, a portion of which is an equity component vesting at the end of each two, three and four year period following grant. The relative proportion of total remuneration packages that is performance based is set out in the table below:
Role Title
Name
Fixed Remuneration
Short-term incentive
Long-term incentive
Chief Executive Officer Chief Financial Officer Chief Operating Officer Chief Sustainability Officer Chief Commercial Officer Chief Marketing Officer Chief People and Sustainability Officer Chief Information Officer
Zimi Meka Craig Allen Nick Bell Greg Chrisfield a Jean Kowalski b Frank Mellish Neil Trembath Paul Young
70% 60% 63% 73% 73% 78% 73% 78%
30% 16% 15% 11% 11% 9% 11% 9%
0% 24% 22% 16% 16% 13% 16% 13%
a - Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 b - Ms Kowalski ceased to be Key Management Personnel on 1 July 2012
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) FIXED REMUNERATION The total remuneration packages for Senior Executives contain a fixed component. This is expressed as a specific amount that the executive may take in a form agreed with the Group and is determined based on the scope and nature of the individual's role, their performance and experience. The fixed component of remuneration is set at a level to reflect the market range for a comparable role. In addition, the past performance of the Executive is assessed, as are the performance of business lines within his or her control and the contribution of the Executive to the overall performance of the Group. Senior Executives may choose to receive benefits by way of salary sacrificed motor vehicles and superannuation. All benefits received by Senior Executives are disclosed below. In addition, the Group provides superannuation in accordance with its legal obligations in the relevant global jurisdictions. SHORT-TERM INCENTIVE ("STI") PLAN The terms of employment for Senior Executives contain a short term annual performance based component. The STI plan involves linking specific targets or key performance indicators ("KPIs") with the opportunity to earn cash incentives based on a percentage of base salary. Any portion of the STI that is not achieved in any financial year may not be deferred to future financial years. Currently 60% of the KPIs for the STI plan relate to financial performance. In general, the performance conditions are related to the Group's overall profitability and the financial performance of the Group when measured against the annual business plan. The remaining 40% of the KPIs for the STI plan relate to non-financial performance. These non-financial indicators include lead and lag indicators directly linked to the KPIs included in the Group's strategic plan. The non-financial KPIs are linked to outstanding performance in the following areas: client satisfaction health, safety and the environment in support of the Group's objective of "Safety in all we do" people management and development, and adherence to and implementation of the Group's strategic business plan
The Board considers these performance conditions to be appropriate because they directly link remuneration to the strategic objectives and direction of Ausenco, achievement of financial and non-financial targets and identification of new growth opportunities that are important for Ausenco's future success. The basis for determining whether the performance criteria for the financial KPIs are met is an objective measurement against the audited financial statements for the financial year. The non-financial KPIs are assessed against relevant criteria which take into account the Group's safety performance, people and performance measures including retention, and specific actions required to implement the business plan. Measurement of the non-financial KPIs involves the assessment of a combination of objective measures. KPIs are generally chosen because they focus on the key behaviours or results the Group seeks to attain, are capable of measurement and can be readily audited. In addition to the annual targets described above, significant projects are from time to time assigned their own KPIs. LONG TERM INCENTIVE ("LTI") PLAN - PERFORMANCE RIGHTS PLAN ("PRP") The Groups LTI plan is designed to link executive and selected management personnel reward with the key performance drivers which underpin sustainable long term growth in total shareholder return, comprising earnings growth, share price appreciation, dividends and capital returns to shareholders. The Board determines on an annual basis whether the LTI plan will operate in the year. Participation in the LTI plan is offered at the discretion of the Board to eligible executives and selected management personnel who are able to influence the generation of shareholder wealth over the long term. The LTI plan provides the opportunity to receive performance rights, subject to the satisfaction of performance hurdles and vesting periods (Eligible Employees). The Groups PRP provides for performance rights to be issued to Eligible Employees. Under the PRP, Eligible Employees are invited to apply for performance rights, each of which entitles the holder to subscribe for one fully paid ordinary share in the Company at a nil exercise price.
10
REMUNERATION REPORT (continued) LONG TERM INCENTIVE ("LTI") PLAN - PERFORMANCE RIGHTS PLAN ("PRP") (continued) Subject to the relevant performance hurdles being satisfied, each performance right entitles the holder to subscribe for one fully paid ordinary share in the Company at a nil exercise price. One third of the rights granted vest at the end of each two, three and four year period following grant, subject to an overriding service condition. Performance rights carry no dividend or voting rights. Where a participant leaves the Group, the terms of the PRP prescribe that the Board may exercise its discretion to allow a proportion of performance rights to vest and be exercised. The Board may deem any performance rights to have lapsed if, in the opinion of the Board, the Eligible Employee acts fraudulently or dishonestly or is in breach of any of their obligations to the Group. In the event of a takeover or other formal scheme for the acquisition of the shares of the Group, the Directors may exercise their discretion to determine that all unvested performance rights vest, subject to further conditions to be determined by the Board. PERFORMANCE RIGHTS HURDLES The Board believes that a combination of Earnings Per Share (EPS) growth and Total Shareholders Return (TSR) is the most appropriate measure for Ausenco executives and best reflects current market practice. For selected management personnel EPS is deemed to be the measure most appropriate. Consequently, the Group uses dual measures of EPS growth and TSR hurdles for executives, whilst the hurdle for selected management personnel is EPS only. For executives EPS and TSR performance targets are equally weighted to 50%. Each executives performance rights are exercisable subject to EPS measurement in accordance with the following table. The balance of each executives performance rights entitlement for each year will be measured by the Groups TSR against a group of organisations considered to be Ausencos key peers globally. For selected management personnel the performance targets for the PRP are 100% subject to EPS measurement in accordance with the same table. Earnings Per Share Target EPS growth above CPI performance target Rights Vesting Total Shareholder Return Targets TSR growth above Comparator Group Rights Vesting
Less than 4% above CPI target
0% 20% for executives 50% for selected management personnel
Less than 50% percentile
0%
4% above CPI target
50th percentile
30%
An additional 7.5% for each 1% An additional 12.5% for More than 4% above CPI each 1% increment for target selected management personnel More than 8% above CPI target
Between 50th and 75th percentile
From 51st to 75th, 0.8% increase for each 1.0% percentile
50% for executives 100% for selected management At or above 75th percentile personnel
50%
The peer group comprises AMEC, Fluor Corporation, Jacobs, Lycopodium, Sedgman, SNC Lavalin, Wood Group and Worley Parsons. During 2012, the Shaw Group was acquired by CB&I and has been removed from the peer group. Basic earnings per share is determined by dividing the operating profit attributable to members of the Group by the weighted average number of ordinary shares outstanding during the financial year, as required under AASB 133 Earnings per Share. Growth in EPS will be measured by comparing the EPS in the base year and the measurement years calculated on a normalised basis. EPS growth was greater than 8% above the CPI target in 2012 and therefore 100% of the EPS component will vest.
11
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) LONG TERM INCENTIVE ("LTI") PLAN - PERFORMANCE RIGHTS PLAN ("PRP") (continued) The TSR growth measure represents the change in the capital value of a listed entitys share price over a period, th plus dividends, expressed as a percentage of the opening value. During 2012, TSR growth was above the 75 percentile resulting in 100% of the TSR component share rights vesting.
EXECUTIVE OPTIONS PLAN ("EOP") Prior to the Company's listing on the ASX, it operated a cash based incentive plan which provided conditions for attraction and retention of Senior Executives and was commensurate with individual performance. The EOP was established in April 2006 as a replacement LTI plan for Senior Executives and to also operate as a complimentary reward mechanism for eligible executive employees in specific circumstances. Under the EOP, eligible executive employees are invited to apply for options, each of which entitles the holder to subscribe for one fully paid ordinary share in the Company at an exercise price equal to the Company's share market price at the time of grant. The EOP provides for options, with associated time based vesting conditions, to be issued to eligible executive employees. Options are granted for a three-year period, with one third of each option tranche vesting and becoming exercisable after each subsequent annual anniversary of the date of grant, subject to an overriding service condition. Options expire five years after the date of grant. Options granted under the EOP carry no dividend or voting rights. Where a participant leaves the Group, the terms of the EOP prescribe that the Board may exercise its discretion to allow a proportion of performance rights to vest and be exercised. The Board may deem any options to have lapsed if, in the opinion of the Board, the executive acts fraudulently or dishonestly or is in breach of any of their obligations to the Group. In the event of a takeover or other formal scheme for the acquisition of the Shares in the Group, the Board may exercise their discretion to determine that all unvested options vest, subject to further conditions to be determined by the Board. There are currently no participants in the EOP and no outstanding options in the EOP. EMPLOYEE SHARE ACQUISITION PLAN ("ESAP") In 2006, shareholders approved the ESAP and the first instalment of this was launched in August 2008. Participation in the ESAP is open to all personnel employed on a permanent basis by the Group (Eligible Employees). The ESAP was designed to assist with retaining permanent employees of the Group by enabling them to share in the organisations success. The ESAP provides the Groups Eligible Employees with an enhanced opportunity to acquire shares in the Company. Each annual ESAP offer is subject to Board approval. Following the initial offer in 2008, the Board elected to forego the offer in 2009 and 2010 due to the uncertain economic climate and its impact on contributed equity. In 2011, due to a turnaround in the economic climate, the Board resolved to reinstate the ESAP offer. Under the 2008 ESAP offer, Eligible Employees were able to purchase Ausenco shares up to a specified percentage of their base salary (the 2008 Employee Contribution). The 2008 Employee Contribution was matched by Ausenco with an equal Company Contribution for an equivalent number of shares, vesting pro rata over the next three years following the 2008 ESAP offer.
12
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) EMPLOYEE SHARE ACQUISITION PLAN ("ESAP") (continued) Shares purchased under the 2008 ESAP were restricted and made available for sale by transfer to each Eligible Employee in three equal annual instalments in November 2009, 2010 and 2011. These restrictions were removed from Plan Shares purchased with the 2008 Employee Contribution if a participating Eligible Employee ceased employment with the Group. 2008 ESAP participants who ceased employment forfeited any shares purchased with the Company Contribution unless those shares have already passed their vesting periods. Shares acquired under the 2008 ESAP may be held in trust by the Trustee for a maximum period of ten years after the date of the initial offer. At the expiry of ten years, shares acquired under the 2008 ESAP will be transferred to the relevant Eligible Employee. Under the 2011 and 2012 ESAP offer, Eligible Employees were invited to contribute between $500 and $5,000 to purchase Ausenco shares (Employee Contribution Shares). Ausenco agreed to match the participants Employee Contribution Shares at a ratio of 3:1, providing the participant with one conditional right to receive an Ausenco share at a later date for each Employee Contribution Share, provided the participant remains an Eligible Employee during that period (ESAP Conditional Right). ESAP Conditional Rights, are unlisted securities, have no voting rights or entitlement to dividends, they cannot be traded or transferred and are held in trust until the necessary vesting criteria have been met. Upon vesting a participants ESAP Conditional Rights will automatically convert into ordinary shares and once converted will have full voting rights and dividend entitlements and will remain in the Ausenco Performance Trust until such time as they are transferred or sold. The Employee Contribution Shares along with the ESAP Conditional Rights (together the ESAP Securities) will be held by the Trustee until such time as they are transferred, sold or forfeited. The Trustee remains the legal owner of all ESAP Securities so long as they remain held by the Ausenco Performance Trust. The participants are the beneficial owners of their ESAP Employee Contribution Shares and entitled to the full voting rights and dividend entitlements attached to each ESAP Employee Contribution Share. OPTIONS AND RIGHTS AS REMUNERATION Details of performance rights and options over ordinary shares in the Company provided as remuneration to each of the Group's Senior Executives are set out below. When exercisable, each performance right and option is convertible into one ordinary share of the Company. Plan participants may not enter into any transaction designed to remove the 'at risk' aspect of an instrument before it vests. The assessed fair value at grant date of the performance rights and options granted to the individuals is allocated equally over the period from grant date to vesting date and the amount is included in the remuneration tables shown below. During the year, the Group granted rights to Senior Executives set out in the following table:
13
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) OPTIONS AND RIGHTS AS REMUNERATION (continued)
2012 Options and Rights Number of Performance Options options / rights granted in rights held at granted in the the current 1 Jan 2012 current financial year a,b financial year Options / Rights exercised during the current financial year 35,970 35,970 21,297 42,974 14,426 1,042 79,739 115,709 Options / Number of Number of Number of Rights options / options / options / forfeited rights held at rights vested rights vested during the 31 Dec 2012 in the at 31 Dec current current 2012 c financial financial year year 14,745 50,604 65,349 65,349 31,148 31,148 166,889 182,794 35,052 76,761 44,036 505,532 536,680 35,970 35,970 21,297 20,718 7,213 8,386 3,895 61,509 97,479 7,344 3,895 11,239 11,239
EXECUTIVE DIRECTOR 67,118 Zimi Meka 67,118 Total KEY MANAGEMENT PERSONNEL Craig Allen 77,441 110,745 Nick Bell 103,299 122,469 Greg Chrisfield d 29,171 40,038 Jean Kowalski e 10,566 Frank Mellish 6,837 28,215 Neil Trembath 30,745 47,058 Paul Young 16,970 27,066 Total 275,029 375,591 Grand Total 342,147 375,591
a - Or date of appointment if later b - Opening balance adjusted to exclude Mr Roxburgh who ceased to be Key Management Personnel on 15th April 2011 c - Or date of retirement/resignation if earlier d - Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 e - Ms Kowalski ceased to be Key Management Personnel on 1 July 2012
2011 Options and Rights
Number of Performance options / rights rights held at granted in 1 Jan 2011 a the current financial year
Options granted in the current financial year
Options / Rights exercised during the current financial year 441,105 441,105 60,651 40,000 7,213 17,194 8,386 3,895 137,339 578,444
Options / Number of Number of Number of Rights options / options / options / forfeited rights held at rights vested rights vested during the 31 Dec 2011 in the at 31 Dec current current 2011 b financial financial year year 38,070 38,070 59,112 64,512 23,121 10,563 6,837 6,498 23,541 14,391 208,575 246,645 67,118 67,118 77,441 103,299 29,171 10,566 6,837 17,651 30,745 16,970 292,680 359,798 35,970 35,970 21,297 20,718 7,213 6,461 8,386 3,895 67,970 103,940 22,256 5,595 27,851 27,851
EXECUTIVE DIRECTOR Zimi Meka 546,293 Total 546,293 KEY MANAGEMENT PERSONNEL Craig Allen 121,805 75,399 Nick Bell 125,524 82,287 Greg Chrisfield 30,015 29,490 Jean Kowalski c 21,129 Frank Mellish d 13,674 Ken Roxburgh e 41,343 Neil Trembath 32,645 30,027 Paul Young 16,899 18,357 Total 368,231 270,363 Grand Total 914,524 270,363
a - Or date of appointment if later b - Or date of retirement/resignation if earlier c - Ms Kowalski was appointed on 18 April 2011 d - Mr Mellish was appointed on 9 May 2011 e - Mr Roxburgh ceased to be Key Management Personnel on 15 April 2011
14
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) OPTIONS AND RIGHTS AS REMUNERATION (continued) The following table shows unissued ordinary shares of Ausenco Limited under options / rights at the date of this report: Grant date Expiry date Balance at Granted Exercised Expired Balance at Exercisable Exercise start of the during the during the during the end of the at end of price year year year year year the year Number Number Number Number Number Number $$$$$$$33,621 7,397 1,941 4,614 618,024 1,032,450 1,698,047 $Balance at Granted start of during the year the year Number 2011 27-Apr-06 18-Dec-06 19-Feb-08 25-Feb-08 05-Mar-08 31-Mar-08 23-Jun-08 23-Jun-08 17-Mar-09 01-Jan-10 01-Jan-11 27-Aug-11 18-Dec-11 19-Feb-15 19-Feb-15 19-Feb-15 10-Sep-12 31-Dec-11 19-Feb-15 17-Mar-14 01-Apr-15 01-Jan-16 $1.00 $$$$$$$$$$333,333 373,339 73,211 10,366 6,075 2,982 40,000 4,614 908,436 359,208 - 1,032,450 2,111,564 1,032,450 Weighted average exercise price $0.15 $333,333 373,339 33,565 314 2,934 40,000 183,634 967,119 $0.34 6,025 2,655 1,200 2,982 106,778 359,208 478,848 $33,621 7,397 1,941 4,614 618,024 1,032,450 1,698,047 $9,702 4,722 938 3,076 102,044 120,482 $Number 1,493,976 1,493,976 $18,613 4,154 534 4,614 232,196 260,111 $31,381 405,888 178,107 615,376 $15,008 3,243 1,407 354,447 626,562 1,315,869 2,316,536 $15,008 3,243 1,407 135,051 154,709 $-
2012 19-Feb-08 25-Feb-08 05-Mar-08 23-Jun-08 17-Mar-09 01-Jan-11 01-Jan-12
19-Feb-15 19-Feb-15 19-Feb-15 19-Feb-15 17-Mar-14 01-Jan-16 01-Jan-17
Weighted average exercise price
Grant date
Expiry date
Exercise price
Exercised Forfeited Balance at Exercisable during the during the end of the at end of the year year year year Number Number Number Number
For options / rights granted, the fair value at grant date is determined using the Hull White option pricing model that takes into account the exercise price, the term of the options / rights, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the options / rights. The model inputs for the options / rights granted during the year ended 31 December 2012 included: (i) Share price at grant date in 2012 was $2.49; (2011 issue: $3.05) (ii) Expected price volatility of the companys shares: 39.4%; (2011 issue: 44.1%) (iii) Expected dividend yield: 5.1%; (2011 issue: 3.0%) and (iv) Risk free interest rate: 4.90% (2011 issue: 4.75%). The expected price volatility is based on historic volatility, adjusted for any expected changes to future volatility due to publicly available information. The fair value of share rights granted during 2012 is $1.59 (2011: $2.08).
15
Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) EXECUTIVE SERVICE AGREEMENTS The remuneration and other terms of employment for Senior Executives are formalised in Executive Service Agreements. These agreements provide for the Senior Executive's remuneration, including fixed annual remuneration and performance related STI plan (cash bonuses as disclosed below), and may include participation in the LTI plan. As part of their fixed annual remuneration, Senior Executives may receive benefits including motor vehicles. In addition, fixed annual remuneration will include provision for superannuation, pension scheme and like benefits or payments which Ausenco is required to provide in respect of its employees. Specific Information regarding the Executive Service Agreements for Senior Executives in 2012 is summarised below:
Name Position Terms of agreement / contract and date commenced if during the year
3 years from 15 June 2012c
Total Employment Cost a 906,100 493,566 629,800 307,244 334,565 314,356 393,239 335,058
Target Notice Period Notice Period STI b - Employee - Company 47% 30% 26% 16% 16% 12% 16% 12% 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months
Zimi Meka Craig Allen Nick Bell Greg Chrisfield Jean Kowalski Frank Mellish Neil Trembath Paul Young
a b
Chief Executive Officer Chief Financial Officer Chief Operating Officer Chief Sustainability Officer d Chief Commercial Officer e Chief Marketing Officer Chief People and Sustainability Officer Chief Information Officer
No fixed term No fixed term No fixed term No fixed term No fixed term No fixed term No fixed term
c d e
Total Employment Cost (TEC) in Ausenco's primary measure of fixed remuneration - which included annual base salary and superannuation but excludes leave accrued but not taken and non-monetary benefits. It does not include STI or LTI payments. Target STI as a percentage of base salary is subject to achievement of an individual and Ausenco's performance objectives and overall compliance with Ausenco's values. The Target STI percentage represents the amount payable for Ausenco and the individuals checking on-target performance. Achieving threshold or stretch goals to these objectives acts as a multiplier to these individual STI targets. Mr Meka's employment contract provides for successive three year rollover terms unless otherwise terminated by the giving of notice. Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 Ms Kowalski ceased to be Key Management Personnel on 1 July 2012
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Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) REMUNERATION PAID AND OTHER SPECIFIC DISCLOSURES Details of Remuneration Details of the remuneration paid to Senior Executives of Ausenco and the Company during the 2012 financial year is set out in the following table:
Details of remuneration
Primary Benefits Post Employments Long-term Benefits Share Based Payments Percentage of remuneration that consists of share-based payments $ $ 2.7% 8.4% 2.7% 8.4%
Salary and fees
STI/ Cash Bonus
NonSuperannuation Long Service Performance monetary Benefits leave Rights Plan benefits $ 5,517 $ 92,736 66,252 92,736 66,252 $ 69,716 84,417 69,716 84,417 $ 33,398 81,748 33,398 81,748
ESAP
Termination benefits $ $
Total
$ 199,121 68,807 199,121 68,807
Zimi Meka Sub-total
FY2012 FY2011 FY2012 FY2011
831,284 667,328 831,284 667,328
- 1,226,255 974,069
5,517
- 1,226,255 974,069
KEY MANAGEMENT PERSONNEL Craig Allen Nick Bell

