Macmahon Holdings Limited · ASX:MAH
Macmahon — H1 2007 Earnings Presentation
43 slides from Macmahon's earnings presentation, December 2006
Slide 1: Investor Presentation - December 2006 Half Year Result
Investor Presentation - December 2006 Half Year Result 0
Slide 2: Presentation Outline
Presentation Outline December 2006 Half Year Results Balance Sheet and Cash Flow Operations Order Book Strategy and Outlook 1
Slide 3: December 2006 Half Year Results
December 2006 Half Year Results December 2006 Half Year Results 2
Slide 4: Half Year Highlights
Half Year Highlights Record Revenue of $476.5 million Record EBIT of $28.5 million Record Profit After Tax of $25.8 million Higher margins and earnings: • Improved suite of contracts • Improved operating efficiency in Mining Interim dividend of 1 cent (0.5 cents: 2005) Record Order Book
Slide 5: Key Achievements
Key Achievements Continued Revenue and Profit Growth Acquired ARD and CRE Sold Allplant Hire Achieved 6% EBIT Margin Successful entry into NSW construction market $880 million of new contracts and extensions 4
Slide 6: Financial Summary
Financial Summary $million unless stated 31 Dec 06 31 Dec 05 Change Group Revenue 442.9 370.0 20% Joint Venture 33.6 35.6. (6)% Total Revenue 476.5 405.7 17% EBIT 28.5 20.5 39% EBIT Margin 6.0% 5.1% 18% Net Profit from Contracting 14.7 11.7 26% Net Profit from sale of Allplant 11.1 - - Reported Prof
Slide 7: Profit Composition
Q Profit Composition MAGMAHON 40 5.4 7.6 ; a 25.4 30 28.5 6.3 $ Million Z ZZ Construction Mining Allplant Corporate EBIT Net Income Minority PAT Allplant Reported (discontinued Expenses from Finance Tax Interests from (sale profit) PAT operation) Contracting Costs Expense Contracting
Slide 8: Improved Financial Performance
Improved Financial Performance Revenue EBIT 1000 50 900 45 26.4 458 800 40 700 35 360 600 30 $ Million $ Million 28.5 500 16.1 25 215 476 400 243 20 406 20.5 11.9 300 15 9.9 281 264 200 10 11.2 178 100 7.1 6.8 5 0 0 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 H1 H2 H1 H2 7
Slide 9: Improved Financial Performance
Improved Financial Performance Margins Profit After Tax 30 12 15.7 25 10 9.9 10 9.4 9 8 20 8.2 $ Million Per Cent 6 15 10.2 14.7 6 5.4 11.7 4 10 4.4 4.3 3.6 6.2 2 4.1 5 5.7 2.1 2.4 0 0 2003 2004 2005 2006 H1 2007 2003 2004 2005 2006 2007 EBIT EBITDA H1 H2 8
Slide 10: Improved Financial Performance
Improved Financial Performance PAT Margin Earnings Per Share 3.5 6 3 3.2 5.5 5 3 5 2.5 2.5 4 3.9 2 Per Cen t 3.5 Cents 2 3.4 3 1.5 2.8 2 1 1.2 1.5 1 0.5 0 0 2003 2004 2005 2006 2007 2003 2004 2005 2006 2006 2007 2007 Reported Reported PAT Margin 9
Slide 11: Increasing Shareholder Returns
Increasing Shareholder Returns Return On Equity Dividend 18 2.5 16 15.9 16.1 2 14 14.6 1.5 13.2 12 11.6 1.5 10 Per Cent Cents 8 1 1 1 6 4 0.5 0.5 0.5 2 0 0 2003 2004 2005 2006 2007 2004 2005 2006 H1 2007 Interim Final ROE 10
Slide 12: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Perth to Mandurah Rail, Western Australia 11
Slide 13: Half Year Balance Sheet
Half Year Balance Sheet $ million unless stated December 2006 June 2006 Change % Current Assets 230.3 222.9 3.3 Non Current Assets 288.7 263.8 9.5 TOTAL ASSETS 519.1 486.7 6.6 NET ASSETS 194.9 171.9 13.3 Net Debt 90.3 75.0 20.4 Gearing (Net Debt / Equity ) 46.3% 43.6% Normalised Interest Cover 4.5 5
Slide 14: Balance Sheet Strength
Balance Sheet Strength Capital Expenditure Shareholder Equity 200 140 195 120 126.1 171 150 100 $ Million 80 120 $ Million 76.6 100 99 60 57.4 57.5 40 50 58 20 10.5 0 0 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Full Year Half Year Full Year Half year 13
Slide 15: Cash Flow Waterfall
Q Cash Flow Waterfall MACMAHON 100 68.6 29.3 20.9 67.8 ; i c 60 = 475 36 = SES : * 40 My 15.5 20 ae 5.3 25 = 6.0 0 EBITDA TaxPaid Interest Increasein Saleof Acquisition Increase Capital Dividends Other _ Increase Paid Working —Alliplant in Debt —" in Cash Capital Ss Inflow (Outflow 14
Slide 16: Segment Results
Segment Results Mining Construction December December December December 2006 2005 2006 2005 Revenue 278 210 191 185 EBIT 25.4 12.9 5.3 8.0 EBIT Margin 9.1% 6.1% 2.8% 4.3% Mining Revenue Construction Revenue 500 500 450 471 450 400 400 350 370 350 331 300 300 $ Million $ Million 287 278 250 250 250 2
Slide 17: Revenue by Business
Revenue by Business Allplant Construction - East 2% 13% Open Cut 39% Construction - West 27% Eyre Highway, Western Australia Underground 19% 16
