ANNUAL REPORT 1999 - Morningstar, Inc.

“Challenge is our Tradition”

A N N U A L R E P O R T 1 9 9 9

Brought to you by Global Reports

Registered Office6th Floor251 St Georges TerracePerth, Western Australia, 6000Telephone: +618 9281 9281Facsimile: +618 9481 6699E-mail: [email protected]: www.clough.com.au

Company SecretariesR M ReidM J Uchanski

Audit CommitteeR W Kelly - ChairmanJ M CloughP J KnightR M ReidM J Goddard

DirectorsW H Clough, AO, OBE - ChairmanB E Hewitt - Managing DirectorR J JewkesR M Reid - Finance DirectorM J Goddard - Chief Financial OfficerP J KnightJ M CloughW M CloughR W Kelly

Notice of Annual General Meeting 1999Notice is hereby given that the AnnualGeneral Meeting of Clough Limited will beheld at the Parmelia Hilton Hotel, Mill Street,Perth, Western Australia on Wednesday 17thNovember,1999 at 10:00am.

Clough Limited ACN 008 678 813

PageContents

Year Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

People, Workplace Safety and the Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Financial Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Chairman’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Review of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Business Areas

Oil, Gas and Petrochemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Mining and Minerals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Operations and Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Concise Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Shareholder and Investor Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Front Cover - Phosphoric Acid Plant, Queensland - major turnkey development for the WMC Fertilizers Project.

Back Cover - “Java Constructor” offshore construction barge, North West Australia - Varanus Sales Gas Pipeline Project for Apache Energy.


- Care for our people, the community and the environment.

- Value delivered to our clients.

- People who, as leaders in their field, choose to work for Clough.

- Engineering skill and creativity.

- Organisational learning and development.

- Growth with superior returns to our shareholders.

Our mission is to assist our clients to initiate, expand and manage their businesses through theapplication of safe, high quality and competitive engineering, management and contracting skills.

The pillars of our success are:

Australia’s reputation for engineering excellence has been at the cornerstone of the Clough

Group’s development as a leading engineering and construction contractor. Since 1919, the

organisation has grown on the strength of its multidisciplinary skill and successful

geographic expansion. Now a diversified public company, Clough provides a complete

project development service to leading international clients in the oil and gas,

petrochemicals, mining and minerals, infrastructure, manufacturing, and property industries.

The Group’s turnkey capabilities range from complex front-end engineering design to

construction and long-term operations and maintenance services. Innovative engineering

and the flexibility to meet changing market conditions have assisted Clough to deliver world

class solutions in the most remote and isolated regions of Australia, Asia, the South Pacific,

Middle East and offshore Europe. Underpinning this performance is a proven commitment to

the highest international standards of safety, quality and training in all operations.

The

Com

pany

Company Structure CLOUGH LIMITED AUDIT COMMITTEE

CLOUGHENGINEERING LIMITED

NORTHERN AUSTRALIA & PNG

OFFSHORECONSTRUCTION

SHARK BAYRESOURCES PTY LTDCLOUGH PROPERTY

GROUP SUPPORT& DEVELOPMENT

SOUTHERNAUSTRALIA &

NEW ZEALANDWESTERN

AUSTRALIAINTERNATIONALPT PETROSEA TBK INDONESIA

WUNDOWIEFOUNDRY PTY LTD

ENTACTCLOUGH PTY LTD

1Brought to you by Global Reports

2

• The Woodman Alliancecomprising Clough,Kinhill Pty Ltd and our client, the WaterCorporation of WA, is progressing onthe major $140 million Woodman PointWastewater Treatment Plant Project, in Western Australia.

• The Clough Lucas Joint Venture has undertaken the first twocontracts under a five-year allianceagreement with leading energy distribution company AGL Construction.

• Acquisition of a 50% interest in theCovus Corporation extends specialistsupport and maintenance services tothe offshore oil and gas industry.

• PT Bukit Baiduri Enterprise Contract Coal Mining Extension, Indonesia.

• Ballarat Water Treatment Facilities for Thames Water International, Victoria.

• Telfer Underground Contract MiningExtension for Newcrest Mining, Western Australia.

• Tunu Gas Field Development forPT Total Indonesie, Indonesia.

• The Company wins its first contract in Brunei to undertake two offshorepipeline installations and associatedplatform modifications for BruneiShell Petroleum.

• Consultancy Services for a Coke Calcination Project for the Kuwait National Petroleum Company.

• Gosowong Gold Mine Earthworks for PT Nusa Halmahera Minerals, Indonesia.

• New Perth headquarters for the Chamber of Commerce andIndustry of Western Australia.

•Continued improvement in safety performance with an LTIFR of 2.2 across the Group.A significant achievement was a full year of lost time injury free operations by theNorthern Australia and PNG Division.

•Record profit attributable to shareholders up 3% to $28.1 million.

•Record revenue up 7% to $646.8 million.

•Shareholders’ equity up 12% to $133.2 million.

•Total Company assets up to $317.2 million.

•Clough Offshore successfully installed 160 kilometres of pipelines for Apache Energy off the north west coast of Western Australia.

•Commissioning of a multi-million dollar turnkey phosphoric acid plant is nearingcompletion at the WMC Fertilizers Project, in Queensland. Four substantial new contractsassociated with the project were also awarded during the year.

•The $200 million Graham Farmer Freeway Project, in Western Australia, is on target for completion ahead of schedule, in early 2000.

World class alliances providegrowth opportunities

Significant new contracts secured

Successful project delivery returnsa strong financial performance

Graham Farmer Freeway Tunnel - Ian Chevis, Deputy Project Director and

Glen Shepherd, Area Manager Tunnel Construction

Dampier Port Upgrade

Woodman Point Environmental Enhancement Project, Contract Signing -(Seated L/R) Tim Humphry - Chief Operating Officer Australia, and Brian Hewitt - Managing Director (Standing L/R) The Hon. Peter Jones - Chairman of Water Corporation,Garry Meinck - Acting Chief Executive Officer of Water Corporation, Barry Mahon - Manager of Brown and Root Shared Services, andAndrew Fletcher - Managing Director of Kinhill Pty Ltd.


3

• Dampier Port Upgrade forHamersley Iron,Western Australia.

• Neerabup Groundwater Treatment Plantfor the Water Corporationof Western Australia.

• Earth Station Antennas for the Department of Defence,Northern Territory.

• Kellogg Joint Venture front -end engineering design and costingfor the proposed North West ShelfLNG Expansion Project, Western Australia.

• Nickel Plant Expansion Contractsfor PT Inco Indonesia.

• Asgard A Risers installed and B and C Mooring Installations progressing for Statoil, North Sea.

Diverse range of projects delivered during the yearNeerabup Groundwater Treatment Plant

Asgard ‘A’ Field - Flexible Riser Installation


4

People the Key to the Future

Skill development, career progression and

equal employment opportunity for all

employees are priorities underpinning the

Group’s strategy for sustained growth and

diversification. Across its operations,

Clough employs more than 4,000 personnel,

including some 800 professional and

technical staff. With the support of this

innovative and experienced workforce,

Clough is able to deliver a comprehensive

range of services and to confidently

enter new regions.

Education and Development

A culture of continuous learning and

expanded competency is integral as Clough

positions itself for ongoing growth in the

global marketplace. A range of education and

training programmes have been developed

which combine formal inhouse training with

external training focused on areas such as

safety, project management, commercial

awareness, procurement and quality.

External training has ranged from the

attendance by senior management

personnel at Harvard University’s Advanced

Management Programme, to personal

development courses for staff at all levels,

and specific trade and skills training in

Australia and Indonesia.

Scholarship Programme

To promote the Company as an employer of

choice, Clough has offered undergraduate

engineering scholarships in Western

Australia since 1972, and in Indonesia since

1987. The Company maintains close contact

with scholarship recipients throughout the

period of award, resulting in the successful

recruitment of many graduates who have

gone on to hold senior positions within the

organisation. A total of 14 scholarships and

7 special grants were awarded this year to

students from Curtin University and the

University of Western Australia. The 1999-

2000 scholarship programme will be

extended Australia-wide.

The Queen’s Trust for Young Australians

Clough Offshore engineer Kim Lamb was

one of a hundred young Australians

selected to attend the Queen’s Trust Forum,

in Sydney. The annual forum is designed

to enhance the development of Australia’s

future leaders by encouraging participants

to focus their attention, talent and

energy on a range of issues currently

facing the nation.

Occupational Health and Safety

Clough’s safety performance has continued

to improve and we have reached our lowest

ever lost time injury frequency rate of

2.2. Although this performance continues to

be better than industry standards, the

Company strives for ongoing improvement

with the only acceptable goal being zero

lost time injuries.

Focus on safety was strengthened during

1999 with the implementation of a uniform

improvement campaign known as

“Safety Matters.” The first phase of this

programme involved reviewing and rewriting

all Company policy statements for safety,

environmental and injury management. This

has introduced a common standard for

safety management plans, manuals,

procedures and systems throughout the

Group and is scheduled to be finalised

in the latter half of 1999.

Rhodes Scholar

In recognition of his outstanding academic

performance, sporting achievements and

community contribution, Clough Offshore

engineer Craig Wood has been named WA

Rhodes Scholar for 1999. Craig received the

award after graduating from the University

of Western Australia with honours in

science and engineering.

Clough’s highly skilled and talented workforce provides animportant competitive advantage as the Company continues topursue a diverse range of multidisciplined projects.

Brian Hewitt with Craig Wood - 1999 Western Australian Rhodes Scholar

Safety Management Strategy Conference - (standing) Tricia Payne, Safety Advisor

Queen’s Trust - Clough Offshore’s Kim Lamb(far right) with other Western Australian delegates


5

The Environment

Clough has developed a policy which

reflects the Group’s commitment to high

standards of environmental performance.

The policy is founded on the understanding

that all incidents are preventable and that

preservation of the environment will be

secured through pro-active assessment,

management and control of risk.

Since 1992, the Shark Bay Salt Joint

Venture has been actively involved in

reintroducing rare native species to the

Australian mainland. The company, together

with the Useless Loop Community Biosphere

Group and CSIRO, has helped to establish a

colony of 200 Burrowing Bettongs and 50

Western Barred Bandicoots on the

Heirisson Prong Reserve.

Clough and the Community

Clough has become one of the founders of a

new centre for diabetes research, in

Western Australia, following a major

donation to the Diabetes Research

Foundation. During the year, the Company

supported a range of community activities

including:

•Cystic Fibrosis Association of WA

•Anglicare WA Winter Appeal

•Royal Flying Doctor Service

Telemedicine Fund

•Australian Academy of Technological

Sciences and Engineering

•The Institution of Engineers, Australia

(WA Division)

Full Body Safety Harness - worn during steel erection activities on the Townsville Port Facilities Project, Queensland

Western Australian Industry and Export Award,the Premier’s Award for Excellence and the NationalThomas Cook Export of Services Award

Winner of Top Export Awards in 1998


6

In the 1998/99 financial year, revenue

increased by 7% to $646.8 million while

operating profit before tax grew by 14% to

$42.2 million.

A total of $28.1 million in profit attributable

to shareholders of Clough Limited resulted

in a return on average shareholders’ funds

of 28.2%, after taking into account a 43.3%

increase in income tax expense and a 57.3%

increase in minority interests.

The Company has declared its first fully

franked dividend since listing on the

Australian Stock Exchange in March, 1998.

The year-end dividend of 2.5 cents per share

fully franked follows the payment of an

unfranked dividend of 2 cents per share for

the half-year. The combined payout of 4.5

cents per share totals $15.1 million and

represents a payout ratio of 53.6%.

An increase in activity in Australia is expected

to result in sufficient taxes being paid

domestically to also enable the year 2000

interim dividend to be fully franked. Clough

has activated a Dividend Reinvestment Plan

offering participating shareholders the

opportunity to acquire shares at a 5%

discount on market prices.

Full details of the plan are contained in

a separate document distributed to

shareholders.

During the year, Clough invested $33.6

million on property, plant and equipment.

This included a significant $8 million

investment by the Offshore Division in

refitting the “Java Constructor” barge for

pipelay operations and acquisition of the

remaining half interest in the vessel. To

meet work requirements, Indonesian

subsidiary PT Petrosea Tbk continued to

upgrade its plant fleet with additional

capital expenditure of $18 million. A

number of items were purchased at

discounted prices.

Ownership of the offshore construction

vessel, MSV “Maxita” has been moved from

Portuguese asset holding companies to a

Luxembourg joint investment company and

now appears in the accounts as a $37.5

million investment. The vessel is still owned

jointly by Clough and Saipem SpA, of Italy,

and Clough’s 50% share was previously

included in property, plant and equipment.

Clough’s net cash position at the year end

declined slightly to $21.8 million reflecting

the combination of dividends paid and

capital investments exceeding operating

cashflow. The Company’s strong balance

sheet will facilitate ongoing expansion of

the business while maintaining sufficient

capacity to provide bank backed bonds

essential in the construction industry.

As at June 30, 1999, a total of $128.7

million remained outstanding in construction

bonds and borrowings against a total main

operating facility of $350 million.

With shareholders funds of $133.2 million and

assets of $317.2 million, Clough has sufficient

borrowing capacity to pursue strategic

investments with the potential to complement

and expand its present business. This has

already been demonstrated with the

acquisition of a 50% interest in subsea

engineering and services contractor, Covus

Corporation, and moves to secure the

remaining 33% interest in the specialist

building company Entact Clough.

The Clough Group has strengthened its position with another record financial result.

95

42.2

96

7.1

97

16.1

98

31.1

99

37.0

9695

31.4

97

4.8

98 999795 96 98 999795 96 98 99 95 96

182.

2

97

217.

7

98 99

315.

0

245.

7

559.

4

369.

3

600.

8

605.

3 646.

8

548.

8

396.

4

373.

5

427.

7 435.

4

1.4

20.5

29.5

317.

