leighton presentation

STRATEGIC ANALYSIS

Growth & Diversification“The King’s vision”

1ST March 2010

GROUP 2B

Agenda

1. Introduction to Leighton Holdings

2. Leighton Holdings Current strategy

3. Industry Overview

4. Strategic Recommendations for Leighton Holdings

Future

A Journey of growth &

Diversification

Introduction to Leighton Holdings

The Leighton Group has evolved significantly from the constructioncompany of its origins over 50 years ago. Today it is a diversifiedservice provider to a range of private and public sector clients.

One of the world’s major project development and contractingorganisations. Also the world’s largest contract miner.

They operate in more than 20 countries from headquarters inAustralia, Hong Kong and Dubai.

Employ around 40,000 people.

Turnover of A$13.3 billion in 2009 (1999: A$3.3 billion)

Organisation Structure

Visionstream

LSE Technology

Vytel Asia

Broad

Lucon

Infratek Networks

Quantum

PT Thiess Indonesia

Thiess Services

HVE

Silcar

BOS Australia

Joint Ventures have also added new

capabilities

20 YR. Share Price Performance

Strong performer

Close correlation to economic cycle

Yield Stock

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Mar

ket C

apita

lsia

tion

A$ m

illio

n

LEI - Market Capitalisation

Outperformed the ASX 200 Industrials

Index

Key Financials

-2,000 4,000 6,000 8,000

10,000 12,000 14,000

A$ m

illio

ns

Financial Years

Leighton Holdings - Total Revenue

Total Revenue

0.0100.0200.0300.0400.0500.0600.0700.0

A$ m

illio

ns

Financial Year

Leighton Net Profit After Tax

NPAT

Also strong Balance Sheet with

conservative net gearing of 26.2%#

Financial strength* and capacity to bid for

major projects

Increasing market share without margin

erosion

# Industry gearing target 30% to 40% * $3B in undrawn facilities

Mix of organic & acquisition growth

Leighton founded by Stanley Leighton

1949 19831972 1987 -1988

19891962

Listed on the ASX

Next page

Leighton Contractors established as principal

operating subsidiary

Strategic move into Asia. HK Office

established

German Construction

Company becomes major

shareholder.

Thiess becomes part of the Leighton

Group. Construction and mining services

capability.

Thiess re-establishes in

Indonesia

Leighton Asia establishes office in

Thailand

1995 1996

Leighton Asia established office in the Philippines

Leighton Asia established

offices in Malaysia and

Vietnam.

Acquires Visionstreamfrom Telstra

1975

Wal King Appointed CEO

19062006 2003 2006 2007Previous page 2010

John Holland acquisition

Acquires construction division of Transfield

Leighton Asia opens offices in

Guam and Mongolia

FY2010: Earnings Guidance of $19b revenue, NPAT in

excess of $600 million

45% stake in Al Habtoor

Engineering

Acquisitions extend capabilities

Acquires Henry Walker Eltin

Group

http://www.transfield.com.au/index.htm�


DiversificationCurrent StrategyTarong Energy CorporationValue: $385 millionType: Contract mining & MaintenanceParties: Thiess

Resource View Culture

Each subsidiary is encouraged to maintain its individual culture.

Eight core values sit across the entire Group.

People Leighton is a service based organisation, its

success is reliant upon the quality and service its people delivers.

Systems A variety of delivery systems enables Leighton to

carry out every primary activity of the construction value chain.

Structure The decentralised nature of Leighton’s structure

allows each operating company to pursue its own market position and respond to aggressive

competition and changing market environments.

Experience Long serving leadership. Wal King has been

CEO for 22 years and joined 1968.

Leighton has a promotion from within bias, which has contributed to the depth of the

experience within the company.

Competences Leighton's ability to deliver large scale projects in

multiple industries.

Leighton’s ability to deliver all primary activities of the construction value chain through its

vertically integrated model.