Slide 18: Operations
@) MACGMAHON MINING & CONSTRUCTION
Slide 19: Employees
People 3500 3000 3000 2700 2500 2500 2000 Employees 1700 1500 1200 Leinster, Western Australia1000 500 0 2003 2004 2005 2006 2007 18
Slide 20: Mining - Orebody 18
Mining - Orebody 18 Leinster, Western Australia 19
Slide 21: Mining - Waihi
Mining - Waihi Leinster, Western Australia 20
Slide 22: Mining - Argyle Diamonds
Mining - Argyle Diamonds Leinster, Western Australia 21
Slide 23: Mining – Olympic Dam
Mining – Olympic Dam Eyre Highway, Western Australia 22
Slide 24: Mining – ARD and CRE
Mining – ARD and CRE Eyre Highway, Western Australia 23
Slide 25: Construction - Eyre Highway
Construction - Eyre Highway 24
Slide 26: Construction – Mitchell Freeway
Construction – Mitchell Freeway 25
Slide 27: Construction - Ross River Dam
Construction - Ross River Dam Eyre Highway, Western Australia 26
Slide 28: Construction - Leura
Construction - Leura Eyre Highway, Western Australia 27
Slide 29: Order Book
“race duc Order Book MINING & CONSTRUCTION Da) ORY a aal\ NV
Slide 30: Increasing Orders
Increasing Orders Order Book Order Book Run Off 1800 1000 1600 1622 900 1400 800 430 1200 700 1218 600 1000 $ Million $ Million 618 925 500 574 800 784 400 450 600 300 400 200 341 200 100 1 0 0 2003 2004 2005 2006 2007 2007 2008 2009+ At the Full Year At the Half Year Work Completed Order Book Run O
Slide 31: Diversified Order Book
Diversified Order Book Contracts Commodity Other Gold 7% 4% Copper Governm ent 6% Infrastructure Cost Reimbursable 27% 16% Fixed 4% Alliance Diam onds Schedule of Rates 10% 18% 70% Coal Iron Ore 13% 25% 30
Slide 32: Blue Chip Long Term Contracts
Blue Chip Long Term Contracts Customers Duration of Contract Other < 2 Years 14% 9% BHP Billiton ARTC 31% 5% > 5 Years 25% 2 - 3 Years 14% Kim berley Diam onds 7% Rio Tinto 11% 3 - 5 Years WA Governm ent 52% 18% Peabody Energy 14% 31
Slide 33: Contract Life – Mining
Q Contract Life — Mining MACMAHON BHP Billiton > Orebody 18 > BHP Billiton > Jimblebar > BHP Billiton > Leinster < > BHP Billiton > Olympic Dam Rio Tinto > Argyle < a Rio Tinto > Cape Lambert /Dampier < > Peabody > Eaglefield > Incitec Pivot > Phosphate Hill > Kimberley Diamonds > Ellendale > Lafarg
Slide 34: Contract Life – Construction
Contract Life – Construction 33
Slide 35: Strategy and Outlook
@) Strategy and MACGMAHON MINING & CONSTRUCTION
Slide 36: Market Picture
Market Picture Commodity prices and volumes remain strong Governments upgrading ageing infrastructure Barriers to new competition high Buoyant conditions expected to continue (refer Appendix) 35
Slide 37: Strategy
Q MACMAHON Objective ©) Grow the Business C) Secure Market Position C Increase Shareholder Returns Core Business Focus Areas Mining Construction Mining > Iron Ore > Coal > Base Metals Govt Infastructure > Road > Rail > Water Maintenance Projects aligned with our expertise Australia - East Coast Over
Slide 38: 2007 Outlook
2007 Outlook $430 + million already secured for second half Revenue $1 - $1.05 billion – subject to new work Capital spend will be lower: $30 - $35 million Review of financing for future capital requirements New work flow to continue Second half profit expected to exceed the first half c
Slide 39: Leinster Nickel Operations
Leinster Nickel Operations Leinster, Western Australia 38
Slide 40: Future Growth
Future Growth Concentrated Effort - East Coast Construction Greater Penetration in Coal Pursue “Low Risk” Overseas Opportunities Maximise Vertical Integration Acquisitions Continue To Improve Efficiency 39
Slide 41: Continuing to Deliver
“Continuing to Deliver” @) MACGMAHON MINING & CONSTRUCTION
Slide 42: Appendix 1 - Value of Contract Mining
Appendix 1- Value of Contract Mining Value of Contract Mining (Constant 2003/04 A$'million) 5,000.0 4,500.0 4,000.0 3,500.0 Value of Work ($'million) 3,000.0 2,500.0 2,000.0 1,500.0 1,000.0 500.0 0.0 2001 2002 2003 2004 2005 2006e 2007 2008 2009 2010 2011 Coal Iron Ore Bauxite Copper Gold Silver, Le
Slide 43: Appendix 2 - Engineering Construction
Appendix 2 - Engineering Construction Engineering Construction - Australia (Constant 2003/04 Prices $M) 30.0 25.0 20.0 Value of Work ($'b) 15.0 10.0 5.0 .0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Roads Bridges Railw ays Harbours Water Heavy Industry Other Source: BIS Shrapnel: Enginee