2

4.8

Operating ProfitBefore Tax

$ Millions

OperatingProfit After Tax andBefore Minorities

$ Millions

UncompletedWork in Hand

$ Millions

Total Assets$ Millions

Total Revenue$ Millions5 Year Statistics


7

Asian Review

Turnover from the Asian region totalled

$154.2 million for the 1998/99 financial year

with Indonesian subsidiary PT Petrosea Tbk

returning another steady contribution to the

Group’s performance.

Clough has been a majority shareholder of

this Indonesian public company since 1984

and now owns 73% of the business.

Throughout the year, Petrosea retained its

existing client base which consists of export-

orientated companies. The company’s

philosophy of pursuing contracts

denominated in US dollars has been

significant in maintaining a strong and

profitable position.

Petrosea remains debt free and has

significant cash-on-hand of $24 million.

These reserves enable the organisation

to pursue cost-effective capital equipment

purchases as well as potential investment

opportunities.

Clough has maintained its strong presence

in Asia where the Company’s Singapore

supply base continues to provide

valuable support to local clients and

Group operations. The Group has also

identified new opportunities in locations

such as Papua New Guinea, Thailand,

Pakistan and the Philippines.

Risk Management

A comprehensive risk management strategy

has been developed to safeguard the

Company’s assets and minimise operating

liabilities.

This framework ensures that all sources of

business risks are identified and properly

managed and comprises stringent controls

governing:

•Finance and treasury operations.

•Guidelines and limits for the approval of

capital expenditure and investment.

•A Group regulatory compliance programme

covering key areas such as environment,

occupational health and safety, trade

practices, equal opportunity,

anti-discrimination, sexual

harassment and drugs and alcohol.

•Comprehensive insurance coverage for

plant and equipment, contract works,

product and public liability, expatriate

medical and motor vehicle claims.

Year 2000 Compliance

Detailed auditing of all computer systems

has been progressing since early 1997 and

is reaching the final stages with all

corrective action scheduled to be completed

by the end of September, 1999.

The compliance process is being coordinated

by a steering committee which has adopted

the British Standards Institute definition

(BSI-DISC PD2000-1) as its benchmark. To

date, internal systems and equipment have

proven to be robust.

Outlook

The 1998/99 results demonstrate that

Clough has the financial reserves and

performance track record to achieve ongoing

growth in its business. We will continue to

expand and diversify in support of our

international clients and to take a

prominent role in larger, more complex

engineering and construction developments.

Year Ended 30 June 1999 1999 1998 % Change

Total revenue $m 646.8 605.3 +6.9

Work executed $m 627.2 579.1 +8.3

Value of uncompleted work in hand $m 435.4 427.7 +1.8

Operating profit before tax $m 42.2 37.0 +14.1

Operating profit after tax and before minorities $m 31.4 29.5 +6.4

Profit attributable to shareholders $m 28.1 27.4 +2.6

Total assets $m 317.2 315.0 +0.7

Net cash $m 21.8 31.3 -30.4

Total shareholders’ equity $m 133.2 118.4 +12.5

Undrawn facilities $m 221.3 209.3 +5.7

Financial Summary


8

The mining, oil and gas industries, which

are a large part of our client base, have all

had a difficult time in 1999. The calendar

year started with nearly all commodities at

historically low prices. During 1999 most

commodity prices have improved; oil has

doubled in price. This trend should

encourage companies to start thinking once

again of exploration and development. We

are confident of maintaining profits and

dividends in the year ending 30 June, 2000.

The financial year ending 30 June, 1999,

was our first full year as a public company.

The eighteen months since listing has seen

the Company grow strongly and meet or

exceed all projections made at the time of

the float. In contrast to the steady growth in

the Company the share price has fluctuated

from 85 cents on listing to below 50 cents,

to above 80 cents and currently is at 66

cents. It is very apparent that the share

price fluctuates according to the investors’

perception of the total market with little

reference to the performance of our

Company. We know we have a good sound

organisation. We know our people are the

best. We know we will continue to do

better and we will continue to do what is

best for the Company. This way we expect

over the long term we will gain the respect

and confidence of the market and it will

price us more responsibly.

The Company has a team of about 800

professional and technical staff-mainly

engineers, but covering nearly all

disciplines. They make a keen young

team of enthusiasts who are continually

working at the leading edge of world

development in a wide range of activities.

The demand on management is to

keep providing interesting challenges

and to give them their heads to allow

innovative solutions to emerge. Energetic

application of intellect is undoubtedly

our organisation’s greatest asset.

It allows the Company great flexibility in the

work it does. It allows the Company to

adjust to the constant and accelerating

changes that are a fact of life today with

minimum disruption. Companies are no

longer valued on their net tangible assets -

their plant and equipment, their factories

and buildings. Companies today are valued

on their profit earning capacity, which to a

large extent comes from their intellectual

wealth. We have, in Clough, an

organisation with great intellectual

horsepower and our intention is to continue

to develop into the high-tech areas of our

business. We are confident we have the

young people with the ability to do this.

This year will mark eighty years since my

father, John (Jack) Oswald Clough, a

bricklayer was discharged as a

commissioned officer from the army after

spending over four years of the First World

The Company had a great year in 1999 with a record turnover and recordprofit. Year ending 30 June, 2000 is going to be tougher.

W.H. (Harold) Clough AO, OBE - Chairman Total Shareholders’ Equity

1995

1996

1997

1998

1999

Years

10

0

20

30

40

50

Equi

ty $

Mill

ions

60

70

80

90

100

110

120

80.2 83

.4

94.3

118.

4

130

133.

2


9

War (1914-1918) in Gallipoli and France. He

joined his brother William (Bill) Edwin

Clough, a carpenter, in a partnership

“Clough Brothers”, and they commenced

building homes and schools in Perth. This

marked the start of Clough Limited as it is

today. During the Great Depression of the

1930’s building work was almost non-

existent. Bill Clough left to go gold mining

at Marvel Loch, became Mayor of the town

and ran the state battery. My father, Jack

Clough, was in the army during the Second

World War (1939 - 1945), rose to the rank of

Lieutenant Colonel and commanded the

2/3rd Field Regiment, Royal Australian

Artillery. On discharge, he recommenced

construction of industrial and commercial

buildings. I joined him in 1954 and formed

the partnership of J.O. Clough and Son. We

had two employees. The partnership was

incorporated as J.O Clough and Son Pty Ltd

in 1956 and my father died just before the

completion of our first civil engineering

project - the Narrows Bridge - in 1959.

Today, the Company operates in Australia,

Asia, the South Pacific, the Middle East, and

Europe.

The Company spends a large amount of time

at each board meeting agonising over

safety. We must continually strive to

achieve our objective of zero injuries. Our

employees must be safer at work than at

any other part of their daily lives. It is not

enough to have polices and procedures,

important though these are.

Our people at every level must be taught

and trained to think safety. We are

gradually getting this through. About a year

ago, one of our institutional investors was

visiting us in Indonesia. When he arrived at

the airport he was met by one of our

Indonesian drivers who took his bags and

escorted him to the car. When they were

seated our driver asked the visitor to fasten

his seat belt. He responded by saying, “seat

belts are not compulsory in Indonesia”. Our

driver said, “Yes sir, that is right, but it is

company policy and I cannot go until your

seat belt is fastened”. Our visitor was duly

impressed and commented favourably on

the incident. We have spent a prodigious

amount of time and money on safety

training in Indonesia, and it has made a

difference. Clough Limited and its

subsidiaries employ over 4,000 personnel

worldwide. This workforce together with

our subcontractors for whom we are also

responsible, perform about a million

manhours of work per month on project

sites. In July, 1999, every site throughout

the Company’s operations was accident free

and we had zero lost time injuries. Our

challenge now is to sustain this record

safety performance as we have shown it

can be done.

Peter Knight who took over from me as

Managing Director of Clough Limited in

1989 retired in November, 1998. Peter was

responsible for growing our organisation

five fold during the 1990’s. He managed the

listing of the Company in March, 1998,

which was a great success. He brought

order, management and control into the

Company. He was responsible for the staff

participation in the shareholding of the

Company, which I am sure, has helped in its

success. He was a great colleague. Peter

has agreed to stay on as a Director of

Clough Limited.

I would like to conclude by paying tribute to

our staff and colleagues. We have a fine

team. Engineering and construction can be

very satisfying. It is productive and creative.

It is great to see the result of our work and

usually to know that the monuments that

we build will be around for a lifetime. It is

great to see the results of our creativity

adding both to the wealth of our country and

the quality of life of all of us. Not only is it

satisfying, but it can also be great fun and

the challenge to us as managers is to make

sure all our staff participate in both the

satisfaction and the fun. If we can continue

to engender that ethos we will ensure a

great and successful Company.

Tota

l Rev

enue

$ M

illio

ns

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

Years

100

0

200

300

400

500

600

189.

6

403.

1

369.

3

559.

4 600.

8

605.

3

700

345.

9

505.

5

209.

4

646.

8

W.H. (Harold) Clough AO, OBEChairman of Clough Limited

10 Year Company Growth Chart


10

Overall, the value of work executed

increased by 8% to $627 million, compared

with $579 million in 1997/98. Our order

book has continued to grow, topping last

year’s $1 billion milestone by a further $100

million, and uncompleted work in hand

remains steady at $435 million.

Strong contributions from both the oil and

gas and mining sectors accounted for 75%

of the year’s activities along with record

turnover from our Australian operations.

A key thrust for the year has been the

forging of significant new alliances through

which the Company continues to promote

and develop expertise in both engineering

and project management.

Increased operations and maintenance

capabilities, particularly in the oil and gas

sector, coupled with regional diversification,

has enabled Clough to successfully weather

market fluctuations and demonstrated the

flexibility and foresight which has

traditionally made our Company strong.

Safety is a high priority for all

operations and an important strategic

mechanism through which we create a

competitive edge.

Although we have achieved our best safety

record to date, and our performance is

better than industry standards, we continue

to strive for a target of zero injuries.

Notable achievements for the year include

over one million manhours lost time injury

free at each of the Sangatta, Pagerungan

Island and Rawas project sites, in Indonesia.

Significantly, the Company’s Northern

Australian Division has operated for a full

year without lost time injury.

South-East Asian operations

continue to perform profitably.

Our subsidiary PT Petrosea Tbk remains a

prominent force in Indonesia’s engineering,

construction and contract mining industries.

The outlook for contract mining remains very

positive with operations continuing

successfully for clients such as PT Newmont

Minahasa Raya, PT Bukit Baiduri Enterprise

and PT Barisan Tropical Mining.

Offshore, Petrosea is working on a major oil

and gas field development for PT Total

Indonesie on the Tunu Field, in East

Kalimantan.

Clough achieved another record performance for the 1998/99 financial yearin what proved to be a dynamic and challenging period for the engineeringand construction industry.

Work Executed (by location)

1995

1996

1997

1998

Years

100

0

200

300

400

500

Wor

k Ex

ecut

ed $

Mill

ions

600

Australia Overseas

179.

217

8.0

283.

6

304.

926

9.4

259.

7

258.

4

319.

4

167.

345

9.9

1999

Oil,

Gas

&Pe

troc

hem

ical

s

Min

ing

and

Min

eral

s

Infr

astr

uctu

re

Man

ufac

turi

ng

Prop

erty

10

0

20

30

40

50

Sect

or %

15

75

29

46

10

4

32

41

11

Work Executed Business Sector by %

1995

1996

1997

1998

1999

Years

2.0

0

4.0

6.0

8.0

LTIF

R

Lost Time Injury Frequency Rate

W.H. (Harold) Clough AO, OBEChairman of Clough Limited and Director of Clough Engineering Limited

Brian E. HewittManaging Director of Clough Limited and Chairman of Clough Engineering Limited

Robert J. JewkesDirector of Clough Limited andManaging Director and Chief ExecutiveOfficer of Clough Engineering Limited

5 Year Average

Clough Limited Board


11

The Singapore supply base has contributed

strongly to regional operations by assisting

its local clients and providing support for the

extensive refit of Clough Offshore’s “Java

Constructor” pipelay barge.

The Company has won its first contract in

Brunei where Clough Offshore and its joint

venture partner HJ Malai Mashhor General

Contractors has installed two offshore

pipelines and is also undertaking platform

modifications for Brunei Shell Petroleum.

While some of our competitors have

withdrawn from Asia during the past

two years, Clough has maintained a

strong presence in the region. We are

geared up and ready to pursue expanding

opportunities in Indonesia, as well as in

Papua New Guinea, Thailand, Pakistan

and the Philippines.

Clough Offshore’s contribution to

the year’s results demonstrates

the Company’s ability to compete

effectively in the demanding

offshore oil and gas arena.

The “Java Constructor” offshore

construction barge has proven to be

extremely effective when working in tandem

with the “Clough Challenge” shallow water

laybarge. In the northern waters of

Australia, major pipelines have been

installed at Apache Energy’s Varanus Island

and Wonnich Fields, and work is progressing

on BHP Petroleum’s Buffalo Field, in the

Timor Sea.

The MSV “Maxita”, operated by our SaiClo

Joint Venture, has also completed a full

season for British and Norwegian clients in

the North Sea, and extended its operations

to Canada and Libya for the first time.

A number of important strategic

relationships have been established during

the year including the Clough Lucas Joint

Venture which has secured a five-year

alliance contract for all of AGL’s pipeline and

compressor station work in Australia.

The first two projects have now been

undertaken in Western Australia and New

South Wales.

As part of the North West Shelf

development, Clough has been an active

participant in the high profile Kellogg Joint

Venture which is currently finalising front-

end engineering design and costing of the

proposed LNG Expansion Project.

Our engineers are also progressing with a

wide range of consultancy services for a

300,000 tpa coke calcination plant for the

Kuwait National Petroleum Company.

Clough has expanded into the support and

maintenance of offshore oil and gas

facilities by acquiring a 50% interest in

specialist underwater engineering and

services contractor, Covus Corporation.

