quarterly Half year profit up 61% to $190 million

Transcription

1 update quarterly February Half year profit up 61% to $190 million Yandi Iron Ore Mine, WA HWE Mining HALF YEAR REPORT HIGHLIGHTS Financial Performance Following are highlights from the Half Year Report for the six month period to 31 December The directors are pleased to report that Group profit after tax and minority interests for the half year was up by 61% to $190.0m versus $118.1m last year. An unfranked interim dividend of 45 cents per share (25 cents per share, franked at 50% last year) was announced by directors. For non-resident and corporate shareholders the 45 cents per share dividend will include conduit foreign income. The Group's result reflected strong contributions from a number of large construction projects in Australia and the contract mining of iron ore and coal. Total revenue, including joint ventures, was up 22% to $5.7bn ($4.7bn last year) while revenue from joint ventures increased by 5% to $805m. Principal revenue sources were engineering and infrastructure $2.2bn, mining and resources $1.9bn, building and property development $830m and operations & maintenance services $853m. The Group has maintained a strong financial position with total assets of $4.1bn and net assets of $1.2bn. Cash net of borrowings has increased to $702m. Undrawn facilities and guarantees have reduced to $568m with the award of a number of major construction projects during the period. Work in Hand At 31 December 2006, the Group's work in hand was $20.1bn. This compares with $16.0bn at 30 June 2006 and $14.8bn at 31 December The order book was boosted by the award of some $9.6bn worth of new work, extensions and variations during the period. Major new projects won included Brisbane's North-South Bypass Tunnel and Gateway Bridge Upgrade, the Gold Coast Desalination Alliance in Queensland, the Perth-Bunbury Highway in Western Australia, a major mining contract at Prominent Hill in South Australia and a management contract at the City of Dreams casino in Macau. The Group has management contracts totalling some $1.5bn underway, an increase of $1.1bn since 30 June 2006.

2 Quarter 02 HALF YEAR HIGHLIGHTS CONT. Wal King AO Chief Executive Acquisitions, Investments and Sales The Group has agreed to acquire a strategic 40% stake in Devine Limited for approximately $94.7m. The acquisition, which is subject to the approval of Devine shareholders, substantially increases Devine's ability to fund and develop its business and further diversifies the Leighton Group into the residential property market. John Holland has entered into an agreement to acquire a Central Queensland contractor, CE Marshall & Sons for $85m. This acquisition facilitates John Holland s entry into the contract mining market. During the period the Group acquired a small strategic stake in Downer EDI Limited. This stake has since been sold. Australia/Pacific Operations The Australia/Pacific operations contributed $214m profit before tax (up 73%) from revenue of $4.9bn. Work in hand was up substantially at $16.9bn. Engineering and Infrastructure Engineering and infrastructure was the single largest contributor to Australian revenue at $1.9bn, up 5%. Work in hand was up 30% to $6.6bn. Roads remained a key driver of engineering and infrastructure activity levels and the major source of new work, particularly in Brisbane. A joint venture including Leighton Contractors was awarded the concession to finance, design, build and operate Brisbane's first privatised toll road, the $2bn North-South Bypass Tunnel (NSBT). The project is 6.8km from end to end and comprises 4.7km of tunnels as well as associated road connections. Another joint venture including Leighton Contractors was awarded a contract to design, construct and maintain Brisbane's $1.4bn Gateway Upgrade Project. The project comprises the duplication of the Gateway Bridge, upgrading of 20km of the Gateway Motorway, refurbishment of the existing Gateway Bridge and maintenance of the facility over a 10 year period. In Brisbane, Leighton Contractors was also awarded the design and construction of the Ipswich Motorway/Logan Motorway Interchange Upgrade, construction of a package of the South West Transport Corridor and the Caboolture Bypass project. Good progress was made on construction of the Inner Northern Busway. In Melbourne, new work awarded included the Middleborough Road Alliance to John Holland and a section of the Calder Freeway, awarded to Thiess. Construction of the new $2.5bn EastLink project in Melbourne, Australia's largest road development, progressed well for Thiess and John Holland. Leighton Contractors was awarded the construction of the new Deer Park Bypass in Victoria. In New South Wales, a Leighton Contractors led alliance will deliver the duplication of 35km of the Hume Highway at an estimated cost of between $300 and $400m. In Sydney, the Lane Cove Tunnel project progressed well for Thiess and John Holland, with the opening scheduled for March In Western Australia, a Leighton Contractors led alliance was awarded the design and construction of the New Perth Bunbury Highway. The $512m project involves the construction of 70km of dual carriageway road south of Perth. In Auckland, Leighton Contractors made good progress on the alliance contract to extend the Northern Motorway and the