Investor Teleconference Transcript, Scott Charlton, 3 September 2007

Leighton Holdings Investor Teleconference, September 2007TranscriptLeighton Holdings Investor Teleconference3 September 2007Speaker: Scott CharltonThanks everyone for joining the call. I’m Scott Charlton the Leighton Holdings CFO andwith me today is Bill Wild the Chief Operating Officer of Leighton Holdings as well. Wewant to provide to you and to the market an update on regards to our expansion in theGulf region with a company called Al Habtoor investments, there is a media release anda presentation that is now on our website and I think it has finally come through ASX andapologise for the late delivery of the presentation but for some reason there was a verylong queue in the ASX this morning and we had trouble getting it through but you’ll beable to click on now our website or their website to get that presentation. We’ll runthrough this presentation and then take questions at the end.First of all I’d just like to talk about where we’re going with our growth strategies that wehighlighted a couple of weeks ago at the full year results presentation and we discusseda number of growth initiatives including one of them was our Asian and Gulf expansionand this is obviously one of those initiatives and go into details in a minute. But I alsowanted to reiterate the strength in the underlying business in Australia and travellingquite well here, we expect to announce an award of another billion dollars worth of newwork in our traditional Australian businesses this week so we continue to do well in ourorganic and Australian businesses but this is about further growth obviously overseas.I’ll talk about if you do have the slides now on page 3 of the slide presentation a briefoverview of the transaction. Leighton International merged its operations in the ArabianGulf with Al Habtoor Engineering, Leighton International acquired a 45% stake in AlHabtoor for approximately $A870m, that will make Al Habtoor Leighton one of theregion’s largest multi-disciplined contractors, in that structure Leighton will have equalBoard representation, we will appoint the Managing Director which Bill will go into detaillater and we have the option to acquire further equity to put us in a control position. Thetransaction will be immediately EPS accretive. Looking at the valuation of thetransaction there was speculation in the press today, what we can say is what we’relooking at in sort of acquisition valuation although some of the information is not going tobe made public, that we’ve paid approximately 7 to 8 times EBIT for the business whichthe good thing about the Gulf business that has no debt is that EBIT and PE are thesame multiple, so we’re looking at approximately 7 to 8 times forward PE multiple out toJune 08. And I should also point out that a substantial portion of profits from the existingAl Habtoor projects under construction are being underwritten by the existing sponsors,so the majority of the existing jobs that we take over and the transaction profits areguaranteed and that’s the majority of revenue and profits for the next 2 years. That is afantastic risk mitigation for the Group as we move to put into our systems and ourcontrols.If I turn over to page 4 and look at some of the benefits of the transaction, providesobviously Leighton with the capacity to take capitalise on the market opportunities whichare obviously very large particularly in the UAE area and Qatar, gives us an immediatequantum leap in our presence in that whole region and the launch pad for further growthLeighton Holdings Limited ABN 57 004 482 982 Page 1 of 15

Leighton Holdings Investor Teleconference, September 2007Transcriptin surrounding areas. The merge entity Al Habtoor Leighton will have a total work inhand approximately $A4.4bn, incrementally for Leighton that is approximately $1.5bnand revenue for the June 08 year approximately $2.75bn and incremental to the LeightonGroup $800m. So if you look at the overall guidance that Wal gave the Group a coupleof weeks back, this should lead to over $14bn in revenue for 2008 and gives us over$22bn work in hand for the Group as we sit right now.Al Habtoor Bill will talk about in a bit more detail, obviously provides us a strong trackrecord in the major projects in the Gulf with a 30 year track record. A large ….. plantstrategic property assets and considerable commercial influence and reputation andrelationships in the region. And now what I’ll ask Bill is to provide a better detail to you onsome of the operational aspects.Speaker: Bill WildThank you Scott, good morning. Al Habtoor was established in Dubai in 1970, and it’snow one of the largest construction companies in the Gulf. It has a very broad trackrecord, not only in Dubai and throughout the rest of the UAE and Qatar, but over theyears it also has had experience outside those areas and while we’re not looking atthose at present it is a useful base to have that sort of experience. The company wasfounded by 2 gentlemen, Khalif Al Habtoor and Riaad Sadik, they own respectively 51%and 49% of the shares and they’ve owned the business since its founding. Scottindicated that it’s been responsible for some of the Gulf’s land mark building projects, ithas been essentially a building contractor, but because of its strong in-house resourcingit also does much civil engineering concrete work and that sort of thing, so it provides usa spring board for more than just building in the region and support for more than justbuilding, 25,000 staff including expatriates and workers throughout the region. In Dubaiitself it has a number of labour camps and is probably one of the best set up for importinglabour and supplying labour into its projects. Al Habtoor Engineering is part of the overallAl Habtoor Group which is one of the UAE’s most successful and diversified businesscorporations. They have interests in as well as construction, in hotels, real estate,education, automobiles, publishing and a number of other things, they’re pretty much ineverything. I think the point that Scott’s touched on and I stress is that this gives us theresource capability to address this massive market that we see in the Middle East and it’ssomething that we wouldn’t like to be trying to take on unless we understood that we hadan expansion capacity in terms of resources and Al Habtoor certainly supplies that.Just looking at some of their projects, they’ve certainly done some of the iconic projects,and everybody has heard of the Burj Al Arab hotel and if you can see the webcast you’llsee there a photo that includes the Burj Al Arab but also all that stuff in front of it theMadinat on the left hand side of the picture and the right hand side Jumeirah Resort wereall built by Al Habtoor, so virtually everything in that photo was done over the years by AlHabtoor, very high quality work as you know 6 star hotel in the Burge Al Arab and alsothe Madinat very high quality work and sort of great foundation to do the sort of workthat’s expected in the Gulf. Next photograph shows the Jumeirah Beach residencesthese are further along the coast in the marina area and the bundle of buildings, the lightcoloured ones on the left are all part of the Al Habtoor work.Leighton Holdings Limited ABN 57 004 482 982 Page 2 of 15

