Macmahon Holdings Limited · ASX:MAH
Macmahon — 1H FY2017 Earnings Presentation
25 slides from Macmahon's earnings presentation, Feb 27, 2017
Slide 1: Half Year Results
HALF YEAR RESULTS 27 FEBRUARY 2017
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer DISCLAIMER AS TO FORWARD LOOKING STATEMENTS This presentation contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events. These forward looking statements are based on, among other
Slide 3: Executive Summary
Executive Summary 1H FY2017 Highlights Key Observations Revenue: $168.3 million1 Mining services industry showing strong signs of improvement EBITDA: $10.4 million2 Tropicana (our largest contract) continues EBIT: ($4.5) million2 to perform profitably Net loss after tax: ($5.0) million
Slide 4: Investment Highlights
Investment Highlights FULL SERVICE Diversified mining contractor offering open-pit and underground mining services MINING CONTRACTOR Strong existing relationships with major mining companies STRONG TENDER 18 tender opportunities representing $6.4 billion in aggregate contract value PIPELINE
Slide 5: Update on CIMIC Offer
Update on CIMIC Offer On 24 January 2017, CIMIC made an unsolicited off-market takeover offer to acquire the shares in Macmahon which it does not own for $0.145 cash per share (“Offer”) Offer is final and therefore cannot be increased, in the absence of a competing proposal CIMIC’S OFFER Offer
Slide 6: 1. Operational Update
1. OPERATIONAL UPDATE
Slide 7: Map of Operations
Map of Operations Macmahon’s operations are spread across multiple significant projects in Australia and Southeast Asia, with a growing focus on Indonesia 6
Slide 8: Operational Update
Operational Update Our first priority is to strive for safety excellence SAFETY EXCELLENCE Achieved an LTIFR of 0.5 in 1H FY2017, a 55% reduction compared to 30 June 2016 1 Improved outlook for global mining expansion capex and activity in the mining services sector INDUSTRY OUTLOOK Outlook
Slide 9: Safety Excellence
Safety Excellence 1H FY2017 Performance1 Key Observations 6.3 LTIFR decreased to 0.5; a 55% reduction compared to 30 June 2016 (1.1) 5.4 Frequency Rate (per million hours worked) Most projects remained LTI free 4.4 4.6 Key safety initiatives during the period: 4.1 – Leadership & Safety trainin
Slide 10: Industry Outlook
Industry Outlook Historical Commodity Prices1 Global Expansion Mining Capex2 Commodity prices have rebounded strongly in Resources sector is expected to grow strongly 2016, after a number of challenging years over 2016-19 benefitting mining contractors 140 1 Jan 2016 140 CAGR 2012-2016: (22%) CAGR 2
Slide 11: New Opportunities
New Opportunities Tender Pipeline Macmahon has a tender pipeline of 18 opportunities which represent approximately $6.4 billion in aggregate contract value, 44% of these opportunities are at exclusive, preferred or shortlisted status1 1. Percentage refers to value of total pipeline Note: 18 tender p
Slide 12: Tropicana – Expansion Potential
Tropicana – Expansion Potential Tropicana Directional Production1 Operational Update Independence Group Presentation (15-Dec-16) Tropicana is our largest alliance contract and has 700 been profitable since inception Life of mine contract for AngloGold Ashanti and 600 Independence Group’s open-pi
Slide 13: Telfer – Turnaround Strategy
Telfer – Turnaround Strategy Telfer EBIT Guidance Operational Update 30 Telfer is our second largest contract, an open-pit and bulk earthworks mining contract for Newcrest’s Telfer gold-copper mine in Western Australia 20 Telfer has been incurring significant losses since commencement, driven by
Slide 14: 2. Financial Results
2. FINANCIAL RESULTS
Slide 15: Income Statement
Income Statement $m, for the six months ended 31 December Dec-16 Dec-15 Revenue1 168.3 156.7 EBITDA2 10.4 29.4 EBIT2 (4.5) 16.6 Finance costs (0.1) (1.3) Tax expense (0.4) (1.0) Significant item - (2.1) Net (loss) / profit after tax from continuing operations (5.0) 12.3 Net loss from discontinued op
Slide 16: EBIT Summary
EBIT Summary 1H FY2017 EBIT Key Observations 1H FY2017 EBIT of ($4.5) million impacted by 20 Telfer Macmahon Ex Telfer EBIT $18.7 million loss at Telfer Macmahon anticipates improvements in financial 10 and operational performance at Telfer Tropicana, Macmahon’s largest contract, continued to
Slide 17: Cash Flow Statement
Cash Flow Statement $m, for the six months ended 31 December Dec-16 Dec-15 Cash generated from operating activities 12.5 11.7 Net interest paid (0.1) (1.0) Income taxes paid (0.7) (2.4) Net cash from operating activities 11.8 8.4 Proceeds from sale of assets 9.9 8.6 Investment in joint venture 1.9 (
Slide 18: Balance Sheet
Balance Sheet $m, As at period ended 31-Dec-16 30-Jun-16 Current assets 158.4 175.5 Non-current assets 130.1 124.6 Total assets 288.6 300.1 Current liabilities 92.1 92.3 Non-current liabilities 8.3 0.4 Total liabilities 100.4 92.7 Net assets 188.2 207.4 Total equity 188.2 207.4 Gearing Net cash 49.8
Slide 19: 3. Strategy & Outlook
3. STRATEGY & OUTLOOK
Slide 20: Macmahon’s Strategic Roadmap
Macmahon’s Strategic Roadmap Strategy Developing deeper client relationships and expand international presence Focus on execution of existing projects, whilst reinvigorating the underground business Diversify the business and seek ‘capital light’ growth opportunities New management team (Mic
Slide 21: FY2017 Guidance
FY2017 Guidance Revenue – Key Movements Key Assumptions 500 FY2017 revenue guidance: $350 – 370 million Tropicana Telfer Other Revenue 400 nil — In line with prior guidance provided in Aug-16 300 — >90% of 2H FY2017 revenue is already contracted $m 200 — Revenue growth in 2H FY2017 is primarily dr
Slide 22: FY2018 Guidance
FY2018 Guidance Revenue – Key Movements Key Assumptions 600 Tropicana Telfer Other Revenue FY2018 revenue guidance: $470 – 510 million 500 — Growth from existing contracts driven by increased 400 mining volumes at Telfer and Tropicana, as well as increased productivity at Telfer $m 300 — Assumes 3
Slide 23: Appendix
APPENDIX
Slide 24: Guidance Summary
Guidance Summary $m, financial year ending 30 June FY2017 FY2018 Revenue 350.0 – 370.0 470.0 – 510.0 EBITDA 30.0 – 35.0 67.0 – 75.0 EBIT (3.0) – 0.0 30.0 – 35.0 % EBIT margin (0.9%) – 0.0% 6.4% - 6.9% Capital expenditure Existing contracts Stay in business 37.2 27.7 Expansion 10.3 - New Contracts -
Slide 25: Tender Pipeline: $6.4 billion
Tender Pipeline: $6.4 billion Tender Pipeline by Status Tender Pipeline by Commodity Mineral Sands 4% Uranium 13% Pre Tender Coal 30% Exclusive, 30% Preferred or Shortlisted 44% Tender Gold 26% 53% Tender Pipeline by Contract Type Tender Pipeline by Location Hourly Hire West Africa 2% 4% Alliance Qu