upgrading of the Manakau Motorway Link, and completed the Central Motorway Junction project. An engineering highlight for the period was the award, to an alliance led by John Holland, of the $1.1bn Gold Coast Desalination Project in Queensland, which is capable of producing 125 megalitres of drinkable water per day. The alliance will design, construct and commission the seawater desalination plant, then operate and maintain it for 10 years. John Holland was also awarded further water and wastewater construction work at Rouse Hill in Sydney, at Kwinana in Western Australia and Mackay in Queensland. New water related work awarded to Thiess included the construction of the Bundamba water treatment plant in Queensland and three metropolitan wastewater treatment plants in Western Australia. Rail provided a substantial contribution with a number of major projects underway. In Sydney, John Holland was awarded the design and construction of the Cronulla Line Duplication and made good progress on the Southern Improvements Alliance in regional New South Wales. In Sydney, Thiess was awarded the Revesby Turnback project while in Victoria, Thiess and John Holland completed their respective packages of the Regional Fast Rail project. In Western Australia, Leighton Contractors completed the tunnelling on its package of the Perth-Mandurah rail line and is progressing to substantial completion of the project by April The project remains subject to a number of contractual issues but these are not expected to have any further significant negative impact on the project's performance. Other new engineering and infrastructure projects awarded during the period include a $270m upgrade to the Dalrymple Bay Coal Loader in Queensland for John Holland and construction of a wind farm in Victoria for Leighton Contractors. Mining and Resources The mining and resources sector provided $1.5bn of revenue, up 67% relative to the corresponding period last year and work in hand was up by 63% to $6.1bn. A highlight was the appointment of Thiess as the mining contractor at the Prominent Hill copper-gold project in South Australia. Under the contract, worth approximately $800m over 6 years, Thiess will extract some 153m cubic metres of overburden and waste, and 38m tonnes of ore. In Western Australia, Thiess secured a major extension to the alliance contract at the Mt Keith nickel mine and civil work for the Lang Hancock Rail Project in the Pilbara. In New South Wales, Thiess was awarded the mining operations at Xstrata's Eastern Railway Pit and is preferred on the construction of mine infrastructure at the new Lake Lindsay coal mine in Queensland. Thiess' other contract coal mining operations in Queensland, New South Wales and Victoria performed well and made a solid contribution. Leighton Contractors has been successful in integrating the operations of HWE Mining and the acquisition has made a substantial contribution. New work awarded to Leighton Contractors and HWE Mining includes a 5 year contract, worth in excess of $376m, to develop the next phase of OneSteel's South Middleback Ranges project in South Australia and an extension at Orebody 23/25 in Western Australia. Leighton Contractors progressed well with other coal and iron ore mining activities. Building and Property Development Building and property revenue was up 10% to $725m, while work in hand was up by 57% to $1.4bn. The development activities of Leighton Properties made an increased contribution. Leighton Properties is undertaking property developments with a total end value of approximately $2bn and is working on securing another $1bn worth of developments. The first phase of Leighton Properties' Green Square development in Brisbane has proceeded well and Leighton Contractors was awarded

3 Quarter 03 the construction of the next phase on the development, the $97m North Tower. Leighton Properties and Grosvenor are planning to develop a $350m, 33-storey office tower in Brisbane's CBD and have, since December, appointed Thiess to design and construct the building. In Sydney's west at Parramatta, John Holland completed Leighton Properties' A-grade office tower development at 101 George Street. Nearby, Leighton Contractors' subsidiary Broad made good progress on another A-grade development for Leighton Properties at 25 Smith Street. In Canberra, Thiess progressed well on two developments for Leighton Properties at 18 Marcus Clarke Street and London Circuit. In Victoria, Leighton Properties commenced the approval process for the development of an integrated business park at Cheltenham. A highlight was the award to Leighton Contractors of the design and construction of the new Australian Defence Force headquarters near Bungendore in New South Wales. Leighton Contractors and ABN AMRO each have a 50% share in the Public-Private-Partnership (PPP) vehicle developing this project. John Holland was awarded a contract to design and construct a rail maintenance facility in Sydney for the Reliance Rail PPP consortium and, in Canberra, the construction of the new National Portrait Gallery. John Holland performed well on the Southbank TAFE in Brisbane and a number of other building projects around the country. Thiess made good progress on Stage 1 of the Westmead Hospital redevelopment in Sydney and completed an office tower in North Sydney for Leighton