Leighton Holdings Investor Teleconference, September 2007TranscriptMoving onto Business Bay that’s a current project, that’s underway at present. Amassive project something like 700,000sqm of floor space, predominantly residential butI think one of the towers is office and there’s a fair bit of commercial in among it and ahotel but pretty typical of what these guys are doing over there, fairly high qualityaccommodation, big scale stuff, doing it with all their own resources which I think isextremely important in a market that’s as buoyant as the Middle East. I mean the bigissue in that market now is inflation and resourcing projects and Al Habtoor really bringthe right approach to that in that they have all their own people, they use their own staffand workers for all aspects of the job and they own an electrical/mechanical business aswell so they can do their own services fitout, they own a foundation company, so theycan manage their own foundations. So in a market where you struggle to getsubcontractors and other resources to have your own capacity is really the right way togo forward.Another project here that they’re doing in joint venture with the Murray and RobertsGroup is the fitout of the Dubai International Airport a big project, a very big project andimpressive progress that they’re making on it. Al Habtoor and Murray and Roberts havehad a fairly long standing joint venture on big projects and of course we know the Murray& Roberts Group very well, we’ve worked with them for something like 20 years in Asiaand a little bit in the old days even in Australia. So it’s an interesting joint venture that AlHabtoor brings to our acquisition.I mentioned their capability to do work themselves and on the next slide you can seethere the specialist subsidiaries they have Specon which is theirmechanical/electrical/plumbing business which they own 51% of, their foundationengineering company STFA again 51% ownership, they own a small interior fitoutcompany which gives them some capacity to control their destiny on fitout work and as Imentioned they’ve got this ongoing JV that they’ve used for undertaking these majorprojects.Just moving over to a couple of the Leighton jobs or at least on of them that we’vebought into the joint venture company, you see there Al Shaqab Equestrian Centre inQatar, a massive job that we’re doing there and that will become part of the new mergedgroup. As well as that we’ve recently been awarded work on Saadiyat Island in AbuDhabi this is an extremely exciting opportunity, a massive amount of work to beundertaken in Abu Dhabi something like $60bn. I guess this is very much behind thephilosophy of us forming this new group that to take on that sort of work without an abilityor the knowledge that you can put your own resourcing in there and you know how youcan get the resourcing I think would be too risky for us, but I think with the new group wehave it’s a fantastic opportunity now in a Greenfield market, in a Greenfield developmentof massive proportions. The current job we have if you can see the road running throughthere the bridge that’s in the foreground, the road that runs from that through the middleof the development if you like is freeway job that we’ve just picked up and that will beundertaken now by the new group and all along the front you’ll notice there the newmuseums they’re building, the Guggenheim, the Louvre and a number of other things.So fantastic opportunity.Leighton Holdings Limited ABN 57 004 482 982 Page 3 of 15

