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Business Description: Leighton Holdings (LEI) provides development, construction, contract mining, and operation and maintenance services to the infrastructure, resources and property markets in 20 countries throughout Australia, Asia, the Middle East and Southern Africa. LEI owns and operates through a number of diverse and independent operating companies: Leighton Contractors; Thiess; John Holland; Leighton Asia, India and Offshore; and Leighton Properties.
Strategy Analysis: LEI´s business model focuses on diversification, with the company undertaking construction, contract mining and management services in the infrastructure, resources and property markets in Australia, Asia and the Middle East. Risk assessment and project delivery have become significant problems for senior management, particularly on large scale infrastructure construction projects.
In response to the significant problems and losses on the two infrastructure projects LEI announced a change in the company´s strategic approach to major tenders and contracts. LEI´s new approach is to focus on risk management including tender accuracy, risk identification, satisfactory time allowance, adequate pricing risk and exact project delivery. Investor confidence will only be restored in next twelve months if there is evidence the new strategic focus is having an impact on lowering the company´s risk profile.
Leighton Holdings reported NPAT of $450.1m for the year ended 31 December 2012. Revenues from ordinary activities were $18.95bn, up 3% from last year. Diluted EPS was 133.1 cents compared to 101.0 cents last year. Net operating cash flow was $1.21bn compared to $327.9m last year. The final dividend declared was 60.0 cents, taking the full year dividend to 80.0 cents compared with 60.0 cents last year. Work in hand as at 31 December 2012 totalled $43.5bn. In addition, contracts beyond five years were valued at $10.8bn and the group's preferred bidder positions totalled $6.6bn. In financial year 2013, subject to market conditions and unforeseen circumstances, the group expects to deliver improved underlaying NPAT in the range of $520.0m to $600.0m. The group also expects to be within the new target gearing range of 25-35%.
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