Properties. Operations and Maintenance Revenue from operations and maintenance (O&M) activity was up by 53% to $793m and work in hand grew by 57% to $2.7bn. Thiess Services extended their presence in the waste market with the award of new contracts in Mackay, Queensland and in Melbourne. In January, a major success was the award of five separate contracts, worth in excess of $400m, for waste collection and recycling in New South Wales and Queensland. A joint venture, including Thiess Services, was also awarded telecommunications contracts worth over $430m by Telstra. John Holland's rail maintenance business continued to provide a solid level of work and a number of new telecommunications projects added to the workload. Leighton Contractors undertook a good level of O&M work maintaining telecommunications and transport related infrastructure. Financial Highlights Operating Profit Before Tax and Minorities $million /03 03/04 04/05 05/06 06/07 Profit After Tax and Minorities $million /03 03/04 04/ /06 06/07 2,667 2,640 Brisbane Water Enviro Alliance, Qld John Holland Key Performance Indicators for the year ended 31 December 2006 Total Revenue $million Includes joint ventures 3,515 02/03 03/04 04/05 4, Dec 2006 $ 000 5,725 05/06 06/07 Work in Hand $million Includes joint ventures 8,589 12,500 14,969 02/03 03/04 04/05 31 Dec 2005 $ ,811 20,096 05/06 06/07 % Change Revenue - Group 4,897,513 3,918, % - Joint Venture Entities 805, , % Other Revenue 22,395 8, % Total Revenue 5,724,973 4,696, % New Contracts, Extensions & Variations 9,630,252 4,047, % Value of Work in Hand 20,095,854 14,810, % (includes Joint Ventures) Profit Before Tax 246, , % Income Tax (55,558) (45,130) 23.1% Minorities (578) (310) 86.5% Profit After Tax 190, , % Earnings per Ordinary Share % Dividends per Ordinary Share % 31 Dec 2006 $ Jun 2006 $ 000 % Change Total Capital and Reserves 1,205,096 1,102, % (excludes minority interests) Total Assets 4,117,826 3,803, % Cash Net of Borrowings 702, , % Undrawn Facilities and Guarantees 567, ,715 (30.0%)

4 04 Quarter Al Shaqab Equestrian Academy, Qatar Leighton Asia (Southern) Asian Operations The Group's Asian operations reported a reduced profit before tax of $30m, down $12m on the previous period, from revenue of $791m. The result was impacted by the poor performance of the Darajet geothermal power station project in West Java, Indonesia. Work in hand was down by 4% to $3.2bn. Indonesia The Group's Indonesian operations were again a significant contributor to the Asian result, based largely on a solid performance from Thiess on three large coal mining contracts at the Satui, Senakin and KPC mines in Kalimantan. Thiess also progressed resources related projects in South Sumatra, as well as the construction of telecommunications towers across Indonesia. Leighton Asia (Southern)'s work at three coal mines in Kalimantan, the Toka Tindung gold mine in Northern Sulawesi and civil works in Irian Jaya performed well. Hong Kong/Macau A highlight for the period was the commencement by a Leighton Asia (Northern)/John Holland led joint venture, of a management contract for the construction of the $1.7bn City of Dreams in Macau. This integrated gaming and entertainment resort will comprise: four deluxe hotel towers, ranging from 28- to 35-storeys; serviced apartments; an underwater-themed casino; a luxury retail arcade; multiple food and beverage outlets; and a world-class performance hall. Leighton Asia (Northern) completed phase one of the Wynn Resorts hotel and casino complex, which opened in September. A $400m extension to the complex involving a 40 storey hotel is being negotiated with the client. In nearby Hong Kong, Leighton Asia (Northern) progressed its other major infrastructure projects, the Eagles Nest road tunnel and the Central Reclamation project. A successful start was made to the Kowloon Southern Link rail project, which is being undertaken in joint venture with John Holland. Malaysia Design and construction of the Kuala Lumpur to Putrajaya highway continued to perform well for Leighton Asia (Southern). The double tracking of 400km of rail line between Rawang and Ipoh neared completion. India Leighton Asia (Southern) continues to build their presence in India winning a number of new projects. A joint venture including Leighton Asia (Southern) was awarded a contract to install subsea pipelines at Gujarat for Reliance Industries, one of India's leading business conglomerates. Work also continued on the installation of a crude oil pipeline at Cochin for Kochi Refineries. In Mumbai, Leighton Asia (Southern) secured two construction projects for Reliance including a $200m office park and a $135m high-rise building. The construction of manufacturing facilities for Flextronics and Salcomp progressed well. In joint venture with local contractor Oriental Structural Engineers, Leighton Asia (Southern) was awarded $200m worth of work widening and upgrading two tollroad projects; 45km of National Highway 11 between Agra and Bharatpu, near Delhi; and 72km of National Highway 3 between Indore and Khalghat, south of Delhi. Gulf Region Construction of the state-of-the-art $518m Al Shaqab Equestrian Centre in Qatar has progressed well for Leighton Asia (Southern). In Dubai, a joint venture including Leighton Asia (Southern) continued work on the construction of roads and