FY2012^ FY2011^ FY2012^ FY2011^ 465,466 408,979 577,798 495,826 63,241 281,875 153,470 210,128 321,610 213,488 360,770 294,000 279,025 240,652 2,221,380 2,144,948 3,052,664 2,812,276 80,325 34,834 94,617 52,236 16,550 3,532 26,815 19,944 31,072 29,605 19,099 20,081 288,422 140,288 487,543 209,095 5,517 7,290 5,517 5,517 3,040 16,209 5,517 10,330 38,277 10,330 43,794 27,658 23,344 60,517 49,326 9,133 25,687 16,226 18,912 28,400 16,154 35,266 29,124 26,831 23,466 204,031 186,013 296,767 252,265 14,830 9,035 14,830 9,035 84,546 93,452 83,657 96,843 91,767 83,245 30,880 66,024 4,674 17,588 17,216 11,383 34,786 31,690 20,257 19,795 283,237 326,568 316,635 408,316 1,144 1,179 2,323 2,323 185,996 41,319 671,936 578,552 831,989 686,150 305,800 382,635 243,648 246,628 387,170 241,025 466,113 400,628 345,212 309,511 12.5% 16.7% 10.8% 12.1% 10.1% 17.3% 2.4% 7.1% 4.4% 4.7% 7.5% 7.9% 5.7% 6.4% 8.7% 11.5% 7.1% 10.7%
Greg Chrisfield a FY2012

FY2011
Jean Kowalski b
FY2012 FY2011
Frank Mellish Neil Trembath Paul Young Sub-total Grand total
FY2012 FY2011 FY2012 FY2011 FY2012 FY2011 FY2012 FY2011c FY2012 FY2011c
227,315 3,251,868 - 2,845,129 227,315 4,478,123 - 3,819,198
^ - Highest Paid Executive a - Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 b - Ms Kowalski ceased to be Key Management Personnel on 1 July 2012 c - Opening balance adjusted to exclude Mr Roxburgh who ceased to be Key Management Personnel on 15 April 2011
NON-EXECUTIVE DIRECTOR REMUNERATION POLICY The fees paid to Non-Executive Directors are set at levels which reflect both the responsibilities of, and the time commitments required from each Non-Executive Director to discharge their duties. The Non-Executive Directors do not receive performance related payments. In setting fee levels for the Non-Executive Directors, the Committee, which makes recommendations to the Board, takes into account: the Group's remuneration policies independent professional advice fees paid by comparable companies the level of remuneration necessary to attract and retain directors of a suitable calibre, and the general time commitment required from Directors and the risks associated with discharging the duties attaching to the role of Director.
17
REMUNERATION REPORT (continued) NON-EXECUTIVE DIRECTOR REMUNERATION POLICY (continued) Non-Executive Directors' fees, including Committee fees, are set by the Board within the maximum aggregate amount of $600,000 (2011: $600,000) approved by shareholders at the 2012 Annual General Meeting. Total fees paid during the 2012 financial year were $501,590 (2011: $457,130). Non-Executive Directors receive a base fee of $82,827 (2011: $75,300) per annum in relation to their services as a Director. The Chairman of the Board received an annual fee of $170,282 (2011: $154,800) reflecting the greater time commitment required. The Chairman of the Board does not receive any additional fees for Committee membership or participation. There are no additional fees paid to Directors who sit on sub-committees such as the Remuneration Committee and the Audit Committee. In accordance with Rule 13.4 of the Constitution, Directors are also permitted to be paid additional fees for special duties which may be in addition to, or in substitution of fees otherwise paid to Directors, within the aggregate remuneration cap approved by shareholders. Directors are also entitled to be reimbursed for all business related expenses, including travel on the Group's business, which may be incurred in discharge of their duties. Superannuation contributions are made on behalf of the Non-Executive Directors in accordance with Ausenco's statutory superannuation obligations. The Board, with the assistance of the Committee, reviews its approach to Non-Executive Director remuneration to ensure it remains in line with general industry practice principles of corporate governance. The Non-Executive Director fee arrangements were reviewed during the 2012 financial year to ensure that they adequately reflect the increased size and complexity of Ausenco and the consequent enhanced responsibilities associated with membership of the Committees of the Board, as well as increased travel requirements of members of the Board. REMUNERATION Details of Non-Executive Directors' remuneration for the financial years ended 31 December 2012 and 31 December 2011 are set out in the following table: Primary Benefits Post employment STI/ Cash Statutory Salary and fees Other Bonus superannuation $ $ $ $ 156,222 142,018 76,144 69,083 75,988 70,119 82,827 75,300 75,988 69,083 467,169 425,603 14,060 12,782 6,683 6,217 6,839 6,311 6,839 6,217 34,421 31,527 -
Details of remuneration
Total $ 170,282 154,800 82,827 75,300 82,827 76,430 82,827 75,300 82,827 75,300 501,590 457,130
NON-EXECUTIVE DIRECTORS Wayne Goss FY 2012 FY 2011 George Lloyd FY 2012 FY 2011 Greg Moynihan FY 2012 FY 2011 Mary Shafer-Malicki FY 2012 FY 2011 Bob Thorpe FY 2012 FY 2011 Hank Tuten a FY 2012 FY 2011 Total FY 2012 FY 2011
a - Mr Tuten does not receive a fee for his role as a Director
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Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) DIRECTORS' / KEY MANAGEMENT PERSONNEL'S SHAREHOLDINGS Particulars of Directors' and Key Management Personnel's beneficial interests in options, performance rights and shares of the Company, including their personally related parties interests, as at the date of this report are set out in note 29 of the financial statements. 2012 Shares DIRECTORS
Wayne Goss Zimi Meka George Lloyd Greg Moynihan Mary Shafer-Malicki Bob Thorpe Hank Tuten Sub-total 1,209,934 15,947,224 220,376 30,688 11,118,250 3,642,668 32,169,140 837,430 107,465 14,901 1,796 26,880 23,125 1,011,597 33,180,737 509,432 4,481 5,000 518,913 171,536 314 299 909 3,800 176,858 695,771 35,970 35,970 21,297 42,974 14,426 1,042 79,739 115,709 480,246 480,246 126,536 126,536 606,782 1,209,934 16,012,380 224,857 30,688 5,000 11,118,250 3,642,668 32,243,777 903,727 150,753 29,327 2,095 28,831 26,925 1,141,658 33,385,435
Balance at 1 Jan 2012a
Shares granted as remuneration
Shares acquired during the year
Received on exercise of Balance at Shares sold options / 31 Dec 2012 rights
SENIOR EXECUTIVES
Craig Allen Nick Bell Greg Chrisfield b Jean Kowalski c Frank Mellish Neil Trembath Paul Young Sub-total Grand total
a - Opening balance adjusted to exclude Mr Roxburgh who ceased to be Key Management Personnel on 15 April 2011 b - Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 c - Ms Kowalski ceased to be Key Management Personnel on 1 July 2012
2012 Options and Performance rights DIRECTORS

Zimi Meka Sub-total
Balance at 1 Jan 2012a

67,118 67,118 77,441 103,299 29,171 10,566 6,837 30,745 16,970 275,029 342,147
Granted as Exercise of Options / rights Balance at 31 remuneration options / rights forfeited Dec 2012
35,970 110,745 122,469 40,038 28,215 47,058 27,066 375,591 375,591 35,970 35,970 35,970 21,297 42,974 14,426 1,042 79,739 115,709 14,745 50,604 65,349 65,349 31,148 31,148 166,889 182,794 35,052 76,761 44,036 505,532 536,680
SENIOR EXECUTIVES
Craig Allen Nick Bell Greg Chrisfield b Jean Kowalski c Frank Mellish Neil Trembath Paul Young Sub-total Grand total
a - Opening balance adjusted to exclude Mr Roxburgh who ceased to be Key Management Personnel on 15 April 2011 b - Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 c - Ms Kowalski ceased to be Key Management Personnel on 1 July 2012
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REMUNERATION REPORT (continued) DIRECTORS' / KEY MANAGEMENT PERSONNEL'S SHAREHOLDINGS (continued) Shares Received on Shares 2011 Balance at 1 acquired exercise of Balance at granted as Shares sold Shares Jan 2011 during the options / 31 Dec 2011 remuneration year rights DIRECTORS
Wayne Goss Zimi Meka George Lloyd Greg Moynihan Mary Shafer-Malicki Bob Thorpe Hank Tuten Sub-total 1,209,934 15,506,085 218,025 30,688 11,118,250 3,629,952 31,712,934 773,604 74,300 7,688 598,617 16,412 19,006 1,489,627 33,202,561 34 2,351 12,716 15,101 3,175 165 1,796 2,082 224 7,442 22,543 441,105 441,105 60,651 40,000 7,213 17,914 8,386 3,895 138,059 579,164 7,000 95,407 102,407 102,407 1,209,934 15,947,224 220,376 30,688 11,118,250 3,642,668 32,169,140 837,430 107,465 14,901 1,796 520,404 26,880 23,125 1,532,001 33,701,141
SENIOR EXECUTIVES
Craig Allen Nick Bell Greg Chrisfield Jean Kowalski a Frank Mellish b Ken Roxburgh c Neil Trembath Paul Young Sub-total Grand total
a - Ms Kowalski was appointed on 18 April 2011 b - Mr Mellish was appointed on 9 May 2011 c - Mr Roxburgh ceased to be Key Management Personnel on 15 April 2011
2011 Options and Performance rights DIRECTORS