Work Executed - Business Sector $ Millions

Richard M. ReidFinance Director

Michael J. GoddardDirector and ChiefFinancial Officer

Peter J. KnightDirector

J.M. (Jock) CloughDirector

Ross W. KellyDirector

W.M. (Bill) CloughDirector

1995 1996 1997 1998 1999 %

Oil, Gas and Petrochemicals 135.3 235.8 155.0 136.7 180.0 29

Mining and Minerals 134.1 137.7 249.0 317.1 290.7 46

Infrastructure 58.7 88.2 86.4 81.4 70.5 11

Manufacturing 19.2 45.3 42.2 23.7 61.4 10

Property 9.9 35.0 41.7 20.2 24.6 4

Total 357.2 542.0 574.3 579.1 627.2 100


12

Diversity of services has been the key

to another strong return from the mining

and minerals sector.

A significant milestone has been the successful

upgrading of Hamersley Iron’s Dampier Port, in

Western Australia. This complex brownfields

project involved comprehensive modifications

to two ports and associated bulk materials

handling systems. A carefully-planned

management strategy facilitated the work in a

series of 30 shutdowns during which the client

maintained production and exported record

tonnages.

During the year, we have been active in

contract mining in both Australia and

Indonesia. Our long-term relationship with

Newcrest Mining Limited is continuing at

Telfer, in Western Australia, where Clough has

operated since 1994. This underground mining

and development contract has been renewed

on the strength of our financial and technical

performance, as well as on the outstanding

safety record achieved.

Preliminary work began in March, 1999, at

Cobar Management’s CSA mine in New

South Wales. What began as a contract for

underground development has already been

extended to include blasting, loading and

trucking of ore to an underground crusher.

In Indonesia, Petrosea’s contract mining

operations continued, in addition to

significant new work at Gosowong and Batu

Hijau. The last of a series of contracts has

been finalised at PT Inco Indonesia’s fourth

nickel plant expansion project, in Sulawesi.

Increased government spending in

Australia has helped to revitalise

essential infrastructure.

Clough has capitalised on a growing

demand for high quality water supplies and

wastewater plant infrastructure with a

series of substantial new projects.

We are now a partner in the milestone

Woodman Alliance with Kinhill Pty Ltd and

the Water Corporation of WA in the

$140 million Woodman Point Wastewater

Treatment Plant Project, in Western

Australia. The project is a step forward in

relationship contracting and is a first for

public infrastructure projects of this scale in

Western Australia. This project maintains

Clough’s ongoing involvement with the

Water Corporation and follows the

successful completion of a design and

construction contract for a ground water

improvement plant at Neerabup.

Clough is also designing and constructing

new water treatment facilities for Thames

Water International, at Ballarat, in Victoria.

Together with our joint venture partner,

Environmental Solutions International,

Clough has reached the commissioning

phase of a unique fuel oil from wastewater

sludge plant at the Water Corporation of

WA’s Subiaco Wastewater Treatment Plant.

After nearly four years, construction of the

landmark $200 million Graham Farmer

Freeway, in Perth, has also reached the

closing stages. This demanding design and

construction project incorporates one of the

largest underground traffic tunnels of its

kind in Australia.

In the advanced communications field,

Clough has demonstrated its ability to

manage sophisticated multidisciplinary

projects with the recent successful

installation of earth station antennas for the

Department of Defence.

Clough Management

Group Headquarters - Perth, Western Australia

Timothy R. HumphryDirector Clough EngineeringLimited and Chief Operating Officer Australia

Tony E. SpeechleyDirector Clough EngineeringLimited and PresidentDirector of PT Petrosea

Jeremy J. RobertonDirector Clough EngineeringLimited and Manager ofInternational Division

Peter ToléDirector Clough Engineering Limitedand General Manager SouthernAustralia and New Zealand Division

Mirek J. UchanskiCompany Secretary andCorporate Financial Controller

Donald K. CornishGeneral Manager of WA Division

Bruce G. WhitefordGeneral Manager of NorthernAustralia and PNG Division


13

A multi-million dollar manufacturing

facility highlights Clough’s capabilities

in complex turnkey developments.

Our international consortium, with ABB

Engineering Construction Pty Ltd and the

Mitsui Engineering and Shipbuilding Co Ltd,

of Tokyo, is preparing to start up the

multi-million dollar turnkey phosphoric acid

plant for WMC Fertilizers, in Queensland

following mechanical completion in

August,1999. During the year, an additional

four contracts were awarded on this project

including a rock slurry filtration plant, a

mechanical draft cooling tower system, a

dry gypsum stacking plant, and reclaim,

storage and outloading facilities at the Port

of Townsville.

Clough continues to operate its own iron

and steel casting manufacturing facility in

Western Australia. The Wundowie Foundry

is a leading supplier to the agricultural and

mining industries and is currently developing

new products for growth opportunities in

export markets.

Vigorous marketing of high quality

residential land subdivisions has

returned excellent results.

Clough’s property development company

Landrow Limited has performed strongly as

land values continue to improve in Western

Australia. During the year, additional lots

were released to meet demand at the Jane

Brook and Ocean Park Estates. The prime

oceanfront Watersun Estate, in Mandurah

has now been fully developed with only

eight of the 260 residential blocks remaining

to be sold.

Landrow gained another accolade during the

year with the joint venture Mindarie Keys

Harbour Estate being named the premier

subdivision in Australia. The project

received the prestigious President’s Award

at the Urban Development Institute of

Australia’s 1999 conference.

Commercial building in the property sector

has been steady during the year. Entact

Clough has completed a West Perth office

building for CBH Superannuation Fund

and is progressing on a number of

additional contracts in Western Australia.

These include modern headquarters for the

Chamber of Commerce and Industry,

a state-of-the-art cinema in Fremantle, and

a new Target shopping complex adjoining

the Lakeside Joondalup shopping centre.

Mark F. BradleyDirector Clough EngineeringLimited and Managing Directorof Offshore Division

Michael J. CahillDirector Clough EngineeringLimited and Manager GroupSupport and Development

Susan L. MurphyDirector Clough EngineeringLimited and ManagerTechnical Resources Group

Galil Metry (Joe) AzzamDirector Clough EngineeringLimited and Group CommercialManager

Peter J. CollinsDirector Clough EngineeringLimited and Group Manager,Business Development

Kevin J. LuttrellManaging Director of Entact Clough and GeneralManager of Property Division

General M.L. VichaiChayangkuraChairman of Clough Thailand

William E. PearceManaging Director ofWundowie Foundry

Gerry I. GauntlettChairman of Landrow Limited

Peter G. NewsteadChief Executive Officer ofShark Bay Resources

Mindarie Keys Harbour Estate


14

Clough has built a strong operations

and maintenance service as part of its

total project delivery.

The MPA Energy Services Joint Venture is

one of the few Australian companies

providing integrated operations and

maintenance services to the power industry.

Now in its sixth year, MPA manages

large-scale fly ash collection and disposal

systems at Delta Electricity’s Mt Piper

and Macquarie Generation’s Bayswater

Power Stations.

Our operations and maintenance skills have

been developed over many years working

both as a contractor and as an operator of

our own facilities. These include the major

Western Australian solar salt producer

Shark Bay Resources.

This year salt sales levels have been

maintained and the field expansion has

continued with a new 2,800 hectare

production pond successfully integrated.

A ten year contract for the operations and

maintenance of the Graham Farmer Freeway

tunnel, in Perth, for Main Roads Western

Australia, will commence when the tunnel

opens early next year.

In Indonesia, PT Petrosea continues to

own and operate one of South-East Asia’s

largest fleets of modern mining and

earthmoving plant. For almost a

decade, Petrosea has provided heavy

plant and equipment, skilled personnel,

construction, operations and maintenance

support to its clients PT Freeport Indonesia

and PT Kaltim Prima Coal.

Advanced technical competency

remains an important strategic thrust

for the Company.

The drive for technical excellence has been

demonstrated with the growth of our

multidisciplined engineering team.

To accommodate this expansion, an

additional storey has been added to our

Perth headquarters.The engineering office

provides a central source of specialist

expertise for both domestic and overseas

projects allowing the Company to build

strong project teams that meet the specific

needs of our clients. It is supported by the

professional estimating, procurement and

project management services of the

Technical Resources Group.

The Company has identified a number of

significant strategic thrusts to ensure its

operations remain efficient, competitive and

relevant to the needs of our clients.

North Atlantic Ocean

SOUTH AMERICA

CANADA

AGL Midwest Pipeline Project


15

AUSTRALIA

1. PERTH (GROUP HEAD OFFICE)2. MELBOURNE3. SYDNEY4. BRISBANE5. DARWIN

OVERSEAS

6. JAKARTA7. BALIKPAPAN8. TANJUNG BATU9. SANGATTA10. TIMIKA

11. MANADO12. SAMARINDA13. JAMBI14. BATU HIJAU15 BANGKOK

16. LAE17. KARACHI18. SINGAPORE19. DUBAI

OFFICES

PROJECTS

AUSTRALIA

NEW ZEALAND

CHINA

SRI LANKA

TAIWAN

JAPAN

Southern Ocean

Indian Ocean

INDONESIA

Pacific Ocean

6

FIJI

South Atlantic Ocean

North Sea

ENGLAND

NORWAY

MediterraneanSea

ITALY

19 17

PAKISTAN

INDIA

BANGLADESH

MYANMARHONG KONG

VIETNAMTHAILAND15

MALAYSIA 91218

13 87

11

14

PAPUA NEW GUINEA

Tasman Sea

Coral Sea

1

23

4

5

1610

PHILIPPINES

KUWAITLIBYA

AFRICA

UNITED ARAB EMIRATES

Our future will be built on innovative

engineering, efficient business systems

and expanded geographic coverage.

The Company has been extremely active in

developing new business opportunities over

the past 12 months. Attention is focused on

our traditional markets, as well as other

regions such as the Middle East, Central

and South America and Africa. Clough is

confident of securing work in these

locations where our experience and track

record for remote turnkey project delivery

equips us well.

As always, we are a people business.The

high calibre of our staff will always be the

Company’s most valuable asset. We are

committed to developing our people with

comprehensive education programmes;

continuing opportunities for personal

growth; and to supporting them with

efficient systems.

The Company ended the 1998/99 year in a

strong financial position having achieved

record operating profit and revenue.

Prospects in the future are exciting. We see

a multitude of opportunities to grow our

Company ensuring continued profitable

rewards for our shareholders.

We will achieve our goals by developing

a pro-active safety culture, long-term

client relationships and advanced

management systems.

The expansion of our funding and

investment capability is also an important

strategy for future growth. These resources

will enable us to pursue new business

opportunities as they arise.

Brian E. HewittManaging DirectorClough Limited

Robert J. JewkesManaging Director and Chief Executive OfficerClough Engineering Limited

Technical Resources Group -Central Engineering Office, Perth

Operations Map


16

Midwest Pipeline ProjectAGL ConstructionAustralia

The Clough Lucas Joint Venture hasundertaken its first pipelineconstruction project under the AGLAlliance, in Western Australia. The352km long high pressure gaspipeline extends from an existingcompressor station, near Geraldton,to the new Windimurra vanadiummine, south-east of Mt Magnet.

Compressor Station ProjectsSolar Turbines AustraliaAustralia

Work has reached mechanicalcompletion on the Clough Lucas JointVenture’s compressor stationcontracts. The work was undertakenas a joint venture between CloughLucas and AGL Construction. Theproject included procurement,fabrication and construction of twocompressor stations at Young andBulla Park on the Moomba toMelbourne gas supply pipeline.

LNG Expansion ProjectNorth West Shelf VentureAustralia

The Kellogg Joint Venture is finalisingfront-end engineering design andcosting of proposed expandedLiquefied Natural Gas (LNG)production facilities on the North-West Shelf. A key feature of theproject is the Propane-pre-cooledMixed Refrigerant process utilisingMain Cryogenic Heat Exchangers with Propane and Mixed Refrigerant compressors.

During the year, the Clough Lucas Joint Venture was awarded the first two contracts under a five year alliance agreement for all of AGL’s pipeline and

compressor station work in Australia. Clough is also involved in a number of technically-complex developments including the front-end engineering design

and costing of one of the world’s largest proposed LNG trains on the North West Shelf. The front-end design is being undertaken by the Kellogg Joint

Venture which comprises Clough, MW Kellogg, JGC Corporation and Kaiser Engineers. Clough is also progressing on a contract for the provision of design

and consultancy services for a new 300,000 tpa coke calcination plant, in Kuwait. The design includes a new facility to substantially limit environmental

emissions. Through its Indonesian subsidiary, PT Petrosea Tbk, Clough returned to Pagerungan Island to install new inlet compression facilities for repeat

client ARCO. An exemplary safety record was achieved on this project with more than one million manhours lost time injury free.

Notable Projects

Relationship contracting has emerged as animportant strategy for growth in the competitiveinternational oil and gas industry.

Pagerungan Project - Turbine Compressors

North West Shelf Venture - Illustration of proposed LNG Train (courtesy of Woodside Energy Ltd)


29%

17

Sector Performance - Oil, Gas and PetrochemicalsSector Performance - Oil, Gas and Petrochemicals

% Work ExecutedOil, Gas and Petrochemicals

Pagerungan Inlet CompressionFacilitiesARCO - Indonesia

New inlet booster compressionfacilities, including two new gas trainseach with 500 MMSCFD capacity, havebeen successfully commissioned forthis repeat client. The substantialengineering, procurement andconstruction contract was the firstIndonesian project to comply withARCO’s stringent Contractor SafetyManagement System.

Coke Calcination Plant ProjectKuwait National PetroleumCompany - Kuwait

Clough has returned to Kuwait toprovide front-end engineering designand consultancy services for a new300,000 tpa coke calcination plant. Thedesign includes modifications to anexisting green coke handling system,construction of an 80,000 tonne storagebuilding and integration with loadoutand shipping facilities.

