Macmahon : Interim Financial Report 31 December 2021

For personal use only

CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT

For the six months ended 31 December 2021

For personal use only

Contents

Directors' report	3
Lead auditor's independence declaration	7
Independent auditor's review report	8
Directors' declaration	10
Condensed consolidated statement of profit or loss and other comprehensive income	11
Condensed consolidated statement of financial position	12
Condensed consolidated statement of changes in equity	13
Condensed consolidated statement of cash flows	14
Notes to the condensed consolidated interim financial statements	15
Corporate directory	24

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For personal use only

DIRECTORS' REPORT

For the six months ended 31 December 2021

The Directors present their report, together with the condensed consolidated interim financial statements, of Macmahon Holdings Limited and its controlled entities (the Group or Macmahon) for the six months ended 31 December 2021 including the independent review report thereon.

DIRECTORS

The Directors of the Company at any time during or since the end of the interim period are:

E Skira	(Non-Executive Chair)
M Finnegan	(Managing Director and Chief Executive Officer)
D McComish	(Non-Executive Director)
B Munro	(Non-Executive Director)
A Ramlie	(Non-Executive Director)
A Sidarto	(Non-Executive Director)
H Tyrwhitt	(Non-Executive Director)
V Vella	(Non-Executive Director - Resigned 20 October 2021)

PRINCIPAL ACTIVITIES

Macmahon is an ASX listed company that has been offering mining and construction services to clients for more than 58 years. We seek to develop strong relationships with our clients in which both parties can work together in an open, flexible and transparent way. Our approach to doing business, together with our capabilities in surface and underground mining, civil design and construction, performance enhancement, and mine site maintenance and rehabilitation services, has established Macmahon as a trusted partner on resources projects throughout Australia and internationally.

OPERATIONAL OVERVIEW

Macmahon derives revenue from activities including surface and underground mining, civil design and construction (primarily on mine sites), equipment repair and maintenance, mining advisory services, design and fabrication of mining infrastructure, and mine site maintenance and rehabilitation services.

Surface Mining

Macmahon's surface mining division offers a broad range of services including mine planning, drill and blast, bulk and selective mining, crushing and screening, water management as well as equipment operation and maintenance. During the period, Macmahon provided surface mining services to the following projects:

• Tropicana Gold Mine - Macmahon is fulfilling a life of mine contract at the Tropicana project in Western Australia for AngloGold Ashanti and Regis Resources Limited.
• Telfer Gold Mine - Macmahon is fulfilling a life of mine contract at the Telfer project in Western Australia for Newcrest.
• King of the Hills Mine - Commencing in early 2022, Macmahon will be providing both surface and underground mining services to Red 5 Limited at the King of the Hills Project in Western Australia.
• Batu Hijau Copper / Gold Mine - Macmahon is fulfilling a life of mine contract to provide all mining services at the Batu Hijau mine in Indonesia for PT Amman Mineral Nusa Tengarra (AMNT).
• Byerwen Coking Coal Mine - Macmahon is fulfilling a contract for the provision of open cut mining at the Byerwen project for QCoal in Queensland.
• Mt Morgans Gold Mine - Macmahon is fulfilling a contract for the provision of open pit mining services, including drilling and blasting, loading, hauling and technical services at the Mt Morgans project in Western Australia for Dacian Gold.
• Martabe Gold Mine - Macmahon is contracted by PT Agincourt Resources to provide mining services at the Martabe gold mine in the North Sumatra province of Indonesia.
• Langkawi Quarries - Macmahon is fulfilling a mining services quarry contract on Langkawi Island, Malaysia, for YTL Cement.
• Foxleigh Mine - Macmahon is fulfilling an equipment hire and maintenance services contract at the Foxleigh Mine located in Queensland's Bowen Basin.
• Dawson South - Macmahon is fulfilling surface mining services for Anglo American's Dawson South mine located in Queensland.
• Julius - Macmahon is fulfilling surface mining services at the Julius gold project in Western Australia for Northern Star Resources.

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For personal use only

DIRECTORS' REPORT

For the six months ended 31 December 2021

• Warrawoona Gold Mine - Macmahon is scheduled to commence open cut mining activities in early 2022 for Calidus Resources Limited at the Warrawoona gold project in Western Australia.