Zimi Meka Sub-total
Balance at 1 Jan 2011

546,293 546,293 121,805 125,524 30,015 41,343 32,645 16,899 368,231 914,524
Granted as Exercise of Options / rights Balance at 31 remuneration options / rights forfeited Dec 2011
75,399 82,287 29,490 21,129 13,674 30,027 18,357 270,363 270,363 441,105 441,105 60,651 40,000 7,213 17,194 8,386 3,895 137,339 578,444 38,070 38,070 59,112 64,512 23,121 10,563 6,837 6,498 23,541 14,391 208,575 246,645 67,118 67,118 77,441 103,299 29,171 10,566 6,837 17,651 30,745 16,970 292,680 359,798
SENIOR EXECUTIVES
Craig Allen Nick Bell Greg Chrisfield Jean Kowalski a Frank Mellish b Ken Roxburgh c Neil Trembath Paul Young Sub-total Grand total
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Ausenco Limited Directors' report 31 December 2012 (continued) REMUNERATION REPORT (continued) DIRECTORS' / KEY MANAGEMENT PERSONNEL'S SHAREHOLDINGS (continued) ADDITIONAL INFORMATION The following table provides the options / rights granted to date to KMP and provides for the maximum value of options yet to vest.
Date options/ rights granted Number of options/ rights granted % vested during year % forfeited in year Date first Fair value Exercise option/ per price per right option/ option/ tranche right at right can be grant date exercised
19-Feb-10 17-Mar-11 01-Apr-12 19-Feb-10 17-Mar-11 01-Apr-12 01-Jan-13 01-Jan-14 31-Dec-10 19-Feb-10 17-Mar-11 01-Apr-12 01-Jan-13 01-Jan-14 17-Mar-11 01-Apr-12 01-Jan-13 01-Jan-14 01-Jan-13 01-Jan-13 01-Jan-14 19-Feb-10 17-Mar-11 01-Apr-12 01-Jan-13 01-Jan-14 17-Mar-11 01-Apr-12 01-Jan-13 01-Jan-14 $6.25 $1.83 $3.94 $6.25 $1.83 $3.94 $2.35 $1.84 $6.00 $6.30 $1.83 $3.94 $2.35 $1.84 $1.83 $3.94 $2.35 $1.84 $2.38 $2.38 $1.84 $6.25 $1.83 $3.94 $2.35 $1.84 $1.83 $3.94 $2.35 $1.84
Expiry Date
Minimum Maximum value of value of options/ options/ rights to rights to vest vest
EXECUTIVE DIRECTOR
Zimi Meka 19-Feb-08 17-Mar-09 01-Jan-10 SENIOR EXECUTIVES Craig Allen 19-Feb-08 17-Mar-09 01-Jan-10 01-Jan-11 01-Jan-12 Nick Bell 23-Jun-08 23-Jun-08 17-Mar-09 01-Jan-10 01-Jan-11 01-Jan-12 Greg Chrisfield a 17-Mar-09 01-Jan-10 01-Jan-11 01-Jan-12 Jean Kowalski b Frank Mellish 01-Jan-11 01-Jan-11 01-Jan-12 Neil Trembath 19-Feb-08 17-Mar-09 01-Jan-10 01-Jan-11 01-Jan-12 Paul Young 17-Mar-09 01-Jan-10 01-Jan-11 01-Jan-12 21,405 92,214 42,831 75,399 110,745 110,745 40,000 11,538 95,901 46,743 82,287 122,469 122,469 36,066 16,752 29,490 40,038 40,038 21,129 13,674 28,215 28,215 7,815 36,720 17,058 30,027 47,058 47,058 19,476 10,428 18,357 27,066 27,066 33% 33% 33% 33% 33% 33% 33% 33% 33% 33% 33% 33% 33% 33% 50% 100% 50% $0.00 19-Feb-15 $0.00 17-Mar-14 $0.00 01-Apr-15 $0.00 01-Jan-16 $0.00 01-Jan-17 $0.00 31-Dec-11 $0.00 19-Feb-15 $0.00 17-Mar-14 $0.00 01-Apr-15 $0.00 01-Jan-16 $0.00 01-Jan-17 $0.00 17-Mar-14 $0.00 01-Apr-15 $0.00 01-Jan-16 $0.00 01-Jan-17 $0.00 01-Jun-16 $0.00 01-Jan-16 $0.00 01-Jan-17 $0.00 19-Feb-15 $0.00 17-Mar-14 $0.00 01-Apr-15 $0.00 01-Jan-16 $0.00 01-Jan-17 $0.00 17-Mar-14 $0.00 01-Apr-15 $0.00 01-Jan-16 $0.00 01-Jan-17 33,751 33,751 88,625 88,6252 203,771 203,771 35,099 97,725 225,343 16,073 51,916 26,879 35,294 86,587 14,256 21,581 49,801 36,168 155,739 76,143 33% 33% 33% $0.00 19-Feb-15 $0.00 17-Mar-14 $0.00 01-Apr-15 57,001 57,001 -
a - Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 b - Ms Kowalski ceased to be Key Management Personnel on 1 July 2012
21
Ausenco Limited Directors' report 31 December 2012 (continued) AUDITORS INDEPENDENCE DECLARATION A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 23. ROUNDING OF AMOUNTS The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the 'rounding off' of amounts in the directors' report. Amounts in the directors' report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. AUDITORS PwC Australia continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of Directors.
Zimi Meka Director
George Lloyd Director Brisbane 19 February 2013
22
Auditors Independence Declaration As lead auditor for the audit of Ausenco Limited for the year ended 31 December 2012, I declare that to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit.
b)
This declaration is in respect of Ausenco Limited and the entities it controlled during the period.
S P Neill Partner PricewaterhouseCoopers
Brisbane 19 February 2013
23
PricewaterhouseCoopers, ABN 52 780 433 757 Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001 T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Ausenco Limited Consolidated statement of comprehensive income For the year ended 31 December 2012 Consolidated Notes Revenue from continuing operations Other income Staff and contractors costs Directly attributed project costs Office and administration costs Other expenses Depreciation and amortisation expense Finance costs Profit before income tax 6 7 5 5 2012 $'000 633,485 1,009 (407,162) (111,770) (45,496) (814) (10,196) (3,507) 55,549 2011 $'000 547,942 572 (342,689) (94,324) (56,857) (7,183) (9,157) (4,742) 33,562
1
Income tax expense Profit for the year
(14,154) 41,395
(7,208) 26,354
Other comprehensive income Changes in the fair value of cash flow hedges Exchange differences on translation of foreign operations Net investment hedge Income tax relating to components of other comprehensive income Other comprehensive profit / (loss) for the year, net of tax 22 22 22 22 2,725 (695) 2,030 611 (2,717) (5,931) (155) (8,192)
Total comprehensive income for the year
43,425
18,162
Profit for the year attributable to the ordinary equity holders of the Company: Owners of Ausenco Limited 41,395 41,395 Total comprehensive income for the year attributable to the ordinary equity holders of the Company: Owners of Ausenco Limited 43,425 43,425 Cents Earnings per share for profit attributable to the ordinary equity holders of the Company: Basic earnings per share Diluted earnings per share 9 9 33.5 32.8 21.5 21.3 18,162 18,162 Cents 26,354 26,354
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
1 The 2011 numbers have been reclassified to improve comparability with 2012. Refer to note 2(a).
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Ausenco Limited Consolidated balance sheet As at 31 December 2012 Consolidated 2012 $'000
Notes ASSETS Current assets Cash and cash equivalents Trade and other receivables Unbilled revenue Current tax receivables Other current assets Total current assets Non-current assets Trade and other receivables Available-for-sale financial assets Property, plant and equipment Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Billings in advance Borrowings Current tax liabilities Provisions Other current liabilities Total current liabilities Non-current liabilities Borrowings Deferred tax liabilities Provisions Other non-current liabilities Total non-current liabilities Total liabilities Net assets EQUITY Contributed Equity Reserves Retained earnings Total equity
2011 $'000
10 11 12 13
52,625 87,797 52,887 2,850 7,253 203,412
67,661 82,380 50,538 4,557 3,691 208,827
11 14 15 16 13
2,360 24,980 200,337 24,640 1,966 254,283 457,695
2,342 28 28,570 177,008 25,001 1,504 234,453 443,280
17 12 18 19 20
81,413 8,109 29,347 7,156 2,844 3,038 131,907
84,550 12,751 9,268 6,890 1,075 2,373 116,907
18 16 19 20
35,054 5,300 2,564 8,682 51,600 183,507 274,188 0
59,798 2,366 2,606 8,805 73,575 190,482 252,798
21 22 23
216,878 (37,174) 94,484 274,188
215,177 (39,918) 77,539 252,798
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
25
Ausenco Limited Consolidated statement of changes in equity For the year ended 31 December 2012
Consolidated Balance at 1 January 2011 Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Dividends provided for or paid Employee share plan
Notes
Ordinary shares
Reserves
Retained earnings
Total
$'000 209,605 -
$'000 (30,705) (8,192)
$'000 54,997 26,354
$'000 233,897 18,162
21 24 22
5,572 5,572
(1,021) (1,021) (39,918)
(3,812) (3,812) 77,539
5,572 (3,812) (1,021) 739 252,798
Balance at 31 December 2011
215,177
Balance at 1 January 2012 Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Share buy-back, inclusive of transaction costs Dividends provided for or paid Employee share plans 21 21 24 22
215,177 -
(39,918) 2,030
77,539 41,395
252,798 43,425
2,701 (1,000) 1,701
714 714 (37,174)
(24,450) (24,450) 94,484
2,701 (1,000) (24,450) 714 (22,035) 274,188
Balance at 31 December 2012
216,878
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
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Ausenco Limited Consolidated statement of cash flows For the year ended 31 December 2012 Consolidated 2012 $'000 693,992 (641,963) 52,029
Notes Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST)
2011 $'000
571,046 (552,673) 18,373
Interest received Borrowing costs paid Income taxes paid Net cash inflow from operating activities 27 7(a)
1,265 (3,507) (8,563) 41,224
789 (4,734) (3,067) 11,361
Cash flows from investing activities Payments for property, plant and equipment Payments for intangibles Acquisition of subsidiary, net of cash acquired Proceeds from disposal of non-current assets Net cash outflow from investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Share buy-back Dividends paid Net cash outflow from financing activities 21(a) 24(a) (10,412) (1,000) (21,761) (33,173) 21,863 (19,049) (3,103) (289) 36 14 (4,418) (14,571) (5,160) 338 (23,811) (8,967) (2,468) 5,450 (5,985)
NET INCREASE / (DECREASE) IN CASH HELD
(15,760)
5,087
Cash and cash equivalents at the beginning of the financial period Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of year
67,661 724 52,625
63,594 (1,020) 67,661
Non-cash financing activities Dividends satisfied by the issue of shares under the dividend reinvestment plan are shown in note 21.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
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Ausenco Limited Notes to the consolidated financial statements For the year ended 31 December 2012
General information
Ausenco Limited (the Company) and its subsidiaries (together, the Group) provide engineering design, project management, process controls and operations solutions to the energy, environment & sustainability, minerals & metals, process infrastructure and program management sectors. The Group operates around the world with projects in APAC/Africa, North America and South America regions. During the year, the Group acquired control of Rylson Pty Limited, an Australian based global provider of business improvement and asset management solutions and Reaction Consulting Inc. a Canadian based specialist provider of engineering services in the SAGD bitumen and oil sands sectors. The company is a public company limited by shares, which is listed on the Australian Securities Exchange and incorporated and domiciled in Australia. The address of its registered office is 144 Montague Road, South Brisbane, Queensland, 4101, Australia.
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Ausenco Limited and its subsidiaries. (a) Comparatives During the year and as part of its implementation of uniform systems in all its businesses, the group reviewed the classification of expenses as well as assets and liabilities. The reclassifications did not affect net asset, basic and diluted earnings per share. In relation to expenses the Group has ceased presenting reimbursable costs and is now presenting directly attributed project costs as a separate line item. To enhance comparability the prior year numbers have been revised. Directly attributed project costs for 2011 are now $94,428k with the significant reclassification being office and administration reduced by $20,109k and reimbursable costs of $68,605k reallocated. During the year deferred tax assets and liabilities were offset where there was a legally enforceable right to offset and the Group intends to either settle on a net basis or to realise the asset and liabilities simultaneously. To enhance comparability the prior year numbers have been revised. The impact on this is to reduce the deferred tax asset and liability by $6,462k. The 2011 cash flow statement has been revised to gross up the receipts from customers and payments to suppliers for Goods and Services Tax ($60.5 million).
(b) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). These financial statements have been prepared under the historical cost convention except for derivatives which are stated at fair value. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. (i) New and amended standards adopted by the Group
None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning on or after 1 January 2012 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. (ii) New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2013, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the group, except the following set out below:
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Ausenco Limited Notes to the consolidated financial statements For the year ended 31 December 2012 (continued)
Summary of significant accounting policies (continued)
(b) Basis of preparation (continued) (ii) New standards and interpretations not yet adopted (continued)
AASB 9 Financial Instruments (effective from 1 January 2015) AASB 9 was issued in November 2009 and October 2010 and addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the parts of AASB 139 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories; those measured at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entitys business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. There will be no impact on the Groups accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the group does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The group is yet to assess the full impact of AASB 9 and intends to adopt no later than the accounting period beginning on or after 1 January 2015. In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for joint arrangements, consolidated financial statements and associated disclosures. AASB 10 Consolidated Financial Statements (effective 1 January 2013) AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and Interpretation 12 Consolidation Special Purpose Entities. The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its returns. There is also new guidance on participating and protective rights and on agent/ principal relationships. While the group does not expect the new standard to have a significant impact on its composition, it has yet to perform a detailed analysis of the new guidance in the context of its various investees that may or may not be controlled under the new rules. AASB 11 Joint Arrangements (effective 1 January 2013) AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the joint arrangement. Based on the assessment of rights and obligations, a joint arrangement will be classified as either a joint operation or a joint venture. Joint ventures are accounted for using the equity method, and the choice to proportionately consolidate will no longer be permitted. Parties to a joint operation will account for their share of revenues, expenses, assets and liabilities on the basis of the groups interests in those assets and liabilities. Whist the Group does not expect the new standard to have a significant impact on the accounting for joint ventures, we are still finalising our detailed analysis. AASB 12 Disclosure of Interests in Other Entities (effective 1 January 2013) AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11 and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of this standard by the Group will not affect any of the amounts recognized in the financial statements, but will impact the type of information disclosed in relation to the Groups investments. The new standards will be first applied in the financial statements for the annual reporting period ending 31 December 2013. There are no other AASBs or Interpretations that are not yet effective that would be expected to have a material impact on the Group.
29
Ausenco Limited Notes to the consolidated financial statements For the year ended 31 December 2012 (continued) 2 (c) (i) Summary of significant accounting policies (continued) Principles of consolidation Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of the Group as at 31 December 2012. Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase or acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 2(i). Intercompany transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from intra-group transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidation income statement, statement of comprehensive income, statement of changes in equity and balance sheet respectively. (ii) Joint ventures
The accounting treatment for the recognition of the results from joint venture entities is based on the proportionate consolidation method. Details of joint ventures are set out in Note 26. The application of proportionate consolidation means the balance sheet of the venturer includes its share of the assets that it controls jointly and its share of the liabilities for which it is jointly responsible. The income statement of the venturer includes its share of the income and expenses of the jointly controlled entities. (iii) Employee share trust The Group has formed a trust (known as Ausenco Performance Trust) to administer the Group's employee share scheme. This trust is consolidated as the substance of the relationship is that the trust is controlled by the Group. Unvested shares held by the Ausenco Performance Trust are disclosed as treasury shares and deducted from contributed equity. (iv) Investments in associates Associates are those entities in which the Group has significant influence, but not joint control or joint control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. The consolidated financial statements include the Groups share of the profit or loss and other c omprehensive income of equity accounted interests, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence of joint control ceases. When the Groups share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Groups interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. (v) Changes in ownership interests The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of the Company.
30
2 (c)
Summary of significant accounting policies (continued) Principles of consolidation (continued)
(v) Changes in ownership interests (continued) When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. (d) Segment reporting A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision makers, who are responsible for allocating resources and assessing performance of the operating segments, have been identified as the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer. (e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollars, which is the Companys functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within finance income or costs. All other foreign exchange gains and losses are presented in the income statement within other (losses)/ gains net. Translation differences on non-monetary financial assets and liabilities carried at fair value are reported as part of the fair value gain or loss. (iii) Group companies The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: a) b) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet income and expenses for the consolidated statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and all resulting exchange differences are recognised in other comprehensive income.
c)
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognized in other comprehensive income.
31
2 (e)
Summary of significant accounting policies (continued) Foreign currency translation (continued)
(iii) Group companies(continued) On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When the interest in the foreign operation is reduced the proportionate exchange difference is recognised in the statement of comprehensive income. Repayments of the loans and borrowings are not deemed to be a disposal; consequently no adjustments of exchange differences previously recognised in shareholders' equity are made (f) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Groups activities as specified below. (i) Engineering design and project services Contract revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Where it is probable that a loss will arise from a contract, the excess of total costs over revenue is recognized as an expense immediately. Where the outcome of a contract cannot be reliably estimated, contract costs are expensed as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred. Incentive payments on contracts are recognised as part of total contract revenue where it is probable that specified performance standards are met or exceeded and the amount of the incentive payment can be reliably measured. For fixed price contracts, the methods used to determine the stage of completion of a contract include: a) proportion of contract costs incurred to date for work performed against estimated total contract costs b) surveys of work performed, and c) completion of a physical proportion of the contract work Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred during the reporting period plus the percentage of fees earned. (ii) Consulting Revenue is recognised when the service is provided. (iii) Interest income Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest method. Interest income is recognised on a time proportion basis using the effective interest method. (iv) Dividends Dividends are recognised as revenue when the right to receive payment is established. However, the investment may need to be tested for impairment as a consequence. This applies even if they are paid out of pre-acquisition profits. (g) Income tax The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
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(g) Income tax (continued) Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from an initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right of offset and intends either to settle on a net basis, or to realize the asset and liability simultaneously. Tax consolidation legislation Ausenco Limited and its directly held wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2004. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. The head entity of the tax consolidated group is Ausenco Limited. The entities also have tax sharing and funding agreements in place in order to allocate tax expense to the wholly-owned subsidiaries on a pro-rata basis. In addition, the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax obligations. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Company. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly owned tax consolidated entities. As a consequence, Ausenco Limited recognises current income tax relating to transactions, events and balances of the wholly-owned Australian controlled entities in these financial statements as if those transactions, events and balances were its own, in addition to the current and deferred tax balances arising in relation to its own transactions, events and balances. Expenses and benefits arising under the tax sharing and funding agreements are recognised as a component of income tax expense / (benefit). (h) Leases Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership, are classified as finance leases (note 14). Finance leases are capitalised at the lease's inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short term and long term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statements over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases (note 31). Payments made under operating leases (net of incentives received from the lessor) are charged to profit and loss on a straight-line basis over the period of the lease. Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term. The respective leased assets are included in the balance sheet based on their nature.
33
(i) Business combinations The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition by acquisition basis, either at fair value or at the non-controlling interests proportionate share of the recognised amounts of the acquirees identifiable net assets. Acquisition related costs are expensed as incurred. If a business combination is achieved in stages, the acquisition date carrying value of the acquirers previously held equity interest in the acquire is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entitys borrowing rate, b eing them rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with AASB 139 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity. (j) Cash and cash equivalents For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the consolidated balance sheet. (k) Receivables Receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Collectability of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is raised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amounts of the provision are recognised in the income statement. (l) Investments and other financial assets Classification The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the end of each reporting date. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets. Loans and receivables are included in trade and other receivables (note 11) in the Balance Sheet.
34
2
(l)

