Macmahon Holdings Limited · ASX:MAH
Macmahon — Macquarie Securities - WA Emerging Leaders Conference 2007
35 slides from Macmahon's conference presentation, Oct 9, 2007
Slide 1: Geared for Growth: Macmahon Holdings 2007 Full Year Results
For personal use only GEARED FOR GROWTH Macmahon Holdings 2007 Full 1 Year Results Macquarie Securities - WA Emerging Leaders Conference – October 2007
Slide 2: Disclaimer
Disclaimer For personal use only This presentation contains forward looking statements that are subject to risk factors associated with the mining and construction businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of v
Slide 3: Agenda
Agenda For personal use only Macmahon Background Financial Performance Strategy Strategic Plan Short Term Strategic Focus Long Term Strategic Focus Summary and Outlook Macmahon Holdings 2007 Full Geared for growth 3 Year Results 3
Slide 4: Macmahon Background
Macmahon Background For personal use only History: Founded in 1963, listed (ASX) in 1983 Industry: A leading mine contracting and civil construction company Market Capitalisation: $880 million (S&P/ASX 300) Shareholder Base: 8,000 holders – 80% domestic/20% offshore Performance: 5 year >15
Slide 5: Financial Performance: Five Year Summary
Financial Performance For personal use only Five Year Summary $ million 2007 Chg 2006 2005 2004 2003 Total revenue 966.0 ▲ 12% 863.7 637.3 420.8 478.7 Underlying EBIT 59.7 ▲ 27% 46.9 27.4 18.7 17.0 Underlying NPAT 33.4 ▲ 22% 27.4 15.9 11.6 8.5 Underlying EPS (cps) 6.4 ▲ 16% 5.5 4.2 3.5 3.4 Dividend
Slide 6: Revenue & Margin Growth
Revenue & Margin Growth For personal use only Revenue up 12% EBIT Margin breaks through 6% 6.2% Construction 5.4% Mining 403 4.4% 4.3% 370 3.6% 287 221 149 563 494 350 258 272 FY03 FY04 FY05 FY06 FY07 FY03 FY04 FY05 FY06 FY07 Strong revenue growth in 2007 from Sustained EBIT margin growth $864m
Slide 7: Order Book & Market Capitalisation
Order Book & Market Capitalisation For personal use only Order Book up 65% Sustained increase in Market Capitalisation 880 $1.80 $1.70 2005 $1.60 $1.50 677 $1.40 $1.30 $1.20 $1.10 1218 $1.00 414 $0.90 925 $0.80 784 $0.70 $0.60 $0.50 173 $0.40 341 101 $0.30 39 $0.20 $0.10 $0.00 FY03 FY04 FY05 FY06 FY
Slide 8: Sustainable Earnings & Returns
Sustainable Earnings & Returns For personal use only EPS up 16% TSR returns of 65% DPS up 50% 400% 359% TSR DPS 6.4 Cumulative TSR EPS 5.5 300% 4.2 200% 183% 3.5 3.4 3.0 100% 72% 72% 80% 65% 2.0 59% 1.0 0% 0.5 -7% -46% -100% FY03 FY04 FY05 FY06 FY07 FY03 FY04 FY05 FY06 FY07 Strong growth in underl
Slide 9: Strategy
For personal use only Strategy Macmahon Holdings 2007 Full Geared for growth 9 Year Results 9
Slide 10: Strategy
Strategy For personal use only Objective Grow the Business Secure Market Position Increase Shareholder Returns Core Business Opportunities Focus Areas Outcomes Outcomes Mining Australia Service Provider ¾ East Coast Of Choice ¾ Iron Ore ¾ Coal ¾ Coal ¾ Base Metals Reliable Revenue ¾ Diamonds Low Ris
Slide 11: Strategic Plan
Strategic Plan For personal use only m r a nnu e st p foreca Long Term th Revenue:$1.25 billion grow FY12 0% 20-3 ► A market leader in contract mining Medium Term ► Construction capability FY09 – FY10 expanded ► Infrastructure ownership ► Expand service capabilities ► Significant overseas presence ►
Slide 12: Short Term Strategic Focus
For personal use only Short Term Strategic Focus Macmahon Holdings 2007 Full Geared for growth 12 Year Results 12
Slide 13: Market Environment
Market Environment Australian Engineering Construction Australian Mineral Production 2007 – 2011 2002–2006 & 2007-2011 For personal use only Total=$204 billion 2007-2011 2002-2006 Other Iron Ore (Mt) Heavy Roads Industry Black Coal (Mt) Bridges Pipelines Railways - 1,000 2,000 3,000 Water Harbours G
Slide 14: Market Focus
Market Focus For personal use only Macmahon Holdings 2007 Full Geared for growth 14 Year Results 14
Slide 15: Established Markets (WA & NT)
Established Markets (WA & NT) Growth opportunities Iron Ore Production For personal use only 2007 – 2011 WA capital works program forecast at $5.8 billion for FY08 Pilbara Region Continued investment by major mining houses driving iron ore production Strong mining presence in the Pilbara – s
Slide 16: Orebody Open Cut Iron Ore Mine - BHP Billiton
For personal use only Macmahon Holdings 2007 Full Geared for growth 16 Year Results Orebody 18 Open Cut Iron Ore Mine - BHP Billiton, Western Australia 16
Slide 17: Mitchell Freeway Extension - Main Roads WA
For personal use only Macmahon Holdings 2007 Full Geared for growth 17 Year Results Mitchell Freeway Extension - Mains Roads WA, Western Australia 17
Slide 18: Growth Markets (QLD & NSW)
Growth Markets (QLD & NSW) Growth opportunities Coal Production For personal use only 2007 – 2011 Roads and water Insufficient infrastructure to support growing population Rail and ports ‘At capacity’ coal networks QLD/NSW Coal 84% QLD Bowen Basin - Australia’s largest coal reserve NSW
Slide 19: Jilalan Rail Yard Upgrade - QLD Rail