Leighton Holdings Investor Teleconference, September 2007TranscriptManagement of the new group and governance of the group Leighton will have equalboard representation, the three directors that we’ll be putting on the Board are DavidSavage who’s our MD of Leighton International currently and Wal and Scott. DavidSavage will assume direct day to day management of the combined company, he’ll beManaging Director of that Group and the CFO of Leighton International Michael Connollywill become Deputy CFO of Al Habtoor Leighton. The other directors Riaad Sadik will beon the Board as well together with two of his other executives Mohammed Habtoor andNigel Poole. I’ll hand back to you Scott.Speaker: Scott CharltonThanks Bill, we’ll also point out that Habtoor will be adopting some of the key Leightonsystems. One of the reasons for teaming with Leighton was obviously their desire togrow to scale and they’re looking for a partner not only from a commercial and financialcapacity but also systems, so we’re looking at introducing Leighton systems over time tohelp that business grow and introduce Leighton way of business.Turn now to page 14 if you have the presentation, looking at the financials and what thisall means and how it’s structured. The total investment as we said is roughly $A870m,40% of that is being provided by cash our substantial cash balance from the LeightonGroup balance sheet $350m approximately and 60% of the investment is being providedby non-recourse debt to the Leighton Group $520m. What we’ve done here is set up afinancing structure that isolates the Al Habtoor Leighton investment and to the use ofnon-recourse debt being funded by both local and international banks and I think that’simportant, we have two of the major local banks in Abu Dhabi commercial bank and……….Bank supporting the transaction as well as major banks in HSBC and Royal Bankof Scotland and we’re particularly pleased to have EPIC(?) involved the AustralianGovernment supporting us, so we think that debt funding is a fantastic mix of both ourrelationship banks, old relationship banks and new relationship banks now in the MiddleEast and the spread of risk there. The reason we’re looking at the funding structure isobviously we want to leave additional fire power to do other things that we want to dowith the Leighton balance sheet so this isn’t a one off, this is our growth strategytherefore there’s no more growth, this is just one of our strategies and we have manymore and we’ll continue to pursue those, so this does isolate some of that funding andleaves substantial capacity to do other things and obviously from a political riskperspective we’re obviously a very conservative group and while we don’t see any issuesand actually if you look at the political risk scores on the global ratings, the UAE scoresright up there with the best of the countries and I think it’s just right below Australia andnevertheless because it is the Middle East we have structured the investment so that ifthere was some sort of major catastrophe the investment could be isolated and while itwould cause a bit of pain for the Group it wouldn’t be disastrous for the Group, not unlikehow we’ve looked at doing our operating leases and how we’ve done our Indonesianfunding we’ll continue to use innovative financial structures to both manage our risk andin this case increasing the returns we’re not looking to raise any equity and any dilutionfrom our shareholders and as I said it leaves additional capacity for additional growth thatwe’re looking to pursue.Now turning to page 15 and the outlook and the summary. There are extensiveopportunities obviously as Bill was pointing to, in the UAE alone and Qatar there’sLeighton Holdings Limited ABN 57 004 482 982 Page 4 of 15

Leighton Holdings Investor Teleconference, September 2007Transcriptprobably enough work to utilise all its capacity from Leighton International and Al Habtoorcertainly in the short and medium term and in a good risk profile, good return project.Although as Bill said we do have the platform now to even look further afield and we’ll besetting those options over the next year or so. Again just point out some of the numbers$120bn to be invested in Abu Dhabi alone, $60m we were talking about was just throughone organisation, there’s substantial opportunities in large scale building and civilinfrastructure, we were constrained obviously by our capacity and this now merger andopportunity provides that capacity and we’re very excited and we’ll throw it open forquestions.Question: Shamir Shopra, Deutsche BankHi Scott, Bill, congratulations on the deal. I just wanted to go over a couple of thenumbers first. You mentioned on the slide that the deal is EPS accretive, currently justlooking at the numbers we estimate that Leighton will probably generate about $72madditional NPAT in the current year, does that sound about right.Speaker: Scott CharltonNo I think what we’re doing now for our guidance, when Wal talked about at the analystbriefing he talked about the 20% plus obviously we’ve gone a fair way down thistransaction, although we had issues that we had to overcome to get it across the line. Ithink what we’re confirming Shamir is we’re definitely confirming the plus component ofthe 20% guidance, obviously the first year we got transaction costs and other things thathave to be taken into account we only have 10 months of the transaction, so we’ll let youdo the numbers but I think all we’re going to say officially at this point is the 20% plus butwe’re just confirming the plus.Question: Shamir Shopra, Deutsche BankSecond question was just around the rationale for the deal from the Al Habtoor Group’sperspective, I was wondering if you could shed some colour on that.Speaker: Scott CharltonSure absolutely, it was a good bringing together of the two Groups, it doesn’t normallyhappen this way. For those of you that don’t know the background we actually workedwith Al Habtoor in Bahrain many years ago 20 something years ago, long before I wasassociated with the company. But what was happening is we obviously had a capacityconstrain in the Middle East and were looking for options, they had been growing quitequickly and were looking to take the next step, the previous Managing Director or theManaging Chairman now Riaad Sadik who’s been a big driver of the company is now ata point where probably in 5 or 10 years will have less association of the company andwas looking to where the company was going to go and how it was going to be takenforward and he obviously wanted to leave it in a strong position and actually boost thecapability of the company. So he had started a process where he was going to look atbringing in partners to take him to the next level and looking at a long term exit forhimself and potentially his family. So when his advisors put together a list the first nameon the list was Leighton and he obviously had a good history with Leighton, so he starteddiscussions at the same time we were looking at capacity. So really they’re looking forour expertise, our systems as we talked about earlier they have good systems but they’remore rudimentary for a business that’s of that scale or where the scale is going. TheLeighton Holdings Limited ABN 57 004 482 982 Page 5 of 15

