Leighton reports $110 million profit and $13 billion work in hand

Issue Date:  19 August 2004
Issued By:  Leighton Holdings Limited

The directors today reported that Group operating profit after tax and outside equity interests was $110 million ($140 million last year). The result has been impacted by the recognition of provisions for the Spencer Street Station and Sydney Hilton projects and the write-off of the investment in the Southland Colliery.

The directors have maintained a fully franked final dividend of 27 cents per share, bringing the full year dividend to a total of 45 cents per share (up 2% from 44 cents per share last year).

Chief Executive, Mr Wal King, said that the impact of the two building projects in Leighton Contractors on an otherwise strong underlying performance for the Group was extremely disappointing.

“However, the total provision now taken allows us to be confident about reporting a much stronger result this coming year. Based on current forecasts we expect to report a profit of around $180 million after tax in 2005,” said Mr King.

“Our other Australian operations performed well with both Thiess and John Holland bettering their results of last year. Leighton Properties made another strong contribution.

“We recorded a very good performance from our Asian operations. Profits were up 7% to $87 million with Indonesia, Hong Kong, the Philippines and Malaysia all contributing well,” he said.

Total operating revenue of $6.0 billion (up 7% from $5.62 billion last year) came from engineering and infrastructure $2.03 billion, mining and resources $1.45 billion, building and property development $1.44 billion and operations & maintenance $992 million.

The Group’s balance sheet remains very strong with total assets of $2.7 billion and net assets of $856 million. Cash net of borrowings has increased to $511 million while undrawn facilities increased to $725 million.

“The Group’s work in hand has grown to a record $13 billion, boosted by a number of large projects such as the Lane Cove Tunnel project in Sydney, $1.7 billion worth of extensions to mining contracts in Indonesia, some large construction projects in Hong Kong and Macau, and the Perth-Mandurah railway in Western Australia,” said Mr King.

“The outlook for the Group remains very positive with a solid balance sheet, a record level of work spread relatively evenly across the Group’s diverse markets, and an Australian construction market that is in the midst of a strong upswing.

“Transport infrastructure continues to be a key driver of activity and a number of large road and rail projects now underway will drive revenue growth. Two consortia, one including Leighton Contractors and the other including Thiess and John Holland, have been shortlisted for Melbourne’s $2 billion Mitcham-Frankston Freeway. This project is expected to be awarded in late 2004,” said Mr King.

“Contract coal mining will underpin the mining and resources sector, with other select minerals mining and resources related engineering projects providing a solid contribution.

“Building activity should remain strong driven by a number of Leighton Properties’ developments and a good spread of commercial, industrial, health and defence work. Leighton Properties’ $1.7 billion development pipeline should continue to provide construction opportunities for Group companies,” he said.

“The Group’s position in Asia, boosted during the year by some major awards, should support revenue growth and a stronger contribution.

“The Group expects that its record level of work in hand will be maintained, sustained by a ‘stronger for longer’ upswing in the Australian construction market. This momentum should deliver growth in revenue for the next few years.

“The directors remain confident that the revenue growth will translate into increased levels of profitability and improved returns to shareholders in the future. The Group is well placed to spring back to more normal levels of profitability in the longer term,” said Mr King.

Issued by:
Leighton Holdings Limited
A.C.N. 004 482 982  A.B.N. 57 004 482 982
www.leighton.com.au

For further information:
MR WAL KING
Chief Executive Officer
Ph:  (02) 9925 6912

MR DIETER ADAMSAS
Deputy Chief Executive Officer & CFO
Ph:  (02) 9925 6923