For personal use only Macmahon Holdings 2007 Full Geared for growth 19 Year Results Jilalan Rail Yard Upgrade – QLD Rail, Queensland19
Slide 20: Expanding Markets (SA)
Expanding Markets (SA) Growth opportunities Copper Production For personal use only 2007 – 2011 BHP Billiton’s proposed Olympic Dam expansion One of the world’s largest mine development opportunities SA Macmahon is currently the biggest contractor at Olympic 26% Dam Road, rail, pipelines and
Slide 21: Eyre Peninsula Rail Upgrade
For personal use only Macmahon Holdings 2007 Full Geared for growth 21 Year Eyre Peninsula Rail Upgrade – Genesee & Wyoming Australia Results of Transport, Energy & Infrastructure, South Australia21 and Department
Slide 22: Olympic Dam Underground Mine - BHP Billiton
For personal use only Macmahon Holdings 2007 Full Geared for growth 22 Year Results Olympic Dam Underground Mine – BHP Billiton, South Australia 22
Slide 23: Market Opportunities (SE Asia)
Market Opportunities (SE Asia) Growth opportunities For personal use only SE Asia GDP Growth Mining Many parts of Asia have substantial 12% 2005 2006 percentage of world mineral reserves 10% 2007f 2008f including iron ore (19%), nickel (16%), copper (10%) and lead (14%) 8% 6% Construction 4%
Slide 24: Business Transformation
Business Transformation For personal use only Information Systems Upgrade Capital Management Program Supply Chain Management Strategy Risk and Opportunity Management People Strategy Macmahon Holdings 2007 Full Geared for growth 24 Year Results 24
Slide 25: Business Transformation: Global One Project
Business Transformation For personal use only Information Systems Upgrade CASE STUDY: ‘GLOBAL ONE’ PROJECT Total infrastructure replacement 5 year project to allow all users to access any system, anywhere, anytime and on any hardware devices Macmahon has rebuilt its entire communications net
Slide 26: Business Transformation: Global Integrated Systems Project
Business Transformation For personal use only Information Systems Upgrade CASE STUDY: ‘GLOBAL INTEGRATED SYSTEMS’ PROJECT Business systems upgrade GIS commenced in 2007 to drive internal processes and efficiencies The GIS initiative seeks to develop existing data capture, business informatio
Slide 27: Business Transformation: Debt Refinancing
Business Transformation For personal use only Capital Management Program CASE STUDY: DEBT REFINANCING Refinancing of term debt and guarantee facilities Establishment of operating lease facility Existing New Term Debt A$45m A$75m Guarantee A$45m A$75m Operating Lease nil A$230m & US$50m Benefit
Slide 28: Business Transformation: Tyre Procurement
Business Transformation For personal use only Supply Chain Management Strategy CASE STUDY: TYRE PROCUREMENT Existing contract does not meet growth requirements Working directly with Chinese manufactures to test and secure tyre supplies Benefits: Direct relationships and knowledge sharing S
Slide 29: Business Transformation: Risk and Opportunity Management
Business Transformation For personal use only Risk and Opportunity Management CASE STUDY: RISK OPPORTUNITY MANAGEMENT PROGRAM Implementation of Macmahon Business Risk and Opportunity Management program (MBROM) Procurement of a Risk Management Information System to facilitate the sharing of kno
Slide 30: Business Transformation: People Strategy
Business Transformation For personal use only People Strategy To attract people the Company will focus on: Expansion of successful Apprenticeship, Indigenous and International sponsorship programmes Development of Company brand Innovative recruitment strategies – focusing on rural, defence
Slide 31: Long Term Strategic Focus
For personal use only Long Term Strategic Focus Macmahon Holdings 2007 Full Geared for growth 31 Year Results 31
Slide 32: Acquisitions
Acquisitions For personal use only Criteria Cultural fit – a “critical ingredient” Strengthen business – both horizonal and vertical business extensions (i.e. increase design,underground mining, maintenance service, construction capabilities and access new markets) Size – historical tendency
Slide 33: Acquisitions: ARD / CRE Acquisition
Acquisitions For personal use only Strategic Acquisitions CASE STUDY: ARD / CRE ACQUISITION August 2006 - Macmahon acquired ARD/CRE for A$27m Underground mining services Size – small deal although strategically significant Funding – from bank facilities and existing cash reserves Owners
Slide 34: Summary & Outlook
Summary & Outlook For personal use only The outlook for the industries in which we operate has never been stronger The Company is targeting revenue and profit growth of 20-30% per annum over the next 3-5 years We are well positioned to take advantage of a buoyant resource sector and increased
Slide 35: Questions
For personal use only Macquarie Securities WA Emerging Leaders Conference Macmahon Holdings Strategy Update Ross Carroll – Chief Financial Officer 9 October 2007 QUESTIONS Macmahon Argyle Underground Diamond Mine - Rio Tinto, WA Holdings 2007 Full Geared for growth 35 Year Results 35
Macmahon Holdings — Macquarie Securities - WA Emerging Leaders Conference 2007 on 6ix