Slide 1: 2007 Full Year Financial Results
For personal use only 2007 Full Year Financial Results Nick Bowen – Chief Executive Officer Ross Carroll – Chief Financial Officer1
Slide 2: 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
Slide 3: 2007 Highlights
2007 Highlights For personal use only A Year of Records Record profit - $33.4 million, 22% higher Record revenue - $966 million, 12% higher EBIT margin – increased from 5.4% to 6.2% Safety - 10% improvement Dividend of 3 cps Record order book of $2 billion at 30 June, 65% higher Gearin
Slide 4: Breaking New Ground
Breaking New Ground For personal use only East coast offensive Focus on construction and coal East Coast Order Book at 30 June approaching $840 million New Brisbane and Sydney offices Significant contracts won: Jilalan Rail Upgrade Hale St Link Logan River Catchment Project Kingsgr
Slide 5: 2007 Highlights
2007 Highlights For personal use only Award of $1.75 billion of new contracts and extensions, including: Underground development works at Argyle Diamond Mine Wheelarra / Jimblebar iron ore open cut contract Waihi, Argyle Tails, Dampier, Leinster contracts extending into 10th year and beyond
Slide 6: Winning Work
For personal use only WINNING WORK ‘Our Track Record speaks for itself’ Our “CAN DO” reputation translates to WINNING WORK and MARKET SHARE. MVM Rail 6
Slide 7: Record Order Book
Record Order Book For personal use only Order Book ($ millions) 2005 1218 925 784 341 2003 2004 2005 2006 2007 7
Slide 8: Order Book Run-off
Order Book Run-off For personal use only Customers BHP Billiton 24% Order Book Run-off Government ($ millions) 43% Rio Tinto 933 10% Other Peabody 10% Energy 633 9% Kimberley Diamonds 439 4% Style of Contract Schedule of Alliance 2008 2009 2010+ Rates 48% 46% Fixed Fixed 6% 6% 8
Slide 9: Safety
SAFETY For personal use only ‘Our sights are firmly set on safety’ At Macmahon the safety and health of our people is our number ONE priority. Argyle Diamond Mine – Rio Tinto, Western Australia9
Slide 10: Safety
Safety For personal use only Strong focus on safety and health. Group Safety Performance Continued improvement in Total Recordable Injury Frequency Rate 25.7 Improving Trend 22.1 Big 5 – Group based safety 18.6 initiative, focussed on 14.1 12.7 individual behaviour 3.3 2.9 2.1 1.8 0.7 2003 2004
Slide 11: People
For personal use only PEOPLE ‘Unearthing Talent’ Our strength and success rests with our most valuable resource – OUR PEOPLE. Dampier Bulk Handling – Pilbara Iron, Western Australia 11
Slide 12: People
People For personal use only Macmahon is successfully addressing the sector shortage of skilled labour. Strong focus on: Retention Employee Numbers Indigenous recruitment 3037 Non-traditional recruitment 2704 2543 1686 Apprenticeship Program 1184 Graduate Program 2003 2004 2005 2006 2007 1
Slide 13: Financial Performance
FINANCIAL PERFORMANCE For personal use only ‘Built to Last’ In a year of records – the Company has positioned itself to deliver superior and sustainable returns to shareholders. Mitchell Freeway extension – Main Roads WA, Western Australia 13
Slide 14: Record Profits
Record Profits For personal use only Profit & Loss $ millions 2007 2006 Change Revenue 966.0 863.7 11.8% ▲ EBIT 59.7 46.9 27.3% ▲ EBIT margin % 6.2 5.4 14.8% ▲ Interest (11.0) (8.1) 35.8% ▲ Profit before tax 48.7 38.8 25.5% ▲ Tax (15.3) (11.4) 34.2% ▲ Underlying NPAT 33.4 27.4 21.9% ▲ Underlying NPA
Slide 15: Profit Waterfall
Profit Waterfall For personal use only Profit Variance Analysis ($ millions) 6.6 (5.2) (0.1) (2.9) 1.3 1.4 (3.9) 8.8 33.4 27.4 2006 Profit Margin Volume Volume ARD/CRE Allplant Corporate Interest Tax 2007 Profit Mining Mining Construction Costs 15
Slide 16: Revenue and Margin Growth
