Macmahon Holdings Limited · ASX:MAH
Macmahon — H1 FY2020 Earnings Presentation
30 slides from Macmahon's earnings presentation, Feb 24, 2020
Slide 1: Half Year Results FY 2020
Boston Shaker, WA (AngloGold Ashanti / IGO) Half Year Results FY 2020
Slide 2: Financial Highlights and FY20 Guidance
Financial Highlights and FY20 Guidance 1H20 Revenue 1H20 Underlying EBITDA1 1H20 Underlying EBIT(A)1 $686.7m $114.0m $44.1m p 27% on 1H19 p 28% on 1H19 p 11% on 1H19 1H20 Reported NPAT 1H20 Operating cash flow2 Order Book3 $28.7m $90.7m $4.5bn p 22% on 1H19 p 162% on 1H19 Net Tangible Assets Return
Slide 3: 1H20 Key Developments
1H20 Key Developments • Continued strong revenue and earnings growth • Majority of revenue is from mines at bottom half of global cost curve Financials • Robust financial position – gearing 18.6% • Continued focus on capital discipline – cash conversion of 79.5% and ROACE of 14.6% • Interim dividend
Slide 4: People and Safety
People and Safety Group Employee Numbers1 Injury Frequency Rates 5,227 3.58 3,913 4,119 4,072 2,630 0.26 1H18 FY18 1H19 FY19 1H20 TRIFR (Total Recordable Injury Frequency Rate) 1H18 FY18 1H19 FY19 1H20 LTIFR (Lost Time Injury Frequency Rate) • Successful integration of GBF (460 people) • Safety rema
Slide 5: Key Projects
Key Projects Global Cost Project Client Location Commodity Type Start End Curve1 Comments • Alliance life-of-mine contract • Equipment depreciated on straight line basis Batu Sumbawa Aug Copper-gold Surface 2031 over 5 years to August 2022 Hijau Indonesia 2017 • Investigating extension of the Batu
Slide 6: Key Projects
Key Projects Commodity / Division Location Type Comments • 50:50 joint venture in Indonesia: Indonesia & Gold/Quarries • open cut mining at Martabe – extended by 2 years to March 2023 SE Asia Malaysia Mining Services • developing an exploration decline at Tujuh Bukit – extended to May 2020 • Limes
Slide 7: 1H20 Results
Argyle, WA (Rio Tinto) 1H20 Results MACMAHON - Half Year Results to 31 December 2019 7
Slide 8: Financial Performance
Financial Performance Revenue ($m) Underlying EBIT(A) ($m) 687 44 700 45 40 600 542 561 35 35 32 500 440 400 25 300 270 15 10 200 5 100 -5 1H18 2H18 1H19 2H19 1H20 1H18 2H18 1H19 2H19 1H20 Underlying EBITDA ($m) Underlying EBIT(A) Margin 8.0% 120 114 7.4% 7.2% 100 92 7.0% 89 6.4% 6.3% 80 73 6.0% 60
Slide 9: Delivering strong growth in line with guidance
Delivering strong growth in line with guidance Revenue ($m) Guidance 1,300–1,400 1,400 1,200 1,103 1,000 Guidance 950–1,050 800 710 687 Guidance 600 620–680 400 360 200 FY17 FY18 FY19 FY20 Underlying EBIT(A) ($m) Guidance 100 85–95 80 75 Guidance 70–80 60 42 44 Guidance 40 40–50 20 -2 -20 FY17 FY18
Slide 10: Profit and Loss
Profit and Loss $ Millions 1H19 1H20 Change Revenue 542.2 686.7 p 27% • Strong result – 1H20 revenue and EBIT(A) of $686.7m EBITDA 1 89.1 114.0 p 28% and $44.1 million, up 27% and 11% respectively. EBITDA margin 16.4% 16.6% • Earnings driven by organic growth, GBF contribution (5 EBIT(A)1 39.9 44.1
Slide 11: 1H20 Revenue Diversification
1H20 Revenue Diversification Commodity Clients AMNT 9% 2% 15% AngloGold Gold 10% Newcrest 33% 4% Copper / Gold Q Coal 47% 7% Coking Coal Silver Lake Other Dacian 10% 34% Agincourt 10% 19% Other Country 3% Activity 5% 19% Australia 33% Surface Indonesia Underground Other Civil 64% 76% MACMAHON - Half
Slide 12: Cash Flow – Net Debt waterfall
Cash Flow – Net Debt waterfall -23.3 -11.2 -1.3 -69.9 114.0 -52.7 -21.2 2.3 -28.9 -106.9 Operating Cash Flow $90.7m -10.5 Net Operating Cash Flow $78.2m -4.2 GBF Acquisition EV$48m Net debt at 30 EBITDA Working Interest M&A Costs Capex GBF cash GBF cash GBF debt Dividend Software Net debt at Jun 201
Slide 13: Balance Sheet
Balance Sheet $ Millions FY19 1H20 Cash 113.2 114.2 • Significant movement reflects GBF acquisition – Receivables 200.8 235.4 including goodwill $5.8m Inventories 45.8 55.8 • Robust balance sheet – Gearing 18.6%, Net Debt/annualised EBITDA of 0.5x Property, plant and equipment1 424.9 487.2 Intangibl
Slide 14: Capital Allocation Policy & 1H20 Dividend
Capital Allocation Policy & 1H20 Dividend Policy to balance growth and cash returns to shareholders Objectives 1. Maintain financial strength 2. Invest in growth 3. Return capital to shareholders 1. Maintain strong balance sheet 2. Ensure appropriate liquidity and gearing with regard to revenue visi
Slide 15: Strategy and Outlook
Batu Hijau, Indonesia (PT AMNT) Strategy and Outlook MACMAHON - Half Year Results to 31 December 2019 15