Investments and other financial assets (continued)
(ii) Available-for-sale financial assets Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the reporting period. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. (iii) Derivatives not qualified as hedge Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the income statement and are included in other income or expenses. Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade-date - the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains and losses from investment securities. Subsequent measurement At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Loans and receivables and held-to-maturity investments are subsequently carried at amortised cost using the effective interest method. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations when the Group's right to receive payments is established. Interest income from these financial assets is included in the net gains / (losses). Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income. Details on how the fair value of financial instruments is determined are disclosed in note 37. Impairment The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is reclassified from equity and recognised in the profit or loss as a reclassification adjustment. Impairment losses recognised in profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss. (m) Fair value estimation The net fair value of cash and cash equivalents and non interest bearing monetary financial assets and financial liabilities approximate their carrying amount.
35
(n) Property, plant and equipment Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Costs may also include transfers from equity of any gains/losses on qualifying cash flow hedging of foreign currency purchases of property, plant and equipment. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the income statements during the reporting period in which they are incurred. Property, plant and equipment are stated at historical cost less accumulated depreciation. Repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The expected useful lives are as follows: Property, plant and equipment Leasehold improvements 2.5 5 years 10 years
Leasehold improvements are depreciated on a straight-line basis. Property, plant and equipment are depreciated using either straight-line or diminishing value basis. (o) Intangible assets (i) Goodwill Goodwill is measured as described in note 2(i). Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is not amortised. Instead, Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of Goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing. Each of those cash-generating units is identified according to business segment (note 15 (a)). When organisational changes take place that affect the composition of the cash-generating unit and segment, Goodwill is reallocated based on the relative values of the business units affected by the changes. (ii) Brand Names Brand names have a finite useful life and are carried at cost less accumulated amortisation and impaired losses. Amortisation is calculated using the straight-line method to allocate the cost of brand names over their estimated useful lives, which is 8 years. (iii) Software Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials and service and direct payroll and payroll related costs of employees' time spent on the project. Amortisation is calculated on a straight-line basis over the estimated useful life of 10 years. (iv) Customer contracts Customer contracts and relationships acquired as part of a business combination are recognised separately from goodwill. The customer contracts are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated based on the timing of projected cash flows of the contracts over their estimated useful lives, which is between 2 and 8 years. (v) Software under development Costs incurred in developing software that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software under development. Upon completion, software development costs are transferred to software and amortisation commences. Only costs directly attributable to the development phase are capitalised. These costs may include cost of materials and service and direct payroll related costs of employees time spent on the project.
36
(p) Trade and other creditors These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. (q) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statements over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. (r) Finance costs Finance costs are recognised as expenses in the period in which they are incurred. Finance costs include: (i) interest on bank overdrafts and short-term and long-term borrowings (ii) amortisation of discounts or premiums relating to borrowings, and (iii) amortisation of ancillary costs incurred in connection with the arrangement of borrowings. (s) Provisions Project provisions are recognised when: (i) the Group has a present constructive or legal obligation as a result of past events (ii) it is probable that an outflow of resources will be required to settle the obligation, and (iii) the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the balance sheet date. (t) Employee Benefits (i) Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other trade payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. (iii) Share-based payments Share-based compensation benefits are provided to employees via the Ausenco Executive Option Plan and Ausenco Performance Rights Plan. Information relating to these schemes is set out in note 33.
37
(t) Employee Benefits (continued) The fair value of options and performance rights at grant date is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is independently determined using a Hull White option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The fair value of the options and performance rights granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options and performance rights that are expected to become exercisable. At each balance sheet date, the entity revises its estimate of the number of options and performance rights that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. Upon the exercise of options and performance rights, the balance of the options and performance rights reserve relating to those options and performance rights is transferred to share capital and any proceeds received, net of any directly attributable transaction costs, are credited to share capital. (iv) Superannuation Contributions to the defined contribution fund are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that the cash refund or a reduction in the future payments is available. (u) Ordinary shares Ordinary shares are classified as equity (note 21). Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration. If the Company reacquires its own equity instruments, for example as the result of a share buy back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity. (v) Dividends Provision is made for the amount of any dividend declared, determined or publicly recommended by the directors on or before the end of the financial year but not distributed at balance sheet date. (w) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year excluding treasury shares. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (x) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheets.
38
(x) Goods and services tax (GST) (continued) Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (y) Unbilled revenue and billing in advance Construction work in progress is stated at the aggregate of contract costs incurred to date plus recognised profits less recognised losses and progress billings. If there are contracts where progress billings exceed the aggregate costs incurred plus profits less losses, the net amounts are presented as billings in advance. Contract costs include all costs directly related to specific contracts plus costs that are specifically chargeable to the customer under the terms of the contract. (z) Impairment of assets Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and additionally when there is an indicator of impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). (aa) Rounding of amounts The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the 'rounding off' of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar. (ab) Assets held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and the sale is highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets, investment property and non-current biological assets that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of derecognition. Non-current assets classified as held for sale are presented separately from the other assets in the balance sheet. (ac) Derivatives Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss (for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement within finance costs. The gain or loss relating to the effective portion of f orward foreign exchange contracts hedging export sales is recognised in the income statement within sales. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets) the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in profit or loss as cost of goods sold in the case of inventory, or as depreciation in the case of fixed assets. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
39
2
(ac)

Derivatives (continued)
(i) Net investment hedge Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss within other income or other expenses. Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is partially disposed of or sold. (ad) Parent entity financial information The financial information for the parent entity, Ausenco Limited, disclosed in note 34 has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) Investments in subsidiaries, associates and joint venture entities Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of the Company. Dividends received from associates are recognised in the Companys profit or loss, rather than being deducted from the carrying amount of these investments. (ii) Tax consolidation legislation Ausenco Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation. The Company and the controlled entities in the tax consolidated group account for their current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right. In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate the Company for any current tax payable assumed and are compensated by the Company for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to the Company under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognized in the wholly owned entities financial statements. The amounts receivable/ payable under the tax funding agreement are due upon receipt of the funding advice from the Company, which is issued as soon as practicable after the end of each financial year. The Company may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities. (iii) Financial guarantees Where the Company has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment. (iv) Share based payments The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.
40
Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. (a) Revenue Recognition The Group, in assessing the outcome of the contracts at the early stages of progress, when incorporating risks to completion has only recognised contract revenues to the extent of costs incurred that are expected to be recoverable. It is probable that the Group will be able to recover the contract costs incurred, however as the outcome of the contract costs cannot be estimated reliably, no profit is recognised in the early stages of the contract. (b) Intangibles The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2(o)(i). The recoverable amounts of cash generating units have been determined based on value in use calculations. These calculations require the use of assumptions. Refer to note 15 for details of these assumptions and the potential impact of changes to the assumptions. (c) Income taxes The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the Group's understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made. Deferred tax assets for unused the losses are recognised only if it is probable that future taxable amounts will be available to utilise the losses. This assessment is based on consideration of earnings outlined in board approved budgets.
Segment information
(a) Description of segments Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer, Chief Financial Officer and the Chief Operating Officer (collectively Chief Decision Makers) that are used to make strategic decisions. The Chief Decision Makers consider the business from a services perspective and have identified six reportable segments being Energy, Environment & Sustainability, Minerals & Metals, Process Infrastructure, Program Management and Corporate & Regional Services. Although the Energy, Environment & Sustainability and Program Management segments do not meet the quantitative thresholds required by AASB 8, management has concluded that these segments should be reported, as they are closely monitored by the Chief Decision Makers as a potential growth segment and are expected to materially contribute to Group revenue in future. All segments deliver study, engineering, Engineering Procurement and Construction Management (EPCM), project management and operations and maintenance services to the global resources and energy sectors. The Minerals & Metals segment delivers its services through the Minerals & Metals business. The Process Infrastructure segment delivers port, pipeline, marine and transport solutions. The Environment & Sustainability segment provides geotechnical and environmental solutions. The Energy segment concentrates on the delivery of projects to the gas, renewable energy, project sectors, consulting and engineering services to the oil and gas industry. The Program Management segment draws upon the combined program management expertise across the Group, supported by systems and processes and a global procurement network.
41
Segment information (continued)
(b) Segment information provided to the Chief Decision Makers The segment information provided to the Chief Decision Makers for the reportable segments for the year ended 31 December 2012 is as follows:
Environment & Sustainability $'000 31,119 (1,187) 29,932 (888) Minerals & Metals $'000 388,031 (12,452) 375,579 58,543 Process Infrastructure $'000 189,098 (34,159) 154,939 28,021 Program Management $'000 51,803 (176) 51,627 471
Consolidated 2012
Energy $'000
Corporate $'000 7,865 (475) 7,390 (26,631)
Total $'000 680,947 (48,727) 632,220 59,560
Total segment revenue Inter-segment revenue Revenue from external customers Segment Adjusted EBITA
13,031 (278) 12,753 44
Trade and Other Receivables Unbilled Revenue Total Segment Assets
2,016 1,269 3,285
3,888 6,852 10,740
39,275 30,819 70,094
19,702 12,477 32,179
10,125 278 10,403
12,791 1,192 13,983
87,797 52,887 140,684
Consolidated 2011
Energy $'000
Environment & Sustainability $'000 37,200 (986) 36,214 2,483
Minerals & Metals $'000 320,406 (10,449) 309,957 50,103
Process Infrastructure $'000 160,406 (15,514) 144,892 15,884
Program Management $'000 48,087 (115) 47,972 4,617
Corporate $'000 7,022 (701) 6,321 (31,929)
Total $'000 575,645 (28,190) 547,455 40,006
Total segment revenue Inter-segment revenue Revenue from external customers Segment Adjusted EBITA
2,524 (425) 2,099 (1,152)
Trade and Other Receivables Unbilled Revenue Total Segment Assets
606 44 650
2,158 2,981 5,139
48,443 26,452 74,895
20,466 18,293 38,759
7,350 1,755 9,105
3,357 1,013 4,370
82,380 50,538 132,918
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Segment information (continued)
(c) Other segment information (i) Segment revenue Sales between segments are carried out at arms length and are eliminated on consolidation. The rev enue from external parties reported to the Chief Decision Makers is measured in a manner consistent with that in the income statements. Segment revenue reconciles to total revenue from continuing operations as follows: Consolidated
2012 2011
$'000 Total segment revenue Inter-segment eliminations Interest revenue Revenue from continuing operations 680,947 (48,727) 1,265 633,485
$'000 575,645 (28,190) 487 547,942
The Group is domiciled in Australia. The result of its revenue from external customers in Australia is $114.2 million (2011: $115.3 million), and the total of revenue from external customers in other countries is $518.0 million (2011: $432.2 million). Segment revenues are allocated based on the country in which projects are located. (ii) Adjusted EBITA The Chief Decision Makers assess the performance of the operating segments based on a measure of segment EBITA. A reconciliation of adjusted EBITA to operating profit before income tax is provided as follows: Consolidated 2012 2011 $'000 $'000 Adjusted EBITA Interest Income Finance costs (note 7) Amortisation of intangibles other Intangibles (note 6) Profit before income tax from continuing operations
1 This performance measure is discussed in detail on page 94 1
59,560 1,265 (3,507) (1,769) 55,549
40,006 487 (4,742) (2,189) 33,562
43
4 Segment information (continued)

(c) Other segment information (Continued) (iii) Segment assets The amounts provided to the Chief Decision Makers with respect to segment assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. Reportable segment assets are reconciled to total assets as follows: Consolidated 2012 2011 $'000 $'000 140,684 132,918 52,625 2,850 7,253 2,360 24,980 200,337 24,640 1,966 457,695 67,661 4,557 3,691 2,342 28 28,570 177,008 25,001 1,504 443,280
Segment Assets Unallocated: Cash and Cash Equivalents Current Tax Receivables Other Current Assets Non-Current Trade and Other Receivables Available-for-sale Financial Assets Property, Plant & Equipment Intangible Assets Deferred Tax Assets Other Non-Current Assets Total Assets as per the Balance Sheet
The total of segment assets located in Australia is $74.1 million (2011: $66.5 million), and the total of these segment assets located in other countries is $66.6 million (2011: $66.4 million). Segment assets are allocated to countries based on where the assets are located.
Revenue
Consolidated 2012 $'000 2011 $'000
From continuing operations Services Interest Income
632,220 1,265 633,485
547,455 487 547,942
Other income Foreign exchange gains (net) Other income
572 437 1,009
572 572
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Expenses
Consolidated 2012 $'000 2011 $'000
Profit before income tax includes the following specific expenses: Employee benefits expense Defined contribution superannuation expense Share based payment expense (note 33) Total employee benefits expense 12,934 1,881 14,815 10,493 1,470 11,963
Depreciation of property plant, and equipment Amortisation of intangibles: Software Other intangibles Total amortisation (note 15) Total depreciation and amortisation expense
(note 14)
5,914
5,163
2,513 1,769 4,282 10,196
1,805 2,189 3,994 9,157
Impairment losses Financial Assets Trade receivables 1,039 3,299
Foreign exchange losses (net)
1,550
Operating lease rentals
19,759 572
21,136 966
Net loss on disposal of Grass Valley assets (a)

(a)
2012 included an additional loss recognised upon finalisation of the sale
Finance costs
Consolidated 2012 $'000 2011 $'000 4,892 (150) 4,742
Interest and borrowing expenses Less amounts capitalised on qualifying assets (a) Finance costs expensed
4,107 (600) 3,507
(a)
Capitalised borrowings costs
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is 6.9% and represents the weighted average interest rate applicable to the entitys outstanding borrowings during the year (2011: 6.9%).
45
8
(a)
Income taxes
Income tax expense Consolidated 2012 $'000 2011 $'000 9,089 (3,309) 1,428 7,208
Current tax expense Deferred tax benefit Adjustments for current tax of prior periods
14,283 (801) 672 14,154
Deferred income tax (revenue) / expense included in income tax expense: Decrease/ (Increase) in deferred tax assets (note 16) (Decrease)/ Increase in deferred tax liabilities (note 16) 850 (1,651) (801) (2,773) (536) (3,309)
(b)
Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense Tax at the Australian tax rate of 30.0% (2011 - 30.0%) Tax effect of amounts which are not deductible / (taxable) in calculating taxable income: Amortisation of intangibles International exempt income Entertainment Unrealised foreign exchange losses relating to net investment hedges Current period losses not recognised Other Items of capital nature Assessable income not recognised in accounting profit Non-assessable income recognised in accounting profit
1
55,549 16,665
33,562 10,069
553 (1,443) 75 (209) 415 (493) 503 172 (709) 15,529
(103) (2,321) 105 (1,833) 1,822 (989) 103 2,412 (3,262) 6,003 1,823 1,428 (2,046) 1,205
International tax rate differential
(556) 672 (1,491) (1,375)
Adjustments for current tax of prior periods Previously unrecognised tax losses used to reduce deferred tax expense
Income tax expense

1
14,154
7,208
represents net (reduction) / increase for foreign tax rate differential.
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8
(c)
Income taxes (continued)

Tax losses Consolidated 2012 $'000
2011 $'000 32,018 10,599
Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit at relevant country tax rate
10,009 3,085
Earnings per share

Consolidated 2012 Cents 2011 Cents 21.5 26,354 122,710,993
Basic earnings per share (cents per share) attributable to the ordinary equity holders of the Company: Net profit used as the numerator in calculating basic earnings per share ($'000) Weighted average number of ordinary shares used as a denominator in calculating basic earnings per share Diluted earnings per share (cents per share) attributable to the ordinary equity holders of the Company: Net profit used as a the numerator in calculating diluted earnings per share ($'000) Weighted average number of ordinary shares used as a denominator in calculating diluted earnings per share
33.5 41,395 123,658,522
32.8 41,395 126,151,860
21.3 26,354 123,860,030
WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR Weighted average number of ordinary shares used as the denominator in calculating earnings per share ADJUSTMENTS FOR CALCULATION OF DILUTED EARNINGS PER SHARE Options and rights Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 2,493,338 126,151,860 1,149,037 123,860,030 123,658,522 122,710,993
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10 Cash and cash equivalents

Consolidated 2012 $'000 Cash at bank and in hand Deposits at call 26,004 26,621 52,625 (a) Cash at bank and in hand Cash in hand is non-interest bearing. Cash at bank is bearing interest at a rate between 0% and 2.5% (2011: 0.0% and 4.5%). 2011 $'000 40,172 27,489 67,661
(b) Deposits at call The deposits are bearing interest at variable rates between 3.2% and 7.0% (2011: 5.3% and 10.3%).
11 Trade and other receivables

Consolidated 2012 $'000 Current Trade debtors Less: Provision for impairment of receivables (a) 71,296 (2,750) 68,546 Debtor retentions Interest receivable Trade receivables from related parties (note 32) GST/VAT receivables Other receivables (c) 353 19 4,732 1,226 12,921 87,797 Non-current Loans to related parties (note 32) 2,360 2,360 Total trade and other receivables 90,157 2,342 2,342 84,722 73,555 (4,862) 68,693 650 30 3,845 332 8,830 82,380 2011 $'000
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11 Trade and other receivables (Continued)

(a) Impaired trade receivables As at 31 December 2012 trade receivables of the Group with a nominal value of $4,572,000 (2011: $4,862,000) were impaired. The amount of the provision is $2,750,000 (2011: $4,862,000). Movements in the provision for impairment of receivables are as follows: Consolidated 2012 $'000 Opening balance at 1 January Provision for impairment recognised during the year Receivables written off during the year as uncollectable Unused amounts reversed Closing balance at 31 December 4,862 1,363 (1,528) (1,947) 2,750
2011 $'000 1,807 4,296 (844) (397) 4,862
The creation and release of the provision for impaired receivables has been included in 'other expenses' in the income statement. Amounts charged to the provision account are generally written off when there is no expectation of recovery.
(b) Past due but not impaired As of 31 December 2012, trade receivables of $49,031,000 (2011: $44,631,000) were past due but not impaired. The ageing analysis of these trade receivables is as follows:
Consolidated 2012 $'000 36,732 12,299 49,031 2011 $'000 33,573 11,058 44,631
Up to 3 months Over 3 months
The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these other classes, it is expected that these amounts will be received when due. (c) Other receivables These amounts generally arise from transactions outside the usual operating activities of the Group. Interest may be charged at commercial rates where the terms of repayment exceed six months. Included in other receivables is $10.0 million for which collateral was obtained. Other receivables mainly consist of advance amounts, sundry debtors and deposits. (d) Foreign exchange and interest rate risk Information about the Group's exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in note 37. (e) Fair value and credit risk Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above. The fair value of securities held for certain trade receivable approximates the fair value of any collateral. Refer to note 37 for more information on the risk management policy of the Group and the credit quality of the entity's trade receivables.
49
12 Unbilled revenue and Billing in Advance