Capabilities

•Onshore process plants

•Onshore and offshore pipeline systems

•FPSO mooring systems

•Subsea/deepwater installations and maintenance

•Shallow water and marginal field structures

•Oil and gas terminals

Bulla Park Compressor Station

Pagerungan Inlet Compression Facilities

Midwest Pipeline Project


18

Notable Projects Varanus Sales Gas PipelineApache Energy LimitedAustralia

Clough Offshore was responsible fordesign, engineering, installation andprecommissioning of a 400mmdiameter x 100km long trunklineassociated with Apache Energy’sexpansion programme. TheCompany’s specialist barges wereused to install the 70km long subseasection of the pipeline from VaranusIsland to the Western Australianmainland.

Wonnich Field PipelinesApache Energy LimitedAustralia

The “Java Constructor” has installed33km of twin 200mm diametersubsea pipelines between VaranusIsland and the Wonnich Field offshorestructure. The rigid pipeline designrequired two pipelines to be“piggybacked” to make use ofexisting subsea pipeline corridors.

Tunu Gas Field DevelopmentPT Total IndonesieIndonesia

PT Petrosea is undertaking a majoroffshore engineering and constructioncontract at the Tunu Field, in EastKalimantan. The workscope includesinstallation of four subsea trunklines,modifications to seven existingplatforms, construction of three newplatforms and installation of a subsea25km fibre optic cable.

Notable Projects

“Java Constructor” - Varanus Sales Gas Pipeline Project


19

BHPP Buffalo Field FPSOMODEC Inc of JapanTimor Sea

Clough Offshore is providingengineering, procurement andinstallation services for a new FPSOin 300 metres of water off the coastof Darwin. The “Java Constructor”will mobilise to the field in mid-October to complete installation ofthe gravity bases, flowline system,electro-hydraulic control umbilicaland to assist in hook-up to the FPSO.

Offshore Pipeline InstallationBrunei Shell Petroleum CompanySdn Bhd - Brunei

The fast-track installation of a 25kmoffshore pipeline marks thesuccessful completion of the first ofthree turnkey packages for thisclient. Other work includesinstallation of a new 14km subseaand onshore gas supply pipeline andconstruction of an onshore gasmetering station and associatedfacilities.

Asgard Risers and MooringInstallationsStatoil - North Sea

During the year the MSV “Maxita”installed 12 risers in 300 metres ofwater in the Asgard A Field, off theNorwegian coast. A second contractis being undertaken to install twomooring systems in the Asgard Band C Fields including the tow andhookup of one of the world’s largest production semi-submersible’s in the Asgard B Field.

Terra Nova Mooring SystemHalliburton Canada IncCanada

SaiClo provided engineering andconstruction services for installationof a nine-point mooring system onthe Terra Nova Field off the coast ofCanada. The MSV “Maxita”, whichwas chartered for this contract,installed riser bases weighing up to 150 tonnes and completed hook-up of the mooring system toa spider buoy.

During the year, the “Java Constructor” and

“Clough Challenge”, were heavily committed

in the northern waters of Western Australia,

successfully completing pipelay projects for

Apache Energy.

Both vessels are now working on a new

contract off the coast of Brunei. Clough

Offshore is undertaking three turnkey

packages for Brunei Shell Petroleum in joint

venture with major Brunei oil and gas

company HJ Malai Mashhor General

Contractors.

Following this project, the “Clough

Challenge” will be mobilised to support

Indonesian subsidiary PT Petrosea with

offshore installations on Total Indonesie’s

Tunu Field. The “Java Constructor” will

relocate to the BHPP Buffalo Field, in the

Timor Sea, to assist with the FPSO mooring

and pipeline system installations.

The Group’s specialist deepwater

construction company, SaiClo, has also

completed another full season. SaiClo owns

and operates the dynamically-positioned

vessel MSV “Maxita” and its activities now

extend as far afield as Canada, Libya and

the North Sea.

Offshore support and maintenance

capabilities have been bolstered this year

with the acquisition of a 50% interest in

subsea engineering and services contractor,

Covus Corporation.

Clough Offshore’s specialist construction bargeshave proven to be an effective combination forshallow water marginal field developments.

Covus - Underwater Operations Support, on board Woodside’s MSV “Shelf Supporter”(Photo courtesy of Woodside Energy Ltd)

DP MSV “Maxita”- Troll Field, North Sea “Clough Challenge” - Varanus Sales Gas Pipeline Project


20

Liquor Burning FacilityWorsley Alumina Pty LtdAustralia

Construction of a liquor burningfacility is progressing at the WorsleyAlumina Refinery, in WesternAustralia. The workscope involvesinstallation of steelwork, pipework,and rotating equipment includingerection of a 4.2 metre diameter x 58metre long rotary kiln, testing andprecommissioning.

Telfer Gold MineNewcrest Mining LimitedAustralia

Ore production and mine developmentcontracts were extended during theyear on the strength of financial andtechnical performance, and amilestone safety achievement of 500days lost time injury free. Clough hasworked continuously at Telfer since1994 on a range of projects includingmine development, ore production,civil and mechanical works.

CSA Copper MineCobar Management Pty LtdAustralia

The initial mine development contracthas been expanded to include oreproduction with remote loading andhaulage of the ore to the undergroundcrusher. Cobar Management andClough have finalised an alliance tocarry out all underground activities for the next five years.

Successful commissioning of expanded ore handling and shiploading facilities at the Dampier Port, in Western Australia, has been a milestone. The design

and construction work undertaken by the Clough Sandwell Joint Venture represents the most significant upgrade at Dampier for more than two decades

giving the client a substantial increase in export tonnage capacity. The specialist Underground Mining Division has continued to perform well during the

year. A long-running ore production contract at Telfer was extended for the second time, largely on the strength of Clough’s creditable safety record in this

challenging risk environment. New work has commenced at Cobar Management’s copper mine at Cobar, in New South Wales. Discussions are being

finalised with Cobar Management to form an alliance with Clough to carry out mine development and ore production work at the mine until December,

2004. Clough is also constructing a new liquor burning facility at the Worsley Alumina Refinery, south of Perth, in Western Australia. The refinery is

currently being expanded to increase production capacity from 1.8 Mtpa to 3.1 Mtpa.

Notable Projects

Clough has performed strongly in the resources sector, despite record low commodity prices, delivering a range of diversified services in contractmining, bulk materials handling and minerals processing.

Telfer Gold Mine - Raisebore Machine during operations

CSA Copper Mine - Shift Change

Worsley Liquor Burning Facility


21

Dampier Iron Ore Port UpgradeHamersley Iron Pty LtdAustralia

A complex process of 30 shutdownsenabled the client to maintain recordexport quotas during extensiveupgrading of ore handling andshiploading facilities at Parker Pointand East Intercourse Island. The brownfields project includedmajor modifications to storagestockpile areas, conveyor systems,outloading facilities, shippingchannels and berths.

Capabilities

•Underground mining and tunnelling

•Open cut mining

•Minerals processing and beneficiation

•Construction of harbourworks, coastal structures,

infrastructure and buildings

•Development of bulk materials handling facilities

•Heavy equipment rental and skilled personnel hire

46%

% Work ExecutedMining and Minerals

Dampier Iron Ore Port Upgrade


Contract Coal MiningPT Bukit Baiduri EnterpriseIndonesia

An additional contract for five milliontonnes of coal and 40 million cubicmetres of overburden will seePetrosea’s operations continue at EastKalimantan until June, 2002. Duringthe year, additional plant andequipment was employed to raiseproduction to more than 1.5 milliontonnes per annum.

Contract Gold MiningPT Newmont Minahasa RayaIndonesia

Petrosea has produced more than30 million tonnes of ore and wastesince operations commenced at NorthSulawesi in 1995. New equipment,including a 10 cubic metre hydraulicexcavator and 100 tonne capacitydump trucks were mobilised during the year to maintain productionrequirements.

Ore and Overburden Handling SystemPT Freeport IndonesiaIndonesia

Two Krupp semi-mobile crushingstations and a 7,500 tph capacityKrupp gyratory crusher, considered tobe the largest of its type in the world,have been commissioned at Freeportthis year. The project includedinstallation of a semi-mobilestacker/spreader boom system andtransport crawler capable of lifting1,250 tonnes.

22

Notable Projects

PT Newmont Minahasa Raya’s Gold Mine - Overburden Stripping Operations


Long term contract mining projects have

made a significant contribution to the

company’s workload. Ongoing contracts

have progressed during the year for clients

such as PT Bukit Baiduri Enterprise, in East

Kalimantan, PT Newmont Minahasa Raya,

at North Sulawesi, and PT Barisan Tropical

Mining, in South Sumatra.

A diverse range of engineering and

construction projects has also been

completed. At Freeport, in Irian Jaya, a

crushing and overburden handling system

has been installed for Krupp Engineering

and all contracts have been completed at

the Inco Nickel Expansion Project, in South

Sulawesi. A notable two million manhours

were achieved without lost time injury

during the life of the Inco project.

Important new contracts commenced during

the year at the PT Nusa Halmahera

Minerals’ Gosowong gold mine and at PT

Newmont’s Batu Hijau project site, where

Petrosea has been operating since 1997.

Petrosea’s services are enhanced by one of

the region’s largest plant and equipment

fleets and a commitment to international

standards of quality and safety.

Nickel Plant ExpansionPT Inco IndonesiaIndonesia

All contracts have now beensuccessfully completed at Soroako,South Sulawesi, where Petrosea hasbeen operating since 1996. Activitiesduring the year included the supplyof skilled personnel, equipment andmaterials, fabrication and erection ofpiping systems and civil works for anew truck dump, crushing andscreening station.

Gosowong Civil EarthworksPT Nusa Halmahera MineralsIndonesia

Petrosea is progressing on a newcontract at the greenfieldsGosowong gold mine on the Island ofHalmahera. The project includesextensive earthworks for a goldprocessing plant, road works andconstruction of two major earth-filldams for the disposal of tailingswater and mine site run-off.

Batu Hijau Site InfrastructurePT Newmont Nusa Tenggara and PT Fluor Daniel - Indonesia

Petrosea is supplying a wide rangeof heavy plant and equipment at thisgreenfields copper and gold minedevelopment, in Sumbawa. Otheractivities include overhead powerdistribution and electrical systemsfor the port and township. Petroseahas also established an onsitefabrication workshop for pipespooling, pipe supports and paintingservices.

23

Another profitable performance from Indonesiansubsidiary PT Petrosea Tbk has reinforcedClough’s commitment to South-East Asia.

Freeport - Semi Mobile Stacker/Spreader Boom System

Heavy Equipment for Dredging Operations -Batu Hijau

Inco Civil Works Project

PT Bukit Baiduri Enterprise - Contract Coal Mining Operations


Graham Farmer FreewayMain Roads Western AustraliaAustralia

The Baulderstone Clough JointVenture is on schedule to completethe $200 million design andconstruction of Stage One of thisextensive inner-city freeway systemnext year. Innovative installationtechniques have been utilised in theconstruction which incorporates a1.6km traffic tunnel, one of thelargest of its kind in Australia.

Woodman Point EnvironmentalEnhancement ProjectWater Corporation of WAAustralia

The Woodman Alliance hasembarked on a milestone partnershipto design and construct a majorexpansion of treatment facilities atthe existing Woodman PointWastewater Treatment Plant. Theproject will increase treatmentcapacity from 100 ML per day to 160 ML per day to cater for agrowing population in Perth’s southern corridor.

Neerabup Ground WaterTreatment PlantWater Corporation of WAAustralia

Clough has completed the design,procurement, construction andcommissioning of a 120 ML per dayraw water purification plant, atNeerabup. The facility includes sixgravity filters, chemical dosingfacilities, three water storage tanks,a pump station, 1200mm diametertransfer water main, and anoperations control centre.

Notable Projects

Graham Farmer Freeway - Overview of Tunnel from Eastern ApproachGraham Farmer Freeway - Overview of Tunnel from Eastern Approach


Clough has maintained a strong foothold in

this traditional market. The provision of high

quality water treatment facilities, in

particular, has become an important source

of opportunity. Following the successful

completion of the Neerabup project, for the

Water Corporation of Western Australia,

major contracts are now progressing in

Western Australia and Victoria.

Clough is a partner, with Kinhill Pty Ltd and

our client, the Water Corporation of

Western Australia, in the major $140 million

Woodman Point Wastewater Treatment

Plant Project. This landmark initiative

demonstrates the growing importance of

relationship contracting in the

cost-effective implementation of large-scale

public infrastructure.

Construction of the Graham Farmer Freeway

Stage One, in Perth, is now in its closing

stages. The project, which includes the

1.6km Northbridge tunnel, is one of the

most challenging road construction ventures

undertaken in the State.

In addition to essential public utilities,

Clough is also involved in specialised high

technology installations, such as earth

station defence antennas and an innovative

oil from wastewater sludge treatment

facility, which is now being commissioned

by the ESI-Clough Joint Venture. The facility

is considered to be a world first and is

designed to meet output from the Subiaco

Wastewater Treatment Plant for the

next 40 years.

Ballarat Water Treatment PlantsThames Water InternationalAustralia

Clough is developing two watertreatment plants to improve thequality of water available to Ballaratresidents. The workscope includesdesign and construction of 65 ML perday processing facilities at the Lal Laland White Swan reservoirs, as wellas pipelines, pumping facilities andclear water storage tanks.

Earth Station AntennasDepartment of DefenceAustralia

Work on this project entailed thedesign and construction of four new16-metre diameter automatedtracking antennas and therefurbishment of three existingantennas. The completed systemscomprise sophisticated RFcommunications, tracking controlsystems, monitoring and supervisorycontrol equipment, ancillarymechanical and electricalsubsystems.

Capabilities

•Bridges, roads, tunnels and airports

•Water supplies, water and wastewater treatment

•Communication and systems engineering

•Power generation

•Harbourworks and coastal structures

•Environmental engineering

•Piling and foundation construction

•Institutional, commercial and industrial buildings

Challenging world-class multidisciplinarydevelopments have emerged in the wake ofrenewed infrastructure investment in Australia.

