preliminary final report & june quarterly update - Leighton Holdings

More documents

Recommendations

Info

Leighton International was further restructured in April 2011 to facilitate a better span of control and consistency across the various geographic regions and timezones. Hamish Tyrwhitt, Managing Director of Leighton Asia, has assumed responsibility for India, Malaysia and the Offshore Oil and Gas operations of Leighton International. Laurie Voyer, Managing Director of HLG, is now also responsible for operations in Africa. Since year end, David Saxelby, Managing Director of Thiess, announced his intention to leave the Group later this calendar year. Bruce Munro, currently Thiess’ Chief Executive Mining, will fill the role of acting Managing Director until a formal appointment is made. A number of changes occurred at a Board level during the financial year. Wal King resigned from the Board and was replaced by David Stewart. Dieter Adamsas retired from the Board in November 2010 and Peter Gregg was appointed to the Board in December 2010. Dr Herbert Lutkestratkotter and Dr Peter Noe, both HOCHTIEF executives, resigned from the Leighton Holdings Board. Dr Lutkestratkotter was replaced by Dr Frank Stieler, the new CEO of HOCHTIEF, in May 2011. As at 30 June 2011, the Board comprised three HOCHTIEF directors, two Leighton executive directors, and six independent directors including the Chairman, David Mortimer AO. During the year, the Group’s major shareholder HOCHTIEF was the subject of a takeover by ACS. During June 2011, ACS announced it had secured control of more than 50% of HOCHTIEF voting share, and that HOCHTIEF would continue to control the investment in Leighton. Leighton senior executives have met with both HOCHTIEF and ACS representatives who remain closely aligned with Leighton on the Company’s strategic and financial goals. Safety, Workforce and Environment At 30 June 2011, the Group directly employed 51,281 people (up from 45,340 in 2010) including 581 graduates and 1,169 trainees/apprentices. Safety remains the Group’s most fundamental operational priority. The Company believes that if participants in the construction procurement chain - clients, designers, contractors, and employees - all play their role in ensuring workplace safety, all fatalities and permanent disabling injuries can be prevented. Leighton Holdings’ safety objective is to eliminate these incidents and to systematically reduce all other injuries across its operations. A new safety function has been established at Leighton Holdings with the aim of establishing an audit and assurance program that delivers the benefits of sharing learnings and best practices. The Group’s Lost Time Injury Severity Rate (LTISR), which is measured per million hours worked, increased from 27.7 to 28.8 for our Australian operations and decreased from 0.8 to 0.6 in our international operations. LTISR is an indicator of the severity of the lost time injuries that occur and is a measure of the average number of days lost per lost time injury. The Group’s Lost Time Injury Frequency Rate (LTIFR) which is measured per million hours worked increased from 1.6 to 1.8 in our Australian operations and decreased from 0.8 to 0.6 in our international operations. From FY2012 Leighton Holdings will no longer collate or report LTIFR as the Company believes that it is an ineffective indicator of performance and its use drives underreporting. Consistent with the Company’s ongoing commitment to a proactive approach to safety, a broader range of indicators will be introduced to provide a clear picture of performance, to encourage a ‘blame free’ culture, and to provide insight and lessons from hazards and near misses Potential Class 1 and Actual Class 1 incidents have decreased in our Australian operations but increased in our international operations. It is clear from the data that the objective of eliminating fatalities and permanent disabling injuries has not yet been realised. There were four fatalities within the Group in the past year. One occurred within our Australian operations and three occurred within our international operations. These four fatalities demonstrate that there is still work to be done to improve safety performance across the Group. Many of the features developed as part of the new structure and process in FY2011 have already been implemented and are expected to drive a further step change in safety performance. Industrial relations in Australia is an emerging issue. Labour productivity is declining and there is an urgent need to review and assess the effectiveness of the construction industry’s industrial relations framework, including the Fair Work Act, the operation of the ABCC and the Commonwealth Government’s Code of Practice In FY2011, Leighton Holdings developed an environmental, social and governance strategy endorsed by the Board of Directors which addresses the priority issues and underpins the Group’s business strategy. Two Level 1 environmental damage incidents were reported in our Australian operations, both at Thiess operations during the Queensland floods. There are no expected prosecution or penalties arising from these incidents. The Federal Government’s proposed carbon pricing scheme is due to start on 1 July 2012. The Company estimates the potential direct liability under the proposed scheme will be $7.4 million in 2012/13, based on an expected 2-4% annual compound rate of increase in the Group’s scope 1 greenhouse gas emissions on projects over which Group companies have operational control. The most significant impact of the Clean Energy Future package will be from the cut to fuel tax credits (FTC), which are currently worth more than $110 million a year to the Australian operating companies. It is estimated that the cuts will reduce the amount of FTC claimed by about $20 million a year from 2012/13. The Group is currently working through the draft Bills to determine any further impacts. Operational Performance The Group made a loss before tax of $491 million which represents a significant turnaround from last year’s profit before tax of $843 million. Revenue for the year totalled $19.4 billion with $16 billion coming from Australia and New Zealand and $3.4 billion from offshore. The major revenue generating markets for the Group were infrastructure $10.7 billion, resources $7.4 billion and property $1.3 billion. Group companies provided a range of services to these markets including construction $12 billion, contract mining $5.2 billion, and services $2 billion. Leighton Holdings Limited JUNE 2011 QUARTERLY UPDATE Page 33
