Macmahon Holdings Limited · ASX:MAH
Macmahon — H1 2008 Earnings Presentation
36 slides from Macmahon's earnings presentation, Feb 20, 2008
Slide 1: 'On Track' Half Year Results 2008
For personal use only ‘ On Track ’ Half Year Results 2008 Nick Bowen – Chief Executive Officer Ross Carroll – Chief Financial Officer 1
Slide 2: Disclaimer and important notice
Disclaimer and important notice This presentation contains forward looking statements that are subject to For personal use only 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
Slide 3: 2008 Half Year Highlights
2008 Half Year Highlights For personal use only $ millions $ millions HY08 Dec 07 Change Change % Profit 23.7 59.1% ▲ Revenue 610.4 28.1% ▲ EPS (cents per share) 4.5 55.2% ▲ Dividend (cents per share) 2.0 100.0% ▲ Order Book 2012 24.0% ▲ 3 3
Slide 4: On Track To Meet Growth Targets
On Track To Meet Growth Targets Construction Business – EXCEPTIONAL PERFORMANCE For personal use only Memorandum of Understanding with Leighton ACCELERATES GROWTH opportunities Group Refinancing and Low Gearing IDEALLY POSITIONED to pursue growth opportunities Insulated from market uncer
Slide 5: Record Order Book
Record Order Book For personal use only Order Book ($ million) 1100 2005 2012 925 1218 784 2004 2005 2006 2007 HY08 Feb‐08 Order Book Moly Mines 5 5
Slide 6: Security of Revenue
Security of Revenue Order Book Run‐Off For personal use only ($ million) 1538 1190 1000 2008 2009 2010+ Work Completed Order Book Run‐Off Moly Mines 95% of 2008 revenue target now secured Strong position for 2009 with $1 billion locked away, including Moly Mines 6 6
Slide 7: Order Book Diversity
Order Book Diversity Duration of Contract (years) %* Style of Contract %* Fixed For personal use only 3% >5 <2 22% 21% Alliance 36% Schedule of Rates 2‐3 61% 3‐5 22% 35% Commodity %* Customer %* Other Rio Tinto Iron Ore 9% 17% 18% Government Coal BHP Billiton 36% 11% 26% Government 37% Other Diamond
Slide 8: People and Safety
People and Safety For personal use only People and Safety Group Employee Numbers Group Safety Performance (Total Recordable Injury Frequency Rate) 3171 3037 2704 2543 22.1 18.6 1686 14.1 12.7 13.0 2004 2005 2006 2007 HY08 2004 2005 2006 2007 HY08 8 8
Slide 9: Record Profits
Record Profits Income Statement For personal use only $ millions HY08 HY07 Change % Revenue 610.4 476.5 28.1% ▲ $ millions HY08 HY07 EBIT 37.1 28.5 30.2% ▲ EBIT margin % 6.1% 6.0% 0.1% ▲ Interest (3.9) (6.3) (38.1%) ▼ Profit before tax 33.2 22.2 49.5% ▲ Tax (9.5) (7.3) 30.1% ▲ Net Profit after Tax 2
Slide 10: Construction – Financial Performance
Construction – Financial Performance For personal use only $ millions Dec 07 Dec 06 Change % Revenue 322.9 191.0 69.1% ▲ EBIT 22.3 5.3 320.8% ▲ EBIT margin % 6.9% 2.8% 4.1% ▲ Capex 1.3 3.1 (58.1%)▼ Order Book 850 468 81.5% ▲ Employees 908 780 16.4% ▲ 10 10
Slide 11: Mining – Financial Performance
Mining – Financial Performance For personal use only $ millions Dec 07 Dec 06 Change % Revenue 287.5 278.0 3.4% ▲ EBIT 21.6 25.4 (15.0%) ▼ EBIT margin % 7.5% 9.1% (1.6%) ▼ Capex 21.1 61.5 (65.7%) ▼ Order Book 1162 1155 0.7% ▲ Employees 2125 1984 7.1% ▲ 11 11
Slide 12: Profit Waterfall
Profit Waterfall For personal use only Profit Variance Analysis 5.2 (4.7) 0.9 (5.4) 11.8 2.4 (2.2) 0.8 23.7 14.9 HY07 Margin Volume Margin Volume Sale of Corporate Interest Tax HY08 Profit Construction Construction Mining Mining Allplant Costs Profit 12 12
Slide 13: Superior Growth & Sustainable Margins
Superior Growth & Sustainable Margins For personal use only Revenue ($ million) and EBIT margin (%) 6.2% 6.1% 5.4% 4.4% 4.3% 490 458 349 243 610 406 476 288 178 2004 2005 2006 2007 HY08 H1 H2 13 13
Slide 14: Strong Shareholder Returns
Strong Shareholder Returns For personal use only NPAT – NPAT Margin (%) Return on Equity – (%) 3.9% 3.5% 3.2% 21.4% 2.8% 2.5% 18.7% 18.5 17.4% 15.7 23.7 14.7% 14.4% 10.2 8.2 14.9 11.7 3.4 5.7 2004 2005 2006 2007 HY08 2004 2005 2006 2007 HY08 H1 H2 Note ‐ HY08 returns have been annualised 14 14
Slide 15: Positive Cash Flow
Positive Cash Flow Cash Flow For personal use only $$ millions millions Dec 07 Dec 07 DecDec 06 06 Change % Change Operating cash flow 40.1 17.9 124.0% ▲ Investments ‐ (29.3) (100.0%) ▼ Disposals 4.9 77.4 (93.7%) ▼ Other (4.9) ‐ 100.0% ▲ Capital expenditure* (24.1) (76.6) (68.5%) ▼ Net borrowings* (
Slide 16: Geared for Growth
Geared for Growth For personal use only Net Debt ($ M) – Gearing % 51.8% 50.7% 43.6% 26.0% 18.7% 75.0 61.3 54.8 51.5 43.2 2004 2005 2006 2007 HY08 New financing package complete ‐ Protected from uncertainty in credit markets Conservative gearing ‐Ideally positioned to take advantage of market op
