Macmahon Holdings Limited · ASX:MAH
Macmahon — H1 FY2010 Earnings Presentation
35 slides from Macmahon's earnings presentation, Feb 16, 2010
Slide 1: Macmahon 2010 Half Year Results
For personal use only Macmahon 2010 Half Year Results Nick Bowen – Chief Executive Officer Ross Carroll – Chief Financial Officer 16 February 2010
Slide 2: Contents
Contents For personal use only Overview Half year snapshot Contract awards Order book Safety Financials Business review Strategy and outlook 2
Slide 3: Improved performance and outlook
Improved performance and outlook For personal use only Strong first half result Profit $21.5 million, up 52% from the corresponding period Confidence has returned to the sectors in which we operate Substantial increase in resource related work Tendering activities are high in mining and co
Slide 4: Half year snapshot
Half year snapshot For personal use only $ millions Dec 09 Dec 08 Change Revenue 656.3 734.8 (11%) Profit 21.5 14.1 52% Earnings per share (cents) 2.9 2.6 12% Dividends per share (cents) 1.5 1.5 - Order Book 1,283 1,941 (34%) Order Book (16 February 2010) 1,870 - - 4
Slide 5: Order book diversity
Order book diversity For personal use only Key contract awards to 31 December 2009 Olympic Dam extension, BHP Billiton, South Australia, $110 million Ulan Line Alliance, Australian Rail Track Consortium, New South Wales, $100 million Glenugie Bypass, Road Traffic Authority, New South Wales, $5
Slide 6: Building our order book
Building our order book For personal use only Order book ($ million) 2,500 2,000 1,500 $m 2,138 1,000 2,005 1,870 1,412 1,218 1,283 500 - June 2006 June 2007 June 2008 June 2009 December 16 February 2009 2010 $1.25 billion of new contracts and extensions awarded since 1 July 2009 6
Slide 7: Safety
Safety For personal use only Group safety performance 16 38% improvement in TRIFR 14.1 14 12.7 12.9 38% improvement in LTIFR 12 Safety performance a key factor 10 7.4 for clients when awarding and 8 6 extending contracts 4.6 4 1.9 2.0 2 0.7 0.8 0.5 0 June 2006 June 2007 June 2008 June 2009 Dec
Slide 8: Financials
Tiger Brennan Drive, NT / Federal Government, Northern Territory For personal use only Financials 8
Slide 9: Income statement
Income statement For personal use only $ millions Dec 09 Dec 08 Change Revenue 656.3 734.8 (11%) EBIT 33.4 23.3 43% Interest (3.1) (4.3) 28% Profit before tax 30.3 19.0 59% Tax (8.3) (4.7) (77%) Net profit after tax & minorities 21.5 14.1 52% PBT margin % 4.6 2.6 77% NPAT margin % 3.3 1.9 74% Intere
Slide 10: Construction performance
Construction performance For personal use only $ millions Dec 09 Dec 08 Change Revenue 419.1 376.9 11% PBT 18.7 6.4 192% PBT margin % 4.5 1.7 165% Capex 0.4 3.1 (87%) 192% increase in profit before tax Strong revenue growth on the back of resource related projects in WA and QLD Prior correspon
Slide 11: Mining performance
Mining performance For personal use only $ millions Dec 09 Dec 08 Change Revenue 237.2 357.9 (34%) PBT 19.7 21.3 (8%) PBT margin % 8.3 7.0 (19%) Capex 30.6 19.1 60% Mining Business back on track after a disappointing 2009 second half Strong turnaround in profitability Profit includes claims se
Slide 12: Revenue
Revenue For personal use only Revenue ($m) 1,600 $1,486 1,400 $1,244 1,200 751 $967 1,000 633 $m 800 490 600 400 735 611 656 477 200 - 2007 2008 2009 2010 First half revenue Second half revenue 12
Slide 13: NPAT and NPAT margin
NPAT and NPAT margin For personal use only NPAT – NPAT margin (%) 60.0 4 3.9% 4 50.0 3.5% 3.3% 3 40.0 3 25.1 2 $m 30.0 2 18.5 1.2% 20.0 1 2.8 1 23.7 21.5 10.0 14.9 14.1 0 - 0 2007 2008 2009 2010 First half NPAT Second half NPAT NPAT Margin % Improved margin performance 13
Slide 14: Growth in profit after tax
For personal use only $m H 0 5 10 15 20 25 30 35 Y0 9 M Pr ar of gi it n Co n st ru Vo c lu tio m n e C on st ru ct io n M ar gi n M in in g Vo lu m e M Growth in profit after tax C in in om g m er ci al cl ai m C s or po ra t e Co s ts Profit variance analysis ($m) Both businesses contributing st
Slide 15: Strong cash flow
Strong cash flow For personal use only Cash flow $ millions Dec 09 Dec 08 Change Operating cash flow 60.6 40.0 52% Disposals 2.4 2.3 4% Capital expenditure* (32.4) (28.2) (15%) Op. cash flow per share - cents 8.3 7.3 14% Cash at hand 100.7 74.3 36% * Includes equipment purchased under finance lease
Slide 16: Balance sheet strength
Balance sheet strength For personal use only Gearing (%) 50.0% 43.9% 40.0% 30.0% 26.1% 20.0% 11.7% 10.0% 0.6% 0.0% June 2006 June 2007 June 2008 June 2009 December 2009 -10.0% -8.4% -20.0% Negative net debt as at 31 December 2009, with cash exceeding $100 million Strong balance sheet to fund gro
Slide 17: Securing new funding facilities
Securing new funding facilities For personal use only Existing funding facility expires 30 October 2010 Entered into a Mandate Letter with CBA and HSBC to act as joint lead arrangers to syndicate a new debt facility Target of $240 million for the new facility Three tranches Working capital
Slide 18: Business review
Business review For personal use only Hale Street Bridge, Brisbane City Council, Queensland 18
Slide 19: Construction – project updates
Construction – project updates For personal use only Jilalan Rail Yard Upgrade, Queensland Rail, Queensland Tiger Brennan Drive, NT / Federal Government, Northern Territory Rail Portfolio of rail contracts continues to grow The Jilalan Rail Yard Upgrade project performed exceptionally well, reac
Slide 20: Construction – project updates (cont.)