infrastructure for the massive $1bn plus City of Arabia development. Other Countries Leighton Asia (Northern)'s mining contract at Rapu Rapu was disrupted due to a typhoon in December. Leighton Asia (Northern) was commissioned to rebuild the damaged infrastructure and the mine restarted in early February Leighton Asia (Northern) has opened an office in Korea and plans to pursue selected large-scale infrastructure opportunities in that market. Group Prospects Outlook for the Full Year The Group's already high level of work in hand should be maintained at similar levels over the second half of the financial year. Providing significant momentum, the work in hand is expected to produce strong levels of revenue for the period and a full year revenue of approximately $12bn. The directors are confident of reporting another solid operating profit in the second half and an increase in profit for the full year of approximately 45%. Long-Term Outlook The longer-term outlook remains very positive driven by the Group's record level of work in hand, the continued strength of the core markets in Australia and an increasing exposure to the growth markets of Asia. The Group has a strong competitive position across most of its markets and is backed by a very solid balance sheet. This financial strength supports the pursuit of acquisitions which further diversify the business and provide growth opportunities. In Australia, after decades of under-investment in economic infrastructure such as roads, rail, water, electricity and telecommunications, a sustained catch-up spend is required. Ageing infrastructure, a growing population and specific issues such as the current drought, support a positive long term outlook for investment on infrastructure. The Australian construction market, which has been through a strong upswing in recent years, should therefore continue to see infrastructure spending remain at recent historical high levels. Road construction is expected to be maintained at high levels with the Federal government's AusLink program fuelling investment in highways and arterial roads. These include regional investments in the Bruce Highway and the Toowoomba Bypass, both in Queensland, and the Pacific Highway and the F3 to Branxton Link in New South Wales. A number of major capital city road projects are also likely to commence over the next few years including; the Airport Link and Ipswich Motorway in Brisbane, the M4 East and F3 Connector in Sydney, and the Monash-West Gate Upgrade and the Eastern Freeway Extension in Melbourne. Investment in rail infrastructure should remain strong with major investments being made to improve the efficiency of the interstate freight network on the east coast. In Sydney, a major spend is also underway to untangle the existing city network and improve the effectiveness of the system, while a significant investment will be made over the next few years to expand the network to new suburbs being developed in Sydney's north-west and south-west. Prompted by recent drought conditions, major investments are proposed and underway in water related infrastructure including desalination,

5 05 Quarter recycling and new dams. As a major player in this market, the Group anticipates undertaking more water related work in the future. While not as urgent as water, new investment will also have to be made in electricity generation and transmission over the next few years. China's almost insatiable demand for minerals and energy, fuelled by its industrialisation and urbanisation, is driving strong investments in resources related infrastructure. While this investment boom will provide good minerals related infrastructure opportunities for the Group over the next few years, these will eventually slow as new supply comes on stream. China's demand for commodities will lead to increased export volumes, which should support good, long-term opportunities for contract mining, particularly of iron ore and coal. A number of oil and gas projects are advanced in their development or planning and these also bode well for future heavy and process engineering work. After five years of continuous growth the nonresidential building market is expected to continue growing in 2007 but to slow from Offices should remain a major driver of activity, based on the underlying strength of the economy while there will be some slowing of investment in retail and hotels. The use of PPP's to deliver social infrastructure such as hospitals and schools should provide a number of good opportunities. The various sectors of the operations and maintenance (O&M) market continue to grow at the same rate as, or more strongly than, GDP. More of this market is being outsourced, providing more opportunities for the Group to operate and maintain utilities, telecommunications, rail, road and mining infrastructure, as well as the collection of waste and associated facilities. Asia remains a primary driver of global growth and the region, led by China and to a lesser extent India, is expected to continue growing strongly. Indonesia, currently the Group's largest contributor of the Asian markets, will continue to be driven by the contract mining of coal and the development of other resources related projects. While Indonesia has a significant need for infrastructure, which may present construction opportunities - particularly