Macmahon Holdings Limited · ASX:MAH
Macmahon — H1 2015 Earnings Presentation
27 slides from Macmahon's earnings presentation, Feb 26, 2015
Slide 1: Half Year Results 2015
For personal use only HALF YEAR RESULTS 2015 26 February 2015
Slide 2: 2015 HY Result Overview
2015 HY Result Overview For personal use only • Underlying net profit after tax $11.3 million, down 42% Earnings • Underlying earnings before interest and tax $23.3 million, down 38% Revenue • Revenue of $384.3 million, down 30% Cash Flow • Operating cash flow of $27.2 million • Balance sheet underp
Slide 3: Cost Management
Cost Management For personal use only Independent cost review commissioned Organisational restructure underway - targeting reduced overhead and operating costs (~$25 million) Consolidation of major facilities and offices Business improvement program delivered savings of $8 million – further
Slide 4: Investment Case
Investment Case For personal use only Net Tangible Assets of 26 cents per share Quality assets ~$200M+ of premium equipment less than 3 years old Balance sheet underpinned by hard assets with a book value of $333.9 million and cash of $124 million Limited CAPEX resulting in stronger cash flo
Slide 5: Current factors impacting valuation
Current factors impacting valuation For personal use only Key issue Macmahon response Loss of Christmas Creek Aggressive cost reduction program and organisational contract restructure – ensuring profitability from lower revenue Mongolian contract Negotiations are continuing – successful outcome
Slide 6: Operations
For personal use only OPERATIONS
Slide 7: Surface Mining
Surface Mining For personal use only Commodity price volatility resulting in ongoing pressure for customers Strong focus on improving performance at existing projects through productivity and efficiency gains Major projects - Tropicana Gold Mine in WA and the Waihi Gold Mine in NZ Works succ
Slide 8: Underground Mining
Underground Mining For personal use only Operations at Olympic Dam Mine in SA performing well RBR900VF raisedrill “Big Rig” successfully deployed. First shaft (RB40) completed ahead of schedule with a depth of 730 metres Exploration decline at Ranger 3 Deeps in NT successfully completed. Await
Slide 9: International
International For personal use only South East Asia operations continuing to deliver in line with expectations Macmahon selected as preferred contractor for a five year extension at Kanthan in Malaysia Increased focus on productivity at Calabar and Ewekoro in Nigeria – limited new equipment de
Slide 10: Mongolia Update
Mongolia Update For personal use only Operations suspended in August 2014 following ongoing payment dispute for work completed Standstill agreement in place protecting the rights of Macmahon and the client Negotiations with the client regarding the dispute are continuing Macmahon currently p
Slide 11: People and Safety
People and Safety For personal use only Group employee numbers Employee numbers decreased following completion of Eaglefield and Ranger projects and reduction in overheads 4,791 Leadership development remains a key 3,536 3,495 2,467 2,097 focus Significant improvement in safety Jun-11 Jun-12 J
Slide 12: Financials
For personal use only FINANCIALS
Slide 13: Financial Performance
Financial Performance For personal use only $ millions Dec-14 Dec-13 Total revenue (including joint ventures) from continuing 384.9 550.1 operations EBITDA from continuing operations before significant items 55.9 89.4 EBIT from continuing operations before significant items 21.0 37.1 Interest (7.5)
Slide 14: Summary of Earnings
Summary of Earnings For personal use only $ millions Dec-14 Statutory EBIT from continuing operations (109.3) Add back significant items: - Impairment of PPE 90.4 - Goodwill 18.3 - Inventory (majority tyres) 15.7 - Onerous lease provision (including leasehold provisions) 5.8 EBIT from continuing ope
Slide 15: Operating Cash Flow
Operating Cash Flow For personal use only $ millions Dec-14 Dec-13 EBITDA from continuing operations before 55.9 89.4 significant items EBITDA from discontinued operations before 2.2 0.5 significant items Net interest paid (5.4) (8.2) Income taxes received / (paid) 14.0 (3.9) Working capital and pro
Slide 16: Cash Flow
Cash Flow For personal use only $ millions Dec-14 Dec-13 Cash flow from operating activities 27.2 (13.6) Proceeds from sale of assets 2.8 28.8 Capital expenditure (10.3) (59.3) Cash flow used in investing activities (7.5) (30.5) Cash flow used in financing activities (6.3) (2.5) Net increase / (decr
Slide 17: Mining Performance
Mining Performance For personal use only $ millions Dec-14 Dec-13 Mining revenue of $384.3 million, down 30% Segment revenue 384.3 550.1 on pcp mainly due to project completions and Profit before tax before limited new work opportunities 12.1 33.5 significant items Profit before tax of $12.1 mil
Slide 18: Discontinued Operations
Discontinued Operations For personal use only $ millions Dec-14 Dec-13 Profit before tax of $2.2 million Segment revenue 4.2 24.8 predominantly due to settlement of Trangie Profit before tax 2.2 0.5 Nevertire Irrigation Project dispute Profit after tax 1.6 1.8 Order book - 0.5 18
Slide 19: Balance Sheet and Gearing
Balance Sheet and Gearing For personal use only $ millions Dec-14 Jun-14 Total assets 660.7 823.7 Total shareholders’ equity 332.3 432.2 Gross debt 161.2 165.3 Cash 124.7 109.4 Net debt 36.4 55.9 Gearing 11.3% 12.9% Note: Numbers in the table may not add due to rounding Christmas Creek termination
Slide 20: Strategy and Outlook
For personal use only STRATEGY AND OUTLOOK
Slide 21: Strategy
Strategy For personal use only Ensure business is structured to be competitive in key markets and profitable despite lower revenue Focus on ensuring performance is maximised on existing contracts Target key markets and sectors where we have a competitive advantage De-risk business by diversi
Slide 22: Outlook
Outlook For personal use only Current market conditions are challenging Commodity price volatility expected to continue Greater emphasis on value adding solutions Shift from investment to production phase resulting in a cost focused environment Possible market consolidation 22
Slide 23: Summary
For personal use only SUMMARY
Slide 24: Summary
Summary For personal use only Macmahon is adapting to challenging conditions Significant effort on cost management Ongoing focus on existing workload Balance sheet underpinned by hard assets and substantial cash Quality assets and people Continuing to drive greater safety performance 24
Slide 25: 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 business. While Macmahon considers the assumptions on which these statements are based to be reasonable, whether circumstances actually occ
Slide 26: Disclaimer and Important Notice
Disclaimer and Important Notice These interim financial statements have been prepared on the going concern basis. For personal use only At 31 December, the Group had drawn $159.0 million in equipment finance facility and $8.9 million of outstanding bank guarantees against its total approved syndicat
Slide 27: Half Year Results 2015
For personal use only HALF YEAR RESULTS 2015 25 February 2015