Consolidated 2012 $'000 Current assets (Amounts due from customers for contract work) Construction contracts in progress net position Current liabilities (Amounts due to customers for contract work) Construction contracts in progress net position Net amounts due from customers for contract work The majority of contacts are cost plus and expected to be settled in the next 12 months. 52,887 2011 $'000 50,538
8,109 44,778
12,751 37,787
13 Other assets
Consolidated 2012 $'000 Current Prepayments 7,253 7,253 Non-current Other assets 1,966 1,966 Total other assets 9,219 1,504 1,504 5,195 3,691 3,691 2011 $'000
50
14 Property plant and equipment

Furniture, fittings and equipment $'000
Consolidated
Freehold land Leasehold and buildings improvements $'000 $'000
Total $'000
Year ended 31 December 2012 Opening net book amount Additions Acquisition of a subsidiary (note 36) Disposals Depreciation charge (note 6) Net transfers (note 15) Reclassification Exchange differences Closing net book amount As at 31 December 2012 Cost Accumulated Depreciation Net book amount 600 (3) (29) 568 11,739 329 13 (16) (1,656) 536 141 11,086 16,231 4,089 535 (264) (4,258) (2,100) (550) (357) 13,326 28,570 4,418 548 (280) (5,914) (2,100) (17) (245) 24,980
954 (386) 568
18,216 (7,130) 11,086
43,101 (29,775) 13,326
62,271 (37,291) 24,980
Consolidated
Freehold land Leasehold and buildings improvements $'000 $'000
Furniture, fittings and equipment $'000
Total $'000
Year ended 31 December 2011 Opening net book amount Additions Disposals Depreciation charge (note 6) Exchange differences Net transfer to other non-current assets Closing net book amount As at 31 December 2011 Cost Accumulated Depreciation Net book amount 456 (45) 189 600 9,642 3,830 (168) (1,482) (83) 11,739 15,707 5,137 (909) (3,636) 239 (307) 16,231 25,805 8,967 (1,077) (5,163) 345 (307) 28,570
949 (349) 600
17,877 (6,138) 11,739
40,945 (24,714) 16,231
59,771 (31,201) 28,570
51
15 Intangible assets
Consolidated Goodwill $'000 Brand names $'000 Software Customer Software under contracts $'000 development $'000 $'000 Total $'000
Year ended 31 December 2012 Opening net book amount Additions Acquisition of subsidiary (note 36) Disposals Amortisation charge (note 6) Net transfers (note 14) Exchange differences Closing net book amount At 31 December 2012 Cost Accumulated amortisation and impairment Net book amount 178,355 (8,200) 170,155 10,865 (6,662) 4,203 27,524 (11,130) 16,394 6,186 (4,594) 1,592 8,763 231,693 (770) (31,356) 7,993 200,337 163,758 6,026 371 170,155 5,426 274 (1,338) (159) 4,203 3,787 4,454 1,401 (8) (2,513) 9,216 57 16,394 1,779 248 (431) (4) 1,592 2,258 177,008 12,851 (7,116) 17,579 7,675 (8) (4,282) 2,100 265
7,993 200,337
Consolidated Year ended 31 December 2011 Opening net book amount Net transfers from other current and non-current assets Additions Amortisation charge (note 6) Exchange differences Disposals Closing net book amount At 31 December 2011 Cost Accumulated amortisation and impairment Net book amount
Goodwill $'000
Brand names $'000
Software Customer Software under contracts $'000 development $'000 $'000 5,160 247 210 (1,802) (28) 3,787 12,369 (8,582) 3,787 2,863 (817) (24) (243) 1,779 5,942 (4,163) 1,779 5 2,258 (3) (2) 2,258 3,028
Total $'000
166,076 60 (1,272) (1,106) 163,758 171,958 (8,200) 163,758
6,846 (1,372) (48) 5,426 10,827 (5,401) 5,426
180,950 307 2,468 (3,994) (1,374) (1,349) 177,008 204,124
(770) (27,116) 2,258 177,008
52
15 Intangible assets (continued)

(a) Impairment tests for goodwill Goodwill is allocated to the Group's cash-generating units (CGUs) identified according to business segment. During 2012 the Group acquired Reaction Consulting Inc. and Rylson Pty Ltd. The acquisition increased the goodwill allocated to the Energy and Program Management CGUs and segments by $3.0 million and $3.0 million respectively. On 1 January 2011, as part of planned operational restructures, the specific activities offices located in Mumbai, Montreal and Santiago where reorganised to fall under the Minerals & Metals segment. As a result of these restructures goodwill of $4.8 million in Environment & Sustainability and $10.0 million in Process Infrastructure was moved to the Minerals & Metals CGU. During 2011 the Grass Valley office of the Environment & Sustainability segment was disposed of. Goodwill of $1.1 million was written off as part of the sale, calculated based on the sale price of the office relative to the value of the Environment & Sustainability CGU.
Environment & Process Minerals & Sustainability Infrastructure Metals $'000 $'000 $'000 Program Management $000
Energy $'000
Total $'000
2012 CGUs Opening Balance Additions (note 36) Translation adjustment Closing Balance Discount rate 2011 CGUs Opening Balance Additions Disposals Reallocation Translation adjustment Closing Balance Discount rate (b) 9,554 (175) 9,379 12.5% 38,475 (1,106) (4,792) (271) 32,306 15.4% 118,047 (9,982) (766) 107,299 12.5% 14,774 14,774 16.0% 166,076 (1,106) (1,212) 163,758 9,379 3,008 (33) 12,354 12.0% 32,306 486 32,792 14.6% 107,299 (82) 107,217 12.0% 14,774 14,774 14.0% 3,018 3,018 14.0% 163,758 6,026 371 170,155
Key assumptions used for value-in-use calculations
Cash Flows The value-in-use calculation is based on cash flow projections for a term of five years plus a terminal value. The cash flow projections for the five year period are based on assumptions in relation to the cash inflows and outflows that represent management's best estimate based on future cash flows, based on past performance and expectations for the future. Discount Rate In performing the value in use calculations for each CGU, the Group has applied post tax discount rates to discount the forecast future attributable post tax cash flows. The pre-tax discount rates applied per CGU are listed above. The discount rates used reflect specific risks relating to the relevant segments and the countries in which they operate. Growth Rate The growth rate used to calculate the terminal value used in the value in use calculation was 3.0% (2011: 3.7%) and represents management's expectations of long-term growth, and is consistent with industry reports.
53
15 Intangible assets (continued)

(b) Key assumptions used for value-in-use calculations (continued)
Sensitivity Analysis A sensitivity analysis was conducted to determine the carrying value of the Cash-Generating Units under adverse conditions. There is no impairment charge with any reasonable change in the assumptions used to generate the cash flow projections.
16 Deferred income tax

(a) Deferred tax asset: Consolidated This balance comprises of: Amounts recognised in profit or loss Tax losses Employee benefits Unrealised foreign exchange losses Accruals Provision for impairment of receivables Project provisions Lease incentive liability Property, plant and equipment Compound interest Other 9,031 5,927 3,416 2,841 909 722 2,235 350 429 456 26,316 Amounts recognised directly in equity Employee options Costs associated with capital raisings Total deferred tax assets Set-off to deferred tax liabilities pursuant to set-off provisions Net deferred tax assets 40 150 26,506 (1,866) 24,640 374 31,463 (6,462) 25,001 12,901 3,486 4,024 4,735 1,218 688 2,633 372 705 327 31,089 2012 $'000 2011 $'000
Deferred tax assets expected to be recovered within 12 months Deferred tax assets expected to be recovered after more than 12 months
10,399 16,107 26,506
10,127 21,336 31,463
Balance at 1 January (Expensed)/ Credited to income statement (note 8) Net tax losses Expensed to equity Foreign currency translation reserve translation Closing balance at 31 December
31,463 (850) (3,715) (392) 26,506
31,748 2,773 (2,344) (156) (558) 31,463
54
16 Deferred income tax (continued)

(b) Deferred Tax Liability Consolidated 2012 $'000 2,848 617 693 2,748 70 6,976 Amounts recognised directly in equity Asset revaluation Employee options Total deferred tax liabilities Set-off of deferred tax liabilities pursuant to set-off provisions Net deferred tax liabilities Deferred tax liabilities expected to be settled within 12 months Deferred tax liabilities expected to be settled after more than 12 months 190 7,166 (1,866) 5,300 617 6,549 7,166 2011 $'000 2,745 666 744 4,204 65 8,424 190 214 8,828 (6,462) 2,366 666 8,162 8,828
This balance comprises of: Amounts recognised in profit or loss Unrealised foreign exchange gains Work in progress Depreciation - property, plant and equipment Intangible assets Other
Balance at 1 January Acquisition of subsidiaries (note 36) Credited to the income statement (note 8) Foreign currency translation reserve Closing balance at 31 December
8,828 66 (1,651) (77) 7,166
9,429 (536) (65) 8,828
55
17 Trade and other payables

Consolidated 2012 $'000 Current Trade payables Payables to related parties (note 32) Other tax payables Total trade and other payables 75,324 76 6,013 81,413 2011 $'000 77,498 20 7,032 84,550
18 Borrowings
Consolidated 2012 $'000 Current Secured bank loans Other unsecured loans Non-current Secured bank loans Other unsecured loans Total borrowings 25,122 4,225 29,347 34,006 1,048 35,054 64,401 2011 $'000 6,864 2,404 9,268 59,773 25 59,798 69,066
(a) Bank loans Bank loans are subject to a weighted average interest rate of 4.5% (2011: 4.3%). See note 20(b) for details of security given. (b) Other loans Other liabilities are subject to a weighted average interest rate of 2.9% (2011: 3.6%). As at 31 December 2012, the Australian and New Zealand Banking Group (ANZ) and National Australia Bank (NAB) funding facility was $129.2 million, split between overdraft and loan facilities of $79.1 million, bank guarantee and letter of credit facilities of $50.0 million and asset finance facility of $0.1 million. (2011: $136.7 million). At 31 December 2012, $43.2 million (2011: $46.4 million) of the total ANZ and NAB facility was unused. Other group borrowings comprise of bank overdrafts and lines of credit details of which are included in note 37.
56
18 Borrowings (continued)
(c) Assets pledged as security Consolidated 2012 $'000 Current Floating charge Cash and cash equivalents Trade and other receivables Unbilled revenue Current tax receivables Other current assets Total current assets pledged as security Non-current Fixed and floating charge Receivables Available-for-sale financial assets Property, plant and equipment Deferred tax assets Intangible assets Other non-current assets Total non-current assets pledged as security Total assets pledged as security 2011 $'000
36,988 53,940 34,957 934 4,438 131,257
52,664 53,390 37,602 3,201 1,136 147,993
4,719 15,587 20,677 185,494 1,230 227,073 358,330
4,684 28 22,827 26,946 165,832 1,347 221,664 369,657
19 Provisions
Consolidated 2012 $'000 Current Long service leave employee entitlements Make-good provision Project warranty provision Other provision 569 100 2,012 163 2,844 Non-current Long service leave employee entitlements Make-good provision Project warranty provision Other provisions Total provisions 2011 $'000 478 337 260 1,075
1,798 541 220 5 2,564 5,408
2,311 295 2,606 3,681
Employee benefit amounts not expected to be settled within the next 12 months: 2012 $000s Leave obligations expected to be settled after 12 months 1,798 2011 $000s 2,311
57
19 Provisions (continued)
Movements in each class of provision during the financial year, other than employee benefits, are set out below: Make good provision $000 Carrying amount at start of the year Charged/(credited) to profit or loss: - Additional provisions recognised - Unused amounts reversed Amounts used during the year Exchange differences Difference arising from translation of foreign operations Closing balance 185 (167) (9) 641 3,274 (439) (837) (26) 2,232 168 (7) 7 168 (28) 3,041 3,627 (606) (844) 632 Project warranty provision $000 260 Other provisions $000 Total $000
892
Analysis of total provisions Current Non-current 100 541 641 2,012 220 2,232 163 5 168 2,275 766 3,041
20 Other liabilities
Consolidated 2012 $'000 Current Lease incentive Deferred consideration Onerous leases Other
(a)
2011 $'000 1,285 330 758 2,373
1,263 1,069 63 643 3,038
Non-current Lease incentives Contingent consideration Onerous leases Other

(b)
7,038 1,644 8,682
8,190
31 584 8,805 11,178
Total other liabilities

(a) (b) Further information relating to deferred consideration can be found in Note 36 Further information relating to contingent consideration can be found in Note 36
11,720
58
21 Contributed Equity
(a) Share capital Consolidated 2012 $'000 215,177 2,689 (995) (5) 12 216,878 2011 $'000 209,605 709 263 4,600 215,177
Balance at 1 January Shares issued Shares brought back and cancelled Exercise of options Transaction costs Treasury shares Total contributed equity
(b) Movements in ordinary share capital Consolidated 2012 Shares 123,258,843 613,822 (345,091) 123,527,574 2011 Shares 122,427,576 271,821 263,305 296,141 123,258,843
Balance at 1 January Shares issued Shares brought back and cancelled Exercise of options Exercise of performance rights Total contributed equity
(c) Terms and Conditions of Contributed Equity Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the Group, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. (d) Treasury shares Treasury shares are shares in Ausenco Limited that are held by the Ausenco Performance Trust for the purpose of issuing shares under the Ausenco employee share and performance rights schemes (see note 33 for further information). 2012 Shares 29,700 257,436 (250,650) (11,459) 25,027 2011 Shares 1,207,155 344,499 (154,986) (1,366,968) 29,700
Opening balance at 1 January Acquisition of shares by the Trust Transferred - options / performance rights Transferred ESAP Balance at 31 December (e) Share buy back
On 10 October 2012, the Company announced it intended to buy-back up to 6.2 million shares on market over the next 12 months. During 2012 a total of 345,091 shares were bought back and subsequently cancelled. The buy-back is part of Ausencos capital management program which is aimed at optimising the companys capital structure for all shareholders.
59
21 Contributed Equity
(f) Dividend reinvestment plan On 6 March 2009 the company has implemented a dividend reinvestment plan under which shareholders may elect to reinvest all or part of their dividend into Ausenco shares. Shares are issued in accordance with the DRP rules a 2.5% discount has been applied to the 5 day volume Weighted Average Price (VWAP) to determine the issue price. In August 2012 the Company advised that the DRP would be suspended until further notice.
22 Reserves (a) Reserves

Notes Consolidated 2012 $'000 Hedging reserve Share-based payments reserve Foreign currency translation reserve 2,464 (39,638) (37,174) 2011 $'000 1,750 (41,668) (39,918)
Movements: Hedging reserve Balance at 1 January Movement in net cash flow hedging reserve Deferred tax Balance 31 December Share-based payments reserve Balance at 1 January Options and Performance rights expense Employee share plan expense Acquisition of shares Shares issued to employees Balance 31 December Foreign currency translation reserve Balance at 1 January Net investment hedge Currency translation differences arising during the year Balance 31 December (41,668) (695) 2,725 (39,638) (33,020) (5,931) (2,717) (41,668) 33(d) 33(d) 1,750 1,758 123 (95) (1,072) 2,464 2,771 1,329 141 (671) (1,820) 1,750 (456) 611 (155) -
60
22 Reserves (Continued)
(b) Nature and purpose of other reserves (i) Hedging reserve cash flow hedges The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in other comprehensive income, as described in note 2(ab). Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss. (ii) Share-based payments The sharebased payments reserve is used to recognise: the grant date fair value of shares, options and rights issued to employees the issue of shares held by the Ausenco Performance Trust to employees the funding of share purchases to employees made of the Ausenco Performance Trust. (iii) Foreign currency translation Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note 2(e) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the controlled foreign entity investment is reduced. The Group has long-term internal loans and receivables that are designated as part of the net investment in foreign subsidiary operations totalling $67.9 million (2011: $69.9 million). The Group also has $21.2 million of external borrowings designated as hedges against net assets in foreign subsidiaries. On consolidation, exchange differences of $0.7 million (2011: $5.9 million) arising from the revaluation of these loans and borrowings are taken to foreign currency translation reserve.
23 Retained earnings
Movements in retained earnings were as follows: Note Consolidated 2012 $000 Balance 1 January Net profit for the year Dividends Balance 31 December 24 77,539 41,395 (24,450) 94,484 2011 $000 54,997 26,354 (3,812) 77,539
61
24 Dividends
(a) Ordinary shares Consolidated 2012 $000 Interim dividend Interim ordinary dividend for the financial year ended 31 December 2012 of 10.0 cents per share paid on 27 September 2012 Interim ordinary dividend for the financial year ended 31 December 2011 of 3.1 cents per share paid on 21 September 2011 Final dividend Final ordinary dividend for the financial year ended 31 December 2011 of 9.8 cents per share paid on 4 April 2012 Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan during the years ended 31 December 2012 and 2011 were as follows: 2011 $000
12,380 -
3,812
12,070 24,450
3,812
Consolidated 2012 $000 21,761 2,689 24,450 Consolidated 2012 $000
2011 $000 3,103 709 3,812
Paid in cash Satisfied by the issue of shares (b) Dividends not recognised at the end of the reporting period
2011 $000
In addition to the above dividends, since year end the Directors have recommended the payment of a final dividend of 10.1 cents per fully paid ordinary share (2011: 9.8 cents), 50% franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 1 May 2013 out of retained profits at 31 December 2012, but not recognised as a liability at year end, is:
12,476
12,079
(c) Franked dividends The franked portion of the final dividends recognised after 31 December 2012, will be franked out of existing franking credits or out of franking credits arising from the payments of income tax in the year ended 31 December 2013. Parent Entity 2012 $'000 Franked credits available for subsequent financial years based on a tax rate of 30.0% (2011: 30.0%) 3,889 2011 $'000 2,980
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for: (i) franking credits that will arise from the payment of the current tax liability, (ii) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and (iii) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
62
25 Investments in controlled entities

