Corporate Update 2000

Issue Date:  11 May 2000
Issued By:  Leighton Holdings Limited

“At the end of the third quarter of 99/2000, Leighton Holdings had over $4.8 billion of work in hand and the prospect of significantly increasing this level of work by the end of the financial year,” Leighton Holdings Chief Executive Officer Mr Wal King said today.

“The success of our diversification strategy, both in Asia and Australia, is seeing the Group successfully ride through the downturn in Australian construction,” Mr King said.

“At 31 March 2000, the level of work in hand stood at $4.84 billion with incomplete management contracts valued at $492 million. This compares with $4.29 billion of work in hand and management contracts of $363 million at the half year.

“The acquisition of John Holland’s Australian business was finalised during the quarter, bringing $527 million worth of work in hand. John Holland brings to the Group expertise in new markets such as rail maintenance. It will also provide the opportunity to improve profitability over the next few years as the Group’s management disciplines and financial backing allow John Holland to improve its performance.

“An outstanding feature of the quarter was the work secured by Leighton Asia. Two major projects were won in Malaysia, a A$270 million contract to develop 10,000 apartments for teachers accommodation and a A$100 million contract to construct the main civil works for a new power station.

“These projects will be supplemented by the recent acquisition of selected assets from John Holland Asia. Their Indonesian business, which includes two major coal mining contracts, and a rail maintenance contract in Thailand will add a further A$282 million to Leighton Asia’s workload.

“Leighton Asia’s work in hand has risen to a record A$1.13 billion and it now has a much stronger regional presence with significant operations in Hong Kong, Malaysia, the Philippines, Thailand and Indonesia.

“The Group is poised to further enhance its workload in Asia by the end of the financial year, reflecting the success of our long-term strategy to maintain a diverse presence in the region.

“In Australia, Thiess has continued its diversification into the maintenance sector by winning Telstra’s National Telepower Network contract through Silcar, a 50:50 joint venture between Thiess and Siemens. This project involves routine maintenance, fault management and repairs, design and construction of new sites, and back-up power supply systems for over 35,000 sites in Australia. The initial contract is for five years and is worth in excess of $100 million per annum to the joint venture.

“The telecommunications market continues to provide excellent opportunities for the Group. Through further acquisitions, Leighton Contractors hopes to supplement the range of services it currently offers to the telecommunications industry through its subsidiary, Visionstream. It is also progressing another fibre optic cable infrastructure development similar to the Reef Networks Brisbane to Cairns project now in construction.

“Speedrail’s $4.8 billion Sydney-Canberra Very High Speed Train is a longer term prospect for Leighton Contractors. This 50:50 venture with ALSTOM is currently being considered by government.

“Leighton Properties completed its development at 80 Pacific Highway, North Sydney during the quarter. An excellent finish and sought after location contributed to the property being fully leased before completion and it is now in the process of being sold.

“The outlook for 2000 and beyond is very positive. Revenue and profit for the full year will be an improvement on last year and work should be significantly higher, particularly in Asia.

“However, with the competitive pressures from a slowing construction market in Australia our challenge will be to improve the profitability of recently acquired businesses and convert the record level of work in hand into enhanced returns for shareholders.

“We will continue to diversify into new markets such as telecommunications, make acquisitions which complement our existing businesses and take strategic stakeholdings which secure our position and provide additional profit streams.

“The Group has a very healthy future with some exciting prospects and work levels tracking towards a new level of activity,” Mr King said.

ENDS.

Issued by:
Leighton Holdings Limited
ACN 004 482 982

For further information:
Ms Penny Bingham-Hall
General Manager Corporate Affairs
Ph: (02) 9925 6641
M: 0412 275 391