11%

% Work ExecutedInfrastructure

Earth Station Antennas Project

Graham Farmer Freeway -Bob Ness, Leading Hand and Tamsin Durey, Project Engineer

25

The Woodman Alliance Project Office:(L/R) Robert Jones - Project Director, Rob McPharlin - Design and Integration Manager and Darryl Whiteley - Alliance Manager

Neerabup Treatment Plant - Pump Station


26

Phosphoric Acid PlantWMC FertilizersAustralia

Practical completion of this majorphosphoric acid plant is on track forOctober, 1999. Mechanicalcompletion of the entire plant wasachieved on 25 August,1999. ABB-Clough are responsible forproject management, detailed design,procurement, construction, andtesting and commissioning services.

Phosphoric Acid PlantAssociated ContractsWMC FertilizersAustralia

Three additional contracts wereawarded during the year to ABB -Clough. The scope of work beingundertaken includes engineering,procurement, construction andcommissioning of a rock slurryfiltration plant and mechanical draftcooling tower system and supply and installation of a gypsum drystacking plant.

Townsville Port FacilitiesWMC FertilizersAustralia

The design, procurement andconstruction of new facilities at the Port of Townsville includes thedevelopment of two large storagebuildings for sulphur and fertilizerproducts. Extensive materialshandling and conveyor systems are also being constructed linking the storage areas to receival andloadout stations.

Work is nearing completion on WMC Fertilizers’ Phosphoric Acid Plant Project which has been designed and constructed by Clough in collaboration with ABB

Engineering Construction Pty Ltd and the Mitsui Engineering and Shipbuilding Co Ltd, of Tokyo. More than 500,000 manhours have been expended lost time

injury free at the construction site, near Mt Isa in Queensland. Three additional contracts won during the year are also progressing on the project. The plant

process combines sulphuric acid, phosphate rock and ammonia to produce high analysis fertilizer with the end product being shipped to Townsville for sale to

domestic and export markets. Under a separate contract, ABB-Clough is undertaking the design and construction of sulphur and fertilizer storage and handling

facilities at the Port of Townsville.

In Western Australia, Clough continues to operate its own iron and steel casting foundry at Wundowie. The foundry is recognised as a leading manufacturer

of high quality wear resistant products to the agriculture and mining industries and is currently developing new products to meet export growth opportunities.

Notable Projects

Clough’s role in a high profile internationalconsortium has contributed to the success of a major turnkey manufacturing development.

Phosphoric Acid Plant - Acid storage tanks in foreground

Phosphoric Acid Plant - Part of the project site team


10%

Wundowie FoundryAustralia

The Wundowie Foundry hassuccessfully fulfilled its contract withthe Sydney Olympic Authority tosupply purpose-made cast treesurrounds for a beautificationprogramme at Homebush, site of theyear 2000 Olympic Games.

27

Capabilities

•Industrial manufacturing plants

•Food and beverage processing plants

•Materials handling and storage

•Upgrades and maintenance

Sector Performance - Oil, Gas and Petrochemicals

% Work ExecutedManufacturing

Wundowie Foundry - Iron and Steel Casting Facility Townsville Port Facilities

Phosphoric Acid Plant - Reactor Tank Area and Main Filter Building


28

West Perth Office ComplexCBH Superannuation FundWestern Australia

This quality three-storey officedevelopment is a 3,500 square metrereinforced concrete structure withglass curtain perimeter walls. Themodern architecture features polishedstainless steel downpipes and sand-coloured precast elements.

Lakeside Joondalup-Retail StoreTarget AustraliaWestern Australia

This 10,600 square metre retail storeforms the centrepiece of a newsuburban shopping complex adjacentto an existing store which hasremained operational duringconstruction. The new complexcomprises retail floorspace,warehousing, office accommodationand provision for specialty shops.

New Perth HeadquartersChamber of Commerce andIndustry (CCI) of Western Australia

Entact Clough is developing a new8,000 square metre inner-cityheadquarters for the Chamber ofCommerce and Industry, in Perth. Thefive-storey reinforced concrete buildingwill feature external glass curtainwalling and a metallic clad finish.Entact Clough is also providingconstruction finance for the project.

Notable Projects BUILDING CONSTRUCTION

West Perth Office Complex


4%

29

During the year, Entact Clough made

substantial progress on a range of high

quality metropolitan and regional

developments including completion of an

office complex in West Perth for

CBH Superannuation Fund.

Work is now nearing completion on a state-

of-the-art cinema complex for Coastal

Cinemas in Fremantle. The complex houses

four cinemas, a food court, carpark and

other entertainment facilities.

A highlight has been the commencement of

new Perth city headquarters for the

Chamber of Commerce and Industry of

Western Australia.

Landrow ended the year with the Mindarie

Keys Estate being named the premier

subdivision in Australia at the Urban

Development Institute of Australia’s national

conference.

Clough has a 49% interest in Landrow

which manages a substantial portfolio of

residential land subdivisions throughout

Western Australia.

During the year, new administration, dining,

leisure and recreational facilities have been

completed at the St. Louis retirement estate

in Claremont. Landrow owns and manages

the 153 unit development which is

recognised as one of Western Australia’s

premier retirement villages.

Mindarie Keys Harbour EstateWestern Australia

Landrow is joint project managerand owns a 20% interest in thissought-after marina andresidential development north ofPerth. More than 400 residentiallots have been sold since 1996with a further 500 unitsscheduled for release over thenext two years.

Ocean Park EstateWestern Australia

This year, Landrow acquired100% ownership of the estate ithas been developing jointly withthe Western Australian LandAuthority, LandCorp. In total,Landrow will develop more than900 residential lots at Clarkson,280 of which have already beenreleased for sale.

Jane Brook EstateWestern Australia

Two hundred residential lots,including a recent Stage Fourrelease, have been developed5km from the commercial centreof Midland. A total of 550residential, community,commercial and group housinglots are included in theprestigious estate which hasbeen progressing steadily since 1995.

Capabilities

Building

•Retail and commercial developments

•Apartment complexes

•Industrial buildings

•Institutional and educational buildings

Property

•Land subdivision development and sale

•Retirement village operations

% Work ExecutedProperty

Building Construction Property Development

PROPERTY DEVELOPMENT

Vigorous marketing andgrowing market demandresulted in another successfulperformance by propertydeveloper Landrow Limited.

St Louis Retirement Village

New Perth Headquarters for CCI of WA -Entact Clough’s Adrian Ridderhof - General Manager,Chris Boultbee - Site Supervisor and Robert Radici - Project Engineer

Commercial buildingactivities have continuedto perform steadily in thecompetitive WesternAustralian market.

Mindarie Keys Harbour Estate


30

Mt Piper Power StationDelta ElectricityAustralia

Now in the second year of a five-yearcontract extension, MPA EnergyServices is working under a formal“Partnering Charter” with the client tomanage the station’s fly ashcollection and disposal system.Activities include maintenance of thecoal handling system and compressedair plant, plus control of surface andground water leachate.

Bayswater Power StationMacquarie GenerationAustralia

MPA’s contract for the operations andmaintenance of ash and dust systemshas been extended this year, andincludes management of ashplacement and water at the minevoid. Additional contracts formaintenance of the coal handlingsystem and pulverised fuel millingplant have also been awarded.

Shark Bay Salt Joint VentureAustralia

Construction of a new 5.5km seawallhas been completed during the yearcreating a 2,800 hectare primary pondat Shark Bay in Western Australia. Asa result, salt production has thecapacity to rise from 1 million to over1.5 million tonnes over the next five years.

Activities extend across the Company’s broad range of market sectors reflecting the depth of Clough’s industry and technical expertise, coupled with the

experience of managing its own operations. In New South Wales, MPA Energy Services continues to grow strongly as one of the few Australian companies

offering specialised operations and maintenance services to the power industry. Clough’s solar salt producer at Shark Bay has maintained its sales levels

despite higher than average rainfall this year. Clough and AMP Life Limited jointly own Shark Bay Resources Pty Ltd which manages the field and owns

70% of the operation. In Western Australia, a five year contract has been been completed at BHP Iron Ore’s Jimblebar mine. In Indonesia, services to

mining operations have continued for the ninth successive year in Irian Jaya, for PT Freeport, and in East Kalimantan, for PT Kaltim Prima Coal. Petrosea

is also providing ongoing mining services at the Rawas, Minahasa Raya and Bukit Baiduri sites. A ten year contract for operations and maintenance of the

Northbridge tunnel section of the Graham Farmer Freeway, in Perth, will commence next year.

Notable Projects

In addition to its engineering and constructioncontracts, Clough has a strong capability inoperations and maintenance services.

Bayswater Power Station

Shark Bay Salt Field - Stockpile Area


Jimblebar Contract MiningBHP Iron OreAustralia

For five years, Clough providedservices for mining, transportation,operations and maintenance of acrushing and screening plant, andtrainloading of ore. The developmentof detailed operating procedures,maintenance strategies and planswere vital to increased productionand efficiency over the period.

Copper and Gold Mine SupportPT Freeport IndonesiaIndonesia

For almost a decade, Petrosea hassupported the development andoperations of this major mine, in IrianJaya. Services this year includemechanical repair, maintenance andrebuilding of mine equipmentcomponents, and provision ofspecialised heavy equipment andskilled personnel. Petrosea has alsoconstructed substantial infrastructureat the site over the period.

31

Capabilities

•Operations and maintenance management

•Maintenance project management

•Strategy and plan development

•Systems and procedures

•Manpower

•Plant overhauls

•Commissioning

Bayswater Power Station - Mill Maintenance Operations

Mt Piper Power Station - Dust Conditioning BinsJimblebar Contract Mining - Ore Processing Plant


32

This statement outlines the principal corporategovernance practices that were followed by theCompany throughout the financial year.

Board of Directors

The Clough Board is responsible to shareholders forthe Group’s overall corporate governance. TheBoard’s responsibilities include:

• reviewing and determining strategic directionand policy;

• establishing goals for Management andmonitoring the achievement of those goals;

• appointing, monitoring and rewarding seniorManagers; and

• reporting to shareholders.

The Company currently has four non-executiveDirectors and five executive Directors. Thiscomposition conforms with the Board’s policy ofappointing Directors with an appropriate range ofbackgrounds, skills and experience.

The major Shareholder, Lowmond Pty Ltd, isrepresented on the Board by Mr WH Clough and twonon-executive Directors, Messrs. JM Clough and WM Clough.

The Board has six scheduled full meetings each year.The Board holds other meetings at short notice whenparticular issues arise which require discussion and a decision.

Members of the Board visit significant locations andprojects when it is considered that actual inspectionand meetings with local management will assist theDirectors’ understanding of important operationalissues.

Committee Structure

The Board of Clough is supported by the followingcommittees which assist the Board in the dischargeof its obligations by the review of financial reports,audit, remuneration and the composition and selfappraisal of the Board itself.

Audit Committee

The members of the audit committee are Messrs. RW Kelly (Chairman), PJ Knight and JM Clough, allnon-executive Directors, RM Reid and MJ Goddard.The Managing Director, Company Secretary and theexternal audit partner in charge of the Clough auditalso attend meetings by invitation.

The committee monitors internal control policies andprocedures designed to safeguard company assetsand to ensure the integrity of financial reporting.

Among its specific responsibilities, the committeereviews and advises the Board on the nomination andremuneration of external auditors and the adequacyof existing external and internal audit arrangements,including the scope and quality of audits.

The committee meets and reports to the Board atleast three times during the year. Meetings are timedto coincide with profit announcements made to theAustralian Stock Exchange and audit engagement.

Remuneration and Nomination Committee

The members of the remuneration and nominationcommittee, together with Chairman Mr WH Clough,are non-executive Directors Messrs. PJ Knight, JM Clough, WM Clough and RW Kelly.

The committee has been recently formed and intendsto review the remuneration and terms and conditionsof appointment of Board Members, the ManagingDirector and senior executives, and reviews andmonitors Board and Management succession plans.

The committee provides guidelines on the overallremuneration philosophy of the Company, includingany bonus schemes and executive share option plans.

Equity Participation by Directors and SeniorManagement

The Company has a policy which controls the times,and circumstances, in which Directors and seniorexecutives may buy or sell shares in the Company.Unrestricted trading is limited to specified shortperiods after announcements to the Australian StockExchange of half yearly and preliminary final resultsand after annual general meetings, thereafterprudent controls apply.

Ethical Standards

Clough recognises the need for Directors andemployees to observe the highest standards ofbehaviour and business ethics when engaging incorporate activity.

Risk Management

The Company has established a framework tosafeguard Company assets and to ensure thatbusiness risks are identified and properly managed.

The Company has in place a number of riskmanagement controls, which include:

• policies and procedures for the management offinancial risk and treasury operations.

• guidelines and limits for the approval of capitalexpenditure and investments.

• a Group regulatory compliance programme,supported by approved guidelines andstandards, covering environment, occupationalhealth and safety, trade practices, equalemployment opportunity, anti-discrimination,sexual harassment and drug and alcohol.

• a comprehensive insurance program. Howeverthe Company will with respect to plant andequipment, contract works, product and publicliability, expatriate employee medical expensesand motor vehicles pay the first $US 5 million ofaggregated losses in a three year period, forlosses beyond this the Company is fully insured.

Year 2000

The Clough Group has almost completed the projectto ensure, as far as possible, that business operationswill not be adversely affected by the year 2000systems issue. The year 2000 project is beingcoordinated by a steering committee, using externalconsultants where necessary. Regular reports onprogress are made to the Board.

Work commenced on this important project in early1997. The detailed audit to identify problem areas isall but complete. Most corrective actions werecompleted by 30 June, 1999, with the remainingactions to be finalised by 30 September, 1999.

The major areas of exposure are the Group’s internalsystems, suppliers and customers. All criticalinternal systems including corporate, accounting,payroll, industry standard packages, estimating,building and office equipment systems have beenreviewed and tested. All computer hardware hasbeen surveyed for compliance. Where required itemshave either been modified or replaced.