(a) Significant investments in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2(c): Name of entity Country of Incorporation Beneficial interest held by the consolidated entity 2012 % AB Ventures Ltd Ausenco Africa Limited Ausenco Americas LLC Ausenco Beijing Limited Ausenco Canada Inc (b) Ausenco Chile Limitada Ausenco Communities Pty Ltd Ausenco do Brasil Engenharia Ltda Ausenco Engineers Private Limited (c) Ausenco Engineering Alberta Inc Ausenco Engineering Canada Inc Ausenco Global Pty Ltd Ausenco International Pty Ltd Ausenco Ireland Pty Limited Ausenco Management Pty Ltd Ausenco Operations Pty Ltd (d) Ausenco Peru S.A.C Ausenco Projects Limited Ausenco PSI LLC Ausenco Senegal SARL Ausenco Services Pty Ltd
(a)
2011 % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Maurititus Maurititus United States China Canada Chile Australia Brazil India Canada Canada Australia Australia Ireland Australia Australia Peru Hong Kong United States Senegal Australia
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
63
25 Investments in controlled entities (continued)

(a) Significant investments in subsidiaries (continued) Country of Name of entity Incorporation Beneficial interest held by the consolidated entity 2012 2011 % % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 75 100 70 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 100 100
Ausenco Sierra Leone Pty Limited Ausenco Solutions Canada Inc Ausenco Solutions Pty Ltd Ausenco Solutions Quebec Inc. (e) Ausenco South America Holdings Pty Ltd Ausenco USA Inc. Ausenco Vietnam Co Ltd Forestal Enterprises Ltd Forestal International Consultants Inc Global Procurement Services Limited Pipeline Systems Chile SA Pipeline Systems Incorporated (Baotou) Ltd Pipeline Systems International Australia Pty Ltd PSI Engineering Ltd. PT Ausenco Indonesia (f) Rylson Pty Limited Sandwell Engineers Corp Sandwell Engineers (Proprietary) Limited Sandwell Inc Sandwell Offshore Technologies. Inc Sandwell Sarana Consultants Inc. Swan Wooster Engineering Consultants Inc Vector Argentina S.A. (g) Vector Bolivia S.R.L. (h) Vector Colombia Limitada Vector Engineering Inc
(a) (b) (c) (d) (e) (f) (g) (h)
Sierra Leone Canada Australia Canada Australia United States Vietnam Maurititus Canada Thailand Chile China Australia Canada Indonesia Australia United States South Africa Canada United States Canada Canada Argentina Bolivia Colombia United States
During 2011 the Group purchased the remaining 50% portion of AB Ventures Ltd resulting in the entity becoming fully controlled by the Group. This investment was previously disclosed as an investment in joint ventures (note 26(a)). The entity name remains unchanged. During 2011 PSI Chile Limitada and Sandwell Chile Limitada merged into Vector Chile Limitada, to form a fully controlled entity within Chile. The entity name was changed to Ausenco Chile Limitada. During 2012 the Group acquired 100% of Reaction Consulting Inc., the name of the entity was changed to Ausenco Engineering Alberta Inc. During 2011 PSI Peru S.A.C and PSI Peru S.A merged into Vector Peru S.A.C to form a fully controlled entity within Peru. The entity name was changed to Ausenco Peru SAC. During 2011 the legal name of Vector Panama S.A. was changed to Ausenco South America Holdings Pty Ltd. The entity's country of incorporation was also migrated to Australia. During 2012 the Group acquired 75% of Rylson Pty Limited. During 2012 Vector Bolivia S.R.L. was formally dissolved. During 2012 Vector Colombia Limitada was formally dissolved.
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26 Interests in joint ventures

(a) Interests in joint ventures Ownership Interest Consolidated 2012 2011 % % 50 50 50 50 50 50 50 50 50 50 50 50
Ausenco Roche - A joint venture with Roche Mining Ausenco Taggart - Specific Coal Handling and Preparation Plant (CHPP) Projects Ausenco Taggart Mongolia LLC - Coal Handling and Preparation Plant (CHPP) Projects in Mongolia Kramer Ausenco - Integrated engineering and construction services in PNG and the South Pacific Islands WorleyParsons Ausenco Joint Venture - Program management services for Alpha Coal Project Ausenco Saudi Arabia Ltd.
Information relating to the joint venture entities, presented in accordance with the accounting policy described in note 2(c)(ii) is set out below: 2012 $'000 Share of joint ventures assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net liabilities Share of joint ventures revenue, expenses and results Service revenues Expenses Loss of foreign exchange contracts Loss before income tax The group had no other commitments in the joint ventures. Contingent liabilities in joint ventures are disclosed in note 28. 10,383 2,379 12,762 17,280 670 17,950 (5,188) 26,351 (29,054) (2,703) 2011 $'000 3,072 1,604 4,676 7,366 883 8,249 (3,573) 22,930 (23,488) (14) (572)
65
27 Reconciliation of profit after income tax to net cash inflow from operations
Consolidated 2012 $'000 Reconciliation of operating profit after income tax to net cash flow from operating activities: Net profit loss after income tax expense Depreciation and amortisation of non-current assets Share based payments expense Unrealised net loss / (gain) on foreign exchange Net loss / (gain) on disposal of property, plant and equipment and intangibles Loss on disposal of Grass Valley assets Change in operating assets and liabilities adjusted for effects of purchase of controlled entities during the Financial year Increase in trade receivables Increase in unbilled revenue Decrease in deferred tax assets Increase in other assets (Decrease) / Increase in billings in advance (Decrease) / Increase in payables and other liabilities Increase in provision for income tax Increase in other provisions Increase / (decrease) in deferred tax liabilities Net cash inflow from operating activities (3,027) (2,349) 361 (4,008) (4,642) (6,913) 2,269 1,215 2,868 41,224 (41,653) (11,382) 284 15,873 15,327 4,459 905 (601) 11,361 41,395 10,196 1,881 1,120 286 572 26,354 9,157 (1,027) (6,990) (311) 966 2011 $'000
66
28 Contingent Liabilities
(a) Guarantees 2012 $'000 The consolidated entity is, in the normal course of business, required to provide guarantees and letters of credit on behalf of controlled entities in respect of their contractual performance related obligations. These guarantees and indemnities only give rise to a liability where the entity concerned fails to perform its contractual obligations. Bank guarantees outstanding at the balance date in respect of commitments for expenditure. 2011 $'000
$27,670
$30,150
(b) Litigation One of the Groups wholly owned subsidiary companies was incorrectly named as a co -defendant to a court action in Ontario, Canada. The claim related to services that were provided by a company which is not, and has not at any time been, related to Ausenco. In December 2012 the Ontario Superior Court of Justice determined that the Courts in Ontario do not have jurisdiction to hear this mat ter, this decision is subject to the Plaintiffs right of appeal and in January 2013 the plaintiff filed a Notice of Appeal with the Court of Appeal for Ontario. A date for the appeal hearing has not been set. Update on matter reported in 2011: In an action relating to Lumwana copper project in Zambia, AB Ventures Limited (ABV) was in dispute with one of its suppliers, the basis of which was disclaimed by ABV. The matter was presented to the court in Zambia and a th judgment was handed down on 18 December 2012 in favour of the plaintiff for USD110,000 plus interest. The Groups share of this judgment is 50%. ABV will not be appealing this judgment.
29 Key Management Personnel

(a) Directors The following persons were directors of Ausenco Limited during the financial year: (i) Chairman Wayne Goss (ii) Executive Directors Zimi Meka (Chief Executive Officer) (iii) Non-Executive Directors George Lloyd Greg Moynihan Mary Shafer-Malicki Bob Thorpe Hank Tuten (b) Key Management Personnel The following persons were Key Management Personnel of Ausenco Limited during the financial year: Craig Allen Nick Bell Greg Chrisfield Jean Kowalski Frank Mellish Neil Trembath Paul Young Chief Financial Officer Chief Operating Officer Chief Sustainability Officer (ceased on 17 March 2012) Chief Commercial Officer (ceased on 1 July 2012) Chief Marketing Officer Chief People Officer (to 15 March 2012) and Chief People and Sustainability Officer (from 16 March 2012) Chief Information Officer
67
29 Key management personnel (continued)

(c) Key Management Personnel compensation Consolidated 2012 $ 3,550,537 296,767 84,546 318,958 227,315 4,478,123 (d) Equity instrument disclosures relating to key management personnel (i) Options provided as remuneration and shares issued on exercise of such options 2011 $ 3,324,698 275,623 93,452 421,789 4,115,562
Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments Termination Benefits
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in the remuneration report on pages 7-21. (ii) Option holdings Particulars of Directors' and Key Management Personnel's beneficial interests in options and performance rights of the Company, including their personally related parties interests, as at the date of this report are set out below. Number of options/ 2012 Balance at Exercise Options / Balance at Number of Granted as rights vested Options and 1 Jan 2012 of options rights 31 Dec options/ remuneration at 31 Performance rights / rights forfeited 2012 rights vested c December 2012 DIRECTORS Zimi Meka 67,118 35,970 31,148 35,970 Sub-total 67,118 35,970 31,148 35,970 SENIOR EXECUTIVES Craig Allen 77,441 110,745 21,297 166,889 21,297 Nick Bell 103,299 122,469 42,974 182,794 20,718 Greg Chrisfield a 29,171 14,426 14,745 7,213 Jean Kowalski b 10,566 40,038 50,604 Frank Mellish 6,837 28,215 35,052 Neil Trembath 30,745 47,058 1,042 76,761 8,386 7,344 Paul Young 16,970 27,066 44,036 3,895 3,895 Sub-total 275,029 375,591 79,739 65,349 505,532 61,509 11,239 Grand total 342,147 375,591 115,709 65,349 536,680 97,479 11,239
a Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 b - Ms Kowalski ceased to be Key Management Personnel on 1 July 2012 c - Opening balance adjusted to exclude Mr Roxburgh who ceased to be Key Management Personnel on 15 April 2011
68

(d) Equity instrument disclosures relating to key management personnel (continued) (ii) Option Holdings (continued) 2011 Options and Performance rights Exercise of Balance at 1 Granted as options / Jan 2011 remuneration rights Number of Options / Balance at Number of options/ rights rights 31 Dec options/ vested at 31 forfeited 2011 rights vested December 2011 38,070 38,070 59,112 64,512 23,121 10,563 6,837 6,498 23,541 14,391 208,575 246,645 67,118 67,118 77,441 103,299 29,171 10,566 6,837 17,651 30,745 16,970 292,680 359,798 35,970 35,970 21,297 20,718 7,213 6,461 8,386 3,895 67,970 103,940 22,256 5,595 27,851 27,851
DIRECTORS Zimi Meka Sub-total SENIOR EXECUTIVES Craig Allen Nick Bell Greg Chrisfield Jean Kowalski a Frank Mellish b Ken Roxburgh c Neil Trembath Paul Young Sub-total Grand total
546,293 546,293 121,805 125,524 30,015 41,343 32,645 16,899 368,231 914,524
75,399 82,287 29,490 21,129 13,674 30,027 18,357 270,363 270,363
441,105 441,105 60,651 40,000 7,213 17,194 8,386 3,895 137,339 578,444
All vested options are exercisable at the end of the year.
69

(d) Equity instrument disclosures relating to key management personnel (continued)
(iii) Share holdings The numbers of shares in the Company held during the financial year by each Director of Ausenco Limited and other Key Management Personnel of the Group, including their personally related parties, are set out below: 2012 Shares Balance at 1 Jan 2012 c Shares granted as remuneration Shares acquired during the year 509,432 4,481 5,000 518,913 171,536 314 299 909 3,800 176,858 695,771 Received on Shares sold Balance at exercise of 31 Dec 2012 options / rights 35,970 35,970 21,297 42,974 14,426 1,042 79,739 115,709 480,246 480,246 126,536 126,536 606,782 1,209,934 16,012,380 224,857 30,688 5,000 11,118,250 3,642,668 32,243,777 903,727 150,753 29,327 2,095 28,831 26,925 1,141,658 33,385,435
DIRECTORS Wayne Goss Zimi Meka George Lloyd Greg Moynihan Mary Shafer-Malicki Bob Thorpe Hank Tuten Sub-total SENIOR EXECUTIVES Craig Allen Nick Bell Greg Chrisfield a Jean Kowalski b Frank Mellish Neil Trembath Paul Young Sub-total Grand total
1,209,934 15,947,224 220,376 30,688 11,118,250 3,642,668 32,169,140 837,430 107,465 14,901 1,796 26,880 23,125 1,011,597 33,180,737
a Mr Chrisfield ceased to be Key Management Personnel on 17 March 2012 b - Ms Kowalski ceased to be Key Management Personnel on 1 July 2012 c - Opening balance adjusted to exclude Mr Roxburgh who ceased to be Key Management Personnel on 15 April 2011
70

(d) Equity instrument disclosures relating to key management personnel (continued) (iii) Share holdings (Continued) 2011 Shares Balance at 1 Jan 2011 Shares granted as remuneration Shares acquired during the year 34 2,351 12,716 15,101 3,175 165 1,796 2,082 224 7,442 22,543 Received on Shares sold Balance at exercise of 31 Dec 2011 options / rights 441,105 441,105 60,651 40,000 7,213 17,194 8,386 3,895 137,339 578,444 (7,000) (95,407) (102,407) (102,407) 1,209,934 15,947,224 220,376 30,688 11,118,250 3,642,668 32,169,140 837,430 107,465 14,901 1,796 520,404 26,880 23,125 1,532,001 33,701,141
DIRECTORS Wayne Goss Zimi Meka George Lloyd Greg Moynihan Mary Shafer-Malicki Bob Thorpe Hank Tuten Sub-total SENIOR EXECUTIVES Craig Allen Nick Bell Greg Chrisfield Jean Kowalski a Frank Mellish b Ken Roxburgh c Neil Trembath Paul Young Sub-total Grand total
1,209,934 15,506,085 218,025 30,688 11,118,250 3,629,952 31,712,934 773,604 74,300 7,688 598,617 16,412 19,006 1,489,627 33,202,561
(e) Other transactions with key management personnel During the year ended 31 December 2012 and 31 December 2011 no other transactions were made with the key management personnel of Ausenco Limited.
71
30 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its network firms and non-PwC audit firms: Consolidated 2012 $ (a) PwC Australia Audit and other assurance services Audit and review of financial statements Other accounting services Taxation services Tax compliance services Total remuneration of PwC Australia 2011 $
667,292 7,178 12,722 687,192
568,755 4,600 19,080 592,435
(b) Network firms of PwC Australia Audit and other assurance services Audit or review of financial statements Other accounting services Other services Tax compliance services Total remuneration of network firms of PwC Australia
335,206 17,542 135,127 487,875
312,198 11,039 124,519 447,756
(c) Non-PwC audit firms Audit and other assurance services Audit and review of financial statements Other accounting services Other services Taxation services Total remuneration of non-PwC audit firms
88,668 31,904 87,338 207,910
52,756 46,782 99,538
Total Auditors remuneration
1,382,977
1,139,729
72
31 Commitments
(a) Capital commitments Consolidated 2012 $'000 Capital expenditure commitments in relation to plant and equipment contracted but not provided for and payable: Within one year Later than one year but not later than five years 420 210 630 1,012 630 1,642 2011 $'000
(b) Lease commitments: group as lessee (i) Non-cancellable operating leases The Group leases various offices under non-cancellable operating leases expiring within one to ten years. The leases have varying terms and renewal rights. On renewal, the terms of the leases are renegotiated.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year Later than one year but not later than five years Later than five years Commitments not recognised in the financial statements Sub lease payment Future minimum lease payment expected to be received in relation to non-cancellable sub-lease of operating leases
18,554 57,423 40,460 116,437
18,446 56,090 50,920 125,456
7,647
10,503
(ii) Finance leases
Commitments in relation to finance leases are payables as follows: Within one year Later than one year but not later than five years Later than 5 years Commitments recognised in the financial statements (c) Remuneration commitments
1,736 1,079 2,815
1,236 667 (32) 1,871
Commitments for the payment of salaries and other remuneration as follows: Within one year
906
693
73
32 Related party transactions