Current Strategy

Geography

Markets/Activities

Brands

Delivery systems

GeographyAustraliaAsia/PacificGulf Region

Delivery SystemsHard DollarDesign & ConstructionProject ManagementAlliancingNegotiated DevelopmentPrivatised projects/ PPPs

BrandsLeighton ContractorsThiessJohn HollandLeighton InternationalLeighton AsiaLeighton Properties

MarketsInfrastructureResourcesProperty

ActivitiesConstructionContract MiningServicesDevelopment

Why does Leighton’s have more than one brand?

Brand Recognition enhanced by different core capabilities and

track record

Markets and Activities

Markets Infrastructure

Resources

Property

Diverse Capabilities Civil Engineering Major Infrastructure Development Building Contract Mining Process Engineering Telecommunication Services Facilities Management Mining Environmental Services

Utilities Services Facilities Operations & Maintenance Structural mechanical process Rail Water Tunnelling and Underground Mining Telecommunication & power transmission Property development Specialist services in development mgt

Diversified Strategy by Service offering

Geographic Diversification

Mongolia

Kuwait

Operate in high growth markets in the Asia Pacific Region and Middle East

VersusEuro area 0.3%USA 1.3%

# Based on 2010 GDP forecasts from the IMF

MongoliaKorea

China 9.0%

Australia 2.0%

New Zealand

Near Pacific

QatarKuwait

UAE 5.2%

Indonesia 6.3%

TaiwanIndia 6.4%Hong Kong 3.5%

Sri Lanka

Thailand

Macau

Malaysia

VietnamPhilippines

GE Business Screen

Protect position

Selectively manage for earnings Build selectively

Divest

Strong position for all SBU with the exception of Leighton Properties.

Bus

ines

s St

reng

th

Market Attractiveness

Low Medium High

High

Medium

Low

Peer Review

High revenue and modest gearing.

$3 billion in unused debt capital facilities

Net Gearing Ratio

Leighton 26.21%Downer EDI 39.00%Laing O’Rourke 24.57%Bovis Lend Lease 2.90%UGL 28.95%Transfield 50.13%Monadelphous 20.32%

Leighton

Binfinger Berger (Est)

Downer EDI

Laing O’Rourke

Bovis Lend Lease

UGL Transfield

Monadelphous

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

$A m

illio

ns

Total Revenue - 30 June 2009


DiversificationIndustry AnalysisSydney Desalination PlantValue: $980 millionType: Design, Construct, Operate & MaintainParties: John Holland & Veolia Water Consortium

Market Attractiveness

Strategic Groups

Strongest competitive position on broad service offering and brand image

Bra

nd Im

age

Broad Service Offering High

High

Low

Key Risks Identified

1

42

9

Opportunities


DiversificationThe Emerald Palace - DubaiValue: $293 millionType: Construction onlyParties: Leighton International & Al Habtoor Engineering

Future Strategy

Future Strategy & Issues

Industry consolidation amongst smaller players. Opportunity for Leighton to acquire further niche capabilities.

CEO leadership transition.

Consortium structure will continue to flourish as a way of sharing and managing project risks

Difficult regulatory regime in Australia for bidding for major government infrastructure. High bidding costs at 100% risk to get to prequalification stage. Eg Sydney Metro project cancellation.

Infrastructure Australia should codify bidding rules with the objective of minimising bidding and pre-selection costs. Leighton’s will continue to lobby this organisation to tighten up the tendering process for major infrastructure works.

Engineering personnel shortages will resurface as the economy rebounds.

Careful consideration of exposure to emerging markets.

Thank You


Diversification

Wynn Encore – Macau


Diversification

Parramatta Rail Link


Diversification

WestLink M7


Diversification

St Vincent Hospital


Diversification

Thailand Rail


Diversification

Lucas Height – Research Reactor


Diversification

MSJ Coal Mine


Diversification

Taiwan Rail


Diversification

Jumeirah Beach Hotel - UAE


Diversification

Yallourn Energy


Diversification

Hilton Hotel


Diversification

Malampaya Gas Field


Diversification

City of Dreams – Macau


Diversification

Rapu Rapu Minerals - Phillipines


Diversification

Pluto LNG Project


Diversification

The Emerald Palace - Dubai

leighton presentation

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