Revenue and Margin Growth For personal use only Revenue - EBIT margin 6.2% 5.4% 4.4% 4.3% 966 3.6% 864 637 479 421 2003 2004 2005 2006 2007 16
Slide 17: Well Managed Funds
Well Managed Funds For personal use only NPAT - NPAT Margin Return on Equity/ROFE 3.5% 3.2% 15.9% 15.8% 14.6% 2.8% 2.5% 33.4 13.2% 12.6% 11.6% 11.1% 27.4 1.8% 8.7% 7.7% 6.7% Return on equity % 15.9 11.6 Return on funds 8.5 employed % 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Exceptional fu
Slide 18: Record Returns and Share Price
Record Returns and Share Price For personal use only Shareholder Returns Market Capitalisation ($ millions) & Share Price EPS (cents) 6.4 $1.30 677 DPS (cents) $1.20 5.5 $1.10 $1.00 4.2 $0.90 414 $0.80 3.4 3.5 $0.70 3.0 $0.60 2.0 $0.50 173 $0.40 1.0 $0.30 101 0.5 $0.20 39 - $0.10 $0.00 2003 2004 200
Slide 19: A Cut Above The Rest
A Cut Above The Rest For personal use only 3 Year Total Shareholder Returns 580% 230% 178% 189% 123% 127% 89% -5% MND DOW MAH TSE LEI CLO UGL ASL *Note – Share price data to 30 June 2007. Dividend data to 31 December 2006. Macmahon delivers top quartile TSR performance We aim to be the long term
Slide 20: Financial Performance - Cash Flow
Financial Performance For personal use only Cash Flow $ millions 2007 2006 Change Operating cash flow 68.7 68.2 0.7% ▲ Investments (29.3) (5.8) Disposals 79.5 3.1 Capital expenditure* (90.9) (126.2) (28.0%) ▼ Dividends (8.8) (5.7) 54.4% ▲ Equity raising 1.5 56.1 (97.3%) ▼ Net borrowings* 7.0 58.1 (8
Slide 21: Achieving the Right Balance
Achieving the Right Balance For personal use only Balance Sheet $ millions 2007 2006 Change Current assets 277.8 222.9 24.6% ▲ Non current assets 282.0 263.8 6.9% ▲ Total assets 559.8 486.7 15.0% ▲ Net assets 211.1 171.9 22.8% ▲ Net Debt 54.8 75.0 (26.9%) ▼ Gearing (Net Debt/Equity%) 26.0 43.6 (40.4
Slide 22: Geared for Growth
Geared for Growth For personal use only Net Debt - Gearing 119.6% 2007 2006 Change 75.0 69.3 61.3 54.8 51.5 51.8% 50.7% 43.6% 26.0% 2003 2004 2005 2006 2007 22
Slide 23: Proposed Refinancing
Proposed Refinancing For personal use only Company credit significantly improved – opportune time to refinance Operating Comments on Operating Lease Lease Strong growth projected – additional 2007funding required 2006 Change Open cut business is capital intensive Existing debt and guarantee
Slide 24: Mining
For personal use only MINING ‘We do more than move dirt’ We offer our clients a total mining service – this sets us apart from the competition. Leinster Nickel Mine – BHP Billiton Nickel West, Western Australia 24
Slide 25: Financial Performance - Mining Business
Financial Performance For personal use only Mining Business $ millions 2007 2006 Change Revenue 555.9 472.6 17.6% ▲ EBIT 50.6 33.7 50.1% ▲ EBIT margin % 9.1 7.1 28.2% ▲ Capex 86.0 98.2 (12.4%) ▼ Order Book 1073 724 48.2% ▲ Employees 2102 1636 28.5% ▲ Strong revenue driven by expansion of existing
Slide 26: Argyle Underground Diamond Mine - Rio Tinto, WA
For personal use only Argyle Underground Diamond Mine - Rio Tinto, WA 26
Slide 27: Wheelarra / Jimblebar Open Cut Iron Ore Mine - BHP Billiton, WA
For personal use only Orebody 18 / Wheelarra / Jimblebar Open Cut Iron Ore Mine - BHP Billiton, WA 27
Slide 28: ARD 121R Raise Drill, Olympic Dam, SA
For personal use only ARD 121R Raise Drill, Olympic Dam, SA 28
Slide 29: Construction
CONSTRUCTION For personal use only ‘Shaping Australia’ As one of the country’s leading infrastructure builders – Macmahon is helping shape the face of Australia. Darwin City Waterfront Project - NT Government, Northern Territory 29
Slide 30: Financial Performance - Construction Business