Existing key suppliers have been contacted and allresponses have confirmed their ability to supplycompliant products. Equipment and systems requiredto be supplied to customers for current and recentlycompleted projects are year 2000 compliant. Most ofthe Group’s customers are large responsiblecompanies and we do not expect them to have anypayment problems related to year 2000 dates. Theestimated cost of the year 2000 project is $0.8million, of which $0.2 million is still to be expended.

We expect our internal systems and equipment willbe robust and we have received similar assurancesfrom key suppliers. However, we also recognise thatthis is a highly complex issue that may haveunexpected consequences from unusual sourcesoutside our control. Contingency actions will bedeveloped for critical systems.

Role of Shareholders

The Board of Directors ensures that Shareholders areinformed of all major developments affecting theCompany’s state of affairs through:

• annual and half year reports distributed to allshareholders.

• regular reports released through the AustralianStock Exchange and the media.

• the annual general meeting.


33

Directors’ Resumes

William Harold Clough AO, OBE (72)BE(Hons), MS(Calif), Hon FIEAust, CPEng, Hon DE(UWA), FTSE, FAICD, FAIMChairman, Clough LimitedDirector, Clough Engineering Limited

Harold Clough is highly distinguished in Australia’sengineering and construction industry. He joined theClough family company in 1954 and served asManaging Director until 1989. Mr Clough’scontribution to the development of Australia’s traderelations and the advancement of the engineeringprofession has been extensively acknowledged by arange of prestigious awards including Queen’sHonours in 1977, 1979 and 1990. He wasacknowledged WA Citizen of the Year in Industry andCommerce in 1983, and won the AustralasianInstitution of Electrical Engineers James N KirbyAward and the Institution of Engineers, AustraliaPeter Nicol Russell Memorial Medal in 1993 and theAustralian Institute of Company Directors (WA)inaugural gold medal for contributions to engineering,industry and commerce in 1994. In 1997 Mr Clough received a Services toConstruction Award from the Australian Constructors’Association in recognition of his lifelong contributionto the construction industry.

Mr Clough has been a member of many companyboards, currently including West AustralianNewspaper Holdings Limited and has made extensivecontributions to business and communitydevelopment initiatives.

Dr Brian Edwin Hewitt (55)BE(Hons), PhD, MBA, FIEAust, CPEng, FAICD, FAIMManaging Director, Clough LimitedChairman, Clough Engineering Limited

Dr Hewitt joined the Clough Group in 1977 after 10years with the WA Metropolitan Water Supply andPublic Works Departments. He has managed many ofthe Group’s major projects, including Clough’s largestdesign and construct contract, a major gas processingplant in Indonesia for Atlantic Richfield.

Dr Hewitt returned to Perth in 1993 to head theGroup’s Services Division and Western Australianoperations. From 1995 he held the position ofManaging Director and Chief Executive Officer ofClough Engineering Limited. In 1998 he wasappointed Chairman of Clough Engineering Limitedand Managing Director and Chief Executive Officer ofthe Group listed entity, Clough Limited.

Dr Hewitt is also Chairman of the ConstructionCouncil of the Western Australian Chamber ofCommerce and Industry, and serves on the WesternAustralian State Training Board.

Robert John Jewkes (43)BE, FIEAust, CPEng, FAICDDirector, Clough LimitedManaging Director and Chief Executive Officer,Clough Engineering Limited

Robert Jewkes joined the Clough Group in 1979 after2 years with the WA Public Works Department. Hehas managed many of the Company’s major oil andgas and resource related port and offshoreconstruction projects. He initiated Clough Offshoreactivities in 1986 and was appointed ManagerOffshore Division in 1988. Mr Jewkes was ProjectManager when Clough won the prestigiousAustralian Federation of Construction Contractors’Construction Achievement Award for BHP Petroleum’sChallis Field installations in 1990.

Mr Jewkes joined the Board of Clough EngineeringLimited in 1990 after which he took the posting ofRegional Director, South East Asia operations in1992. He returned to Perth in 1995 to take theposition of Chief Operating Officer, Australia andassumed his present position as Managing Directorand Chief Executive Officer of Clough EngineeringLimited in 1998. Mr Jewkes has also been a memberof the Clough Limited Board since 1998.

Richard Malcolm Reid (56)BSc, FCAFinance Director, Clough LimitedDirector, Clough Engineering Limited

Richard Reid is a Fellow of the Institute of CharteredAccountants. After extensive experience in seniorauditing positions in London, Belgium and Perth, hejoined Agnew Clough Limited as Company Secretaryin 1980. Since 1983 he has served as FinanceDirector of the Clough Group. Mr Reid wasinstrumental in the floating of PT Petrosea Tbk andhas overseen many of the Company’s acquisitions,joint ventures and partnership structures.

Michael John Goddard (52)BCom, MBA, MPhil, CPADirector and Chief Financial Officer, Clough LimitedDirector, Clough Engineering Limited

Michael Goddard joined Clough in 1994 and wasappointed a Director of Clough Limited two yearslater. With more than 25 years experience infinancing and business, Mr Goddard is responsible forthe development of Clough’s financial systems and isa specialist in corporate planning, finance andcorporate affairs. He is currently Chairman of PacificForest Corporate Limited and Adjunct Professor,Curtin University Graduate School of Business.

Peter John Knight (60)BE, FIEAust, CPEng, FTSE, FAICD, FAIMNon-Executive Director, Clough Limited

Peter Knight has had a distinguished engineeringcareer which earned him The Institution of Engineers,Australia National Professional Engineer of the YearAward in 1993 and the Western Australian Citizen ofthe Year Award in 1995.

On joining Clough in the early 1960s, Mr Knightgained extensive experience on many majorconstruction projects both in Australia and overseas.Following the Clough Group’s acquisition of thePetrosea Group of Companies in 1984, Mr Knight wasappointed Managing Director of Petrosea and wasbased in South East Asia for five years. He returnedto Perth in 1989 as Managing Director and ChiefExecutive Officer of Clough Limited and held thisposition until his retirement in November, 1998. Mr Knight remains on the Board as a non-executive Director. He is also a non-executiveDirector of WMC Limited and Chairman of CentralNorseman Gold Corporation Limited.

Jock McRae Clough (43)BE, MIEAust, CPEngNon-Executive Director, Clough Limited

Jock Clough joined the Board of Clough Limited as anon-executive Director in 1985. A qualified engineer,he left the construction industry in 1982 to joinMcIntosh & Co - stockbrokers in Melbourne as an oiland gas analyst and later became an institutionalshare dealer with Wilson & Co, in Brisbane. Hejoined Hartley Poynton Limited in 1988 and was appointed a Director in 1990. Jock wasappointed Chairman of Hartley Poynton Limited in1996 and has been instrumental in advising manyresource companies on capital raisings, corporateacquisitions and strategic initiatives.

William McRae Clough (38)BSc(Geol), BCom(Hons)Non-Executive Director, Clough Limited

Bill Clough joined Clough Engineering as a BusinessDevelopment Manager in 1984. In 1990 he left toform Koast Corporation Pty Ltd, now one of WesternAustralia’s largest recycling companies with diverseinterests in export distribution, manufacturing andtravel, with particular emphasis on the Koreanmarket. He has been on the Clough Limited Board asa non-executive Director since 1994.

Ross William Kelly (61)BE(Hons), FAICDNon-Executive Director, Clough Limited

Ross Kelly has more than 20 years experience as aprofessional management consultant with specialistexpertise in strategic and operational issues relatedto the construction, mining and heavy processindustries. He is Chairman of the Orbital EngineCompany Limited, and a Director of Aurora GoldLimited and Beltreco Limited. Mr Kelly has been anon-executive Director on the Clough Limited Boardsince late 1996.


‘99Concise Financial Report

30 June 1999

Phosphoric Acid Plant, Queensland - Multi-million dollar turnkey development for the WMC Fertilizers ProjectBrought to you by Global Reports

35

PAGE

DIRECTORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

PROFIT AND LOSS STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

BALANCE SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

STATEMENT OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

DISCUSSION AND ANALYSIS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

1. SEGMENT INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

2. DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

3. EARNINGS PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

4. FULL FINANCIAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

DIRECTORS’ DECLARATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

INDEPENDENT AUDIT REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

SHAREHOLDER AND INVESTOR INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

This concise financial report to shareholders is a short form overview that is designed to givereaders an easy-to-read concise summary of the activities and financial position for the yearended 30 June 1999. A copy of the full financial report is available to all shareholders, andupon request will be sent to shareholders without charge.

A copy can be requested by telephone 618 9281 9310. Readers can also access both theconcise financial report and the full financial report via the Internet at www.clough.com.au


36

The Directors of Clough Limited A.C.N. 008 678 813 present the financial statements of the Company and of the Clough Group, the consolidated entity, forthe financial year ended 30 June 1999 and in accordance with a resolution of the Directors’ report as follows:

1. DIRECTORS

The Directors of Clough Limited at the date of this report are:

Director Qualifications Main Duties

WH Clough AO, OBE, BE(Hons), MS(Calif), ChairmanHon FIEAust, CPEng, Hon DE(UWA), FTSE, FAICD, FAIM

BE Hewitt BE(Hons), PhD, MBA, FIEAust, CPEng, FAICD, FAIM Managing Director &Chief Executive Officer ofClough Limited

RJ Jewkes BE, FIEAust, CPEng, FAICD Director, Managing Director &Chief Executive Officer ofClough Engineering Limited

RM Reid BSc, FCA Finance DirectorMJ Goddard BCom, MBA, MPhil, CPA Director &

Chief Financial OfficerPJ Knight BE, FIEAust, CPEng, FTSE, FAICD, FAIM DirectorJM Clough BE, MIEAust, CPEng DirectorWM Clough BSc(Geol), BCom(Hons) DirectorRW Kelly BE(Hons), FAICD Director

All Directors held office during the whole of the year except for GJ Smith who resigned from the Board on 16 November 1998 and RJ Jewkes whowas appointed on 16 November 1998.

Details relating to Directors’ qualifications, experience and special responsibilities appear on page 33 and this page is incorporated in and forms partof this report.

2. PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year were engineering and construction contracting. There were no significantchanges in the nature of these activities during the year.

3. TRADING RESULTS

The net profit for the consolidated entity for the year was $28,107,000 after deducting income tax expense of $10,791,000 and profits attributable tooutside equity interests in controlled entities of $3,317,000.

4. DIVIDENDS

A final dividend of 1 cent per share, 25% franked, totalling $3,348,000 was paid on 10 November 1998.

An unfranked interim dividend of 2 cents per share totalling $6,696,000 was paid on 14 April 1999.

The Directors have recommended that a fully franked final dividend of 2.5 cents per share totalling $8,371,000 be paid. The books closing date forthe dividend will be 22 September 1999 with the payment date being 8 October 1999.


37

5. REVIEW OF OPERATIONS

A review of the operations of the consolidated entity and the results of those operations is contained in the Financial Overview and Review ofOperations sections on pages 6 and 10 respectively. These pages are incorporated in and form part of this report.

6. STATE OF AFFAIRS

In the opinion of the Directors there were no significant changes in the state of affairs of the consolidated entity that occurred during the financialyear under review not otherwise disclosed in this report or the consolidated financial report.

7. EVENTS SUBSEQUENT TO BALANCE DATE

Since the end of the financial year the Directors are not aware of any matter or circumstance not otherwise dealt with in this report or consolidatedfinancial report that has significantly or may significantly affect the operations of the consolidated entity, the results of those operations or the stateof affairs of the consolidated entity in subsequent financial years.

8. LIKELY DEVELOPMENTS

Disclosure of information relating to likely developments in the operations of the consolidated entity and the expected results of those operations infuture financial years, which will not in the opinion of the Directors unreasonably prejudice the interests of the consolidated entity, is contained in theChairman’s Report and Review of Operations sections on pages 8 and 10 respectively. These pages are incorporated in and form part of this report.

9. ENVIRONMENTAL REGULATION

The operations of the consolidated entity are subject to environmental regulations under Commonwealth, State and Territory legislation. Overseasoperations are also subject to relevant environmental regulations. The standard policy of the Company in relation to the environment requires alloperations to be conducted in a manner to protect and preserve the environment. The Directors are not aware of any material breaches ofenvironmental regulations during or since the financial year.

10. DIRECTORS’ AND EXECUTIVE OFFICERS’ EMOLUMENTS

The remuneration committee, consisting of four non-executive Directors and one executive Director, will advise the Board on remuneration policiesand practices generally, and makes specific recommendations on remuneration packages and other terms of employment for executive Directors,other senior executives and non-executive Directors.

Executive remuneration and other terms of employment are reviewed annually by the committee having regard to performance, relevant comparativeinformation and independent expert advice. As well as a base salary, remuneration packages include superannuation, retirement and terminationentitlements, performance-related bonuses and fringe benefits. Executives are also eligible to participate in the Executive Option Plan.Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the consolidated entity’s diverseoperations. Remuneration of non-executive Directors is determined by the Board within the maximum amount approved by the shareholders fromtime to time.

