Slide 1: Australian Engineering, Construction and Mining Services Conference
For personal use only Australian Engineering, Construction and Mining Services Conference New York 17 September 2008 Nick Bowen – Chief Executive 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: Snapshot of Macmahon
Snapshot of Macmahon Founded in 1963 - listed on the ASX in 1983 For personal use only Extensive experience in: Surface and underground mining operations Civil infrastructure construction Operations in Australia, New Zealand and Asia Over 3,600 employees 2008 revenue of more than $1.2
Slide 4: Shareholding structure
Shareholding structure Market capitalisation of approximately $1 billion, with 539 million For personal use only shares on issue and over 9,600 shareholders Member of the ASX/S&P 200 Largest shareholder is Leighton Holdings with 15.5% of issued capital Over 80% of shareholders are based in A
Slide 5: Company overview
For personal use only Company overview 5
Slide 6: Mining capabilities
Mining capabilities Mine project management For personal use only Drill and blast Surface Load and haul Crushing screening and stacking operations Materials handling, design and construction Mine project management Mine development Underground Mine production Technical support serv
Slide 7: Construction capabilities
Construction capabilities Breakwaters and groynes Marine Wharves and jetties For personal use only Land reclamation, services and installation Bulk earthworks Rail Bridges, tunnels and embankments Track formation and maintenance Bulk earthworks and concrete infrastructure Resource infr
Slide 8: Key company attributes
For personal use only Key company attributes Key company attributes Mid-scale player with large scale attributes 8
Slide 9: Where do we sit?
Where do we sit? Attributes Low High For personal use only Blue chip Customer base customers Maintenance Construction Business diversity services & mining Geographic diversity Africa Asia Australia Manganese Iron ore, Commodity diversity gold coal, nickel, phosphate diamonds Large construction Build
Slide 10: Order book
For personal use only Order book 10
Slide 11: Our customers
Our customers Iron ore Stainless steel materials 23% of order For personal use only book Base metals Metallurgical coal 15% of order Diamonds Iron ore book Roads Rail Road maintenance Total State and government Federal comprises governments 37% of order Bridges Water infrastructure book Long-term re
Slide 12: Strong order book sustained
Strong order book sustained Order book For personal use only ($ million) 2,500 2,000 1,500 $m 2138 1,000 2005 1218 500 925 784 - FY04 FY05 FY06 FY07 FY08 12
Slide 13: Diverse operations
Diverse operations Northern Territory resource infrastructure For personal use only Pilbara iron ore Bowen Basin coal Construction and Mining Construction and Mining WA infrastructure East coast infrastructure Major mining projects 13
Slide 14: Construction
For personal use only Construction Mitchell Freeway Extension – Main Roads WA, Perth, Western Australia Hale Street Bridge, Brisbane City Council, Brisbane, Queensland Jilalan Rail Yard – Queensland Rail, Bowen Basin, Queensland 14
Slide 15: Mining
For personal use only Mining Orebody 18 – BHP Billiton, Pilbara region, Western Australia Olympic Dam – BHP Billiton, South Australia Saraji – BHP Billiton Mitsubishi Alliance, Bowen Basin, Queensland 15
Slide 16: Industry outlook
For personal use only Industry outlook 16
Slide 17: Infrastructure pipeline
Infrastructure pipeline Total Engineering Construction – Australia 40,000 (MAH related industries) For personal use only Harbours Pipelines 35,000 Bridges 30,000 Water Railways 25,000 #039;m 2005/06 Prices 20,000 Roads 15,000 10,000 Mining 5,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Slide 18: Commodity strength
Commodity strength Value of contract mining – by commodity (current prices) Total = $53 billion For personal use only 14,000 12,000 10,000 A#039;billion 8,000 Other 6,000 Coal 4,000 Iron Ore 2,000 Precious and base metals 0 e 09 10 11 12 13 08 20 20 20 20 20 20 Source: BIS Shrapnel 2008 Iron ore prod
Slide 19: Pilbara expansions
For personal use only Pilbara expansions BHP Billiton - iron ore capacity growth Rio Tinto’s - Pilbara port capacity mtpa 450 400 100 350 300 100 250 25 420 200 24 150 42 320 220 100 129 50 0 05 07 09 l 12 20 20 20 ota 20 Q1 bt su Source: BHP Billiton Iron Ore presentation, January 2008 Source: Rio