in toll roads, these remain dependant on funding. Hong Kong's size and economic maturity means that it will present numerous opportunities in terms of infrastructure, both social and economic. Nearby Macau continues to be driven by a gaming boom which is fuelling numerous construction projects. Existing work at the City of Dreams casino will underwrite activity for the next few years and should be supplemented by further work for Wynn at the recently completed casino and the proposed $2bn development at Cotai. Leighton Asia (Northern) is currently pursuing mining prospects in the Philippines, Thailand and China, and building work in Vietnam and the Philippines. Korea is encouraging the entry of foreign contractors and Leighton Asia (Northern) is evaluating opportunities related to infrastructure construction in that country. India, the second fastest growing economy in the world, is developing into a market that offers many opportunities for Leighton Asia (Southern) and Thiess. The country has a pressing need for infrastructure which, if not addressed, will limit its growth. Leighton Asia (Southern) is targeting a number of toll road, airport, oil and gas, and contract mining opportunities in the longer-term. Thiess is also pursuing contract coal mining opportunities in India. In the Gulf, existing projects will underwrite activity for the next few years for Leighton Asia (Southern). Other opportunities will be carefully targeted in the region. Malaysia should continue to provide selected infrastructure opportunities for Leighton Asia (Southern). The outlook remains very positive for the Group. The strength of the Australian infrastructure and resources markets, backed by the potential to further extend the business in Asia, underwrites a positive outlook for the next few years. Other strategic initiatives being developed, such as residential property, provide further opportunities to continue diversifying the Group. The Group expects to be able to maintain work in hand at similar levels to the current record of $20bn for the next few years. This workload is expected to support profit growth and good returns to shareholders. Investments* Engineering & Infrastructure - WestLink Motorway Limited: Leighton Contractors has 5% of the consortium that owns, operates and maintains the M7 WestLink Motorway in Sydney. - Connector Motorways: Thiess and John Holland have 11% of the consortium that will own, operate and maintain the Lane Cove Tunnel in Sydney. - ConnectEast Group: Thiess and John Holland have 15.2% of the consortium that will own, operate and maintain the EastLink Project in Melbourne. - RiverCity Motorway: Leighton Contractors has a 7.8% share of the consortium that will own, operate and maintain the RiverCity Motorway in Brisbane. - James Fielding Infrastructure: Leighton holds a 50% stake in a funds management joint venture with Mirvac. - North Luzon Expressway: Leighton Asia holds a 16.5% stake in the Manila North Tollway Corporation in the Philippines. Mining and Resources - Burton Coal Mine: Thiess holds a 5% investment in the Burton Coal Mine in Queensland. The other 95% is owned by Peabody. Property - Praeco: Leighton Contractors has a 50% share in the consortium that will own and operate the new Defence Headquarters Joint Operations Command in New South Wales. - Viridian Noosa: Leighton Properties holds a 50% share in a property at Noosa in Queensland where a residential/resort development is being developed George Street: Leighton Properties holds a 50% share in a development site in Brisbane where a commercial office tower is being developed Pacific Highway: Leighton Properties holds a 50% share in a commercial office tower development in North Sydney Smith Street, Parramatta: Leighton Properties holds a 50% share in a development site in Parramatta where a commercial office tower is being developed. - Sydney Airports: Leighton Properties holds a 33 1 /3% stake in leasehold development land at Bankstown airport, a 25% interest in leasehold land at Camden airport and a 50% stake in freehold development land at Hoxton Park airport, in Sydney. - Delhi Road: Leighton Properties has developed a commercial office building in North Ryde, in Sydney. - Mulgrave: Leighton Properties is developing a suburban office park in Melbourne. - Tooronga: Leighton Properties is developing a Homemaker Centre on a site in Toorak, Melbourne. - Bay Road: Leighton Properties owns a development site at Cheltenham in Melbourne where a suburban office park and industrial precinct is proposed. - Robinsons Road: Leighton Properties owns a development site at Ravenhall in Melbourne. Property Developments # - St Pauls Terrace: Leighton Properties is developing a site in Brisbane with an office building, a high-tech utility building, a community facility centre and an affordable housing development. - Marcus Clarke: Leighton Properties is developing a commercial office tower in Canberra for ISPT. - NICTA: Leighton Properties is developing a commercial office tower in Canberra for ISPT. - Peninsula Homemakers: Leighton Properties has developed a Homemaker Centre on a site at Mornington in Victoria for Mirvac. * Indicates investments owned by the Group, either infrastructure, resources or property related. # Indicates a development where the Group does not own the underlying property.