Details of the nature and amount of each element of the emoluments of each non-executive Director and executive Director of Clough Limited andeach of the 5 executives of the consolidated entity receiving the highest emoluments are set out in the following tables:

Non-executive Directors of Clough Limited

Name Directors’ Fee Superannuation Other Total$ $ $ $

PJ Knight (1) 15,000 2,310 18,200 35,510JM Clough 32,500 2,275 268 35,043WM Clough 25,000 1,750 372 27,122RW Kelly 35,000 2,450 205 37,655GJ Smith (2) 11,250 1,138 5,291 17,679


38

Executive Directors of Clough Limited

Base Motor Directors’ Super- Retirement OptionsName Salary Vehicle Fee Bonus annuation Benefit Other Total Granted (3)

$ $ $ $ $ $ $ $

WH Clough 264,750 20,000 15,000 - - - 3,900 303,650 -BE Hewitt 310,021 20,000 15,000 50,000 73,019 - 6,437 474,477 300,000RJ Jewkes 303,467 20,000 15,000 30,000 23,693 - 5,903 398,063 200,000RM Reid 174,942 20,000 15,000 20,000 14,696 - 5,685 250,323 100,000MJ Goddard 158,650 20,000 15,000 20,000 22,490 - 5,814 241,954 100,000PJ Knight (1) 78,523 10,000 15,000 50,000 71,014 33,232 3,418 261,187 -

Other Executives of the Consolidated Entity

Base Motor Directors’ Super- Retirement OptionsName Salary Vehicle Fee Bonus annuation Benefit Other (4) Total Granted (3)

$ $ $ $ $ $ $ $

AE Speechley 252,813 19,332 15,000 15,000 1,050 - 93,134 396,329 50,000R Shaddick 197,698 10,158 - - - - 127,765 335,621 -D Ronaldson 174,571 19,332 - - - - 139,658 333,561 -KG Smith 172,682 21,106 - - - - 127,958 321,746 -WA Chamberlain 174,650 19,332 - - - - 118,089 312,071 -

(1) PJ Knight became a non-executive Director from 1 January 1999.

(2) GJ Smith retired on 16 November 1998.

(3) The options were granted under the Executive Option Plan on 22 December 1998. The options have an exercise price of 76 cents and can beexercised between 3 and 6 years after they are granted. Any options not exercised during that time will lapse.

(4) Other benefits for executives located overseas arise because part of their remuneration package includes certain expatriate type benefits suchas housing, schooling and medical cover.

11. SHARE OPTIONS

On 22 December 1998 Clough Limited granted options over 1,600,000 unissued ordinary shares to 21 participating eligible executives under theExecutive Option Plan.

12. ROUNDING OFF OF AMOUNTS

Clough Limited is a company of the kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission, relating tothe “rounding off” of amounts in the Directors’ Report and Financial Report. All amounts have been rounded off to the nearest thousand dollars,unless otherwise stated.

13. SHAREHOLDINGS OF DIRECTORS

Shareholdings of Directors of Clough Limited at the date of this report are:

Director Ordinary Shares OptionsWH Clough, JM Clough, WM Clough & familiesthrough Lowmond Pty Ltd and McRae Investments Pty Ltd 220,993,719 -BE Hewitt 2,000,000 300,000RJ Jewkes 1,500,000 200,000RM Reid 1,050,000 100,000MJ Goddard 500,000 100,000PJ Knight 850,000 -WM Clough 166,600 -RW Kelly 100,000 -


39

14. DIRECTORS’ MEETINGS

The number of Directors meetings and number of meetings attended by each of the Directors of Clough Limited during the financial year are:

Director Board of Directors Audit Committee Remuneration Committeemeetings meetings meetings

Held Attended Held Attended Held AttendedWH Clough 10 8 * * 1 1BE Hewitt 10 10 * * * *RJ Jewkes 10 4 * * * *RM Reid 10 9 3 - * *MJ Goddard 10 10 3 3 * *PJ Knight 10 8 1✧ 1 1 1JM Clough 10 9 3 3 1 1WM Clough 10 8 * * 1 1RW Kelly 10 8 3 3 1 1GJ Smith 10 5 * * * *

GJ Smith resigned on 16 November 1998 and RJ Jewkes was appointed on 16 November 1998.* Not a member of the relevant committee.✧ PJ Knight became eligible on becoming a non-executive Director.

15. INDEMNIFICATION AND INSURANCE OF OFFICERS

The Company has entered into agreements to indemnify all Directors of the Company named in paragraph 1 of this report and current and formerexecutive officers of the Company and its controlled entities against all liabilities to persons (other than the Company or a related body corporate)which arise out of the performance of their normal duties as Director or executive officer unless the liability relates to conduct involving a lack ofgood faith.

The Company has agreed to indemnify the Directors and executive officers against all costs and expenses incurred in defending an action that fallswithin the scope of the indemnity and any resulting payments.

During the financial year the Company paid insurance premiums of approximately $40,000 in respect of Directors’ and officers’ liability insurance.The policy does not specify the premium for individual Directors and executive officers.

For and on behalf of the Board

PERTH23 August 1999

William Harold CloughDirector

Brian Edwin HewittDirector

➤

➤

➤


40

CLOUGH GROUPNotes 1999 1998

$ $WORK EXECUTED AND OTHER REVENUE

Operating revenue - construction projects 589,166,000 525,461,000Managed projects 38,064,000 53,618,000

Work executed 627,230,000 579,079,000

Other revenue 19,616,000 26,186,000

$ 646,846,000 $ 605,265,000

OPERATING PROFIT 42,215,000 37,025,000

Income tax expense attributable to operating profit 10,791,000 7,527,000

OPERATING PROFIT AFTER INCOME TAX 31,424,000 29,498,000

Outside equity interests in operating profit after income tax 3,317,000 2,109,000

OPERATING PROFIT AFTER INCOME TAX ATTRIBUTABLETO MEMBERS OF CLOUGH LIMITED 28,107,000 27,389,000

Retained profits at the beginning of the financial year 83,992,000 59,951,000

Dividends provided for or paid 2 (15,067,000) (3,348,000)

RETAINED PROFITS AT THE END OF THE FINANCIAL YEAR $ 97,032,000 $ 83,992,000

The above consolidated profit and loss statement should be read in conjunction with the accompanying notes and discussion and analysis.


41

CLOUGH GROUP1999 1998

$ $CURRENT ASSETS

Cash 73,951,000 82,920,000Receivables 54,674,000 69,874,000Work in progress 16,666,000 15,452,000Other 3,226,000 4,298,000

Total Current Assets 148,517,000 172,544,000

NON-CURRENT ASSETS

Receivables 415,000 492,000Investments 64,861,000 22,532,000Property, plant and equipment 97,590,000 116,675,000Other 5,822,000 2,738,000

Total Non-Current Assets 168,688,000 142,437,000

TOTAL ASSETS 317,205,000 314,981,000

CURRENT LIABILITIES

Accounts payable 65,399,000 83,141,000Borrowings 6,611,000 5,215,000Provisions 24,999,000 25,895,000

Total Current Liabilities 97,009,000 114,251,000

NON-CURRENT LIABILITIES

Borrowings 45,574,000 46,372,000Provisions 13,327,000 9,076,000

Total Non-Current Liabilities 58,901,000 55,448,000

DEFERRED INCOME 28,071,000 26,926,000

TOTAL LIABILITIES AND DEFERRED INCOME 183,981,000 196,625,000

NET ASSETS $ 133,224,000 $ 118,356,000

SHAREHOLDERS’ EQUITYShare capital 8,519,000 3,348,000Reserves 720,000 5,891,000Retained profits 97,032,000 83,992,000

Shareholders’ equity attributable to members of Clough Limited 106,271,000 93,231,000

Outside equity interests in controlled entities 26,953,000 25,125,000

TOTAL SHAREHOLDERS’ EQUITY $ 133,224,000 $ 118,356,000

The above consolidated balance sheet should be read in conjunction with the accompanying notes and discussion and analysis.


42


$ $Inflows Inflows

(Outflows) (Outflows) CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 605,292,000 557,911,000Payments to suppliers and employees (560,152,000) (474,851,000)Interest received 4,229,000 3,452,000Borrowing costs paid (3,386,000) (1,986,000)Income tax paid (9,797,000) (17,696,000)

Net cash provided by operating activities 36,186,000 66,830,000

CASH FLOWS FROM INVESTING ACTIVITIESPayments for property, plant and equipment (33,584,000) (61,208,000)Payment for purchase of controlled entity 93,000 (277,000)Payment for investments - (5,743,000)Proceeds from sale of property, plant and equipment 6,587,000 6,622,000Proceeds from disposal of controlled entity - 442,000 Proceeds from sale of investments - 8,010,000

Net cash from/(used in) investing activities (26,904,000) (52,154,000)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from share issue - 4,561,000Proceeds from borrowings 2,831,000 42,583,000Borrowings advanced - (723,000)Repayment of borrowings (9,529,000) (6,233,000)Dividends paid (10,044,000) (6,583,000)Dividends paid to outside equity interests (445,000) (1,273,000)

Net cash from/(used in) financing activities (17,187,000) 32,332,000

Net increase/(decrease) in cash held (7,905,000) 47,008,000

Cash at the beginning of the financial year 82,920,000 34,181,000

Effect of exchange rate changes on cash (1,064,000) 1,731,000

Cash at the end of the financial year $ 73,951,000 $ 82,920,000

FINANCING FACILITIESEntities in the consolidated entity have access to financing arrangements with a number of financial institutions.

Main operating facilities 350,000,000 350,000,000

Amount utilisedBorrowings 52,087,000 51,484,000Bonds and guarantees 76,632,000 89,221,000

128,719,000 140,705,000

Unused main operating facilities $ 221,281,000 $ 209,295,000

In addition to the above facilities the consolidated entity enjoys the support of a number of banks and other financial institutions who provide project specific bonding, guarantees and funding.

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes and discussion and analysis.


43

PROFIT AND LOSS STATEMENT

Work executed and other revenue for the year amounted to $646.8 million representing a 6.9% increase on the previous year. This result is largelyattributable to the Group’s strong performance in the mining and minerals and oil and gas sectors, particularly in Australia. As a consequence, operatingprofit before tax increased by 14.1% to $42.2 million. Operating profit before tax, as a percentage of work executed and other revenue, increased to6.5%, compared with 6.1% in 1998. An analysis of both work executed and other revenue, and operating profit before tax by segment, is set out in Note1 of the Notes to the Financial Statements.

Income tax expense has risen, from 20.3% of operating profit before tax in 1998, to 25.6% in 1999. The increase reflects higher rates of tax on certainoverseas income in 1999, as well as increased tax payable in Australia. Income tax expense is lower than the corporate rate of 36% due to recoupmentof tax losses from prior years.

Outside equity interests in operating profit have increased in 1999 due to increased profits earned by the Group’s partly-owned controlled entities.

Dividends provided of $15.1 million comprise an interim dividend of 2 cents per share and a final dividend declared of 2.5 cents per share. In the previousyear, dividends provided amounted to $3.3 million consisting of a 1 cent per share final dividend declared for the three month period during which CloughLimited operated as a listed public company.

BALANCE SHEET

The Group’s net assets rose by 12.6% to $133.2 million over the year. Current receivables (debtors) and current accounts payable (trade creditors) bothdecreased in comparison with the previous year. The amount of the Group’s debtors and creditors fluctuate depending on the percentage completion ofvarious construction projects in progress at the end of the year.

Investments have increased by $42.3 million largely due to the effects of the restructuring of the Group’s ownership of the “Maxita” offshore constructionvessel. During the year, the Group transferred its 50% interest in the “Maxita” to a jointly owned company. This jointly owned company now owns 100%of the “Maxita” after the remaining interest in the vessel was transferred by the other joint owner. The result of this restructure has been a reduction of$37.5 million in the Group’s carrying value of property, plant and equipment and a corresponding increase in the value of the Group’s investments. Aftertaking into account the “Maxita” restructure, and depreciation for the year, the value of property, plant and equipment increased by a net $18.4 millionreflecting the acquisition of new plant and equipment items, including the “Java Constructor” laybarge which changed from being a 50% investment into100% property, plant and equipment.

Share capital increased by $5.2 million and reserves decreased by the same amount after transferring the capital redemption and share premium reservesto share capital, in compliance with the Company Law Review Act 1998 which abolished the concept of par value of shares.

The Group’s gearing (debt to total equity plus debt) has improved from 30.4% at 30 June 1998, to 28.1% at 30 June 1999, mainly due to an increase inretained profits.

STATEMENT OF CASH FLOWS

Cash inflows from operating activities amounted to $36.2 million, compared with $66.8 million in the previous year, resulting from the timing of cashflows from construction projects. Payments to suppliers and employees increased by $85.3 million, which was partially offset by an increase of $47.4million in receipts from customers. Borrowing costs increased from $2 million in 1998, to $3.4 million in 1999, reflecting the first full year’s effect of theborrowing used to fund the acquisition of the “Maxita” in February, 1998.

Cash outflows from investment activities amounted to $26.9 million, a reduction from $52.2 million in the previous year, reflecting lower levels of capitalexpenditure. The previous year included the acquisition of 50% of the “Maxita” for $40 million. There were no payments for or proceeds from the sale ofinvestments which was in contrast to the previous year where a number of restructuring activities took place prior to the public listing of Clough Limitedon the Australian Stock Exchange.

Cash outflows from financing activities amounted to $17.2 million. This contrasts with the preceding year where financing activities produced a cashinflow of $32.3 million. Borrowings for the previous year were significantly higher in order to fund the part acquisition of the “Maxita”. The cash inflowfor 1998 was also boosted from the proceeds of a share issue which did not take place in the 1999 year. Payments for dividends increased reflecting thefirst full year of Clough Limited being a publicly listed company.


44

This concise financial report relates to the consolidated entity consisting of Clough Limited and the entities it controlled at the end of, or during, the yearended 30 June 1999. The accounting policies adopted are consistent with those of the previous year. This concise financial report has been derived fromthe full financial report for the year ended 30 June 1999. This concise financial report cannot be expected to provide as full an understanding of thefinancial performance, financial position and financing and investing activities of Clough Limited and its controlled entities as the full financial report.