Leighton Holdings Investor Teleconference, September 2007Transcriptcommercial and financial acumen which is a bit different for a business of that scale ofwhere he wants it to be and so it’s just a very good fit between the two.Question: Simon Thackray, ABN AmroMorning guys. Just on the financing of the subordinated debt, I think you made it prettyclear you’re effectively quarantining the risk with the Group is that the way to understandthat?Speaker: Scott CharltonThat’s the way to understand that. So there’s a ………..vehicle if you will that has theequity investment from Leighton and that vehicle has raised the debt and its onlyrecourse is to our investment into Al Habtoor.Question: Simon Thackray, ABN AmroYou made the comment obviously that it’s not the end of the growth phase, this is onepart of the offshore development in particularly but presumably also continuingdevelopment in areas like residential in Australia. Just what should we be looking for interms of balance sheet in terms of capacity, it’s hard with you guys but a target gearingrange if you like to say how much additional capacity you’ve got left.Speaker: Scott CharltonSimon I think I mean Wal has talked previously about in the order of $2bn of capacitywithout having to do anything spectacular, I think we still have more than a largecomponent of that because that was on the basis raising it directly off the balance sheetand clearly the 500 of this while it will sit on our balance sheet in an accounting sense,from a risk perspective that will sit off the balance sheet and the Al Habtoor investmentpays for all the interest costs and all the costs associated with that debt plus the return onour equity investment so it has decreased some of our capability through using up thatcash but there’s still substantialQuestion: Simon Thackray, ABN AmroNo exactly I was just starting to think the $2bn as you say is a pretty conservative figurethrough this type of structured financing and I’m now looking to India and other places, Imean you’ve obviously got the JV there but is that where we turn our attention to afterthis?Speaker: Scott CharltonWell I think we’ve got a good management structure, and the management of LeightonInternational is in the process of moving from KL headquarters to Dubai and they’ll bebased there and obviously servicing India is quite easy out of Dubai. So really betweenthe Emaar JV and Al Habtoor management now really has to bed those things down andso I think the issue if you go back to that second slide that we provided growth initiativesand I think you can at least give us a tick for a year around the Gulf expansion and we’llbe looking at the other parts of the Asian businesses maybe back towards the east andsome of the other things down the list like residential property as you said, services,defence and then if other opportunistic things come up in Australia or elsewhere. But Ithink we have to be careful with our management resources the guys have a bigchallenge and a fantastic opportunity now with Al Habtoor and Emaar JV so I think theyLeighton Holdings Limited ABN 57 004 482 982 Page 6 of 15

Leighton Holdings Investor Teleconference, September 2007Transcripthave enough to bed those things down and work through them. And go back to that liston and continue to go through those things.Speaker: Bill WildI’ll add to that when we’re looking at acquisitions and growth and expanding thebusiness, one part of it is our financial capacity but obviously an equally important part isour ability to take on new businesses all around the globe and I think that’s playing anever increasing part in our decision making as to how we do these businesses, it’s onething to get hold of them and to buy them and to have the money to do so but it’s anotherthing to be able to successfully integrate them into our whole operation and I think as youlook at the money side, you’ve also got to look at management capability capacity totake on more businesses. So I think as Scott said you won’t see too much more in theMiddle East for a while until we bed all this down but in other parts of our business we dohave as well as financial capacity we have some management capacity to expand aswell so that will play a fair part in our decision making.Question: Simon Thackray, ABN AmroAnd Bill on that point does it take a long time to implement the systems I mean are wetalking a matter of years or months. How long do you reckon it will take to overlay andbring them into the new Group.Speaker: Bill WildI think if you look at it from a point of view and we’ve probably done a few of these nowand we think we know our way around them, if you look at distressed companies whichwe’ve brought a couple of I think you’ve got to say it takes something like three years tobring it into the culture and bring it into the system. Al Habtoor is by no means adistressed company, Al Habtoor is a company that’s grown as a private business and asScott said it has actually quite good systems but those systems as you start to move intothe turnover we’re talking about need changing so it will be significantly less than threeyears, I’d say off the top of my head I think you’d be looking at 12 months time we’d havemost of our systems in there and 12-18 months time I think we’d be feeling prettycomfortable that it reports and manages its business in the same way that the rest of ourGroup does. One thing about Al Habtoor that really stands out is that they are extremelycapable contractors and builders, they do fantastic work so when you look at integratingthem it’s not a case where you need to worry about that side of it that side is very goodwe just need to integrate the systems and make them fit with a bigger scale business.12 months is my sort of view of where we’re looking at.Question: Simon Thackray, ABN AmroDoes that mean on that basis you don’t necessarily get any margin uplift from theimplementation of those systems, it’s just a question about scaling up.Speaker: Bill WildI don’t see systems as so much margin uplift as risk management, they do the jobsextremely well so I think the issue on margin uplift is how we handle the growth in theMiddle East and that sort of thing more than systems. Inflation is a big issue in theMiddle East and how we manage that is more important in terms of margin than whatsystem we use I think. I think we will improve margins over time, I don’t think there’s anyLeighton Holdings Limited ABN 57 004 482 982 Page 7 of 15

