Slide 1: Full Year Results August 2017
FULL YEAR RESULTS AUGUST 2017 MACMAHON – Full Year Results - 24 August 2017 1
Slide 2: Contents
CONTENTS • YEAR IN REVIEW • INVESTMENT HIGHLIGHTS • KEY CONTRACTS • EXPECTED NEW WORK • KEY PROJECTS • BATU HIJAU • BYERWEN • STRATEGIC PRIORITIES • AMNT TRANSACTION • PEOPLE AND SAFETY • FINANCIAL RESULTS • OUTLOOK • GUIDANCE • APPENDIX MACMAHON – Full Year Results - 24 August 2017 2
Slide 3: Year in Review
YEAR IN REVIEW • Transformational transaction with PT AMNT (completed in August 2017) • Defended hostile takeover attempt from CIMIC • Execution of existing strategy with a greater focus on successful delivery of current work – all projects (except Telfer, which is in a turnaround phase) performed i
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS FULL SERVICE • Diversified mining contractor offering open-pit and underground mining services MINING • Strong existing relationships with major mining companies CONTRACTOR STRONG TENDER • Multiple tender opportunities representing >$6.1 billion in potential aggregate contract
Slide 5: Overview of Key Contracts
OVERVIEW OF KEY CONTRACTS Macmahon’s current key contracts are with tier one global mining companies Project / Client Location Commodity / Type Comments • Macmahon’s second largest contract (after Batu Hijau) and has been profitable since inception • Successful alliance style contract in place since
Slide 6: Overview of Key Contracts (cont.)
OVERVIEW OF KEY CONTRACTS (CONT.) Macmahon’s current key contracts are with tier one global mining companies Project / Client Location Commodity / Type Comments • Schedule of rates contract for equipment and labour hire St Ives Gold • 24 month extension signed in 2016 WA Australia • Over the past ye
Slide 7: New Projects – Byerwen Coal Mine
NEW PROJECTS – BYERWEN COAL MINE Macmahon has been selected by Byerwen Coal Pty Ltd as its preferred mining contractor to establish and then operate the new Byerwen Coal Mine near Glenden in the Queensland Bowen Basin. Asset Overview Byerwen Coal • Macmahon selected as preferred contractor - current
Slide 8: New Projects – Batu Hijau Copper / Gold Mine
NEW PROJECTS – BATU HIJAU COPPER / GOLD MINE Macmahon has been awarded a Life-Of-Mine mining services contract at the Batu Hijau Mine in Indonesia Asset Overview • Large, open pit, owner-mined, porphyry copper-gold deposit located on SUMBAWA ISLAND Sumbawa Island, Indonesia Elang Rinti • Second larg
Slide 9: Strategic Priorities
STRATEGIC PRIORITIES By providing its services safely and efficiently, Macmahon aims to secure and deliver work that is profitable and repeatable in order to deliver sustainable returns to shareholders. TECHNOLOGY • Greater investment in technology and innovation in order to provide differentiated s
Slide 10: AMNT Transaction
AMNT TRANSACTION Macmahon is the life-of-mine mining services provider at the Batu Hijau copper-gold mine in Indonesia and has purchased relevant mobile equipment with new Macmahon shares. • MAH now one of the world’s largest contract mining companies with no sacrifice to margins or ROE TRANSFORMATI
Slide 11: People and Safety
PEOPLE AND SAFETY MACMAHON – Full Year Results - 24 August 2017 11
Slide 12: People
PEOPLE Group Employee Numbers Employees by Division Surface Corporate 3,495 International 2,467 1,659 Underground 1,295 1,529 2013 2014 2015 2016 2017 FY17 highlights: • Several senior appointments including GM Underground and Surface Operations Manager - bolstering leadership capacity • Development
Slide 13: Safety
SAFETY Group Safety Performance KEY MILESTONES 10.1 (per million hours worked) 8.6 • The lowest LTIFR in the last five Frequency rate 5.4 5.6 4.4 years 1.1 0.9 0.9 1.1 • 2017 Kanthan, Malaysia operating 12 0.4 years LTI free 2013 2014 2015 2016 2017 • 2017 Lhok Nga, Indonesia operating TRIFR (Total
Slide 14: Financial Results
FINANCIAL RESULTS MACMAHON – Full Year Results - 24 August 2017 14
Slide 15: Income Statement
INCOME STATEMENT $ Millions 2016 2017 Total revenue1 from continuing operations 312.2 359.6 2 EBITDA (from continuing operations) 42.5 31.8 3 EBIT (from continuing operations) 13.8 (1.7) Asset write-downs and onerous lease provision (2.1) - Takeover defence costs - (3.4) Net finance costs (0.7) (0.1