1. SEGMENT INFORMATION The only significant activity to contribute to consolidated entity results during the period was engineering and construction contracting. Workexecuted and other revenue and operating profit are shown separately as determined on the location of the work executed and on an entity basis,while the total assets are determined on an entity basis. Activities were in two regions as follows:

AUSTRALIA OVERSEAS CONSOLIDATED1999 1998 1999 1998 1999 1998

$ $ $ $ $ $ Work executed andother revenue- Location 465,704,000 332,501,000 181,142,000 272,764,000 646,846,000 605,265,000 - Entity 493,415,000 385,236,000 153,431,000 220,029,000 646,846,000 605,265,000

Operating profit - Location 25,893,000 17,746,000 16,322,000 19,279,000 42,215,000 37,025,000 - Entity 24,785,000 34,793,000 17,430,000 2,232,000 42,215,000 37,025,000

Total assets - Entity 154,618,000 119,604,000 162,587,000 195,377,000 317,205,000 314,981,000


$ $ 2. DIVIDENDS

Ordinary sharesInterim dividend of 2 cents (1998 - N/A) per share paid 14 April 1999

Unfranked 6,696,000 - Final dividend of 2.5 cents (1998 - 1 cent) per share proposed to be paidon 8 October 1999 (1998 - 10 November 1998)

Franked at 36 per cent 8,371,000 837,000 Unfranked - 2,511,000

8,371,000 3,348,000

Total dividends provided for or paid $ 15,067,000 $ 3,348,000

3. EARNINGS PER SHAREBasic earnings per share 8.39 cents 8.28 cents

Diluted earnings per share is not materially different from basic earnings per shareNumber Number

Weighted average number of ordinary shares on issue used in the calculationof basic earnings per share 334,828,000 330,619,781

4. FULL FINANCIAL REPORTFurther financial information can be obtained from the full financial report which is available, free of charge, on request from the Company. A copycan be requested by telephone 618 9281 9310. Readers can also access both the concise financial report and the full financial report via the Internetat www.clough.com.au


45

In accordance with a resolution of the Directors of Clough Limited, the Directors declare that in their opinion, the concise financial report of theconsolidated entity for the year ended 30 June 1999 as set out on pages 40 to 45 complies with Accounting Standard AASB 1039: Concise FinancialReports.

The financial statements and specific disclosures included in this concise financial report have been derived from the full financial report for the yearended 30 June 1999.

The concise financial report cannot be expected to provide as full an understanding of the financial performance, financial position and financing andinvesting activities of the consolidated entity as the full financial report, which as indicated in note 4 is available on request.

For and on behalf of the Board

PERTH23 August 1999

William Harold CloughDirector

Brian Edwin HewittDirector


46

To the Members of Clough Limited

Scope

We have audited the concise financial report of Clough Limited (the Company) for the financial year ended 30 June 1999 as set out on pages 40 to 45, inorder to express an opinion on it to the members of the Company. The Company’s Directors are responsible for the concise financial report.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the concise financialreport is free of material misstatement. We have also performed an independent audit of the full financial report of the Company for the financial yearended 30 June 1999. Our audit report on the full financial report was signed on 23 August 1999, and was not subject to any qualification.

Our procedures in respect of the audit of the concise financial report included testing that the information included in it is consistent with the full financialreport, and examination, on a test basis, of evidence supporting the amounts, discussion and analysis and other disclosures which were not directlyderived from the full financial report. These procedures have been undertaken to form an opinion as to whether the concise financial report complies withAccounting Standard AASB 1039: Concise Financial Reports in that, in all material respects, it is presented fairly in accordance with that standard.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the concise financial report of the Company complies with Accounting Standard AASB 1039: Concise Financial Reports.

Perth23 August 1999

PricewaterhouseCoopersChartered Accountants

M. F. ColganPartner


47

The shareholder information set out below was applicable as at 30 August 1999.

DISTRIBUTION OF MEMBERS AND THEIR HOLDINGS

Number of HoldersSize of holding Ordinary Options Over

Shares Ordinary Shares1 - 1,000 117 -

1,001 - 5,000 804 -5,001 - 10,000 623 -

10,001 - 100,000 777 19100,001 and over 171 2

2,492 21

There were 28 holders of less than a marketable parcel of ordinaryshares.

TWENTY LARGEST SHAREHOLDERS

Percentage of Number ofName Issued Capital Ordinary shares

% heldLowmond Pty Ltd 63.61 213,000,000Clough Petrosea Pty Ltd in its

capacity as trustee of theET Share Purchase Plan 4.10 13,742,800

McRae Investments Pty Ltd 2.38 7,961,800Sandhurst Trustees Limited 1.85 6,187,945Westpac Custodian Nominees Ltd 0.75 2,511,217AXA Trustees Limited

(Lamp IF A/c) 0.75 2,509,000Mercantile Mutual Life

Insurance Co. Limited 0.72 2,422,430National Nominees Limited 0.60 1,995,000BE & J Hewitt Family A/c 0.59 1,966,600Argo Investments Limited 0.53 1,764,500AXA Trustees Limited

(MM Pooled Aust. Share A/c) 0.38 1,270,309Tower Trust Limited 0.37 1,231,650Geoffrey John Smith 0.34 1,125,000Invia Custodian Pty Limited 0.33 1,100,000Robert John Jewkes 0.32 1,075,000Richard Malcolm Reid 0.30 1,016,600Jeremy James Roberton 0.30 1,000,000Timothy Richard Humphry 0.28 952,400John Jamieson Main 0.24 791,600Anthony Edward Speechley 0.23 775,000

78.97 264,398,851

SUBSTANTIAL SHAREHOLDERS

The number of shares held by substantial shareholders, as disclosed inthe substantial shareholding notice given to the Company:

Shareholder Number of Shares

Lowmond Pty Ltd 213,000,000

UNQUOTED EQUITY SECURITIES

There were 1,600,000 options issued to 21 executives under the CloughLimited Executive Option Plan to take up ordinary shares.

VOTING RIGHTS

Ordinary shares carry voting rights of one vote per share.Options have no voting rights.

SHAREHOLDER INQUIRIES

Shareholders can obtain information about their shares or dividendpayments by contacting the Company’s share registry:

Computershare Registry Services Pty LtdLevel 2, Reserve Bank Building45 St Georges TerracePerth, Western Australia 6000Telephone (08) 9323 2000Facsimile (08) 9323 2033

STOCK EXCHANGE LISTING

Securities in Clough Limited are quoted on the Australian StockExchange Limited.

CHANGE OF ADDRESS

Shareholders should notify the share registry in writing immediatelythere is a change of their registered address or change in bankingdetails for dividends electronically credited to a bank account in Australia.

PUBLICATIONS

The annual report is the main source of information for shareholders.

REMOVAL FROM ANNUAL REPORT MAILING LIST

Shareholders who do not wish to receive the annual report, or who are receiving more than one copy, should advise the share registry in writing.

CLOUGH LIMITED WEBSITE

Clough Limited has an internet address at www.clough.com.au

This contains the Company’s latest annual report, interim reports andmedia statements released through the Australian Stock Exchange.


GROUP HEAD OFFICE(Includes Corporate Finances,Administration Services and Technical Resources Group)Perth6th Floor251 St Georges TerracePerth, Western Australia 6000Telephone: +618 9281 9281Facsimile: +618 9481 6699E-mail: [email protected]: www.clough.com.au

PRINCIPAL AUDITORSPricewaterhouseCoopers

MAIN BANKERSCommonwealth Bank of AustraliaThe Bank of Western Australia LimitedCitibank LimitedHSBC Bank Australia LimitedBanque National de ParisIndosuez Group ABN AMRO Australia Limited

VICTORIA

MELBOURNE(Including Clough UndergroundConstruction and Mining Division and Clough Defence Contracting)Level 1, 627 Chapel StreetSouth Yarra, Melbourne,Victoria 3141Telephone: +613 9825 5555Facsimile: +613 9826 6463

NEW SOUTH WALES

SYDNEY(Including Clough EnvironmentEngineering Pty Ltd)345 Pacific HighwayLindfield, New South Wales 2070P.O. Box 47Telephone: +612 9416 0100Facsimile: +612 9416 7535

MPA ENERGY SERVICES PTY LTD345 Pacific HighwayLindfield, New South Wales 2070P.O. Box 47Telephone: +612 9416 0190Facsimile: +612 9416 7535

QUEENSLAND

BRISBANE6th Floor, 301 Coronation DriveMilton, Queensland 4064P.O. Box 1228Telephone: +617 3858 7000Facsimile: +617 3858 7050E-mail:[email protected]

PLANT DEPOT20 Ullswater Street, VirginiaQueensland 4014Telephone: +617 3865 5691 Facsimile: +617 3865 5698

CLOUGH LUCAS JOINT VENTURE4th Floor, 301 Coronation DriveMilton, Queensland 4064Telephone: +617 3858 7544Facsimile: +617 3858 7554

NORTHERN TERRITORY

DARWINPMB 88, WinnellieDarwin, Northern Territory 0821Telephone: +6189 471 722 Facsimile: +6188 947 1499

BAULDERSTONE CLOUGH JOINT VENTUREP.O. Box 79, LeedervilleWestern Australia 6902Telephone: +618 9328 0500Facsimile: +618 9228 3177

KELLOGG JOINT VENTURELevel 17, QV1 Building250 St Georges TerracePerth, Western Australia 6000Telephone: +618 9476 9000Facsimile: +618 9476 9001

THE WOODMAN ALLIANCELevel 13, QV1 Building250 St Georges TerracePerth, Western Australia 6000Telephone: +618 9214 3777Facsimile: +618 9226 3293E-mail: [email protected]

COVUS CORPORATION PTY LTD25 Stiles AvenueBurswood, Western Australia 6100P.O. Box 116Burswood, Western Australia 6100Telephone: +618 9267 8900Facsimile: +618 9472 5011

AUSTRALIA

WESTERN AUSTRALIA

PERTH

WA DIVISION1st Floor, 22 Mount StreetPerth, Western Australia 6000Telephone: +618 9281 9781Facsimile: +618 9481 2919

KEWDALE DEPOT462 Belmont AvenueKewdale, Western Australia 6105Telephone: +618 9353 3355Facsimile: +618 9353 1154

INTERNATIONAL DIVISION2nd Floor, 22 Mount StreetPerth, Western Australia 6000Telephone: +618 9281 9581Facsimile: +618 9481 7020

OFFSHORE DIVISION(Including Clough Offshore and SaiClo Pty Ltd)7th Floor251 St Georges TerracePerth, Western Australia 6000Telephone: +618 9281 9481Facsimile: +618 9481 8202

ENTACT CLOUGH PTY LTD1st Floor, 9 Havelock StreetWest Perth, Western Australia 6005P.O. Box 948, West PerthWestern Australia 6872Telephone: +618 9321 7233Facsimile: +618 9321 7236E-mail: [email protected]

SHARK BAY RESOURCES PTY LTD3rd Floor, 22 Mount StreetPerth, Western Australia 6000Telephone: +618 9420 4320Facsimile: +618 9420 4322

LANDROW LIMITED3rd Floor, 22 Mount StreetPerth, Western Australia 6000Telephone: +618 9322 3687Facsimile: +618 9321 2239

WUNDOWIEWUNDOWIE FOUNDRY PTY LTDHawke Ave, WundowieWestern Australia 6560P.O. Box 127, Wundowie,Western Australia 6560Telephone: +618 9573 6300Facsimile: +618 9573 6424

48Brought to you by Global Reports

INDONESIA

PT PETROSEA JAKARTAJalan Taman Kemang No. 32B Jakarta 12730, Indonesia Telephone: +62 21 718 3255 Facsimile: +62 21 718 3266E-mail: [email protected]: www.petrosea.com

BALIKPAPANJalan Jend. Sudirman No. 561Balikpapan 76114East Kalimantan, IndonesiaTelephone: +62 542 63160

+62 542 61055Facsimile: +62 542 63951

TANJUNG BATUKariangau, Tanjung BatuWest Balikpapan 76134East Kalimantan, IndonesiaTelephone: +62 542 36559Facsimile: +62 542 413257

SANGATTARoad 9, Kaltim Prima CoalSangatta Baru 75387East Kalimantan, IndonesiaTelephone: +62 549 21564 Facsimile: +62 549 21910

TIMIKAJalan SP2 CampTimika 98663Irian Jaya, IndonesiaTelephone: +62 901 321159Facsimile: +62 901 321177

MANADOJalan Santo Joseph No. 26Manado 95116P.O. Box 1436North Sulawesi, IndonesiaTelephone: +62 431 860447Facsimile: +62 431 860447

SAMARINDALoa Buah, Bukit Baiduri ProjectP.O. Box 1183Samarinda 75000East Kalimantan, IndonesiaTelephone: +62 541 38692Facsimile: +62 541 45351

JAMBIJalan Soekarno-Hatta No. 21BTahok, JambiTelephone: +62 0741 26746Facsimile: +62 0741 26746

SUMBAWABenete Batu HijauSumbawa, MataramLombok 82125Telephone: +021 7189 381-9Facsimile: +021 7189 384/90

SINGAPORE

CLOUGH CONSTRUCTION PTE LTD,CLOUGH PETROSEA PTE LTD, AND CLOUGH RC PTE LTD21 Pandan CrescentSingapore 128471Telephone: +65 775 2411Facsimile: +65 778 0026

THAILAND

CLOUGH (THAILAND) CO., LTDBANGKOKUnit 408/37, 9th FloorPhaholyothin Place Building408 Phaholyothin Road, PhayathaiBangkok 10400, ThailandTelephone: +662 619 0738-44Facsimile: +662 619 0679

PAPUA NEW GUINEA

CLOUGH NIUGINI LIMITEDLAEP.O. Box 2359Weybank StreetSection 7, Lot 28LAE, Papua New GuineaTelephone: +675 4757 980 Facsimile: +675 4757 982E-mail:[email protected]

PAKISTAN

KARACHID-30 Block 9Clifton, Karachi 75600PakistanTelephone: +92 21 586 9991Facsimile: +92 21 586 6595

UNITED ARAB EMIRATES

DUBAISuite 203AKhalid Al Attar Tower,Shaikh Zayed RoadP.O Box 53310Dubai, UAETelephone: +971 43 326 701Facsimile: +971 43 326 702

OVERSEAS


“Challenge is our Tradition”

A N N U A L R E P O R T 1 9 9 9


ANNUAL REPORT 1999 - Morningstar, Inc.

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