Leighton Holdings Investor Teleconference, September 2007Transcriptdoubt about that, but I think that will really be a case of managing the market more thananything else.Speaker: Scott CharltonBut Simon I think one of the important aspects to point out is while we’re implementingthose systems over the next 12-18 months and one of the reasons we’ve done the dealwith the founders to underwrite all the existing jobs is so as we bring on the new jobsthey’ll effectively be in the Leighton systems and so we’ve got guarantees on their profitfrom the existing job which is really securing the business for the next 18 months whilstwe’re putting in our systems. Even though we have been given full access we’ve beenworking on it for about 4 months now, full access to all the jobs, all the management veryfriendly deal and it’s been quite a goo process for us, quite a good cultural fit as well.The management is from all over the globe, obviously quite a lot of locals, but quite a lotof expats already involved in the Al Habtoor business and got fantastic clients in most ofthe government entities seems a very good fit.Question: Simon Thackray, ABN AmroThe transaction costs Scott I guess on a financial point are they likely to be material thisyear in F08?Speaker: Scott CharltonNo they’re not going to be material Simon.Question: Simon Thackray, ABN AmroSo we’re not going to see them as an abnormal or something.Speaker: Scott CharltonNo, no excuse for reduced profit.Question: Brendan Wong, AusfieldJust in terms of margins, just wondering how the margins of Al Habtoor how does thepipeline in the Middle East compare to Leighton’s existing pipeline in the Middle East.Speaker: Scott CharltonI think the margins are fairly similar although I’d say that the margins of both areimproving because of the situation in the Middle East and lack of capacity both Groups….Speaker: Bill WildYes I think that’s more noticeable, is not so margins that exist between Al Habtoor andLeighton if you like, the newer jobs are at higher margins and we’re noticing that at bothin Al Habtoor and at Leighton so the jobs that are a couple of years old are generally a bitlower margin and are generally copped a bit of a hiding from inflation over the time butnow we’re seeing quite good margins in terms of what we see in Australia, we’d saythey’re very good margins.Leighton Holdings Limited ABN 57 004 482 982 Page 8 of 15

Leighton Holdings Investor Teleconference, September 2007TranscriptQuestion: Brendan Wong, AusfieldWhat sort of scale would you be talking about when you say the newer projects in theMiddle East have better margins than the older ones?Speaker: Bill WildBy a couple of percent.Question: Brendan Wong, AusfieldThe last question I have is you mentioned that you’ve got options to acquire furthershares in the future, just wondering what the timing of those options might be and alsothe scale of the share percentage?Speaker: Scott CharltonObviously the existing owners of the business are in their 60’s now and are looking for along term exit strategy, we’re keen to tie them into the business for a period of time, wehave under the arrangements the right to acquire 6% within 5 years and obviously underthese shareholders arrangements as well there’s pre-emptive rights and otherarrangements if they choose to exit part of the business beforehand, but we’ve alsolocked them into the business for 5 years, we think it’s important for the health of thebusiness and our prospects, they’ve done such a fantastic job, their relationships and thekey management so we have arrangements we’ve been putting in place to not only lockthem in as key shareholders but lock some of the management in and look at how othersmay exit the business over time but clearly we’re looking to control within that 5 yeartimeframe.Question: John Purtell, Macquarie BankJust a few questions, just confirming that the acquisition is going to be equity accountedjust how that works, obviously conscious there’s a merger as well. Secondly justconcerning on the tax situation that there’s zero tax in relation to Al Habtoor’s profit anddoes that mean there’s no tax reduction on the non-recourse debt.Speaker: Scott CharltonWe wouldn’t do that John. The first question will be an associate on our books, soeffectively we’ll have an investment in the order of $870m on the balance sheet and onthe other side of the balance sheet there will be a liability of roughly $520m of debt andthose two could offset each other, most offset each other on a disaster type scenario, butthat’s how the balance sheet will be accounted and then we’ll just get the dividends anddistributions through associate the Al Habtoor investment. The structure of the finance isit’s actually an Australian vehicle that owns and conducts business in Australia that ownsthe Al Habtoor investment and that’s where the funding is raised although the funding isin US$ to match as everyone may or may not know the AED dirham is pegged to theUS$ funding is in US% and that is in Australia and that will be tax deductible, the interestwill be tax deductible in Australia for the investment in Habtoor with the tax situation,under the arrangements in the UAE there are no taxes paid but in Qatar you pay taxaccording to the amount of foreign ownership that you have, so there will be a smallamount of tax for activities in Qatar but for the UAE there will be no tax.Leighton Holdings Limited ABN 57 004 482 982 Page 9 of 15

