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Media Release

31 December 1999

Toll posts 26% EBIT Growth

Toll Holdings, Australia's leading transport and logistics group, continues its strong earnings growth, with half-yearly earnings before abnormal items interest and tax (EBIT) growing to $30.0 million, up 26% on the previous corresponding period.

Revenue in the six months to December 1999 was up 5.3 % to $685.7 million and after tax profit grew 21.2 % to $22.3 million.

"The EBIT margin improvement from 3.66% to 4.38% reflects the benefit of continued business integration, rigorous cost control programs and a solid contribution from Toll Ipec", Toll's Managing Director Mr Paul Little said.

Improved performance from Refrigerated Roadways, although still at an unsatisfactory level, also assisted in the higher result.

Mr Little said, "This is a very pleasing result and maintains the momentum we have established over the past three years. We are pleased with all the indicators contained in our results, and with the progress of our strategic technology and infrastructure initiatives, which continues to exceed expectations."

In this context, Mr Little highlighted a number of significant achievements since the start of the financial year:
Acquisition of Removals Australia, an important building block in Toll's e-business strategy
Reshaping of Refrigerated Roadways operations, reflecting the Group's determination to have customer-focused, strongly performing businesses in each part of the Group
Commissioning of new port warehousing facilities for Pivot at Geelong as part of Toll's regional ports strategy
New long-term logistics contracts, including those with Coca-Cola and Harris Scarfe, extending Toll's partnerships with major customers
Commenced rollout of new freight management and operational systems, which will extend Toll's customer service capabilities and help capture the next round of benefits from integration
Commenced development of major new facilities in Brisbane for NQX, Toll Express and Ipec, consolidating Toll's property holdings and significantly enhancing existing infrastructure

Strong divisional performances
All operating divisions performed ahead of the previous corresponding period.

The Long Distance division again demonstrated the benefit of cost control and increased operational efficiencies. Revenue of $276 million for the six months was up 22 % on the previous period.

Toll North's revenue of $173 million was down slightly on the previous period, mainly due to adverse weather conditions in North Queensland and a continuing flat mining sector. Earnings however were well ahead of the previous period and generally in line with plan.

The Logistics division posted a 6% higher revenue of $160 million and a substantial earnings improvement compared to the previous corresponding period.

Mr Little said, "The higher result in the Logistics division reflects the benefit of the major new contracts that we have won over the last twelve months."

The fine tuning associated with the implementation of the new Coca-Cola contracts is largely completed with the exception of the Sydney metropolitan business. These contracts are expected to improve margins in the second half.

The Specialised Division reported revenue of $77 million, 21% lower than the previous period. The reduction in revenue reflected the planned downsizing in Refrigerated Roadways interstate transport operations.

Toll Tasmania and Edwards Transport both continued to trade well, with earnings ahead of budget.

GST
Mr Little said, "We are assessing the impact of the GST and changes in the system of diesel fuel grants. This process will continue as more details of the changes become available. We will ensure that our customers receive the benefit of any related cost reductions."

Mr Little also noted that the sustained increase in fuel prices had caused higher costs that would need to be recovered through increased charges.

Financials
The Group's gearing remained low, at 22% (compared with 39% at December 1998).

Capital expenditure for the six months, mainly associated with long-term logistics contracts and property developments, was $17.8 million.

Earnings per share (fully diluted) for the six months grew 20% to 37.9 cents. The Group has announced an interim dividend of 13 cents per share, up from 10 cents previously.

The dividend will be franked to 20%, compared to 35% previously, and will be paid on 31 March 2000 to shareholders registered as at 5:00pm on 10 March 2000.

Outlook
In considering the full year outlook to June 2000, Mr Little said, "Conditions remain strong for the Group and we are optimistic that positive earnings growth will be delivered."

The exciting opportunities identified in our soon to be released e-business strategy will help ensure strong earnings growth long-term.

Full details of our results can be obtained on the company's website, www.tollgroup.com.
For further information contact:
Paul Little
(Managing Director)
(03) 9694 2820
0419 335 053

Neil Chatfield
(Chief Financial Officer)
(03) 9694 2820
0419 566 847