Leighton on track to exceed last year's operating revenue and profit in 1998/99

Issue Date:  05 November 1998
Issued By:  Leighton Holdings Limited

At Leighton Holdings Limited's 37th Annual General Meeting held in Sydney today, Chairman Mr MA (Tim) Besley AO, said that the Group had achieved record levels of operating profit for the fifth consecutive year, strengthening its position as Australia's leading contractor and project developer.

Mr Besley said with record activity levels and strong work in hand, the Directors expect Group operating revenue and profit in 1998/99 to exceed last year.

"Excellent performances from Group companies in Australia and Asia saw operating profit after tax rise 17% to a record $101 million in 1997/98. Operating revenue remained steady at $2.9 billion," said Mr Besley.

"This was an outstanding result, particularly given the difficult market conditions experienced in Asia, and clearly demonstrates management's ability to react positively to rapidly changing market conditions," he said.

The total ordinary dividend was up 18% to 26 cents, fully franked. The total dividend payment was $68 million which resulted in a payout ratio of 66%.

"At the end of the first quarter of 1998/99, work in hand remained high at $4.5 billion compared to a record $4.77 billion held at 30 June 1998 and $4.0 billion held at 30 September last year," said Mr Besley.

"Contrary to the negative sentiment expressed by some market observers, the Australian economy is in relatively good shape particularly those sectors in which we operate," said Mr Besley.

Chief Executive, Mr Wal King AM, confirmed that the overall outlook for the Group remains very positive with Australia continuing to drive growth.

"The diversity of our order book is a critical element in our strategy to smooth construction industry cycles and ensure that we maintain momentum," said Mr King

"Whilst construction remains a core activity, today we are a service business providing project development skills and contracting services to an increasingly broad range of industries such as mining, waste management and telecommunications.

"Major prospects are being pursued in a variety of market sectors and we believe there is potential in Australia despite a downturn in the construction industry.

"There is a renewed focus on infrastructure projects which stimulate economic activity and jobs after the Olympics, particularly in NSW," he said.

"Some large transport projects in metropolitan Sydney have recently been announced and high levels of government expenditure on hospitals and rural roads are expected to continue.

"Large privatised rail projects such as the Very High Speed Train between Sydney and Canberra will create a significant level of employment and the impetus for regional development. The Speedrail Group, a 50:50 joint venture between Leighton Contractors and ALSTOM, is the preferred proponent for this $3.5 billion project. Construction is scheduled to start in early 2000 and should be complete by late 2003.

"Resources projects also provide a large market for the Group with the best prospects in iron ore, coal, oil and gas. Pressure on production costs due to commodity prices and reduced demand from Asia should provide opportunities for contractors able to demonstrate their ability to improve productivity.

"Whilst Asia is unlikely to generate growth in the short term, we are committed to the region for the long term," said Mr King.

"The outlook for Hong Kong remains positive with almost $50 billion of approved government expenditure on new infrastructure over the next five years. Despite current economic, social and political turmoil, our workload in Indonesia remains good with more than $60 million of new work won since year end. We also see construction and mining opportunities in the Philippines although prospects are extremely limited elsewhere in Asia," said Mr King.

ENDS

Issued by: Leighton Holdings Limited
ACN 004 482 982

For further information:
Mr Wal King
Chief Executive Officer
Ph: (02) 9925 6912

Mr Dieter Adamsas
Director Finance and Administration
Ph: (02) 9925 6923