Macmahon Holdings Limited · ASX:MAH
Macmahon — H1 2006 Earnings Presentation
30 slides from Macmahon's earnings presentation, Feb 20, 2006
Slide 1: Release of Half Year Results: Presentation
Release of Half Year Results: Presentation — 20 February 2006
Slide 2: Group Performance Highlights
= 1 i] Group Performance Highlights Record half year profit of $11.7 million ~* Improved profitability from construction division $700 million of new contracts and extensions «+ Successful $56 million capital raising ~» Interim Dividend of 0.5 cent per share fully franked ~ Positive outlook RELEASE
Slide 3: Financials Summary
stag 2 ee | inancials Summary 31 Dec 05 31 Dec 04 Change Revenue Group $370 $243 +52% Joint Venture $36 $38 -5% Total Revenue $406 $281 45% EBIT $20.5 $11.2 +83% EBIT Margin 5.1% 4.0% +28% PBT $16.9 $8.3 +103% PAT $11.7 $5.7 +107% EPS 2.6 cents 1.4 cents +82% Dividends per share 0.5 cent Nil Note: 2
Slide 4: Total Revenue
stale ede a |. EEE # Half year Total revenue up 45% on December 2004 half $406 # 13% increase on June 2005 half confirms continued growth ¥ All divisions delivering growth * Systems in place to manage growth FY2003 FY2004 FY2005 FY2006 | Tie oar Total Revenue RELEASE OF HALF YEAR RESULTS: HY05 = 3
Slide 5: EBIT & Annual EBIT Margin
Rea ON Bei BIT Margin 5.1% » EBIT up 83% on December half and 4.3% 43%, : 27% up on June 05 half Importantly EBIT margins increased to 5.1% - above 2006 FY target of 5% EBIT margin highest in company history * Increased EBIT margins from improved tender results 2003" 2004" 2005 2006 McsirH1 «$= EBIT
Slide 6: Profit After Tax
stale ede? ee | EEE $117 ~# Record half year profit of $11.7 million ~# Profit up 107% on December 2004 half and up 15% on June 2005 half ~ Tax now applied at 30% (AIFRS) although tax paid in 2006 FY will be approximately 15% ~ Accumulated tax losses used up by July 2007 FY2003 FY2004 FY2005 FY2006
Slide 7: EPS & Dividend
eee | CEES 25 w EPS of 2.6 cents on expanded share base following capital raising (516 million shares at December 2005) 2.3 21 ~» Interim fully franked dividend of 0.5 cent on back of record result and positive outlook ~ DRP activated @ 2.5% discount Fy2003" FY2004" FY2005 FY2006 MH? x2 [7] Final Di
Slide 8: AIFRS Adjustments: Profit After Tax
stale ede eee RRS Adjustments AIFRS Restatement on 2005 Full Year | + Accounting tax rate moves to 30% Profit After Tax $m + Value of executive options and AGAAP $19.6 incentive shares amortised over Accounting Tax Rate to 30% ($3.2) benefit period Share Based Payment ($1.4) # Goodwill not amortised
Slide 9: AIFRS Adjustments: Net Assets
stale ne eae RRS Adjustments * Transition to AASB139:APT classified Net Assets at 1 July 2005 as “available for sale”, fair value based on discounted NPV AGAAP $117.9 Restatement of APT Investment to fair value (net of tax) ($10.0) June 05 $29.6 million Investment Impairment of idle assets ($2.4) Ju
Slide 10: Cash Flow
ee a Oe Oo GEE $ million 31 Dec 2005 31 Dec 2004 » Net working capital negligible increase ; despite 45% increase in sales Net profit after tax 11.7 5.7 Depreciation & amortisation 17.5 15.2 Working capital movement 3.5 0.1 ~» Equity raising: Other (2.0) 0.3 - rights issue $31.5 million, Operating c
Slide 11: Balance Sheet
AO | rE $ million 31 Dec 2005 30 Jun 05 ~ No off balance sheet debt Fixed Assets 183 153 Detorred Tax Assets » Tax asset recognised ($5.7 million), & Intangibles 13 11 AIFRS Investments — APT 17 30 -JV’s 3 1 Net Working capital it es) 2) ~» Performance bonding facility for rovision / other liabiliti
Slide 12: Share Price & Market Cap
= 11 i] Share Price & Market Cap * Market cap now +$360 million up from $174 million in June 2005 ~ Share price continues to show improvement up from 46 cents at June 05 and 27 cents June 04 + Positive share price performance following capital raising in late 2005 FYO3 FYo4 FYOS DecOS 17 Feb 0G Mark
Slide 13: Construction Division
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Slide 14: Construction Division Financials
| 13 — Construction Division Financials # Construction revenue continues to grow Revenue JV Revenue * Significant increase in EBIT to $8.0 million with improved EBIT margin of 4.3% # All construction contracts profitable Contracts reflect current industry costs ~ Burnett Dam completed on time and un
Slide 15: Construction Division Outlook
