Macmahon Holdings Limited · ASX:MAH
Macmahon — H1 2004 Earnings Presentation
29 slides from Macmahon's earnings presentation, February 2004
Slide 1: 2004 Half Year Financial Results & Update
2004 HALF YEAR FINANCIAL RESULTS & UPDATE February 2004 NICK BOWEN Chief Executive Officer 1
Slide 2: Contents
CONTENTS Ø Summary Ø Financials Ø Order Book Ø Operating Divisions / Investments Ø Civil Ø Open Cut Ø Underground Ø Services Ø Malaysia Ø APT Ø Outlook Ø Appendices: Ø Appendix 1: Company Structure Ø Appendix 2: Profit & Loss Ø Appendix 3: Cashflow Ø Appendix 4: Balance Sheet Ø Appendix 5: Competito
Slide 3: Summary
COMPANY STRUCTURE SUMMARY Ø Profit $3.4 million up 21% on 2002 ($2.8 million) Ø EBIT Margin on Total Revenue of 3.8% Ø Total Revenue (including attributable JV revenue) down 32% to $184 million reflecting timing of completion/commencement of contracts Ø $630 million of new work and contract extensio
Slide 4: Financials
(2) MACMAHON FINANCIALS
Slide 5: Capital Structure: Raising – January 2004
COMPANY CAPITAL STRUCTURE RAISING – JANUARY 2004 Ø $20 million placement @ 26 cents Ø $7.5 million Share Purchase Plan @ 26 cents Ø $3.0 million from exercise of ANZ options Ø High cost debt retired and financial strength increased Ø Following capital raising Ø Total Shares on issue 373,952,403 Ø To
Slide 6: Revenue and Profit
COMPANY&STRUCTURE REVENUE PROFIT TOTAL REVENUE (including JV) Ø Reduced revenue reflects timing of 300.0 $272 $234 $246 completed contracts (ADrail) and 250.0 $213 200.0 $184 commencement of new work Million 150.0 Ø 2nd half revenue expected to exceed $220 100.0 million delivering +$400 million for
Slide 7: Margins/Cashflow
COMPANY STRUCTURE MARGINS/CASHFLOW EBIT/TOTAL REVENUE Ø EBIT margin @ 3.8% an increase on 5.0% 4.6% 4.5% 4.0% 4.1% corresponding period 4.0% 3.8% 3.5% Ø Expect to maintain EBIT margin in second 3.0% 2.6% 2.5% half 2.0% 1.5% Ø Targeting 5% EBIT for 04/05 1.0% 0.5% 0.0% Dec 01 HY June 02 HY Dec 02 HY
Slide 8: Capital Expenditure and Return on Capital
COMPANY STRUCTURE CAPITAL 25 CAPITAL EXPENDITURE Ø Capex of $20.6 included $6.5 million of $21 20 assets previously under operating lease Ø Total 03/04 capex circa $55 million for new Million 15 10 contracts and replacement $6 $7 5 $4 $4 Ø 04/05 capex forecast at $30 million - replacement and $15 mi
Slide 9: Borrowings
COMPANY STRUCTURE BORROWINGS NET BALANCE SHEET DEBT Ø Debt @ $68.2 million following $20.5 million 90,000 $83 80,000 $68 $69 $68 70,000 capex and $6.8 million investment in APT 60,000 $'000 50,000 $39 Ø Following January capital raising debt 40,000 30,000 reduced to $39 million 20,000 10,000 - Ø Jun
Slide 10: Market Capitalisation and Earnings Per Share
COMPANY STRUCTURE MARKET 120 MARKET CAPITALISATION +$110 Ø Following capital raising market cap now 100 $84 $72 $120 million Million 80 60 $45 $39 $33 40 Ø Shares traded over last 2 months has 20 - averaged 10% of issued capital Dec 01 June 02 Dec 02 June 03 Dec 03 Feb 04 HY HY HY HY HY After Ø Pric
Slide 11: Order Book / New Contracts
(2) MACMAHON ORDER BOOK / NEW CONTRACTS
Slide 12: Order Book
COMPANY ORDER STRUCTURE BOOK Ø In first 6 months this year awarded $630 900 million of new work $832 800 Ø Order book underpins next 2 years 700 $618 Ø Additional $37 million contracts won since 600 December 500 $480 $m 400 $369 By Division $341 As at 31.12.03 : $832m 300 $8 200 $34 100 $241 0 Civil
Slide 13: Order Book & Run-off
COMPANY ORDER STRUCTURE BOOK & RUN-OFF 900 $832 800 700 600 $m 500 $475+ $410 $394 400 $339 300 $210 $283 200 $184 100 0 31.12.03 2003/04 2004/05 2005+ Order Book Total Revenue - Forecast Order book run-off Work completed 13
Slide 14: Order Book Profile
COMPANY ORDER STRUCTURE BOOK PROFILE By Division By Commodity 4% 1% 8% 8% 12% 4% 29% 22% 28% 58% 7% 4% 8% Underground Open Cut Civil Malaysia Other 7% Gold Coal Iron Ore Copper Phosphate Diamonds/Other Civil Limestone Nickel By Client 19% 23% By Contract Duration 12% 20% 58% 68% Government Company M
Slide 15: Operating Divisions/Investments
OPERATING DIVISIONS/INVESTMENTS 15
Slide 16: Civil