Leighton Holdings Investor Teleconference, September 2007TranscriptQuestion: John Purtell, Macquarie BankAnd will you be consolidating, you mentioned revenues of more than $14bn so you’reimplying Scott that you’ll be consolidating some of the revenues or were you just talkingin an overall sense there because the equity accounting presumably you’re not bringingwork in hand and revenues to the Leighton accounts.Speaker: Scott CharltonYou know how we show the associates, we’ll be showing then the associates the impactto the revenue so we’ll make it clear what revenue is coming in from Habtoor as well asthe work in hand, we can put that out for you, it’s too big an acquisition to leave it on theside there so we’ll bring in or highlight the impact of the associate revenue how it’stravelling as well as the work in hand.Question: John Purtell, Macquarie BankTwo final questions just in relation to the style of contracts. Can you confirm that themajority of Al Habtoor’s contracts are cost plus, are there any fixed price in there andlastly as far as the capacity constraints go and obviously that market is significantlycapacity constrained in terms of labour, I understand as you mentioned that most of theirresources are internal but how does Leighton and Al Habtoor intend to grow and I guesstake advantage of that growth in the region when labour is seemingly still so constrained.Speaker: Bill WildWell the contracts are a mixture of contracts, there’s fixed price contracts, fixed pricelump sum contracts and there’s also a range of other contracts I mean the SaadiyatIsland contracts we’re talking about essentially alliance contracts, so there’s a wholerange and a mix of contracts, there’s no one particular dominant one.Speaker: Scott CharltonEven when they’re fixed price though John they do a lot of provisional sums.Speaker: Bill WildMost of the fitout and the E&M there tend to be big provisional sum items, some of thejobs that amounts to 40% or 50% of the total contract value are provisional sums whichare effectively cost plus. The resourcing side I mean Al Habtoor having been providingits own labour and a lot of its own sub-services for many years have the capacity to growthat, I mean there is no shortages of labour into the Middle East if you’re set up to do itand in Dubai itself Al Habtoor has three major work camps of its own that are well locatedaround the town, so bringing extra labour in isn’t the problem that’s what makes it such agood approach to risk management is that there is really no shortage of labour comingout of India, Pakistan, Philippines and that sort of thing and there’s no real price inflationon that labour, I mean we can get plenty of it for what we’re paying now. It’s the otherservices that are really the problem and if you go out to the subcontract market thesubcontractors are fairly stretched and as I said earlier Al Habtoor does all its ownformwork, does all its own concreting so it’s not really stuck in that marketplace.Speaker: Scott CharltonI think as well, the issues around the management and the supervisors and the ability togrow there and we think with Al Habtoor Leighton you’ll attract the best of both worldsLeighton Holdings Limited ABN 57 004 482 982 Page 10 of 15

Leighton Holdings Investor Teleconference, September 2007Transcriptwith large international like Leighton involved and a local like Al Habtoor and thecapability the Group has we think you’ll involve the best expats as well as the locals andorganically the Group can probably grow as Leighton does the Group can probably grow10% to 15% revenue a year organically just by attracting more people, so there’s stillgrowth both and I think we talked a little bit about margin as well as grow organically wethink this company is in the best position to attract these resources but the supervisoryand the management level certainlySpeaker: Bill WildI mean the Middle East is an extremely attractive place for people to work and whatwe’re seeing actually is the Middle East sucking management people out of the rest ofthe world, you get plenty of people coming out of UK and even people going back fromAsia now towards the Middle East because it’s well located, the tax situation forexpatriates is very good and we’re not finding that much difficulty to get managementpeople in there.Question: Sean Burns, Integrity InvestmentsI just wonder if you could talk a little bit about the Al Habtoors book in terms of do theytake any direct property exposure there have they got a land bank book have there beenany property development profits in their underlying earnings, are you expecting to takeproperty in kind or have any type of direct property exposure to the region?Speaker: Scott CharltonNo they’ve got a couple of old pieces of property on the books probably relating to labourcamps, the Al Habtoor Group has a real estate business but this is purely justengineering construction, we don’t have any plans to take any real estate position andthere’s no real positions on their balance sheet other than labour camps which areassociated.Question: Sean Burns, Integrity InvestmentsIn terms of associated sales are there any associated sales or are they third partySpeaker: Scott CharltonThey have built one hotel for one of the partners in the past and they built a residence forone of the partners in the past but that was all done on arms length cost plus marginbasis, currently there’s nothing else on the books and it’s all arms length and it’s justrelated to construction turnover.Question: Cassandra Mar, CommsecJust a quick question there’s two here, the first one can you explain how the labour campactually works and what’s the risk exposure there?Speaker: Scott CharltonThe labour camps if you look at them is quite nice accommodation, but what happens isproperty is obviously a prime in the UAE and where they allow these major labour campsto be set up I mean they can have 10,000 people associated with them which usually theguest workers obviously from Pakistan and India and elsewhere that form the majority ofunskilled labour for these massive projects and those labour camps are dotted aroundLeighton Holdings Limited ABN 57 004 482 982 Page 11 of 15