6 Quarter 06 Interim Dividend The directors have announced an unfranked interim dividend of 45 cents per share payable on 30 March For non-resident and corporate shareholders the 45 cents per share dividend will include conduit foreign income. Close of Books For the purpose of determining dividend entitlements, the Company's Share Registry Office will accept registrable transfers up to 5pm on Friday, 16 March 2007 if paper-based, or by end of day on that date if transmitted electronically on CHESS. Leighton shares are expected to trade ex-dividend on the Australian Stock Exchange on 9 March Leighton Notes Interest on Leighton Limited's $200m of Convertible Unsecured Subordinated Resettable Notes ('Leighton Notes') will be paid on 31 May 2007 at the rate of 8.01% pa in respect of the period from 30 November 2006 to 30 May 2007 (both dates included). For the purpose of determining Noteholders' entitlements to the payment of interest on the Leighton Notes only those persons who are registered as Noteholders at 7.00pm on 23 May 2007 ('Record Date') shall be entitled to receive the payment. John Holland awarded $180m Auburn maintenance facility contract The Reliance Rail public private partnership (PPP) will supply 626 double-deck passenger railcars, which are to be maintained over a period of 30 years, to New South Wales' RailCorp. John Holland has been awarded a contract by Reliance Rail to design and construct a maintenance facility for the PPP. John Holland's multidisciplinary scope of work for the Reliance Rail PPP includes: - design and construction of the maintenance facility at Auburn; - associated siteworks; - trackworks; and - infrastructure involving building, rail infrastructure and civil engineering. The contract involves two divisions of John Holland - NSW Region and Rail. Dennis Brewer, John Holland General Manager NSW/ACT said that the Group's proven expertise in the area of building and rail infrastructure, coupled with an impressive safety, quality and environmental record was critical to their success in being awarded the project. John Holland in $1.12bn Gold Coast desalination project alliance The John Holland Group has been awarded a contract to construct, operate and maintain the Gold Coast Desalination Project in Tugun in an alliance with Gold Coast City Council (GCCC) and QLD State Government, partner Veolia Water and sub-alliance partners SKM and Cardno. John Holland's share of the project is worth $647m. Capable of producing 125ML of drinkable water per day, the Gold Coast Desalination Project will provide a bulk water supply that will be part of the solution to secure the South East Queensland region s future water needs. The Alliance's scope of work on the project will include: - designing, constructing and commissioning, then operating and maintaining the seawater desalination plant for 10 years; - driving twin tunnels, 2.2km & 2km offshore from Tugun, to be used for seawater intake and discharge; - constructing a 25km pipeline to connect the desalinated water produced by the project to the South East Queensland water supply network. First water from the plant is expected by November 2008 and full completion is scheduled for January Greg Taylor, John Holland General Manager, Water, said that John Holland's proven expertise in the area of water and tunnelling infrastructure, coupled with an impressive safety, quality and environmental record was critical to their success in being awarded the project - a strategic part of providing a secure and drought free water supply to South East Queensland. Thiess Services picks up $430m of waste contracts Thiess Services has recently been awarded some $430m worth of waste collection and recycling contracts in NSW and Qld. The largest of these are waste and recycling collection and processing contracts for Gosford and Wyong City Councils in NSW, valued at approximately $220m over 10 years. These involve the collection of domestic general waste, recyclables, green waste and bulk waste, for a population of around 300,000 people. As part of the contract, Thiess Services will build a new Materials Recovery Facility (MRF) to process the recyclables collected. STRATEGY Leighton Properties enters into residential property market Leighton recently announced its intention to take a strategic 40% stake in listed developer Devine Limited for approximately $94.7m. The acquisition will allow Devine to accelerate its diversification and expansion strategy and further diversifies the Leighton Group into the residential property market. Leighton Chief Executive Officer, Mr Wal King, said that the stake in Devine represented a significant move by the Group to expand its property development business. "We have indicated for some time that we are pursuing a range of growth initiatives, which build on our current strategic framework and the strength of our balance sheet. We approached Devine mid way through last year and both companies see the benefits of this strategic alliance," said Mr King. "We believe that Devine, a leading home builder and developer in Australia's residential property market, provides the Group with a great opportunity to further diversify. "Devine offers affordable housing in Queensland, Victoria and South Australia, and is