Leighton Reports 8% Increase in Profit to Record $169m

Issue Date:  15 August 2002
Issued By:  Leighton Holdings Limited

The directors of Leighton Holdings Limited today announced an 8% increase in operating profit after tax and minorities of $169.2 million ($156.2 million last year) from a pre-tax profit of $227.3 million ($196.8 million last year). The after tax return on shareholders’ equity averaged 22.1% for the year (22.3% last year).

A final dividend of 26 cents, franked at 70%, was also announced by the directors bringing the full year dividend to a total of 42 cents per share (up 8% from 39 cents last year).

Chief Executive, Mr Wal King AM, said that the result was a great achievement given the recent downturn in the Group’s core construction markets in Australia.

“Asia has again performed strongly with Thiess’ contract mining operations in Indonesia and Leighton Asia’s construction activities in Malaysia and Hong Kong providing the major contributions,” said Mr King.

“The Group’s diversified contracting activities in Australia performed well despite a competitive operating environment. Property development activities made a good contribution and John Holland has continued to meet its recovery program targets.

“A provision of $45 million has been taken against Nextgen Networks, due to the current instability in the telecommunications market. Leighton will continue to support Nextgen as it develops its business and will closely monitor its progress with regard to the value of the future investment,” said Mr King.

Operating revenue of $5.22 billion (up 20%) came from engineering and infrastructure $1.85 billion, mining and resources $1.41 billion, building and property development $1.16 billion, telecommunications $619 million and environmental services $186 million.

“The Australian engineering and infrastructure market is now moving into a very strong upswing with a number of major transport projects being progressed by governments. The investments being made in road and rail will provide a boost to activity in this market for the next few years,” said Mr King.

“Non-residential building and property are also forecast to move into a sustained upswing from next year.

“A recent highlight has been the award of some large infrastructure projects such as the Parramatta Rail Link in Sydney to Thiess and packages of the Regional Fast Rail project in Victoria to both Thiess and John Holland,” he said.

“Work in hand stood at a record $8.37 billion at year end and should rise further with the finalisation of some major contracts by the end of August.

“Leighton Contractors is currently finalising a $1 billion Engineering, Procurement and Commission (EPC) contract to build Australian Magnesium’s Stanwell plant. It is also part of the consortium which won the redevelopment of Spencer Street Station in Melbourne which will provide $300 million of work to Leighton Contractors.

“Activity levels in the mining and resources market will remain strong due to a number of substantial long-term contracts. However competitive pressures in contract coal mining is making this a tough market to win new work at reasonable margins,” he said.

“Telecommunications infrastructure opportunities are very limited due to the lack of new capital expenditure. Long-term operations and maintenance contracts will provide a moderate contribution going forward but the overall contribution from this sector will decline significantly,” said Mr King.

“The outlook in Asia remains positive. The Group has a strong market presence in the region and a good level of work. We recently announced the restructure of Leighton Asia into two separate operating companies to provide greater management focus on growth.

“The Group’s diversification strategy is continuing to deliver results and the upswing in Australian construction markets together with our strong balance sheet, positions us well for further growth,” said Mr King.

The balance sheet remains extremely strong with total assets of $2.32 billion and net assets of $795 million. The Group retains $524 million of net cash. The directors remain confident that the Group will continue to provide improved returns to shareholders.

Issued by:
Leighton Holdings Limited
A.C.N. 004 482 982  A.B.N. 57 004 482 982

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