Leighton reports 18% increase in operating profit and forecasts improved result again next year

Issue Date:  19 August 1999
Issued By:  Leighton Holdings Limited

The directors of Leighton Holdings Limited today announced an 18% increase in operating profit after tax and minorities of $121.8 million ($102.8 million last year) from a pre-tax profit of $181.8 million.

A fully franked dividend of 18 cents announced by the directors brings the full year ordinary dividend to a total of 30 cents per share (26 cents last year).

Chief Executive, Mr Wal King AM, said that a 20% return on shareholders’ funds demonstrated the continued focus on generating long-term shareholder wealth.

“This year’s result reflects the diversity of the Group’s income streams from contracting and project development businesses,” said Mr King.

Operating revenue of $3.22 billion (up 11%) came from civil engineering and infrastructure $1,070 million, contract mining $792 million, building $776 million, telecommunications $229 million, process engineering $147 million and environmental services $142 million.

Property development revenue of $62 million included the sale of shares in Star City, crystallising part of the successful investment in Sydney’s casino development.

“Increased revenue primarily came from the record level of construction activity in Australia which was dominated by major road works in NSW and Queensland, and some large building projects,” said Mr King.

“Mining activity in Australia remained at a high level due to the amount of long-term coal mining contracts secured by Thiess over the past few years. This work should ensure that the level of mining activity continues.

“There are prospects for the continued expansion of telecommunications and environmental services although growth in the Australian construction market has peaked and winning quality new projects in this sector will be tough,” he said.

“Our Asian operations produced a great result in a difficult environment and a record level of work in hand should result in another good year in Hong Kong, Indonesia and the Philippines.

“During the year, progress has been made in implementing our long-term growth strategy,” said Mr King.

“Thiess has successfully undertaken a number of initiatives to extend its business, particularly in mining. A strategic alliance has been formed with Portman Mining to develop future resources projects together and the recent purchase of Hunter Valley Earthmoving provides a stronger local presence in the NSW coal fields.

“The acquisition of an explosives business in the mining and quarrying industries will provide a new diversified earnings stream and vertical integration in the resources sector,” he said.

“Leighton Contractors has developed its telecommunications capability and is moving to further extend its activities in this sector through sponsorship of Australia’s first independently owned fibre optic network in Queensland.

“Other project developments being pursued include port infrastructure at Newcastle, the Viacom entertainment complex at Docklands in Melbourne and the Sydney-Canberra Very High Speed Train.

“Geographic diversification has been difficult to achieve in the current environment although Leighton Asia’s move into the Philippines has proven a successful counter to restricted prospects in other countries in the region.

The directors remain positive about the overall outlook for the longer-term.

The Board also announced today the appointment of Mr Geoff Dixon as a director of Leighton Holdings Limited. Mr Dixon is Deputy Chief Executive Officer of Qantas Airways and is on the Board of Air Pacific.

ENDS.

Issued by:
Leighton Holdings Limited
ACN 004 482 982

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

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