Slide 16: Cash Flow
CASH FLOW $ Millions 2016 2017 EBITDA from continuing operations 42.5 31.8 Net interest paid (1.0) (0.1) Income taxes paid (2.8) - Working capital and other items (29.6) (1.5) Operating cash flow 9.1 30.2 Proceeds from sale of assets 17.6 12.6 Capital expenditure (23.5) (34.9) Net repayment of borro
Slide 17: Balance Sheet
BALANCE SHEET $ Millions 2016 2017 Pro-forma1 Current assets 175.5 164.5 164.5 Non-current assets 124.6 130.5 313.0 Total assets 300.1 295.0 477.5 Net assets 207.4 185.0 367.5 Net cash 56.5 54.1 54.1 Gearing (27.2%) (29.2%) (14.7%) • No debt – net cash of $54.1 million • Balance sheet significantly
Slide 18: Outlook
OUTLOOK MACMAHON – Full Year Results - 24 August 2017 18
Slide 19: Outlook
OUTLOOK • Market is showing encouraging signs of improvement • Key commodity prices (Gold, Copper, Coal) – stable and/or improving • Noticeable shift in market sentiment and corporate activity • Competitive pressures still present – MAH focusing on opportunities where it has a strategic advantage an
Slide 20: FY2018 Guidance
FY2018 GUIDANCE Guidance and Assumptions FY2018 Revenue – Key Movements • FY2018 revenue of $620 – 680 million 800 Tropicana Telfer Batu Hijau Other 700 • FY2018 EBIT of $40 – 50 million (excluding one-off costs and 600 unrealised FX gains / losses) 500 A$m • Key assumptions: 400 — Commencement of i
Slide 21: Forecast FY18 Revenue and Order Book
FORECAST FY18 REVENUE AND ORDER BOOK Revenue by client Revenue by Commodity AngloGold Gold AMNT 16% Copper-Gold 9% Newcrest 8% Coal 36% Unsecured New Other 12% Other 25% 59% 12% 25% Order book by Commodity Order book $5Bn Gold 2% Batu Hijau Mining Contract 1.2 Copper-Gold Other Order Book 49% (exclu
Slide 22: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER Disclaimer as to forward looking statements The directors of Macmahon consider that they Not a disclosure document have used reasonable care in preparing forward This presentation is not a disclosure document This presentation contains forward looking looking financia
Slide 23: Appendix
APPENDIX MACMAHON – Full Year Results - 24 August 2017 23
Slide 24: Company Overview
COMPANY OVERVIEW Macmahon is a leading Australian based mining services provider with both open-pit and underground mining expertise Business Overview Capitalisation Summary • Macmahon is a pure play ASX-listed company which offers both Unit Pro-forma open-pit and underground mining contracting serv
Slide 25: Executive Team
EXECUTIVE TEAM Michael Finnegan experience, commencing his career in technical Grahame White commercial background to Macmahon through his Chief Executive Officer positions, with the last 10 years in senior Manager, Qld Operations 23 years’ experience across the mining, operational roles in Australi
Slide 26: AMNT Transaction Benefits (1 of 2)
AMNT TRANSACTION BENEFITS (1 OF 2) • FY2018 EBIT guidance has increased from A$30-35 million to A$40-50 million A$10-15 million IMPROVED FORECAST • Full benefit of the Mining Services Contract expected to be realised in FY2019 following ramp-up FY2018 EARNINGS to Full Operations EBIT • Significant
Slide 27: AMNT Transaction Benefits (2 of 2)
AMNT TRANSACTION BENEFITS (2 OF 2) • MAH now has a new major shareholder in AMC (AMNT’s related company) SUPPORTIVE MAJOR • AMC and AMNT will support existing strategy SHAREHOLDER • AMC and AMNT will assist Macmahon in securing further opportunities in Asia and Australia • Strengthened balance sheet
Slide 28: About Batu Hijau
ABOUT BATU HIJAU • Production at Batu Hijau commenced in 2000 with remaining LOM production of approximately 1.5Mt of Cu and 3.5Moz of Au anticipated over 14 years (excluding potential development opportunities at Elang and Nangka) • Resource of 3.0 billion lb Cu / 3.5 million oz Au and reserve of 2
Slide 29: Reconciliation of Non-IFRS Financial Information
RECONCILIATION OF NON-IFRS FINANCIAL INFORMATION $ Millions 2016 2017 Profit/(Loss) for the year (as reported) 1.7 (22.8) Add back: Loss from discontinued operations (net of tax) 9.1 17.3 Net profit / (loss) after tax from continuing operations (as reported) 10.8 (5.5) Add back: • Asset write-downs