Leighton Holdings Investor Teleconference, September 2007Transcriptthe UAE. And obviously the more strategic the more well placed your labour camp is theshorter time you have to the construction site, the more advantage you have in pricing.Habtoor has some labour camps that are within 15-20 minutes of Dubai centre, some ofthe places we’d have to look at labour camps are an hour or an hour and a half away andyou got to transport 10,000 workers an hour and a half as opposed to 20 minutes youstart talking about some big differences and these camps are all set up and a lot of themare freehold owned by Al Habtoor so they own the site so they don’t pay any lease a lotof times now if you want to set up a new labour camp you’ve got to lease the land it’svery expensive so it’s a big advantage as well as their workshops that are located to themajor construction sites, they’ve got a big site near the airport, not sure if you want tomake any other comments Bill.Speaker: Bill WildJust following on from what Scott about distance I mean some of the people have campsup in Sha Sha and it takes anything from 1 ½ to 2 hours each way by the time they getthem on buses and over borders and everything else and when you look at the guysworking the best part of 12 hour shifts you add 4 hours on top of that it’s prettyhorrendous but Al Habtoor have got 3 camps pretty well circling the main Dubai workareas and so that’s a big difference and they can expand them and that’s the otherproblem now to get access to land so you can grow the camps. I think one thing that hitsyou there is the massive number of people on these jobs, you’ll see a single job with5,000-7,000 people on it. So having access to good well placed labour camps is a hugeadvantage.Question: Cassandra Mar, CommsecThe second question is really around the specialist subsidiaries if you could elaborate onLeighton’s relationship with Murray & Roberts.Speaker: Bill WildWell the Leighton relationship over the years has been as a joint venture partner, goingback 20 years or more I think Leighton worked with Murray & Roberts in Australia butwe’ve worked for many years probably 25 years in Asia on projects, many of the marinetype projects but a whole range of different projects, we had in Hong Kong a group calledLeighton Lama which was a joint venture to do marine works and as I say we’ve donemany others, we know the Murray & Roberts executives very well and we’ve had a goodrelationship with them.Question: Cassandra Mar, CommsecIn terms of their holding in Macmahon Holding any relationship there?Speaker: Scott CharltonSorry what’s your question there Cassandra any change in the relationship there?Question: Cassandra Mar, CommsecI note that since the result on Macmahon Holdings last week that they’d increased theirownership of Macmahon so just an update on the position with Macmahon Holdings?Leighton Holdings Limited ABN 57 004 482 982 Page 12 of 15

Leighton Holdings Investor Teleconference, September 2007TranscriptSpeaker: Bill WildOur relationship with Macmahon goes back really to the construction of the Alice toDarwin Railway Line they were one of our partners there with John Holland on thatproject and flowing out of that John Holland in particular has done a lot of work withMacmahon they’re currently doing the Ross River Dam in Queensland, they’re partnerson a potential pulp mill in Tasmania, partners on a lot of the rail refurbishment work upthe east coast so a whole number of jobs, the people in John Holland in particular andMacmahon management know each other very well and there’s been a particularly goodworking relationship there.Speaker: Scott CharltonWe still own the 14.9% which we discussed and we’re still having discussions with thecompany.Speaker: Bill WildI guess one of the ways forward is to do more joint ventures with them.Question: Paul BidellI was just interested in a bit of a feel for what the Al Habtoor safety record is like and howthat fits in relation to Leighton, obviously it’s probably going to be worse but just how badit is.Speaker: Bill WildThe Al Habtoor numbers are pretty good, I couldn’t rattle them off the top because of theway they relate to different factors to what we use. When we went through the whole oftheir governance if you like and management it’s very strong, they have good safetythings, they have good risk management for a private company surprisingly good. Theyhave a good handle on programming systems and everything else, so the safety sidelet’s just say I don’t think it’s as probably as good as Leighton’s because Leighton’srecord overseas is brilliant. But it is still good by Middle East standards and acceptableat this stage by ours.Speaker: Scott CharltonIf you went onto one of those sites in Dubai it wouldn’t be too much different to aLeighton site, much different than going to an Indian contractor and seeing an Indian site,they’re pretty much using best practicesSpeaker: Bill WildWell Al Habtoor management I guess you’d probably say rough figures 50% internationalexpatriate type managers and the rest would be local managers Middle Eastmanagement and Middle East management I think we probably need to note that overthe years the Middle East has become a very western style of construction business,most of the consulting firms are out of Europe or somewhere or out of the States so theyoperate in very much the same way as we do as opposed if you like what you tend tosee in East Asia or South East Asia, Middle East is very much a western style ofconstruction.Leighton Holdings Limited ABN 57 004 482 982 Page 13 of 15

