Slide 1: Commsec Mining Services Conference
For personal use only Commsec Mining Services Conference May 2008 Nick Bowen – Chief Executive Officer 0 0
Slide 2: Disclaimer and important notice
Disclaimer and important notice This presentation does not constitute investment advice. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction. For personal use
Slide 3: Snapshot of Macmahon
Snapshot of Macmahon • Founded in 1963 by Brian Macmahon - listed on the ASX in 1983 For personal use only • Over 9,600 shareholders • Extensive experience in: – Surface / Underground mining operations – Civil infrastructure construction • Over 3,300 employees • All time high order book - $2.1 billi
Slide 4: Company overview
Company overview MACMAHON For personal use only Mining Construction Rail Underground Water Surface Marine Mine services Road Resource infrastructure 3 3
Slide 5: Revenue and earnings
For personal use only Revenue and earnings Revenue NPAT NPAT ($’m) ($’m) margin 1,200 40 4.0% 1,000 966 30 33 3.0% 800 864 27 24 600 637 610 20 2.0% 400 421 16 10 12 1.0% 200 0 0 0.0% FY04 FY05 FY06 FY07 HY08 FY04 FY05 FY06 FY07 HY08 Revenue NPAT NPAT Margin * Figures calculated on an underlying bas
Slide 6: Order book strength
Order book strength Order Book 3,000 ($m) For personal use only 2,500 2,000 1,500 1,000 500 0 FY04 FY05 FY06 FY07 Apr-08 •Excludes $1.1 billion Spinifex Ridge contract for Moly Mines Blue chip customer base Long term relationships – repeat business Our customers operate long life, low cost min
Slide 7: Market overview
Market overview Mining For personal use only Australian mining industry continues to enjoy strong commodity prices and demand, underpinned by growth in China Pilbara is experiencing rapid growth in iron ore production - significant price increases (estimated 70%) and Chinese ownership interest wil
Slide 8: 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 and tyre Significant forward ord
Slide 9: Key opportunities
Key opportunities International Growing opportunities in the For personal use only Middle East & Asia QLD and NSW Coal infrastructure & mining Roads Water Infrastructure WA and NT Rail BHPB and Rio Tinto’s expansion projects New iron ore developments Roads SA Olympic Dam Expansion Governmen
Slide 10: Pilbara projects
Pilbara projects Cape Lambert/Dampier Ports – For personal use only Rio Tinto Newman - BHPB Stockpiling/blending, concrete Concrete foundations for plant at Newman Hub works and stockyard development Pilbara Rail Projects– upgrade and reconfiguration Mesa A – Rio Tinto New 50km railway line Oreb
Slide 11: Queensland coal projects
Queensland coal projects Goonyella to Abbot Point Expansion For personal use only Upgrade of the Pring Rail Yard and Abbot Point Coal Terminal Alliance with QR Jilalan Rail Yard Upgrade Increase the capacity of the Goonyella coal rail network Alliance with QR Saraji and Goonyella Riverside Open
Slide 12: East coast infrastructure projects
East coast infrastructure projects Hale Street Link New bridge - design and For personal use only construction BCC Logan River Catchment Project Alliance based contract in partnership with QWI Kingsgrove to Revesby Quadruplication Expansion of the Sydney rail line TIDC Leura to Katoomba Hwy Re
Slide 13: Other major projects
Other major projects Argyle Diamond Mine Block cave mining For personal use only Rio Tinto Spinifex Ridge Molybdenum Open-cut mining Moly Mines Mitchell Freeway Extension Design and construct a 4km extension Main Roads WA Olympic Dam Underground Development, cabolting and shotcreting BHP Bil
Slide 14: Macmahon Strategy
For personal use only Macmahon Strategy Grow existing core businesses Outlook for the mining and construction sectors remains strong Growth opportunities in coal, iron ore, resource infrastructure and east coast construction Pursue next stage of Macmahon development Overseas opportunities
Slide 15: Takeover Offer for Ausdrill
For personal use only Takeover Offer for Ausdrill 14 14
Slide 16: Takeover Offer for Ausdrill
Takeover Offer for Ausdrill • Compelling premium for Ausdrill shareholders • 1.45 Macmahon shares for every Ausdrill share For personal use only • Implies a value of $2.59 per share based on the closing price of Macmahon Shares of $1.785 and Ausdrill shares of $1.95 on 20 May • Minimum acceptance co
Slide 17: Complementary lines of business and customers
Complementary lines of business and customers • Ability to capitalise on both Macmahon’s and Ausdrill’s existing blue chip corporate and government customers: For personal use only – to extend service offerings – to achieve further contract wins • Increased scale and service offerings important in t
Slide 18: Diversification of the Combined Group
Diversification of the Combined Group •Geographic spread eg. exposure to: – Australian east coast civil construction market, driven by infrastructure spending For personal use only – Western Australian Pilbara iron ore production – Queensland Bowen Basin coal market – African mining market – Asia an
Slide 19: Increased equity market scale and balance sheet strength
Increased equity market scale and balance sheet strength • The Combined Group is expected to have a market capitalisation of approximately $1.4 billion and be a member of the S&P/ASX200 For personal use only • Increased market scale will enhance capacity to access debt and equity capital markets • S
Slide 20: Macmahon's proven track record of shareholder value creation
Macmahon’s proven track record of shareholder value creation • Macmahon’s share price performance has significantly outperformed Ausdrill’s 1 year share price performance For personal use only 2.50 2.00 70% 1.50 (A$) 1.00 -7% 0.50 -26% 0.00 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 Macmahon Ausdrill
Slide 21: Macmahon shares are significantly more liquid than Ausdrill's
Macmahon shares are significantly more liquid than Ausdrill’s Total share turnover as a % of Average daily turnover between 21 For personal use only weighted average total shares May 2007 and 20 May 2008 outstanding between 21 May 2007 and 20 May 2008 2,076,746.53 103% 36% 216,275.36 Macmahon Ausdri
Slide 22: Aligned with Macmahon Strategy
Aligned with Macmahon Strategy • The transaction is complementary to Macmahon’s strategic plan and meets each of For personal use only Macmahon’s three key acquisition criteria: Increased scale Increased geographic reach Diversity of business Macmahon’s Offer represents compelling value for Ausdrill
Slide 23: Macmahon Standalone Outlook
For personal use only Macmahon Standalone Outlook FY08 full year profit growth in line with broker consensus: Profit of around $47 million (40% increase on the $33.4 million NPAT for the year ended 30 June 2007) Revenue circa $1.2 billion The outlook for the business is strong – industry dynam
Slide 24: Questions?
For personal use only Questions? 23 23