Financial Performance For personal use only Construction Business $ millions 2007 2006 Change Revenue 402.6 369.7 8.9% ▲ EBIT 16.0 14.7 8.8% ▲ EBIT margin % 4.0 4.0 - Capex 4.1 2.2 86.4% ▲ Order Book 933 470 98.5% ▲ Employees 818 689 18.7% ▲ 2007 EBIT margin impacted by investment in business deve
Slide 31: Jilalan Rail Yard Upgrade - QLD Rail, QLD
For personal use only Jilalan Rail Yard Upgrade – QLD Rail, QLD 31
Slide 32: Mitchell Freeway Extension - Main Roads WA
For personal use only Mitchell Freeway Extension - Department of Mains Roads, WA 32
Slide 33: Hale Street Link - Brisbane City Council, QLD
For personal use only Artist’s impression of Hale Street Link – Brisbane City Council, QLD 33
Slide 34: Logan River Catchment Project - NQ Water, QLD
For personal use only Logan River Catchment Project - NQ Water, QLD 34
Slide 35: Boddington Gold Mine Concrete Works - Newmont Mining, WA
For personal use only Boddington Gold Mine Concrete Works - Newmont Mining, WA 35
Slide 36: Industry Outlook
For personal use only INDUSTRY OUTLOOK 36
Slide 37: A Piece of the Infrastructure Pie
A Piece of the Infrastructure Pie For personal use only Demand for infrastructure Engineering Construction 2007 – 2011 construction services is expected to ($billions) exceed supply Total=$204 billion Construction Business well Other positioned to take on projected infrastructure works Macmaho
Slide 38: Mine Services - The Boom Within The Boom
Mine Services – The Boom Within The Boom For personal use only Mineral Production Bulk Commodities (Australia) Mt 900 Forecast 800 700 Black Coal 600 500 400 300 Iron Ore 200 100 - 97 98 99 00 01 02 03 04 05 07 08 09 10 11 e 06 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 Source: BIS Shrapnel 2006
Slide 39: Strategy
STRATEGY For personal use only ‘On the Horizon’ Our reputation, expertise and people will drive future growth. Dampier Bulk Handling – Pilbara Iron, Western Australia 39
Slide 40: Strategy
Strategy For personal use only Focus on core activities Strong long-term relationships with blue-chip customers Increased market share in East Coast Construction Continued growth – mining including coal, iron ore and underground Selected overseas opportunities = 20-30% growth rates for nex
Slide 41: Business Outlook
BUSINESS OUTLOOK For personal use only ‘Opportunity Overflow’ While others are asking “Why?” - we’re saying “WHY NOT!”. 41
Slide 42: Business Outlook - FY08
Business Outlook – FY08 For personal use only Continued success with new work - $130 million in July 2007 Strong tendering activities in construction and mining Order book will deliver $1 billion of revenue for FY08 New financing / operating lease provides capacity to grow Strong growth in
Slide 43: Questions
For personal use only QUESTIONS Argyle Tailings Dam – Rio Tinto, Western Australia 43
Slide 44: Appendix 1: Current Key Projects - Mining
Appendix 1: Current Key Projects – Mining For personal use only Underground Mining Open Cut Mining (continued) Leinster Underground Nickel Mine - supply of services, BHP Dampier / Cape Lambert - stock pile management, Billiton, WA, $320 million Pilbara Iron, WA, $77 million Argyle Diamond Mine
Slide 45: Appendix 2: Current Key Projects - Construction
Appendix 2: Current Key Projects – Construction For personal use only Rail Water Infrastructure Southern Improvement Alliance– upgrade on the Logan River Catchment Project - Alliance based main rail line from Sydney to Melbourne, JV contract in partnership with Queensland Water contract, Austral
Slide 46: Appendix 2: Current Key Projects - Construction
Appendix 2: Current Key Projects – Construction For personal use only Resource Infrastructure Blacktip civil works – construction of an access road and general site civil work, ENI Australia, NT, $23 million Boddington Gold Mine – civil infrastructure works for the ball mill and fine ore storage