highly regarded for its innovation, modern, quality homes and dedication to service. It is also known for its high-rise unit developments," he said. "This is an exciting opportunity for both Leighton and Devine, which should create value for the shareholders of both companies. We look forward to developing a positive working relationship with Devine," Mr King concluded. The acquisition, which is subject to the approval of Devine shareholders, is expected to be finalised in late March Thiess Services Executive General Manager, Leigh Ainsworth said, "our NSW/ACT Collection and Recycling Division has always delivered excellent results, and the Gosford-Wyong contract is a testament to their expertise in this industry." In Queensland, Thiess Services has been awarded waste collection and recycling contracts by the Pine Rivers Shire Council and the Caloundra City Council. The contracts cover the collection of refuse and recyclables, and the construction and operation of a new MRF. Thiess Services has also entered into a 7-year, $150m alliance with Brisbane City Council (BCC) to manage the city s four transfer stations and its landfill site at Rochedale. The focus of the alliance is to provide the BCC with innovative waste management solutions as Brisbane generates around 520,000 tonnes of waste each year.

7 Quarter 07 Major road infrastructure projects driving Leighton Contractors' workload Over the last few months Leighton Contractors has continued to secure significant road infrastructure contracts across Australia. Leighton Contractors' newly awarded projects include a portion of the 'Accelerated Southern Hume Duplication Package' in New South Wales, the Deer Park Bypass in Victoria, South West Transport Corridor (Package B) in Queensland and the Perth-Bunbury Highway in Western Australia, which was converted from preferred bidder status in December Leighton Contractors will deliver the portion of the 'Accelerated Southern Hume Duplication Package' - a New South Wales and Australian Government funded initiative - in an alliance with the New South Wales Roads and Traffic Authority, Maunsell Australia, SMEC Australia and Coffey Geotechnics. The package worth between $ m, will duplicate 35km of the Hume Highway in southern New South Wales between the Sturt Highway at Tarcutta and Holbrook by late Peter McMorrow, Managing Director of Leighton Contractors, said that he was delighted that Leighton Contractors had been awarded the project. "The award of this contract is recognition of the capability, commitment and experience of the alliance team. We look forward to working with our alliance partners to deliver this important infrastructure project," Mr McMorrow said. The duplication of the Hume Highway is expected to significantly improve road safety for all motorists and improve transport efficiency for communities and industries along this major freight route. In western Melbourne, the $209m Deer Park Bypass project will provide a new freewaystandard connection from the Western Highway at Caroline Springs to the Western Ring Road and Melbourne's urban freeway network. The 9.3 km bypass will be a four lane freeway with two lanes in each direction. Provision will be made for an additional lane in each direction to be built in the future. Interchanges will be built at the Western Highway, Christies Road, Robinsons Road and the Western Ring Road. The bypass will also cross over the Melbourne-Ballarat railway line. Mark Scorer, Leighton Contractors' General Manager for Victoria, said "We have a proven track record on previous contracts for VicRoads and we look forward to the opportunity of delivering this important addition to the State's road network." Mr Scorer said that construction would commence early next year and take less than three years to complete. In Queensland, Leighton Contractors began work on the $94m South West Transport Corridor (Package B) in November last year. The project, for the Queensland Department of Main Roads, will extend the Centenary Highway at Springfield to the Cunningham Highway at Yamanto. This project will provide a new connection road for residents of the Ripley Valley and should ease congestion on other major Brisbane entry roads. On-site works are scheduled to conclude in late Mr McMorrow said, "we are proud to be recognised as a leader in creative innovation for construction and engineering in Australia. We are dedicated to delivering high quality infrastructure to meet the expanding needs of Queensland." The Perth-Bunbury Highway project was awarded by the Western Australian Government to the Southern Gateway Consortium, which is composed of Leighton Contractors, WA Limestone and GHD Consulting, in partnership with Main Roads WA. The $512m contract for the design and construction of the New Perth Bunbury Highway will see a new 70.5km dual carriageway road constructed south from the Kwinana Freeway to Lake Clifton. The new Highway will provide a major strategic link to the rapidly growing Peel and South-West regions. The project will significantly reduce travel times between Safety Bay Road and Lake Clifton by up to 34 minutes and will also cut delays and congestion, especially during holiday periods, through the Mandurah and Dawesville Peninsular urban areas.

