Leighton reports 14% profit increase and potential for significant future work

Issue Date:  19 February 2002
Issued By:  Leighton Holdings Limited

The directors of Leighton Holdings Limited today announced a 14% increase in operating profit after tax and minorities to $67.3 million ($59.1 million last year) from a pre-tax profit of $96.9 million.

An interim dividend of 16 cents, franked to the extent of 70%, was also announced by the directors representing a 14% increase (14 cents unfranked last year).

Chief Executive, Mr Wal King AM, said that the interim results reflected another strong contribution from the Group’s Asian operations and a solid performance across the diversified contracting activities in Australia.

Operating revenue for the six months was $2.39 billion ($1.91 billion last year) with principal sources including engineering and infrastructure $828 million, mining and resources $706 million, building and property $495 million, telecommunications $257 million, and environmental services $100 million.

“Work in hand has been maintained at a record $7.8 billion. The order book has remained strong with John Holland significantly increasing its order book to $1 billion and Leighton Asia also increasing its workload, particularly in the Philippines. The strength of the workload is a reflection of the success of the Group’s diversification strategy,” said Mr King.

"We are pleased to announce that John Holland has finalised the acquisition of the contracting business of Fletcher Construction in Australia. The acquisition immediately adds $160 million of work in hand with additional new work prospects. No net cash was paid by John Holland and no goodwill results from the acquisition.

“In addition to the current momentum, the amount of large scale development and construction projects coming forward in Australia offers tremendous potential.

“The construction market is now looking positive with over $2 billion worth of government infrastructure projects expected to be announced in New South Wales and Victoria over the next 6 months. A further $5 billion of road and rail projects are likely to proceed over the next 3 years.

“Leighton Contractors is currently tendering for work with Australian Magnesium Corporation on the $1.3 billion Stanwell magnesium project at Rockhampton in Queensland. We expect that an announcement will be made shortly when details have been finalised,” said Mr King.

“Thiess, Australia’s leading contract miner, has a solid base load of long-term work which will remain an important contributor to the Group’s earnings. Selected iron ore and gold projects and an increasing level of activity in the oil and gas sector are likely to offer further opportunities to diversify.

“The building and property market is set for an improvement from 2003 to 2006 and the Group is pursuing a number of opportunities to capitalise on this upturn. Health, defence and correctional facilities as well as some private sector manufacturing and commercial prospects also offer good opportunities,” said Mr King.

“The outlook for new telecommunications work remains flat in the short to medium term however the Group has a good level of existing work which should carry through until this market resumes growth around 2004.

“The outlook for Asia remains positive with contract mining operations in Indonesia and good levels of construction activity across the region to underpin performance.

“The Group has continued to build its financial strength with total assets up by 6% to $2.01 billion and net assets up by 12% to $778 million. Net cash remained strong at $349 million at 31 December, 2001.

“Revenue for the full year is expected to be in excess of $5 billion with increases in both Australia and Asia. The Group expects a stronger operating profit in the second half and to report an increased profit for the full year,” he said.

“The directors remain very positive about the Group’s long-term outlook and its ability to continue to generate good returns for shareholders,” said Mr King.

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