(a) Parent entities The parent entity within the Group is Ausenco Limited which owns 100% of the issued ordinary shares of Ausenco Services Pty Ltd, the controlling parent for consolidated accounting purposes. (b) Subsidiaries Investment in controlled entities and subsidiaries are set out in note 25. (c) Transactions with other related parties Consolidated 2012 $ Dividend revenue - Other related parties Services revenue Services expenses 100,000 15,575,424 (320,180) 15,355,244 2011 $ 350,000 13,877,520 (253,073) 13,974,447
(d) Outstanding balances Consolidated 2012 $ Current receivables (sale of goods) Current payables (purchase of goods) (e) Loans to/from related parties Consolidated 2012 $ Loans to other related parties Opening balance at 1 January Loans advanced Sale of 50% Ausenco Saudi Arabia Ltd shares Closing balance at 31 December 2,341,648 18,000 2,359,648 2,328,698 12,950 2,341,648 2011 $ 4,731,764 (75,716) 2011 $ 3,844,987 (20,386)
(f) Terms and conditions All other transactions were made on normal commercial terms and conditions and at market rates, except that there are no fixed terms for the repayment of loans between the parties. There was no interest charged on loans during the year. Outstanding balances are unsecured and are repayable in cash.
74
33 Share-based payments
(a) Executive Option Plan ("EOP") The Group EOP was established in 2006 as a replacement for the cash based long term incentive plan. Staff eligibility to participate in the EOP is limited to Group Senior Executives (including Directors). Under the EOP, eligible executive employees are invited to apply for options, each of which entitles the holder to subscribe for one fully paid ordinary share in the Company at an exercise price equal to the Company's share market price at the time of grant. The EOP provides for options, with associated time based vesting conditions, to be issued to eligible executive employees. Options are granted for a three year period, with one third of each option tranche vesting and becoming exercisable after each subsequent annual anniversary of the date of grant, subject to an overriding service condition. Options expire five years after the date of grant. Options granted under the EOP carry no dividend or voting rights. There are currently no participants in the EOP and no outstanding options in the EOP. (b) Performance Rights Plan ("PRP") The Groups Long Term Incentive (LTI) plan is designed to link executive and selected management personnel reward with the key performance drivers which underpin sustainable long term growth in total shareholder return, comprising earnings growth, share price appreciation, dividends and capital returns to shareholders. The Board determines on an annual basis whether the LTI plan will operate in the year. Participation in the LTI plan is offered at the discretion of the Board to eligible executives and selected management personnel who are able to influence the generation of shareholder wealth over the long term. The LTI plan provides the opportunity to receive performance rights, subject to the satisfaction of performance hurdles and vesting periods (Eligible Employees). The Groups PRP provides for performance rights to be issued to Eligible Empl oyees. Under the PRP, Eligible Employees are invited to apply for performance rights, each of which entitles the holder to subscribe for one fully paid ordinary share in the Company at a nil exercise price. Subject to the relevant performance hurdles being satisfied, each performance right entitles the holder to subscribe for one fully paid ordinary share in the Company at a nil exercise price. One third of the rights granted vest at the end of each two, three and four year period following grant, subject to an overriding service condition. Performance rights carry no dividend or voting rights. Where a participant leaves the Group, the terms of the PRP prescribe that the Board may exercise its discretion to allow a proportion of performance rights to vest and be exercised. The Board may deem any performance rights to have lapsed if, in the opinion of the Board, the Eligible Employee acts fraudulently or dishonestly or is in breach of any of their obligations to the Group. In the event of a takeover or other formal scheme for the acquisition of the shares of the Group, the Directors may exercise their discretion to determine that all unvested performance rights vest, subject to further conditions to be determined by the Board.
75
33 Share-based payments (continued)

(b) Performance Rights Plan ("PRP") (continued) Performance rights plan ("PRP") and Executive Option Plan ("EOP") Expiry date Exercise price Balance at Granted Exercised Forfeited Balance at Exercisable start of during the during the during the end of the at end of the year year year year year the year Number 2012 19-Feb-08 25-Feb-08 05-Mar-08 23-Jun-08 17-Mar-09 01-Jan-11 01-Jan-12 19-Feb-15 19-Feb-15 19-Feb-15 19-Feb-15 17-Mar-14 01-Jan-16 01-Jan-17 $$$$$$$33,621 7,397 1,941 4,614 618,024 1,032,450 1,698,047 $Balance at Granted start of during the year the year Number 2011 27-Apr-06 18-Dec-06 19-Feb-08 25-Feb-08 05-Mar-08 31-Mar-08 23-Jun-08 23-Jun-08 17-Mar-09 01-Jan-10 01-Jan-11 27-Aug-11 18-Dec-11 19-Feb-15 19-Feb-15 19-Feb-15 10-Sep-12 31-Dec-11 19-Feb-15 17-Mar-14 01-Apr-15 01-Jan-16 $1.00 $$$$$$$$$$333,333 373,339 73,211 10,366 6,075 2,982 40,000 4,614 908,436 359,208 - 1,032,450 2,111,564 1,032,450 Weighted average exercise price $0.15 $333,333 373,339 33,565 314 2,934 40,000 183,634 967,119 $0.34 6,025 2,655 1,200 2,982 106,778 359,208 478,848 $33,621 7,397 1,941 4,614 618,024 1,032,450 1,698,047 $9,702 4,722 938 3,076 102,044 120,482 $Number 1,493,976 1,493,976 $18,613 4,154 534 4,614 232,196 260,111 $31,381 405,888 178,107 615,376 $15,008 3,243 1,407 354,447 626,562 1,315,869 2,316,536 $15,008 3,243 1,407 135,051 154,709 $Number Number Number Number Number
Grant date
Weighted average exercise price
Grant date
Expiry date
Exercise price
Exercised Forfeited Balance at Exercisable during the during the end of the at end of the year year year year Number Number Number Number
The weighted average share price at the date of exercise of options exercised during the year ended 31 December 2012 was $2.49 (2011: $3.15). The weighted average remaining contractual life of share options/rights outstanding at the end of the period was 3.3 years (2011: 1.4 years). Fair value of options/rights granted The fair value at a grant date is independently determined using the Hull White option pricing model that takes into account the exercise price, the term of the options/rights, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the options/rights.
76
33 Share-based payments (continued)

(b) Performance rights plan ("PRP") and Executive options Plan ("EOP") (continued) The model inputs for options/rights granted during the year ended 31 December 2012 included: (i) Share price at grant date in 2012 was $2.49; (2011 issue: $3.05) (ii) Expected price volatility of the companys shares: 39.4%; (2011 issue: 44.1%) (iii) Expected dividend yield: 5.1%; (2011 issue: 3.0%) and (iv) Risk free interest rate: 4.90% (2011 issue: 4.75%). The expected price volatility is based on the historic volatility (based on the remaining life of the options/rights), adjusted for any expected changes to future volatility due to publicly available information. The fair value of share rights granted during 2012 is $1.59 (2011: $2.08). (c) Employee share acquisition plan ("ESAP") In 2006 shareholders approved the ESAP and the first instalment of this was launched in August 2008. Participation in the ESAP is open to all personnel employed on a permanent basis by the Group (Eligible Employees). The ESAP was designed to assist with retaining permanent employees of the Group by enabling them to share in the organisations success. The ESAP provides the Groups Eligible Employees with an enhanced opportunity to acquire shares in the Company. Each annual ESAP offer is subject to Board approval. Following the initial offer in 2008, the Board elected to forego the offer in 2009 and 2010 due to the uncertain economic climate and its impact on contributed equity. In 2011, due to a turnaround in the economic climate, the Board resolved to reinstate the ESAP offer for 2011. Under the 2008 ESAP offer, Eligible Employees were able to purchase Ausenco shares up to a specified percentage of their base salary (the 2008 Employee Contribution). The 2008 Employee Contribution was matched by Ausenco with an equal Company Contribution for an equivalent number of shares, vesting pro rata over the next three years following the 2008 ESAP offer. Shares purchased under the 2008 ESAP were restricted and made available for sale by transfer to each Eligible Employee in three equal annual instalments in November 2009, 2010 and 2011. These restrictions were removed from Plan Shares purchased with the 2008 Employee Contribution if a participating Eligible Employee ceased employment with the Group. 2008 ESAP participants who ceased employment forfeited any shares purchased with the Company Contribution unless those shares have already passed their vesting periods. Shares acquired under the 2008 ESAP may be held in trust by the Trustee for a maximum period of ten years after the date of the initial offer. At the expiry of ten years, shares acquired under the 2008 ESAP will be transferred to the relevant Eligible Employee. Under the 2011 and 2012 ESAP offer, Eligible Employees were invited to contribute between $500 and $5,000 to purchase Ausenco shares (Employee Contribution Shares). Ausenco agreed to match the participants Employee Contribution Shares at a ratio of 3:1, providing the participant with one conditional right to receive an Ausenco share at a later date for each Employee Contribution Share, provided the participant remains an Eligible Employee during that period (ESAP Conditional Right). ESAP Conditional Rights, are unlisted securities, have no voting rights or entitlement to dividends, they cannot be traded or transferred and are held in trust until the necessary vesting criteria have been met. Upon vesting a participants ESAP Conditional Rights will automatically convert into ordinary s hares and once converted will have full voting rights and dividend entitlements and will remain in the Ausenco Performance Trust until such time as they are transferred or sold. The Employee Contribution Shares along with the ESAP Conditional Rights (toget her the ESAP Securities) will held by the Trustee until such time as they are transferred, sold or forfeited. The Trustee remains the legal owner of all ESAP Securities so long as they remain held by the Ausenco Performance Trust. The participants are the beneficial owners of their ESAP Employee Contribution Shares and entitled to the full voting rights and dividend entitlements attached to each ESAP Employee Contribution Share.
77
33 Share based payments (continued)

(d) Expenses arising from share-based payment transactions Total expenses arising from share based payment transactions recognised during the period as part of employee benefit expenses were as follows:
Options issued under employee option and performance rights plan Shares issued under employee share acquisition scheme
Consolidated 2012 $'000 1,758 123 1,881
2011 $'000 1,329 141 1,470
34 Parent entity financial information

(a) Summary financial information The individual financial statement for the parent entity for the following aggregate amounts 2012 $'000 Balance sheet Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Shareholders' equity Contributed equity Reserves - Share based payments reserve Retained earnings 85,871 159,579 245,450 6,965 4,109 11,074 230,205 2,465 1,706 234,376 2011 $'000 87,361 165,139 252,500 8,380 4,224 12,604 (795,312) 228,516 3,854 7,526 239,896
Profit or loss for the year Total comprehensive income Movements in retained earnings were as follows:
18,646 18,646
10,121 10,121
Balance at 1 January Net Profit for the year Dividends Balance 31 December
2012 $'000 7,526 18,646 (24,466) 1,706
2011 $'000 1,344 10,121 (3,939) 7,526
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34 Parent entity financial information (continued)

(b) Guarantees entered into by the parent entity As at 31 December 2012 and 31 December 2011, the parent entity recognised no financial guarantees. In addition, there are cross guarantees given by Ausenco Limited, Ausenco Solutions Pty Ltd, Ausenco International Pty Ltd, Ausenco Global Pty Ltd, Ausenco Operations Pty Ltd and Ausenco Services Pty Ltd as described in note 35. (c) Contingent liabilities of the parent entity The parent entity did not have any contingent liabilities as at 31 December 2012 or 31 December 2011. (d) Contractual commitments for the acquisition of property, plant or equipment As at 31 December 2012, the parent entity had no contractual commitments for the acquisition of property, plant or equipment.
35 Deed of cross guarantee

(a) Consolidated income statement, consolidated statement of comprehensive income and summary of movements in consolidated retained earnings During 2012, the following companies within the Group were parties to a deed of cross guarantee under which each company guarantees the debts of the others: Ausenco Limited Ausenco Solutions Pty Ltd Ausenco International Pty Ltd Ausenco Global Pty Ltd Ausenco Operations Pty Ltd Ausenco Services Pty Ltd
By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare a financial report and directors' report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission. The above companies represent a 'closed group' for the purposes of the Class Order, and as there are no other parties to the deed of cross guarantee that are controlled by Ausenco Limited, they also represent the 'extended closed group'. Set out below is a consolidated statement of comprehensive income and a summary of movements in consolidated retained earnings for the year ended 31 December 2012 of the closed group consisting of Ausenco Limited, Ausenco Solutions Pty Ltd, Ausenco International Pty Ltd, Ausenco Global Pty Ltd, Ausenco Operations Pty Ltd and Ausenco Services Pty Ltd.
79
35 Deed of cross guarantee (continued)

(a) Consolidated income statement, consolidated statement of comprehensive income and summary of movements in consolidated retained earnings (continued) 2012 $'000 Revenue from continuing operations Other income Staff and contractor costs Reimbursable costs Office and administration costs Other expenses Depreciation and amortisation expense Finance costs Profit before income tax Income tax (expense)/ benefit Profit for the year Other comprehensive income Exchange differences on translation of foreign operations Total comprehensive income for the year Summary of movements in consolidated retained earnings Retained earnings at the beginning of the financial year Profit for the year Dividends provided for or paid Retained earnings at the end of the financial year 299,385 135 (191,868) (48,677) (23,691) (689) (4,790) (4,336) 25,469 (7,844) 17,625 2011 $'000 269,855 (125) (159,952) (33,411) (41,757) (10,664) (3,764) (2,843) 17,339 1,367 18,706
621 18,246
804 19,510
69,429 17,625 (24,450) 62,604
54,535 18,706 (3,812) 69,429
80
35 Deed of cross guarantee (continued)

(b) Consolidated balance sheet Set out below is a consolidated balance sheet as at 31 December 2012 of the closed group consisting of Ausenco Limited, Ausenco Solutions Pty Ltd, Ausenco International Pty Ltd, Ausenco Global Pty Ltd, Ausenco Operations Pty Ltd and Ausenco Services Pty Ltd.
2012 $'000 Current assets Cash and cash equivalents Trade and other receivables Unbilled revenue Current tax receivables Other current assets Total current assets Non-current assets Investments Receivables Property, plant and equipment Deferred tax assets Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Billings in advance Current tax liabilities Other current liabilities Provision Total current liabilities Non-current liabilities Borrowings Deferred tax liabilities Provisions Other non-current liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings Total equity 29,245 195,121 22,301 2,580 3,722 252,969 137,738 4,719 15,525 10,781 18,037 186,800 439,769 94,011 30,053 3,712 3,592 901 1,371 133,640 14,664 1,317 2, 344 4,681 23,006 156,646 283,123 216,834 3,685 62,604 283,123
2011 $'000 36,394 168,069 16,716 2,496 3,398 227,073 139,272 4,684 17,240 12,536 3,732 177,464 404,537 50,360 8,646 6,005 2,094 1,061 68,166 40,998 1,108 2,152 4,371 48,629 116,795 287,742 215,249 3,064 69,429 287,742
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36 Business combinations
The Rylson Group (a) Summary of acquisition On 28 August 2012 the Group acquired 75% of the share capital of the Rylson Group for $4.2 million, a global provider of business improvement and asset management solutions. The acquisition forms part of the Program Management business line. The remaining 25% of the business will be acquired by the Group in two years, with a further pro-rata payment at that time. The purchase consideration for acquiring the remaining 25% of Rylson will be calculated by reference to the Rylson Groups normalised earnings before interest and tax (EBIT) for three years from 2012 to 2014. As a result of the acquisition, the group is looking to expand the services offered to existing and new clients in the area of asset management services and to utilise the Rylson intellectual property to enhance Program Managements operations & maintenance offering. The Group has provisionally determined the acquisition accounting with work continuing during 2013 to finalise the valuation of and accounting for the assets and liabilities. Details of the purchase consideration, the net assets acquired, goodwill and the non-controlling interest at the acquisition date are as follows: 2012 $000 Purchase consideration (refer to (b) below): Cash paid Deferred consideration Contingent consideration Total purchase consideration Details of the provisional fair value of the assets and liabilities acquired are as follows: Fair value $000 222 1,877 325 525 1,401 (690) (512) (880) (327) 1,941 3,018 4,959 2,873 442 1,644 4,959
Cash Trade and other receivables Tax receivable Property plant and equipment Intangible assets Trade and other payables Provisions Borrowings Other non-current liabilities Net identifiable assets acquired Add: Goodwill Net assets acquired
There were no contingent assets or liabilities identified and recognised at the time of acquisition or subsequently. The fair values are provisional as the acquisition was completed with effect from 28 August 2012. Provisional fair values may be used for a period of 12 months from acquisition. The goodwill is attributed to the skills and technical talent of the employees of Rylson and the synergies expected to be achieved from integrating the business into Ausencos existing operations. It will not be deductible for tax purposes.
82
36 Business combinations (continued)

(a) Summary of acquisition (continued) i. (i) (i) Deferred consideration Deferred consideration consists of 10% of the initial purchase consideration for the 75% interest, adjusted for working capital and other excluded assets and liabilities at the time of finalising the balance sheet for the Rylson group at the date of acquisition. (ii) Contingent consideration The contingent consideration payment requires the Group to pay in cash the remaining shareholder of the company 25% of three times the average of the Rylson Group's normalised earnings before interest and tax (EBIT) for three years from 2012 - 2014. The potential undiscounted payable under the agreement is between $0.5 million and $1.9 million. The fair value of the contingent consideration was estimated by applying the income approach. The fair value estimates are based on a discount rate of 6.9% and assumed probability-adjusted EBIT. (iii) Non-controlling interests The group has elected not to recognise the non-controlling interest in the Rylson group at its proportionate share of the acquired net identifiable assets as substantially all the risks and rewards have been transferred to the Group on acquisition. (iv) Revenue and profit contribution The revenue included in the consolidated statement of comprehensive income since 28 August 2012 contributed by the Rylson Group was $3.3 million (100%). The Rylson Group also contributed a loss of $0.2 million (100%) over the same period. If the acquisition had occurred on 1 January 2012, consolidated revenue and profit for the year ended 31 December 2012 would have been $8.3million and $0.4 million respectively. (b) Purchase consideration - cash outflow: 2012 $000 Outflow of cash to acquire subsidiary, net of cash acquired Cash consideration Less: balances acquired Cash Outflow of cash - investing activities 2,873 (222) 2,651
Acquisition-related costs Acquisition related costs of $89,000 are included in office and administration expenses in profit or loss and in operating cashflows in the statement of cashflows.
83
36 Business combinations (continued)