Slide 17: Record Returns
Record Returns For personal use only Earnings Per Share Dividend Per Share (cps) (cps) 3.5 2.9 2.0 2.2 2.1 1.5 2.0 4.5 2.6 2.9 1.0 1.0 1.4 2.0 0.5 0.5 2004 2005 2006 2007 HY08 2004 2005 2006 2007 HY08 H1 H2 Interim Final 17 17
Slide 18: Top Quartile Performer
Top Quartile Performer Total Shareholder Returns % For personal use only TSR % 973% 500 400 300 200 100 0 UGL MAH MND DOW CLO BKN TSE LEI ASL * Based on 3 year dividend data to 30 June 2007 and 3.5 year share price data to 31 December 2007 Top‐quartile performance We aim to be the long term inve
Slide 19: Increasing Infrastructure Investment
Increasing Infrastructure Investment Construction revenue and EBIT now Australian over 50% of Macmahon business Engineering Construction For personal use only 2008 – 2011 Margin growth reflects market Total = $259 billion conditions and better project management Engineering Construction spend
Slide 20: Expanding Markets
Expanding Markets For personal use only Bulk Commodities – Australia Base Metals Production ‐ Australia Mt 1,200 2,000 1,000 1,800 1,600 Nickel (kt) 800 1,400 Gold (t) Iron Ore 1,200 600 1,000 400 800 600 Copper (kt) 200 Black Coal 400 200 0 0 e e e e e 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 e
Slide 21: Market Focus
Market Focus For personal use only QLD and NSW 5 year projected infrastructure investment: $129 billion Key opportunities Coal infrastructure & mining WA and NT Roads 5 year projected infrastructure Water Infrastructure investment: $78 billion Rail Key opportunities: BHPB and Rio Tinto’s e
Slide 22: Logan River Catchment Project, Queensland
Logan River Catchment Project, Queensland For personal use only 22 22
Slide 23: Eyre Highway, Western Australia
Eyre Highway, Western Australia For personal use only 23 23
Slide 24: Newman Hub, Western Australia
Newman Hub, Western Australia For personal use only 24 24
Slide 25: Jilalan Rail Yard Upgrade, Queensland
Jilalan Rail Yard Upgrade, Queensland For personal use only 25 25
Slide 26: Queensland Coal Projects
Queensland Coal Projects For personal use only 26 26
Slide 27: Ore Body / Wheelarra, Western Australia
Ore Body 18 / Wheelarra, Western Australia For personal use only 27 27
Slide 28: Olympic Dam, South Australia
Olympic Dam, South Australia For personal use only 28 28
Slide 29: Moly Mines, Western Australia
Moly Mines, Western Australia For personal use only 29 29
Slide 30: Strategy
Strategy For personal use only Focus on core activities – mining, infrastructure and key blue‐ chip customers Diversify and strengthen revenue base Australia and overseas opportunities Leighton MOU Pursue opportunistic acquisitions Company ideally positioned ‐ long term funding in place
Slide 31: 2008 Business Outlook
2008 Business Outlook For personal use only Macmahon is On Track to meet full year revenue and profit targets of 30 per cent growth on 2007 With almost $1.2 billion locked away, the 2008 revenue target of $1.25 billion is 95 per cent secured EBIT margin sustainable at 6 per cent Order Book n
Slide 32: Business Outlook
Business Outlook Heavy focus on new project start ups ‐ Jilalan, Moly, Sinclair For personal use only Ongoing focus on business development and tendering activities Opportunities to joint venture with Leighton Group being pursued Refinancing and Low Gearing – well positioned for growth 20
Slide 33: 'On Track'
For personal use only ‘ On Track ’ 33
Slide 34: Appendix – Balance Sheet
Appendix 1 – Balance Sheet For personal use only Balance Sheet $ millions Dec 07 Jun 07 Change % Current assets 315.9 277.8 13.7% ▲ Non current assets 284.0 282.0 0.7% ▲ Total assets 599.9 559.8 7.2% ▲ Net assets 231.2 211.1 9.5% ▲ Net Debt 43.2 54.8 (21.1%)▼ Gearing (Net Debt/Equity) % 18.7 26.0 (7
Slide 35: Appendix – Key Mining Contracts
Appendix 2 – Key Mining Contracts Underground Mining / Services Open Cut Mining (continued) Argyle Diamond Mine ‐ development of the new block cave mine, Rio Dampier / Cape Lambert ‐ stock pile management and iron ore For personal use only Tinto, WA, $215 million hauling, Pilbara Iron, WA, $77 mi
Slide 36: Appendix – Construction Projects
Appendix 3 – Construction Projects Rail Roads Southern Improvement Alliance – upgrade on the main rail line from Goldfields / Esperance TNC – provision of asset management, For personal use only Sydney to Melbourne, Australian Rail Track Consortium, NSW, Joint long term maintenance and rehabilit