The poor financial performance of the Airport Link and Victorian Desalination PPP projects, along with the slow recovery in property markets, overshadowed an otherwise solid performance across construction, contract mining and services projects in Australia and the near Pacific region. Hong Kong, Indonesia, India, Mongolia and the Offshore Oil & Gas operations all made strong contributions to the Group’s result. Leighton Contractors Good performances across all divisions ensured another strong result from Leighton Contractors. Leighton Contractors earned a segment result of $323 million before tax for the financial year, up 19% versus $271 million in the year to 30 June 2010. This was achieved on segment revenue of $6.2 billion, up 17% on the $5.3 billion recorded in 2010. The company’s work in hand rose by 10% to $10.8 billion at 30 June 2011 versus $9.8 billion for the previous financial year. Leighton Contractors had reportable segment assets of $2.3 billion compared with $1.9 billion for the previous year. Transport infrastructure, resources-related infrastructure, power and energy, and contract mining provided the bulk of the new work won in the financial year to June 2011. During the year, Leighton Contractors secured over $1 billion of new road contracts. Good progress was made on the $467 million M2 Hills Motorway upgrade in New South Wales and the $120 million upgrade of the M80 Ring Road in Victoria. In Western Australia, work commenced on the $229 million Great Eastern Highway alliance project and, in March 2011, the company secured a five-year, $191 million joint venture contract with Opus International Consultants to deliver road improvement and maintenance services in the Wheatbelt region. In Queensland, the Eastern Busway Stage 2 neared completion and, in New South Wales, the Ballina Bypass and Kempsey Bypass projects continued to make good progress. The upgrade of the Sapphire to Woolgoolga section of the Pacific Highway has been impacted by wet weather. Leighton Contractors’ rail projects in New South Wales, Victoria and Queensland continued as expected and were not unduly affected by the extreme weather events along the east coast. The company did secure some minor flood remediation work in the rail sector in Queensland. The RGP5 rail project, in joint venture with Macmahon, was completed during the period. For some time, Leighton Contractors has been active in the health sector, both from a construction and facilities management perspective. In June 2011, the SA Health Partnership, led by Leighton Contractors, reached financial close on Australia’s largest health PPP. The design and construction of the $1.85 billion New Royal Adelaide Hospital, the most advanced facility of its type in the country, is a joint venture contract with Hansen Yuncken. Leighton Contractors is also a sponsor of the project and will invest $68.1 million for a 19.9% equity stake payable in 2014. Other major construction projects won during the year include a $113 million contract to construct the Enfield Intermodal Logistics Centre for the Sydney Ports Corporation, and $113 million to design and construct the new Botany Paper Mill for Amcor. In the power and energy sector, Leighton Contractors secured over $500 million in new work including the $291 million Macarthur wind farm in Victoria, and is part of a consortium to construct the $73 million Mumbida wind farm in Western Australia. Leighton Contractors’ Telecommunications Division saw strong year-on-year growth in revenue and profit and reported its best ever financial results. Visionstream, a 100% subsidiary, performed well on $165 million worth of contracts for Telstra across New South Wales and Victoria. Progress on the 10-year, NZ$1 billion contract to provide telecommunications field services in the Auckland and Northlands regions of New Zealand continued to meet expectations. Visionstream is currently finalising its arrangements with Chorus for the country’s Ultra Fast Broadband (UFB) and Regional Broadband Initiative (RBI) deployments. Visionstream is also seeing continued growth in its intelligent network services area with involvement in the New Royal Adelaide Hospital and growing demand in the resources sector for both fibre optic and wireless infrastructure. Nextgen Networks, Australia’s third largest fibre optic telecommunications network, offers a range of services to corporate, government and wholesale clients. Nextgen continued the rollout of the $250 million Regional Backbone Blackspots Program which is more than 50% complete. Data centre business Metronode and new hosting and cloud services business Infoplex, also delivered solid performances. Leighton Contractors has made further investment in these telecommunications growth areas and has announced the establishment of new generation “BladeRoom” data centres in Melbourne and Perth which will complement established data centres in these cities. Plans were also announced to develop a new telecommunications submarine cable between Perth and Singapore known as “ASC” via the 100% owned subsidiary Australia-Singapore Cable (International) Limited. The cable will have initial capacity of 6.4 Tera bits per second, expandable to 16 Tera bits per second. The first phase, involving detailed design, route survey and permit application, is already underway. The second phase, subject to final Board approval and securing the necessary permits, involves construction and is expected to commence in the first quarter of 2012. Resources related infrastructure continued to be a key driver of construction work in Australia. Leighton Contractors was awarded a $814 million contract to undertake civil and underground services for Chevron on the Gorgon project in September 2010. This is in addition to the $768 million jetty and marine works project secured the previous financial year. Both projects are now underway and remain on track despite a number of unique challenges, particularly in logistics and marine operations. Contract mining volumes and opportunities remained strong in Western Australia, although production at some Leighton Holdings Limited JUNE 2011 QUARTERLY UPDATE Page 34
Page 1 and 2: 2010/11 PRELIMINARY FINAL REPORT &
Page 3 and 4: Results for Announcement to the Mar
Page 5 and 6: Commentary on the Results continued
Page 7 and 8: Consolidated Statement of Comprehen
Page 9 and 10: Consolidated Statement of Changes i
Page 11 and 12: Notes to the Consolidated Prelimina
Page 13 and 14: Notes continued for the year ended
Page 31 and 32: Financial Highlights 30 June 2011 3
Page 33: The Company raised $758 million in
Page 37 and 38: Production at existing mines in Que
Page 39 and 40: invested in the offshore constructi
Page 41 and 42: construction work done is expected
Page 43 and 44: Operational Analysis Operating Reve
Page 45 and 46: • $541m for contract mining servi
Page 47 and 48: • $75m for construction of a prod
Page 49: • Deer Park: Leighton Properties

preliminary final report & june quarterly update - Leighton Holdings

Create successful ePaper yourself

Delete template?

Save as template?