COMPANY STRUCTURE CIVIL Ø Successful completion of Alice Springs to Darwin Railway Ø Revenue down in period due to timing of completion of contracts and commencement of new work Ø Major contracts at Burnett Dam (Alliance JV) and Tonkin Highway utilising ADrail staff and equipment Ø Major earthworks
Slide 17: Open Cut
COMPANY OPEN CUT STRUCTURE Ø Major period of change with 3 contracts completed and 4 major new contracts awarded and mobilised during the period Ø Contract completion and commencement had a negative impact on earnings in the period Ø Pre 2000 contract still delivering losses – completion in December
Slide 18: Underground
COMPANY STRUCTURE UNDERGROUND Ø Underground turnover now circa $50 million pa following comple tion of works at Bendigo Ø Returns from Division (EBIT and ROC) are exceeding internal hurdle rates Ø Extension of Leinster Nickel contract and new contract won at Olympic Dam both for WMC Resources Ø Outl
Slide 19: Services
COMPANY STRUCTURE SERVICES Ø First 6 months of independent operation of business Ø Delivering excellent profits (EBIT and ROC exceeding internal hurdle rates) Ø Current turnover (excluding internal maintenance services) $15 million pa but increasing to +$20 million pa from January 04 Ø All equipment
Slide 20: Malaysia
COMPANY STRUCTURE MALAYSIA Ø Awarded 6 year contract for limestone mining at Kanthan cement / clinker operation Ø Client Lafarge has annual sales exceeding A$25 billion pa and produces 100 million tpa of cement in some 75 countries Ø Contract commenced December 03. Profitable and cashflow positive f
Slide 21: Alice Springs to Darwin Railway - APT
COMPANY ALICE STRUCTURE SPRINGS TO DARWIN RAILWAY - APT Ø Macmahon 7.5% shareholder ($26.5 million investment) Ø Asia Pacific Transport Assets (50 year concession) Ø Track from Tarcoola in SA to Darwin Ø Freight and Logistics Business (Freight Link) Ø Freight operations commenced January 2004 with r
Slide 22: Outlook
COMPANY STRUCTURE OUTLOOK 2003/04 Ø Contracts in hand will deliver +$400 million Total Revenue in 03/04 Ø Target to exceed last years $8.5 million PAT Ø Open Cut contract commencement and equipment delivers biggest risk to June 04 result Ø Capex for 04/05 $55 million – June 04 Debt/Equity circa 80%
Slide 23: Appendices
APPENDICES Company Structure, P&L, Cashflow, Balance Sheet, Price Comparison Chart, New Contracts 23
Slide 24: Company Structure
COMPANY STRUCTURE COMPANY STRUCTURE Appendix 1 Macmahon Holdings Civil Alice Springs to Contracting Darwin Railway - Road works -7.5% APT Shareholder Open Cut - Railways Services (Owner & Operator) Mining - Ports Underground - Dams - Open Cut Mining Mining - Plant Hire - Mine Infrastructure - Drill
Slide 25: Profit & Loss
COMPANY PROFIT STRUCTURE & LOSS ($ million) 1H03 2H03 FY03 1H04 Appendix 2 Operating Revenue 234.4 181.7 416.1 153.6 Joint Venture Revenue 37.7 31.4 69.1 30.3 TOTAL Revenue 272.1 213.1 485.2 183.9 EBITDA 18.8 20.2 39.1 16.9 EBIT 7.1 9.9 17.0 6.9 EBIT Margin on Total Revenue 2.6% 4.5% 3.5% 3.8% Inter
Slide 26: Cashflow
COMPANY STRUCTURE CASHFLOW ($ million) 1H03 2H03 FY03 1H04 Appendix 3 Net Operating Cashflow 14.7 7.1 21.8 20.5 Capex (3.8) (6.8) (10.5) (20.6) Investments - APT - (11.0) (11.0) (6.8) Asset Sales 3.8 9.0 12.8 8.0 Proceeds from Shares 0.2 - 0.2 0.3 Proceeds from Borrowings - 13.8 13.8 16.5 Repayment
Slide 27: Balance Sheet
COMPANYSHEET BALANCE STRUCTURE ($ million) 1H03 2H03 FY03 1H04 1H04* Appendix 4 ASSETS Cash/Receivables/Inventories 76.7 52.0 52.0 51.8 69.7 PPE 113.0 100.6 100.6 104.4 104.4 Intangibles 7.4 7.1 7.1 6.8 6.8 APT Investment - 11.0 11.0 17.8 17.8 TOTAL 197.1 170.7 170.7 180.7 198.7 LIABILITIES Payables
Slide 28: Price Comparison Chart
COMPANY PRICE STRUCTURE COMPARISON CHART Appendix 5 Macmahon 28
Slide 29: New Contracts & Extensions Summary
COMPANY NEW STRUCTURE CONTRACTS & EXTENSIONS SUMMARY Appendix 6 Divisions Contract Client Scope Length Commodity Comment Open Cut Phosphate Hill WMC Resources Mining 5 years Phosphate Eaglefield North Goonyella Coal P/L Develop & operate new coal mine 7 years Coal Waihi Newmont Mining, crushing & ta