Slide 20: Bowen Basin coal
For personal use only Bowen Basin coal Source: Coal Infrastructure in Queensland, Queensland Government, January 2008 Capacity constraints have been restricting growth $15 billion has been committed to the Coal Infrastructure Program to remove bottlenecks and increase capacity Of this, $5.4 bi
Slide 21: Industry dynamics
Industry dynamics Industry challenge Macmahon strategy to overcome For personal use only Project delays Increase business development Target more work Cost pressures Leveraging purchasing power China sourcing strategy Limiting exposure in contracts Equipment & tyre deliveries Significant
Slide 22: FY08 results
For personal use only FY08 results 22
Slide 23: 2008 record performance
For personal use only 2008 record performance Record revenue $1,244 million Record profit after tax $48.8 million Record EPS 9.2 cents per share Record DPS 5.5 cents per share Record order book $2,138 million 23
Slide 24: Solid revenue growth
For personal use only Solid revenue growth Revenue ($ million) Revenue has grown 28.8% in 2008 to $1.2 billion 1,400 1,200 5 year CAGR stands at 24% C AGR 1244 % 1,000 24.2 800 864 966 Construction Business was a $m 600 637 standout with 56% revenue 400 421 growth 200 - 2004 2005 2006 2007 200
Slide 25: NPAT growth and increased margins
For personal use only NPAT growth and increased margins NPAT – NPAT margin (%) NPAT has increased 46% from the underlying 2007 60 4.5% result to $48.8 million 3.9% 4.0% 50 3.5% 3.2% 3.5% Margins have grown, despite 40 2.8% 2.5% 3.0% industry wide cost pressures 2.5% $m 30 48.8 2.0% Margins exp
Slide 26: Gearing and capex
Gearing and capex Gearing % Capital expenditure For personal use only 70% 140 60% 120 126 51.8% 50.7% 100 50% 91 43.6% 80 $m 40% 69 60 30% 58 58 26.0% 40 20% 11.6% 20 10% - 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Targeted gearing levels 30 – 50% 2008 includes $22 million in equipment finan
Slide 27: Driving improved returns
Driving improved returns EPS and DPS (CPS) Return on equity (%) For personal use only 10 25% 9 9.2 8 19.4 20% 7 15.9 15.8 6 5.5 6.4 15% 13.2 Cents 5 5.5 11.7 4 10% 4.2 3.0 3 3.5 2.0 2 5% 1.0 1 0.5 0 0% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 EPS (cents) DPS (cents) EPS growth in line wit
Slide 28: Delivering value
For personal use only Delivering value Five year shareholder returns % Total shareholder returns are our most critical 1000% 900% performance measure 800% 700% We have outperformed 600% 500% peers and the ASX200 400% index over a extended time 300% period 200% 100% 0% We continue to strive to
Slide 29: Increased takeover offer for Ausdrill
Increased takeover offer for Ausdrill In May, Macmahon launched a takeover off for the diversified mining and services For personal use only company, Ausdrill Limited. Details of the offer include: 1.65 Macmahon shares for each Ausdrill share Due to close on 29 September 2008 Declared FINAL -
Slide 30: Business outlook & strategy
For personal use only Business outlook & strategy 30
Slide 31: Business strategy
For personal use only Business strategy 31
Slide 32: Executing the strategy
Executing the strategy Employee engagement & value proposition For personal use only Financial and non-financial benefits People Challenging roles Right ‘fit’ for the job Managing, sourcing and developing talent Construction – large scale projects Mining – end to end solution Activitie
Slide 33: Business outlook
Business outlook Positioned for growth For personal use only Strong outlook, with ongoing demand for contract services driving growth Emerging overseas opportunities Expanding into South East Asia Entry into Africa Pursuit of acquisition opportunities which meet the company’s core criteria
Slide 34: Appendix
For personal use only Appendix 34
Slide 35: Five Year Financial Summary
For personal use only 5 Year Financial Summary Five Year Summary $ million 2008 Chg 2007 2006 2005 2004 Total revenue 1244.4 ▲ 29% 966.0 863.7 637.3 420.8 Underlying EBIT 74.7 ▲ 25% 59.7 46.9 27.4 18.7 Underlying NPAT 48.8 ▲ 46% 33.4 27.4 15.9 11.6 Underlying EPS (cps) 9.2 ▲ 44% 6.4 5.5 4.2 3.5 Divi
Slide 36: 2008 record profits
2008 record profits Income Statement For personal use only $ millions 2008 2007* Change % Revenue 1,244.4 966.0 28.8% ▲ $ millions HY08 HY07 EBIT 74.7 59.7 25.1% ▲ Interest (7.5) (11.0) (31.8%) ▼ Profit before tax 67.2 48.7 38.0% ▲ Tax (17.8) (15.3) 16.3% ▲ Net profit after tax & minorities 48.8 33.