Reaction Consulting (a) Summary of acquisition On 17 January 2012 Ausenco acquired 100% of the issued capital of Reaction Consulting Inc., being a Canadian based specialist provider of engineering services in the SAGD Bitumen and oil sands sectors. The Group has finalised the acquisition accounting. Details of the purchase consideration, the net assets acquired and goodwill are as follows: 2012 $000 Purchase consideration: Cash paid Deferred consideration Total purchase consideration Details of the fair value of the assets and liabilities acquired are as follows: 2,904 595 3,499 Fair value $000 Cash Trade receivables Prepaid expenses Property plant and equipment Intangible assets: customer contracts Trade payables GST/HST payable Current tax liability Deferred tax liability Finance lease liability Net identifiable assets acquired Add: Goodwill Net assets acquired 395 531 16 23 248 (620) (2) (27) (66) (7) 491 3,008 3,499
There were no contingent assets or liabilities identified and recognised at the time of acquisition or subsequently. The goodwill is attributed to the skills and technical talent of the employees of Reaction Consulting and the synergies expected to be achieved from integrating the business into Ausencos existing operations. It will not be deductible for tax purposes. (i) Deferred consideration $0.7 million of the purchase consideration is payable in two equal installments on the first and second closing date anniversary of the acquisition. These payments are not contingent on any future event. (ii) Revenue and profit contribution The acquired business contributed revenues of $3.3 million and net profit of $0.3 million to the Group for the year. These are the same contributions that Reaction Consulting would have made to the Group had the acquisition occurred on 1 January 2012. (b) Purchase consideration - cash outflow: 2012 $000 Outflow of cash to acquire subsidiary, net of cash acquired Cash consideration Less: balances acquired Cash Outflow of cash - investing activities 2,904 (395) 2,509
Acquisition-related costs Acquisition related costs of $65,000 are included in office and administration expenses in profit or loss and in operating cashflows in the statement of cashflows.
84
37 Financial risk management

The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risks and aging analysis for credit risk. The Groups principal financial instruments comprise cash and borrowings. The main purpose of these financial instruments is to partially finance the Groups operations and acquisitions. The Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations and acquisitions. The Group hedges a portion of its exposure to fluctuations in the translations on USD net assets into AUD by designating USD borrowings as a hedging instrument. Exchange differences arising on the translation of USD currency borrowings, to the extent that they are in an effective hedging relationship, are recognised in the statement of comprehensive income to match the exchange differences on the translation of hedged USD net assets. The main risks arising from the Groups financial instruments are interest rate risk, foreign exchange risk, cr edit risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. The largest contributor to the Groups revenue is from the receipt of Australian dollars, although the prices received are influenced by major movements in exchange rates, particularly that of the United States dollar and the Canadian dollar relative to the Australian dollar. The Group does not currently hedge any of this indirect currency exposure. (a) Market risk (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the United States dollar. The amounts below represent the AUD equivalent at 31 December 2012 of USD financial assets and liabilities in entities within the Group whose functional currency is not USD and that are not designated as cash flow hedges:
Consolidated 2012 $'000 Financial assets Foreign cash held Receivables 4,631 9,766 14,397 Financial Liabilities Trade creditors and other accruals Loans Net exposure 405 13,870 14,275 122 44 5,474 5,518 7,834 7,556 5,796 13,352 2011 $'000
85
37 Financial risk management (continued)

(a) Market risk (continued) (i) Foreign exchange risk (continued)
At 31 December 2012 and 31 December 2011, the Group did not have any forward currency contracts or foreign exchange options to cover the exposure to foreign currency risk in United States dollar receivables. The following sensitivity is based on the foreign currency risk exposures in existence at the balance sheet date. With all other variables held constant, the below table illustrates how post tax profit and equity for the Group would have been affected had the Australian dollar had moved against the United States dollar: Post Tax Profit Higher / (Lower) 2012 $'000 AUD / USD + 10% AUD / USD - 5% (8) 5 2011 $'000 (504) 289
Consolidated
The movements in profit are due to the movement in foreign exchange rates which impact the fair value of financial assets and liabilities denominated in foreign currencies. (ii) Interest rate risk The Group's exposure to market risk for changes in interest rates relates primarily to the Group's long term borrowings. At 31 December 2012 and 31 December 2011, the Group had the following mix of financial assets and liabilities exposed to variable interest rate risk: Consolidated 31 December 2012 Weighted average interest rate % Financial assets Cash assets 0.6 0.6 Financial liabilities Bank loans Net exposure 3.5 3.5 41,799 41,799 (31,494) 4.3 4.3 66,636 66,636 (47,089) 10,305 10,305 0.9 0.9 19,547 19,547 Balance $'000 Consolidated 31 December 2011 Weighted average interest rate % Balance $'000
86

(a) Market risk (continued) The board and management believe the balance date risk exposure is representative of the risk exposure inherent in the financial instruments. The Group regularly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative financing, alternative positions and the mix and variable interest rates. The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet date: Higher/ (Lower) 2012 $000 Profit Consolidated +1% (100 basis points) -0.5% (50 basis points) 2012 $000 Equity 2011 $000 Profit 2011 $000 Equity
(220) 110
(127) 64
(b) Credit risk Credit risk is managed on a Group basis. Credit risk is the risk of financial loss to Ausenco if a customer or counterparty to a financial instrument fails to meet its contracted obligations, and arises principally from Ausencos receivables from customers. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers in accordance with policies The Group also has a policy in place to ensure that surplus cash is invested with financial institutions of appropriate credit worthiness. The credit risk of financial assets of the Group which have been recognised on the balance sheet is generally the carrying amount, net of any provisions for doubtful debts. Refer to note 11(b) for analysis of past due but not impaired receivables. For some trade and other receivables the Group may also obtain security in the form of guarantees, deeds of undertaking or letters of credit or shares in listed companies which can be called upon if the counterparty is in default under the terms of the agreement.
87

(c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient assets to meet liabilities as they fall due. The Group ensures that it can meet its financial obligations as they fall due by maintaining sufficient reserves of cash and short term deposits to meet forecast cash outlays. The Group has access to the following undrawn borrowings facilities at the end of the reporting period: 2012 $'000 SECURED FACILITIES Total facilities available: Overdraft facilities Multi-option facilities Multi-currency loan facility Asset finance facility Bank guarantee and letter of credit 20,000 59,123 100 50,000 129,223 Facilities not utilised at balance date: Overdraft facilities Multi-option facilities Multi-currency loan facility Asset finance facility Bank guarantee and letter of credit 20,000 100 23,101 43,201 UNSECURED FACILITIES Total facilities available: Performance bonds and letters of credit 19,279 19,279 Facilities not utilised at balance date: Performance bonds and letters of credit 19,818 19,818 20,000 100 26,251 46,351 20,000 66,636 100 50,000 136,736 2011 $'000
18,508 18,508
13,417 13,417
88

(c) Liquidity risk (continued) The bank overdraft and bank guarantee and letter of credit facilities may be drawn at any time. The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period from balance date to the contractual maturity date. As the amounts disclosed in the table are the contractual undiscounted cash flows, their balances will not necessarily agree with the amounts disclosed in the balance sheet. 0-1 Year 1-2 Years 2-5 Years 5+ Years 2012 Non-derivatives Trade and other payables Borrowings and future interest payments Total non-derivatives $'000 81,413 31,671 113,084 $'000 36,737 36,737 $'000 $'000 Total $'000 81,413 68,408 149,821 Carrying Value $'000 81,413 64,402 145,815
2011 Non-derivatives Trade and other payables Borrowings and future interest payments Total non-derivatives 84,550 12,205 96,755 27,692 27,692 35,596 35,596 84,550 75,493 160,043 84,550 69,066 153,616
(d) Cash flow and fair value interest rate risk The interest bearing assets of the Group is cash. Please refer to note 37(a)(ii) for the interest rate analysis and note 10 for interest bearing asset details. (e) Capital management risk The Groups objectives when managing capital is to safeguard its ability to continue as a going concern, so that it may continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal 1 capital structure to reduce the cost of capital. As at 31 December 2012, the Groups net debt was $11,776,000 (2011: $1,405,000). In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. Management also measures the gearing position of the Group to ensure that banking debt covenants are complied with. During the year, the Group announced its intention proceed with a share buy-back of up to 5% of the companys issued capital. Neither the Company nor any of its subsidiaries is subject to externally imposed capital requirements. (f) Fair value measurements The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The Group applies fair value measurement using the following fair value hierarchy: a) b) c) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2), and inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
At 31 December 2012, the Group did not have any Available-for-sale financial assets. (2011: $28,000).
1
This performance measure is discussed in detail on page 94
89
38 Events after the reporting period

Effective 1 January 2013, the Group has restructured its reporting segments internally. A full analysis of the impact on segment reporting disclosures and re-allocation of assets will be carried out during 2013. No other matter or circumstance has arisen since 31 December 2012 that has significantly affected, or may significantly affect: (a) the Group's operations in future financial years, or (b) the results of those operations in future financial years, or (c) the Group's state of affairs in future financial years.
90
Ausenco Limited Directors' declaration 31 December 2012 In the Directors' opinion: (a) the financial statements and notes set out on pages 24 to 90 are in accordance with the Corporations Act 2001, including: complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory (i) professional reporting requirements, and (ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2012 and of its performance for the year ended on that date, and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable, and at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in note 35 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 35.
(b) (c)
Note 2(b) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. This declaration is made in accordance with a resolution of Directors.
Zimi Meka Director
George Lloyd Director Brisbane 19 February 2013
91
Independent auditors report to the members of Ausenco Limited

Report on the financial report We have audited the accompanying financial report of Ausenco Limited (the company), which comprises the balance sheet as at 31 December 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors declaration for the Ausenco Limited (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at the year's end or from time to time during the financial year. Directors responsibility for the financial report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditors responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
92
PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 DX 77 Sydney, Australia T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditors opinion In our opinion: (a) the financial report of Ausenco Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entitys financial position as at 31 December 2012 and of their performance for the year ended on that date; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(ii)
(b)
the financial report and notes also comply with International Financial Reporting Standards as disclosed in Note 2.
Report on the Remuneration Report We have audited the remuneration report included in pages 7 to 21 of the directors report for the year ended 31 December 2012. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. Auditors opinion In our opinion, the remuneration report of Ausenco Limited for the year ended 31 December 2012, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
S P Neill Partner
Brisbane 19 February 2013
93
Ausenco Limited Alternative performance measures 31 December 2012
Alternative performance measures

In addition to using profit as a measure of the group and its segments financial performance, Ausenco uses EBITDA, adjusted EBITA, net debt, net gearing ratio and EBITDA to net financing costs ratio. These measures are not defined under IFRS and are, therefore, termed Non-IFRS measures. Adjusted EBITA is defined as group profit before net interest, tax and amortisation (excluding amortisation of other intangible assets), while EBITDA is group profit before net interest, tax, depreciation and amortisation. These measures are considered to be useful measures of our operating performance because they approximate the underlying operating cash flow by eliminating depreciation and/or amortisation. Net Debt consists of borrowings (both current and non-current) less cash and cash equivalents and Net gearing ratio is defined as Net Debt divided by Shareholders Equity plus Net Debt. Net debt and Net gearing ratio are measures of the groups indebtedness and provides an indicator of the balance sheet strength. EBITDA to total financing costs ratio is defined as EBITDA divided by interest expense and is useful because it demonstrates the ability of the Group to pay interest expense to external financiers in compliance with Funding facilities. These above mentioned measures are commonly used by management, investors and financial analysts to evaluate companies performance. A reconciliation of these non-IFRS measures and specific items to the nearest measure prepared in accordance with IFRS is included in the table below. The non-IFRS financial information contained within this Directors' Report and Notes to the Financial Statements has not been audited in accordance with Australian Auditing Standards. 2012 Notes 2011 $'000 $'000
Profit before income tax Finance costs Interest income EBIT Amortisation of intangibles other Intangibles Adjusted EBITA Amortisation of intangibles software EBITA Depreciation EBITDA 6 6 6 7 5
55,549 3,507 (1,265) 57,791 1,769 59,560 2,513 62,073 5,914 67,987
33,562 4,742 (487) 37,817 2,189 40,006 1,805 41,811 5,163 46,974
Borrowings - Current Borrowings - Non-Current Total borrowings Cash Net debt
18 18 10
(29,347) (35,054) (64,401) 52,625 (11,776)
(9,268) (59,798) (69,066) 67,661 (1,405)
94
Corporate Directory
Directors Wayne Goss Zimi Meka George Lloyd Greg Moynihan Mary Shafer-Malicki Bob Thorpe Hank Tuten Chief Financial Officer Craig Allen Company Secretary Patrick OConnor Principal Registered Office in Australia 144 Montague Road South Brisbane Qld 4101 Australia T: +61 7 3169 7000 F: +61 7 3169 7001 Principal Share Register Computershare Investor Services Pty Ltd 117 Victoria Street West End Queensland 4101 Australia www.computershare.com Auditor PricewaterhouseCoopers Level 15, Riverside Centre 123 Eagle Street Brisbane Qld 4000 Australia www.pwc.com.au Lawyers McCullough Robertson Lawyers Level 11, Central Plaza Two 66 Eagle Street Brisbane Qld 4000 Australia www.mccullough.com.au Principal Bankers Australia and New Zealand Banking Group Limited (ANZ) www.anz.com.au National Australia Bank Limited (NAB) www.nabgroup.com Securities Exchange Listing Ausenco Limited shares are listed on the Australian Securities Exchange under the code AAX. Website address For further information visit www.ausenco.com Chairman Chief Executive Officer Non Executive Director Non Executive Director Non Executive Director Non Executive Director Non Executive Director

Ausenco 2012 Preliminary Final Report

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Ausenco Financial Report 2012

Appendix 4E Preliminary final report

Ausenco Limited (ASX: AAX)

31 114 541 114

Current reporting period Previous corresponding period

31 December 2012 31 December 2011 A$000 Current period

Results for announcement to the market

15.6% 57.1% 57.1%

$633,485 $41,395 $41,395

Amount per security

Franked amount per security at 30% tax

10.1 cents 10.0 cents

9.8 cents 3.1 cents 1 May 2013

3.4 cents 3.1 cents

Appendix 4E Preliminary final report

Current reporting period $0.60

Net tangible asset backing per ordinary security

Previous corresponding period 31 December 2011 $0.61

Date: 20/02/2013 Patrick OConnor Company Secretary

Ausenco Limited Directors' report 31 December 2012

Segment revenues 2012 $'000

Segment Adjusted EBITA 2012 2011 $'000 $'000

This performance measure is discussed in detail on page 94

Ausenco Limited Directors' report 31 December 2012 (continued)

This performance measure is Discussed in detail on page 94

Ausenco Limited Directors' report 31 December 2012 (continued)

Ausenco Limited Directors' report 31 December 2012 (continued)

Ausenco Limited Directors' report 31 December 2012 (continued)

12,722 135,137 87,338 235,197 291,821

19,080 124,519 46,782 190,381 206,020

56.3 62.7 26% 31.8 2.19 (84%)

70% 60% 63% 73% 73% 78% 73% 78%

30% 16% 15% 11% 11% 9% 11% 9%

0% 24% 22% 16% 16% 13% 16% 13%

Ausenco Limited Directors' report 31 December 2012 (continued)

Less than 4% above CPI target

0% 20% for executives 50% for selected management personnel

Less than 50% percentile

4% above CPI target

Between 50th and 75th percentile

From 51st to 75th, 0.8% increase for each 1.0% percentile

2011 Options and Rights

Options granted in the current financial year

2012 19-Feb-08 25-Feb-08 05-Mar-08 23-Jun-08 17-Mar-09 01-Jan-11 01-Jan-12

19-Feb-15 19-Feb-15 19-Feb-15 19-Feb-15 17-Mar-14 01-Jan-16 01-Jan-17

Weighted average exercise price

Salary and fees

STI/ Cash Bonus

$ 199,121 68,807 199,121 68,807

Zimi Meka Sub-total

FY2012 FY2011 FY2012 FY2011

831,284 667,328 831,284 667,328

KEY MANAGEMENT PERSONNEL Craig Allen Nick Bell

Greg Chrisfield a FY2012

Frank Mellish Neil Trembath Paul Young Sub-total Grand total

227,315 3,251,868 - 2,845,129 227,315 4,478,123 - 3,819,198

Ausenco Limited Directors' report 31 December 2012 (continued)

Balance at 1 Jan 2012a

Shares granted as remuneration

Shares acquired during the year

Received on exercise of Balance at Shares sold options / 31 Dec 2012 rights

2012 Options and Performance rights DIRECTORS

Balance at 1 Jan 2012a