1. Australia Arab Business Forum & Expo May 2011 Al Habtoor Leighton Group

2. Introduction to Al Habtoor Leighton Group (HLG) Issues and Challenges Facing Contractors Opportunities Agenda 2 Al Habtoor Leighton Group

3. Established in September 2007 Leighton Group merged with Al Habtoor Engineering, one of the UAE’s leading building contractors Leighton holds 45% stake in HLG Notable projects include Burj Al Arab, Capital Gate Tower, Dubai Airport Terminal 3 Over 25,000 employees across the UAE, Qatar, Oman, Bahrain, Saudi Arabia, Kuwait, Iraq and Afghanistan Work in hand of around US$5 billion One of the largest construction contractors in the region Introduction to Al Habtoor Leighton Group 3 Al Habtoor Leighton Group

4. Issues and Challenges Australia Arab Business Forum & Expo

5. Middle East was hit hard by 2008 global financial crisis (GFC) – particularly Dubai Dubai’s 2002 decision to allow foreign ownership was the catalyst for an unprecedented real estate boom GFC stopped the boom in its tracks Buyers defaulted, development companies were unable to fund the completion of their projects, projects were cancelled The region has now started to emerge from the downturn Most challenges we are now facing are a direct result of the GFC Issues and Challenges 5 Al Habtoor Leighton Group

6. Issues and Challenges 6 Al Habtoor Leighton Group Increased competition Slowdown resulted in a large number of contractors competing for a reduced volume of work Further pressure on margins Many contractors were forced to leave Further rationalization of the market expected over the next 12 months Many contractors having difficulty raising bonds from banks Only the financially strong will survive

7. Issues and Challenges 7 Al Habtoor Leighton Group Payment Prior to the crisis, clients had been prompt payers The slowdown changed this Some clients stopped paying, some contractors stopped work HLG made a conscious decision to work with clients under financial pressure to reach mutually acceptable solutions Seeing a change in 2011 as the situation stabilises – payments have started to flow again

8. Issues and Challenges 8 Al Habtoor Leighton Group Contractual conditions The boom years presented clients with their own challenges Demand for contractors meant clients were forced to pay an apparent premium for poor performance and quality and forced to accept contractual conditions favouring the contractor Atmosphere of cost-plus contracting Clients also struggled to find quality staff with experience in delivering major projects Contractors were often provided with poor documentation, incomplete drawings, and unrealistic construction times. Economic crisis changed things - since then we have seen increasingly onerous contractual conditions that tend to favour the client Clients are now demanding better quality construction and faster delivery

9. Issues and Challenges 9 Al Habtoor Leighton Group Delays in awarding of projects The crisis has had the effect of making clients more conservative in their approach to awarding projects Today a project needs to make economic sense - and be financed - before it proceeds Regional governments are now driving the market, not speculative developers A combination of bureaucracy and a more conservative approach to project development has resulted in long delays in awarding of major construction projects We are seeing things starting to change and projects are being awarded – HLG awarded over AED3 billion of new work already in 2011

10. Issues and Challenges 10 Al Habtoor Leighton Group Operating environments Operating environments are very different to what we experience in Australia Outsiders often assume that the countries that make up the Middle East are all the same Each country is unique and presents different challenges It takes times and patience, and good local support to navigate through each individual market

11. Issues and Challenges 11 Al Habtoor Leighton Group Recruitment Identifying, recruiting and retaining people continues to be an issue Australian resources boom and strong Australian dollar has made it difficult to recruit Australians – and others Middle East is not a region that interests everyone We are spending considerable time, effort and resources identifying good quality people who are interested in working in the Middle East Recruitment is one of our greatest challenges

12. Issues and Challenges 12 Al Habtoor Leighton Group Social / political upheaval Incredible upheaval has taken place across the Middle East and North Africa over the past few months We have not seen any direct impact from the unrest Tipping point would be if the ripple effect reached Saudi Arabia In the longer-term the upheaval is likely to be a positive for the region’s construction industry

13. Opportunities Australia Arab Business Forum & Expo

14. Opportunities for contractors in the Middle East and North Africa outweigh the challenges Not for the faint-hearted! Most major economies in the region are forecast to record substantial budget surpluses and net capital inflows in 2011 The IMF advised that it had revised its 2011 growth forecast for the GCC to 7.8% Growth varies significantly from country to country, but it’s indicative of the strength and potential of the region Opportunities 14 Al Habtoor Leighton Group

15. Qatar Qatar’s economic outlook is particularly robust IMF forecasting 20% growth this year Construction is a major component of GDP Up to $60 billion will be spent on World Cup related-infrastructure –$4 billion on stadia –$25 billion on rail –$24 billion on roads Significant power and water projects Opportunities 15 Al Habtoor Leighton Group

16. Al Shaqab Equestrian Academy, Doha 16 Al Habtoor Leighton Group

17. Abu Dhabi Abu Dhabi’s more conservative approach to development has meant that it has not been impacted like Dubai A strong economy, underpinned by one of world’s largest oil reserves and the world’s largest sovereign wealth fund Will remain one of the world’s strongest construction markets for some years A number of ambitious projects completed, underway and planned Opportunities 17 Al Habtoor Leighton Group

18. Paris Sorbonne University, Abu Dhabi 18 Al Habtoor Leighton Group

19. Zayed University, Abu Dhabi, U.A.E. 19 Al Habtoor Leighton Group

20. Louvre Museum, Abu Dhabi 20 Al Habtoor Leighton Group

21. Kuwait Kuwait has been described as a sleeping giant Very wealthy nation, but slow to get moving Has announced a new five-year, $100 billion investment programme Airports, road, bridges, hospitals, universities, ports and housing are all part of the programme Opportunities 21 Al Habtoor Leighton Group

22. Iraq Iraq’s entire infrastructure needs to be rebuilt Local contractors have limited capability and capacity International contractors are required Our initial focus is on oil and gas related infrastructure for international companies Other opportunities – rail, roads, water power etc - will emerge as security and stability improves Opportunities 22 Al Habtoor Leighton Group

23. Saudi Arabia The largest infrastructure market in the region Saudi Arabia’s young, growing population means that the Government has to invest and diversify the economy - around 60% of the Saudi population are under the age of 25 Six planned economic cities will require more than $100 billion of investment to provide homes and job for its people Ambitious rail and airport plans to improve transportation links More than 3,000 megawatts of power required per year for the next 10 years Three world-scale oil refineries planned Wastewater facilities required in every major city Extensive plan for universities Opportunities 23 Al Habtoor Leighton Group

24. Summary Australia Arab Business Forum & Expo

25. Significant opportunities available Many risks, challenges and issues not present in Australia Not a contracting environment for the faint-hearted Current and future growth built on strong oil price and the transport and social infrastructure needs of a growing, demanding population Middle East is an exciting place to be, particularly for engineers Summary 25 Al Habtoor Leighton Group