Slide 16: Strategy on track
Strategy on track Our strong order book with excellent revenue visibility underpins a focus on execution of work in hand and pursuit of new opportunities A premium provider of contract mining services across the mining value chain, delivering consistent returns and stable employment Execution and Pe
Slide 17: Work in Hand
Work in Hand Work in Hand ($m)1 3 year Work in Hand by Commodity 1,300 4% 1,100 7% 850 Gold Copper / Gold 687 1H20 52% Coking Coal 36% Other FY20 FY21 FY22 3 year Work in Hand by Country • Order book of $4.5 billion2 1% • Existing order book underpins FY20 growth before any civil and underground chu
Slide 18: Tender Pipeline
Tender Pipeline Near Term Medium Term Long Term Exclusive / Preferred Tender Pre Tender Bubbles represent = $200m New Client Current Client contract value • 25 tender opportunities worth $7bn+, split primarily between Australia and Indonesia, and gold, base metals, lithium and coking coal • $4.5bn+
Slide 19: FY20 Priorities and Outlook
FY20 Priorities and Outlook FY20 priorities: Revenue Guidance • Lock in additional contract expansions / new work • Build on strong safety culture $1.3–$1.4bn • Enhance and diversify earnings by targeting further growth in underground and civil businesses $687m • Maintain disciplined management of c
Slide 20: Thank You
Thank You Contact Chris Chong Investor Relations and Corporate Development cchong@macmahon.com.au Mick Finnegan CEO & MD mfinnegan@macmahon.com.au Giles Everist CFO geverist@macmahon.com.au www.macmahon.com.au Tropicana, WA (AngloGold Ashanti / IGO) MACMAHON - Half Year Results to 31 December 2019 2
Slide 21: Appendix
Tropicana, WA (AngloGold Ashanti / IGO) Appendix MACMAHON - Half Year Results to 31 December 2019 21
Slide 22: Corporate Overview
Corporate Overview Capital Structure Share Price ($) – 3 years Share Price1 $0.29 0.30 Fully paid ordinary shares (m) 2,155 Market Capitalisation $625.0m 0.25 Cash at 31 December 2019 $114.2m Debt at 31 December 2019 $221.0m 0.20 Enterprise Value $731.8m 0.15 Directors and Senior Management 0.10 Eva
Slide 23: Map of Operations
Map of Operations MACMAHON - Half Year Results to 31 December 2019 23
Slide 24: Batu Hijau – world class asset
Batu Hijau – world class asset AMNT SUMBAWA • AMNT is an Indonesian mining company that acquired 82.2% of Batu Hijau mine from Newmont and Sumitomo in November 2016 • Supportive strategic shareholder and two board representatives Batu Hijau Elang Nangka • Open pit, copper-gold porphyry located on Su
Slide 25: Delivering value through technology
Delivering value through technology Finance • Successful implementation of single ERP Finance People Management Operating • Rollout of Cloud Based HRM Technology - driving System improved employee engagement, training outcomes and performance People Management Operations & Maintenance Operating • De
Slide 26: ESG – achievements and focus
ESG – achievements and focus Environmental Safety, Health, Quality • Rehabilitation – Batu Hijau, Tropicana, Peak Downs and South • Continued improvement in safety – record low TRIFR Walker Creek • Promoted mental and physical health workplace • Installed solar panels at head office – produce 400,00
Slide 27: Reconciliation of Non-IFRS Financial Information
Reconciliation of Non-IFRS Financial Information $ Millions 1H19 1H20 Profit for the year (as reported) 23.5 28.7 Add back: Loss from discontinued operations (net of tax) 0.1 - Less: Profit from discontinued operations (net of tax) - - Net profit after tax from continuing operations (as reported) 23
Slide 28: Lease Accounting – minor impact
Lease Accounting – minor impact 1H20 financial impact of new leasing standard – AASB16 • AASB 16 provides a new lessee accounting model which requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months. Depreciation on the leased asset and interest on leas
Slide 29: Cash Flow
Cash Flow $ Millions 1H19 1H20 EBITDA 89.1 114.0 Movement in receivables (30.3) (8.8) Movement in inventory (3.8) (2.9) Movement in payables and provisions (12.8) (13.0) Other (7.5) 1.4 Interest and tax (paid) / received (10.0) (11.2) Class Action Settlement (7.6) - M&A costs - (1.3) Net operating c
Slide 30: Important Notice and Disclaimer
Important Notice and Disclaimer Disclaimer as to forward looking statements The forward looking statements in this Non-IFRS Financial Information presentation reflect views held only as at the date This presentation uses non-IFRS financial This presentation contains forward looking of this presentat