= 14 i] Construction Division Outlook ~ Awarded 5 major contracts in first half High levels of tendering activity in WA and QLD for Government infrastructure (roads and rail) and mining (iron ore, coal and LNG) # Acquisition of 60% shareholding in MVM Rail provides opportunity for turnkey rail works
Slide 16: Mining Division
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Slide 17: Mining Division Financials
Mining Division Financials ~* Further growth in revenue from both open cut and underground + Strong EBIT result but margins below target due to impact of ‘old contracts’ “Before Corporate overhead costs of 1.6% of Revenue ~# 50% of revenue from iron ore and coal + Progressively increasing length of
Slide 18: Mining Division Outlook
= 17 i] Mining Division Outlook w Existing mines continue to increase production (Eaglefield and Olympic Dam) * 4 year $250 million BHP Billiton Orebody 18 iron ore contract commences March 06 ~ Preferred tenderer for BHP Billiton Jimblebar iron ore mine ~» Contract renegotiations and new work will
Slide 19: Services Division (Allplant)
Slide 20: Services Division (Allplant) Financials
= 19 i] Services Division (Allplant) Financials * Further growth in revenue to $29 million for half * EBIT and EBIT margin down on June 05 half due to changing mix of business and ‘set up’ expenditure for growth “Before Corporate overhead costs of 1.6% of Revenue RELEASE OF HALF YEAR RESULTS: HY05 1
Slide 21: Services Division (Allplant) Outlook
= 20 i] Services Division (Allplant) Outlook * Nebo workshop complex in Queensland coal fields now operational w Equipment hire fleet expanded to 132 items # Planning underway for new workshop complex in Perth # Increased apprentice intake # Revenue and profit growth expected in second half * Furthe
Slide 22: Workforce now at 2550
«# Workforce now at 2550 * Need to increase workforce over next 12 months for new work + Longer term contracts for blue chip clients attractive for employees # Shortages of engineers and mechanical tradesmen. Overseas recruitment a short term solution w Focusing on retention strategies for existing
Slide 23: Order Book
cee ing 2 eta EEE ~ $705 million of new contracts and $925 contract extensions in 6 months to December 2005 $ ~ December 2005 order book at a record $1.2 billion $341 . A w Focusing on securing longer term cL contracts for blue chip clients 1 ~ Further contract extensions and new FOR 1 FvO3 Fvoa FYO
Slide 24: Run-Off & Style of Contract
23 Run-Off & Style of Contract # Majority of contracts (89%) fully protected for cost increases Alliance 22% Fixed Price 1% Schedule of Rates ~# Fixed price contracts appropriately (with Rise and Fall priced ~* $392 million of contracts already secured for June 2006 half ~ Combined with expected con
Slide 25: Contract Life Construction
Contract Life Construction Client Contract WA Govt Rail Link Package A WA Govt Goldfields/Esperance TNC 2000 | | I WA Govt Sawyers Valley WA Govt Karratha to Tom Price Rd QLD Govt Ross River Dam NT Govt Waterfront Alcan Gove Woodside NWS Train V - Site Prep Rio Tinto lron Ore Construction 208 i ARTC
Slide 26: Contract Life Mining
a Client BHP Billiton BHP Billiton BHP Billiton BHP Billiton BHP Billiton Rio Tinto Rio Tinto Peabody Anglo Coal Bendigo Mining Birla Kimberley Diamonds Lafarge Newmont OM Xstrata MMM Open Cut Contract Mt Whaleback Orebody 18 Phosphate Hill Leinster Olympic Dam Argyle Cape Lambert / Dampier Eaglefie
Slide 27: Macmahon Strategy: Increase Total Shareholder Returns
Rea ee | eee Macmahon Strategy — Increase Total Sharehoider Returns + Two key Pillars: * Grow the Business * Increase EBIT Margins (Profitability) ~ Growth Opportunities * Construction - Large government infrastructure projects - Mining expansion projects (iron ore and coal) * Mining - Iron ore, coa
Slide 28: Increase EBIT Margins and Targets
Ree yO eee o Ee ~ Increase EBIT Margins - Tendering strategies - Risk management + Targets Targets Actual Dec 05 EBIT Margin 5% 2006 5.1% 6% 2007 PAT Growth +20% pa +107% Debt/Equity <50% short term 16.9% <30% long term ROE +15% 15.8% TRIFR Continual Improvement 18.2% improvement RELEASE OF HALF YEA
Slide 29: Outlook
RO OC EEE # Positive Market Conditions - Government infrastructure - Resources activity (iron ore, coal, copper) # Contractor services in short supply - opportunity + Expect 2006 revenue of $850 million with EBIT margins above 5% * 2006 PAT circa $25 million — up 25% on 2005 # Capex $130 million wit
Slide 30: 7) si i
7) si i