Leighton Holdings Investor Teleconference, September 2007TranscriptQuestion: Paul BidellSo putting in place the Leighton type controls and rigour on the safety side should slowup the volume outlook for the Al HabtoorSpeaker: Bill WildNot at all, there won’t be any loss in that context at all.Question: Peter Chiltern, Constellation Capital ManagementMy question was about safety and I think that’s just been answered thank you.Question: Andrew Johnston, CitigroupThe question actually just relates back to a broader perspective on the strategy and thegrowth of the Group, if we go back probably the last 18 months from my perspective itsounds like the Indian opportunities have probably got more or are a bigger part of theconversation to the Middle East and probably in the last 6 months much more talk aboutopportunities in the Middle East and now what looks like a very significant and veryexciting opportunity and one that is likely to grow I would have thought much quickerthan what’s going on in India, is that a fair representation of how you’d seen it over thelast couple of years?Speaker: Scott CharltonIndia is still very promising, the mining activity we’re hopeful of getting something, if themining activity does anything near where it needs to do there will be some excitingopportunities in India. This thing with Emaar MGF will provide us as you know they’reguaranteeing a minimum of $US1bn over the next 5 years so. Still India is very excitingfor us and there’s lots of other opportunities the oil and gas is going well but I guess theMiddle East we were there, we found an opportunity that made sense, we looked atacquisitions in India, we were looking at acquisitions in the Middle East, if we hadn’tfound Al Habtoor and we were still sitting here, Middle East would be turning over a niceprofit and a nice revenue but it wouldn’t have grown, I think it’s one of those opportunisticthings Andrew, it’s one of the several area that we were looking at, it came along, it fit, it’sright, it fits all our valuation criteria and it makes sense for long term growth for earnings.It hasn’t taken the focus of India, it goes back to our statement about that growth in thatpart of the world, I think that Leighton International together with Thiess involvement inIndia as well I mean the management now has a great opportunity to capitalise on thecapacity and the opportunities they’ve been given between that Emaar alliance and AlHabtoor and I think you’ll see Leighton Holdings management focus on the operationalissues there but the growth objectives will move to other areas.Speaker: Bill WildI also think it’s part of the natural thing of developing businesses, it’s a bit like athletes goup in spurts and then sit on a plateau for a while. In India we’ve got a number of differentbusiness types going, our toll road type things, our building type things, oil and gas, thefactory sector and each of those I think you get going with the workload and you take it abit easier to ensure it’s working well before you push to another level and I think that’swhat we’re seeing at present. A year ago we won a couple of road jobs and we’ve reallyheld off being very aggressive until we see how they progress, the same on the oil andgas side. So I think it’s really just a natural thing that arises out of how you go aboutLeighton Holdings Limited ABN 57 004 482 982 Page 14 of 15

Leighton Holdings Investor Teleconference, September 2007Transcriptbuilding a business rather than just keep it roaring along year in and year out, do it get itgoing see how it goes and when you’re comfortable with it expand each of thosesegments.Question: Andrew Johnston, CitigroupAnd you’re comfortable with how they’re tracking so far in terms of risk and the usualmeasures of safety etc.Speaker: Bill WildThey’re all different I think one thing we’re really seeing is that in India the differentsectors are different, the factory sector we’ve gone very well in and I think that’s gonealong quite smoothly and steadily and grown steadily, I think the road sector we’reunderstanding that there’s issues there with just getting through the bureaucracy and thatsort of thing, the jobs themselves are going ok. Mining I think we’ve learnt one thingthere which I think we knew for a long time is that it takes forever to get a miningcontract off the ground or awarded, one job there we’re on our fourth bid Rhaj Mahal soeach sector you need to look at differently and where it fits, obviously the Emaar thinggoes along because it’s a private group and they’re driving growth in a steady mannerwhereas in the mining sector as I say is very bureaucratic and the government likes toget one off the ground before they even think about the next one.Speaker: Scott CharltonThanks everyone it’s a very exciting time for us, we’re pleased that you could join us thismorning, apologies again for the presentation getting out there a bit late but as I saidbefore look for some more announcements on just our normal work in hand this weekand we’ll keep you updated as Al Habtoor progresses, we might be looking at doingsome sort of analyst/media tour in the first week or two in December so we can talk toyou a little bit about that later and show you some of these big exciting jobs over there,not a bad place to visit as opposed to inner Mongolia right Bill. Thanks very mucheveryone.End of TranscriptThis document has been transcribed from the Investor Teleconference, September 2007. Whilst all care has been taken,the content should not be relied upon for any investor decisions.Leighton Holdings Limited ABN 57 004 482 982 Page 15 of 15