8 Quarter 08 PEOPLE NEWS David Hudson John Elvy David Saxelby Dr Herbert Lütkestratkötter David Hudson and John Elvy appointed Leighton ' Executive General Managers Mr David Hudson has commenced with Leighton as Executive General Manager, Risk Management. Formerly the Managing Director of Barclay Mowlem, Mr Hudson's responsibilities at Leighton include overseeing the company's enterprise risk management system and management of risk controls on selected projects. Mr John Elvy has been appointed as Executive General Manager, Business Development. Mr Elvy has wide ranging experience in the property and commercial field throughout Asia, India and the Middle East, as well as in Australia. Mr Elvy will assist in securing development opportunities for Leighton Properties and commercial, civil & services projects for all Leighton companies. David Saxelby appointed Thiess Managing Director Mr David Saxelby, formerly CEO of Thiess' Australian operations, has been appointed Managing Director of Thiess as Mr Roger Trundle has decided to step down from the position due to health reasons. Chief Executive, Mr Wal King, said that while he was pleased to congratulate David on his promotion it was with regret that he announced Mr Trundle's decision. "The Leighton Board and I would like to thank Roger for his leadership and contribution to Thiess over many years of service. Roger has been a valued member of the executive team and I m sure that we all wish him well for the future," said Mr King. Leighton ' Board changes The Leighton Board wishes to advise that Dr Herbert Lütkestratkötter has been appointed a Director of the company. An Alternate Director for Dr P M Noè since 2004, Dr Lütkestratkötter has been a member of the Executive Board of HOCHTIEF since December Prior to joining HOCHTIEF Dr Lütkestratkötter accumulated a wide range of experience in the industry having served for over 25 years in international engineering and construction businesses. Mr Thomas Leppert resigned as a director of Leighton on 1 February The Leighton Board wishes to thank Mr Leppert for his valuable contribution as a Non-Executive Director since his appointment in Significant Indian Contracts for Leighton Asia (Southern) Leighton Asia (Southern) has recently been awarded toll road and building contracts worth a total of $530m in India. Leighton's share of the work is worth $430m. In joint venture with local contractor Oriental Structural Engineers, Leighton Asia (Southern) was awarded $200m worth of work on two tollroad projects; the widening of a 45km section of National Highway 11 between Agra and Bharatpur; and the widening and upgrading of 72km of National Highway 3 between Indore and Khalghat. In Mumbai, Leighton Asia (Southern) secured two construction projects for Reliance Industries including a $200m corporate park and a $135m, 29 storey high-rise building. The Reliance Corporate Park is a multi-facility precinct comprising; six office blocks with a total floor area of over 150,000 m 2, a retail mall, a data centre, a research and development centre, a convention centre and support facilities. COMMUNITY INVESTMENT Leighton Giving In November, Leighton launched the workplace giving program, Leighton Giving. This program seeks to build a stronger link between Leighton and the community. It also aims to provide support and encouragement to employees who want to give something back to the community. Through this program staff have the opportunity to support five charities by nominating to make donations directly from their pay, in a way that is both efficient for the charities and tax effective for donors. Leighton will be matching contributions made by employees. The recipients selected include a range of charities covering medical research, support for children suffering from cancer and their families, poverty relief in developing countries and the environment. Thiess' Mt Keith contract extended Thiess has signed a three-year extension to the Mount Keith Alliance contract with BHP Billiton. The Alliance is responsible for undertaking all mine planning, scheduling, drill and blast, load and haul, and mill feed at the mine which operates 24 hours a day, 365 days of the year. Western Australian General Manager, Ric Buratto, said the $396m alliance contract had been extended to "We are pleased to be continuing our long-term commitment to the Mount Keith nickel mine. There are currently 95 million tonnes of material being moved annually and the pit will have an eventual depth of more than 600m," Mr Buratto said. Leighton Limited ABN Pacific Highway, St Leonards NSW 2065, Australia Telephone (02) Facsimile (02)