Slide 37: Strong balance sheet
For personal use only Strong balance sheet Balance Sheet $ millions 2008 2007 Change % Current assets 334.8 278.1 20.4% ▲ Non current assets 295.5 282.0 4.8% ▲ Total assets 630.3 560.1 12.5% ▲ Net assets 251.0 211.1 18.9% ▲ Net debt 29.2 54.8 (46.7%)▼ Gearing (Net debt/equity) % 11.6 25.9 (55.2%) ▼
Slide 38: Improving cash flows
Improving cash flows Cash Flow For personal use only $ millions 2008 2007 Change % Operating cash flow 88.3 68.7 28.5% ▲ Investments (10.7) (29.3) Disposals 5.7 79.5 Capital expenditure* (47.0) (90.0) (47.8%) Op. cash flow per share - cents 16.6 13.1 26.7% ▲ Cash at hand 120.1 114.6 4.8% ▲ * Include
Slide 39: Construction – financial performance
For personal use only Construction – financial performance $ millions 2008 2007 Change % Revenue 628.0 402.6 56.0% ▲ EBIT 38.1 16.0 138.1% ▲ EBIT margin % 6.1 4.0 52.5% ▲ Capex 5.4 4.1 31.7% ▲ Order Book 974 933 4.4% ▲ Employees 1,137 818 39.0% ▲ Strong revenue growth underpinned by expanding work
Slide 40: Mining – financial performance
For personal use only Mining – financial performance $ millions 2008 2007 Change % Revenue 616.4 555.9 10.9% ▲ EBIT 54.4 50.6 7.5% ▲ EBIT margin % 8.8 9.1 (3.3%) ▼ Capex 36.9 86.0 (57.1) ▼ Order Book 1,164 1,073 8.4% ▲ Employees 2,337 2,102 11.2% ▲ Ongoing revenue growth with new contract wins and
Slide 41: Order book depth
Order book depth Duration of contract (years) % Style of contract % Fixed For personal use only 3% <2 >5 14% 19% 2- 3 Alliance 29% SOR 45% 52% 3- 5 38% Customer % Commodity % Rio Tinto Iron Ore Nickel 15% 16% Govt. 5% Govt. 37% 38% BHP Billiton Diamonds 23% 16% Other Other Coal 21% 14% 11% Lafarge
Slide 42: Key construction projects
Key construction projects Rail Water Infrastructure (cont) Jilalan Rail Yard Upgrade – An Alliance with Queensland Rail, to increase Stirling Dam Upgrade – upgrade and strengthening work on the capacity of the Goonyella coal rail network in QLD, the wall of the Stirling Dam, WA Water Corporation
Slide 43: Key mining contracts
Key mining contracts Underground Mining / Services Surface Mining (continued) Argyle Diamond Mine ‐ development of the new block cave mine, Rio Phosphate Hill – includes mining ore and waste, Incitec Piviot, For personal use only Tinto, WA, $345m QLD, $81m Olympic Dam Underground ‐ development