leighton presentation
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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
A Journey of growth &
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
A Journey of growth &
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
A Journey of growth &
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
A Journey of growth &
Diversification
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Hilton Hotel
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Malampaya Gas Field
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City of Dreams – Macau
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Rapu Rapu Minerals - Phillipines
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Pluto LNG Project
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Diversification
The Emerald Palace - Dubai
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