Construction – project updates (cont.) For personal use only Nepean Weirs, Sydney Catchment Authority, New South Wales RGP5, BHP Billiton Iron Ore, Western Australia Resource infrastructure RGP5 contributing to Construction’s revenue growth Opportunities in resource infrastructure continue to be
Slide 21: Mining – project updates
Mining – project updates For personal use only Orebody 18, BHP Billiton Iron Ore, Western Australia Olympic Dam, BHP Billiton, South Australia Strong track record of contract renewals Olympic Dam underground mine extended for an additional two years Orebody 18 open cut iron ore mine extended f
Slide 22: Mining - international project updates
Mining - international project updates For personal use only Signing of the Ewekoro contract, Nigeria Kanthan open cut quarry, Lafarge, Malaysia Strategy of diversifying into the overseas market paying off Macmahon now has four contracts for Lafarge in Indonesia, Malaysia and Nigeria Mobilisat
Slide 23: Strategy and outlook
For personal use only Strategy and outlook 23
Slide 24: Construction outlook
Construction outlook For personal use only Value of Australia’s infrastructure industry (AUDbn) 60 50 40 AUDbn 30 20 10 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Roads and bridges infrastructure Railways infrastructure Ports, harbours and water Power p
Slide 25: Mining outlook
Mining outlook For personal use only Australian iron ore exports (Mt) Australian coking coal port throughput (Mt) 250 600 500 200 400 Million tonnes Million tonnes 150 300 100 200 50 100 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 2013 2014 2015 Source: UBS estimates So
Slide 26: Our strategy
Our strategy For personal use only • Target government and resource infrastructure work Construction • Strengthen east coast presence • Target larger size construction opportunities in JV • Leverage expertise with underground on civil tunnelling contracts Surface • Focus on iron ore and coal sectors
Slide 27: Order book run-off
Order book run-off For personal use only Order book run-off ($m) 2,000 1,800 1,600 1,400 1,200 $m 1,000 800 600 400 200 - Order book Feb 09 Run off FY10 Run off FY11 Run off FY12+ Work completed to 31 December 2009 Order book now at $1.87 billion FY11 and FY12 order books beginning to build 27
Slide 28: Outlook
Outlook For personal use only $1.25 billion of revenue locked away for 2010 On track for $1.3 billion of revenue Full year forecast upgraded to $36 – $40 million, based on stronger than anticipated operating performance and improving outlook Pursing opportunities to deliver further growth in
Slide 29: Macmahon 2010 Half Year Results
For personal use only Macmahon 2010 Half Year Results Nick Bowen – Chief Executive Officer Ross Carroll – Chief Financial Officer 16 February 2010
Slide 30: Appendix – business structure
Appendix – business structure For personal use only 30
Slide 31: Appendix - management strength
Appendix - management strength For personal use only Nick Bowen Fraser Ramsay Chief Executive Officer Executive General Manager Surface Mining Ross Carroll Greg Miller Chief Financial Officer, & General Manager Underground Director International Mining Patrick Doyle Diane Jaksa Executive General Man
Slide 32: Appendix - balance sheet
Appendix - balance sheet For personal use only Balance sheet Dec 09 Dec 08 Change Current assets 236.1 276.0 (14%) Non current assets 333.9 305.7 9% Total assets 570.0 581.7 (2%) Net assets 332.3 258.0 29% Net debt (27.5) 31.1 188% Return on equity (%) 13.0 11.0 18% Return on funds employed (%) 16.8
Slide 33: Appendix - order book movement
Appendix - order book movement For personal use only Order book movement $ millions Opening balance as at 1 July 2009 1,412 Less: Work completed (806) Add: Contract extensions / renewals 708 Add: New contracts 556 Closing balance as at 16 February 2010 1,870 33
Slide 34: Appendix - order book
Appendix - order book For personal use only Commodity % Client % Style of contract % Limestone 7% Iron Ore Rio Tinto Fixed 14% 14% 13% Schedule of Diamonds Rates 15% BHP Billiton 42% Government 45% 24% Government 45% Alliance Coal 45% Other 4% Other 15% 10% Lafarge 7% Order book comprised of: Soli
Slide 35: Disclaimer and important notice
Disclaimer and important notice 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 affec