Macmahon Holdings Limited · ASX:MAH
Macmahon — Shareholder Meeting (October 2003)
24 slides from Macmahon's shareholder meeting presentation, Oct 20, 2003
Slide 1: Chairman's Address to the Fortieth Annual General Meeting
MACMAHON HOLDINGS LIMITED A.C.N. 007 634 406 CHAIRMAN’S ADDRESS TO THE FOURTIETH ANNUAL GENERAL MEETING OF MACMAHON HOLDINGS LIMITED TO BE HELD AT 2.00PM (WST) MONDAY, 20™ OCTOBER 2003 AT THE GRAND CHANCELLOR HOTEL, 707, WELLINGTON STREET PERTH, WESTERN AUSTRALIA. Thank you for your attendance here
Slide 2: Strategy for growth and new contract work
We are continuing with our strategy for growth and maintain our policy of only accepting high quality assignments at appropriate profit margins from high quality customers. As | forecast in my report in the 2003 Annual Report, the world economy continues to improve, the demand for mineral commoditie
Slide 3: Railway investment, dividends and director options
We will manage our investment (7.5% in Asia Pacific Transport, owner and operator of the railway for 50 years) to realise the best financial return possible for Macmahon. The work we do is physically and intellectually demanding and | congratulate all 2000 members ofthe Macmahon team on their succes
Slide 4: Director options and closing remarks
The options are not excessive and do not in my opinion compromise the independence of your non executive directors. They were entirely appropriate in the circumstances the Company experienced at the time the offer of options was made to our directors. | should also like to thank the board of directo
Slide 5: 2003 Annual General Meeting Presentation
CQMACMAHON 2003 ANNUAL GENERAL MEETING PRESENTATION Nick Bowen Chief Executive Officer Macmahon Holdings Ltd 20 October 2003
Slide 6: Agenda
CQMACMAHON » 2003 Results » Strategy » Alice Springs to Darwin Railway (APT) » New Work Update » Outlook
Slide 7: Key Performance Indicators
KEY PERFORMANCE INDICATORS Total Revenue 496 2001 2002 2003 Group @ JV Profit After Tax 1999 2000 2001 2002 = 2003
Slide 8: Key Performance Indicators: Debt/Gearing
KEY PERFORMANCE INDICATORS 2003 Results Debt/Gearing EEE Debt EZ Operating Lease Debt woconne Yy Gearing 1999 2000 2001 2002 2003
Slide 9: Key Performance Indicators
KEY PERFORMANCE INDICATORS 2003 Results PAT on Total Sales (including JV) 1.7% 1.5% 413.3% Earnings Per Share 3.4 cents 2.9 cents +17.2% Return on Capital * 12.9% 13.4% -3.7% Return on Equity 14.6% 14.3% 4+2.1% * EBIT / Average Capital Employed including Investments
Slide 10: 2003 Scorecard
2003 SCORECARD 2003 Results After tax margin on Improvement on 2002 actual of 1.5% but Total revenue 2% 1.7% below target. Targeting further improvement. Net Debt Under $70 million $69.3 Achieved notwithstanding $11 million early equity contribution to Alice Springs to Darwin railway. Safety (LTIFR)
Slide 11: Safety
SAFETY 2003 Result esults 60 Frequency Rate (per 5Q million man hours worked) 40 30 20 10 0 -LTIFR target of 2 not achieved for year, but still below industry average -Industry best processes to improve result -Focus now on TRIFR which is new industry measure 65.1 38.5 25.1 44 5 4 25 33 || oo 0 1999
Slide 12: Company Structure
COMPANY STRUCTURE Strategy - Road works - Construction - Railways - Ownership - Ports - Dams - Plant - Labour - Crushing - Mine Development - Maintenance - Mine Production - Production Drilling - Ground Support - Diamond Drilling I - Open Cut Mining - Mine Development _ priij & Blast - Maintenance
Slide 13: Strategy
Strategy ca Strong business in WA Expansion into QLD — Burnett River Dam Mine Infrastructure development — tron Ore Expansion Government Infrastructure — Tonkin Highway Achieving target margins Opportunities for growth in the next 2-3 years Limited capital required People and bonding critical
Slide 14: Open Cut
OPEN CUT Strategy Strong business in WA and QLD Significant new business in recent months (Phosphate Hill, Eaglefield and Whaleback) Excellent spread of commodity risk — coal, iron ore, diamonds, gold, copper, etc Margins and Return on Capital now at acceptable levels Now operating at full equipment
Slide 15: Underground
UNDERGROUND Business size has reduced Strategy » Industry tender margins for new work below Macmahon financial hurdles » Focussing on higher margin specialist work » Increasing work for owner miners » Industry requires rationalisation — Macmahon will remain a participant 1
Slide 16: Services
SERVICES Development from our equipment and labour hire businesses Strategy » Provides a range of services including: Equipment hire y Labour hire y Maintenance services y Logistics YS » — Utilises all Macmahon’s internal expertise » Sector returns very attractive » Significant opportunities for gro
Slide 17: Alice Springs to Darwin Railway - APT
ALICE SPRINGS TO DARWIN RAILWAY - APT Macmahon 7.5% shareholder ($26.5 million investment) » APT Assets » Track from Tarcoola in SA to Darwin » Freight and Logistics Business 50 year concession period First Freight Train January 2004 » Ramp-up to full production over 2-3 years Dividend from APT not
Slide 18: Order Book & Run Off
ORDER BOOK & RUN OFF At June 30 2003 only $341 million » — In first 3.6 months this year awarded $510 million of new work including $77 million awarded today 14
Slide 19: Major Contracts Won Since June
MAJOR CONTRACTS WON SINCE JUNE 03 Open Cut Phsophate Hill WMC Resources Mining § years Phosphate Eaglefield RAG Australia Coal Develop & operate new coal mine 7 years Coal Waihi Newmont Mining, crushing & tailings dam 3 years Gold Carosue Sons of Gwalia Drill & Blast 2 years Gold Ellendale Kimberley
Slide 20: Capital Expenditure / Balance Sheet
CAPITAL EXPENDITURE / BALANCE SHEET 03/04 budget contained $30 million for capital expenditure (including APT investment) » This level of capital still resulted in total overall debt reduction to around $65 million by June 04 » — Level of new work won will require additional $20 million capex taking
Slide 21: Targets
TARGETS Macmahon has established the following Targets: » Annual profit and EPS growth » Long term Debt/Equity of 75% » Returm on Capital of 13% to 15% » 20% annual reduction in Total Recordable Injury Frequency Rate 17
Slide 22: Outlook
OUTLOOK 2003 Results Based on work won outlook is positive 03/04 Revenue of $400 million + New work won will not be reflected in first half. Benefit comes in second half with increased Revenue and Profit. New work is positioning the company for 04/05 year and onwards. Anticipate 04/05 Revenue $450 t
Slide 23: Challenges / Risks
CHALLENGES / RISKS Retention of key staff 2003 Results » Recruitment of quality staff » Commodity price / exchange rate » Availability of capital » Understanding the risks » — Knowing our limitations 19
Slide 24: Potential Upside
POTENTIAL UPSIDE Significant opportunities available in Australia and possibly Malaysia » Civil construction and Open Cut mining for Blue Chip Clients » Margins provide acceptable returns on investment » Macmahon considering options — either limited growth or increase business size » Selected acquis
Macmahon Holdings — Shareholder Meeting (October 2003) on 6ix