The directors of Leighton Holdings Limited today announced a 6% increase in operating profit after tax and minorities to $75.6 million ($71.0 million last year) from a pre-tax profit of $110.7 million. A fully franked interim dividend of 18 cents was also announced by the directors representing a 6% increase (17 cents fully franked last year).

Chief Executive, Mr Wal King AM, said that work in hand at 31 December had grown to a new high of $12.5 billion. Work levels were boosted during the period by the award of over $1.7 billion worth of new contract mining work in Indonesia, some major transport projects in Asia and the Thiess/John Holland consortium achieving financial closure on the $1.1 billion Lane Cove Tunnel in Sydney.

“This equates to the equivalent of more than two years worth of revenue, which is the best position I’ve ever seen for the Group,” said Mr King.

The Group’s operating result reflected a solid contribution from its diversified contracting activities in Australia and Asia as it included a $12 million provision taken against the Southland Colliery project.

Operating revenue for the six months was $2.58 billion ($2.62 billion last year) with principal sources including engineering and infrastructure $960 million, mining and resources $643 million, building and property $651 million and operations and maintenance $331 million.

“The Group’s outlook remains very strong supported by a powerful competitive position in the Australian contracting market, record levels of work in hand and a robust balance sheet. Work in hand should be maintained given the number of projects that are in the bidding stages or those for which Group companies are the preferred proponents.

“Australia’s construction upswing should continue to be driven by a number of major engineering projects such as the $1.8 billion Mitcham-Frankston Freeway, in Melbourne. Two consortia, both of which include Group companies, are progressing bids to develop the project, which is expected to be awarded during 2004/05,” he said.

“Thiess’ prominent position in contract coal mining and its large long-term contracts, together with strong world demand for coal should provide a good base load of activity. Engineering work for a number of large minerals and energy processing facilities should also provide opportunities.

“Building and property activity levels are forecast to continue to expand through to the middle of the decade, led by solid economic growth, good levels of business investment, Leighton Properties’ development pipeline and a pick up in the level of Public-Private-Partnership (PPP) investment,” said Mr King.

“Group companies are extending their activities in the operation and maintenance (O&M) market, which accounts for around 10% of work in hand. These are usually long-term contracts, which provide a recurring earnings stream.

“The Group has a broad footprint in Asia, supported by a focused structure, which should facilitate its continued growth in the region. A highlight for the period was Thiess Indonesia’s life-of-mine contracts at the Satui, Senakin and KPC mines, which will underwrite activity levels into the future,” said Mr King.

“The Group’s financial capability remains strong with total assets up by 7% to $2.26 billion. Net cash remained steady at $214 million as at 31 December 2002 and we successfully issued $200 million worth of Leighton Notes.

“The Leighton Notes issue forms an important part of our capital management program and will provide access to additional facilities to support continued growth in the Group’s core business. We will continue to utilise our strong financial position to fund capital investments and to support guarantees, bonds and letters of credit,” he said.

“Revenue for the full year is expected to be over $6.0 billion with higher levels of activity in Australia. The Group expects a stronger operating profit in the second half and to report an improved underlying profit for the full year.

“The directors remain confident that the Group can continue to deliver improving returns for shareholders,” said Mr King.