Underground Mining

Macmahon's underground mining division offers underground development and production services, a broad range of ground support services, as well as services to facilitate ventilation and access to underground mines including shaft sinking, raise drilling and shaft lining. During the period, Macmahon provided underground services to the following projects:

• Boston Shaker Gold Mine - Macmahon is fulfilling a contract to develop an underground mine at the Tropicana project in Western Australia for AngloGold Ashanti and Regis Resources Limited.
• Gwalia Gold Mine - Macmahon is fulfilling a contract providing underground mining services to St Barbara at the Gwalia Gold Mine in Western Australia.
• King of the Hills Mine - Commencing in early 2022, Macmahon will be providing both surface and underground mining services to Red 5 Limited at the King of the Hills Project in Western Australia.
• Granny Smith Gold Mine - Macmahon provides cablebolting services to Goldfields in Western Australia.
• Fosterville Gold Mine - Macmahon provides cablebolting services to Kirkland Lake Gold in Victoria.
• Leinster Nickel Mine - Macmahon provides production drilling and other mining services to BHP in Western Australia.
• Olympic Dam Mine - Macmahon provides raise drilling services to BHP in South Australia.
• Deflector Gold Mine - Macmahon is fulfilling a contract providing underground mining services to Silver Lake Resources at the Deflector Gold Project in Western Australia.
• Mt Belches Gold Mine - Macmahon provides underground mining and development services for Silver Lake Resources at the Maxwell's, Cock-Eyed Bob and Santa underground mines in Western Australia.
• Nicolsons Gold Mine - Macmahon provides fleet rental and equipment maintenance support for Pantoro in Western Australia.

Mining Support Services

Macmahon provides consulting, design, civil construction, equipment hire, maintenance and site rehabilitation services. During the period, Macmahon provided services to the following projects:

• Warrawoona Gold Project - Macmahon provides early-stage civil works (construction of new mine infrastructure, including roads, pads, drainage, dams, office facilities and workshops) to Calidus Resources Limited at the Warrawoona Gold Project in Western Australia.
• Peak Downs Coking Coal Mine - TMM provides mine services works, top soil stripping, rehabilitation, tailings dam remediation and civil works to BHP Mitsubishi Alliance (BMA).
• Saraji Coking Coal Mine - TMM provides equipment, a full workshop with maintenance services and civil infrastructure design, construction and mine rehabilitation works to BMA.
• Coburn Mineral Sands - Macmahon has been providing civil construction services, including the construction of a 43 kilometre access road, bulk earthworks, other site roads, main intersection and drainage to Strandline Resources at their Coburn Mineral Sands mine in Western Australia.
• Fimiston - Macmahon provides civil works at Northern Star's Fimiston Project in Western Australia.
• Hu'u - Macmahon is constructing an 11km access road at the Hu'u copper gold exploration project in Indonesia.

Equipment Maintenance and Management

Macmahon owns and operates world-class equipment maintenance facilities, giving it the ability to support front line contracting services with plant maintenance services.

Macmahon's primary workshop, located in Perth, Western Australia, is a key operational asset with the ability to rebuild both plant and components. This facility allows Macmahon to keep maintenance activities in-house and to rapidly and efficiently deploy supplies to client locations and conduct essential maintenance work.

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For personal use only

DIRECTORS' REPORT

For the six months ended 31 December 2021

FINANCIAL OVERVIEW

Profit or Loss
		Restated1
	For the six months ended	For the six months ended
	31 December 2021	31 December 2020
	$'000	$'000
Revenue
Australia	643,552	472,009
Indonesia	164,641	173,459
Other International	1,554	7,004
Group Revenue	809,747	652,472
EBITDA (underlying)	138,738	121,181
EBIT(A) (underlying)	46,908	46,476
NPAT (underlying)	31,688	30,356
EBITDA (reported)	113,944	116,302
EBIT (reported)	18,501	41,408
NPAT (reported)	3,282	43,142

• 31 December 2020 balances have been restated to reflect the Group's change in accounting policy for costs related to configuration and customisation of Software-as-a-Service (SaaS) arrangements. Refer to Note 10 to the condensed consolidated interim financial statements for more details.

With the exception of revenue and NPAT (reported), the measures above are not defined by IFRS and are unaudited. Refer to Note 5 to the condensed consolidated interim financial statements for reconciliation of underlying results.

Revenue for the Group increased by 24% to $809.7 million (31 December 2020: $652.5 million). This increase is primarily attributed to the growth in the Company with the commencement of new projects (Foxleigh, Dawson South, Julius and Gwalia), along with the expansion of existing contracts and growth within mining support services (Granny Smith, Olympic Dam, Fimiston, Leinster, Hu'u and Coburn).

Underlying earnings (before interest, tax, customer contracts amortisation and other one-off items (EBIT(A)) increased by 1% to $46.9 million (31 December 2020: $46.5 million). Similarly, underlying earnings before interest, tax, depreciation and amortisation and other one-off items (EBITDA) increased by 14% to $138.7 million (31 December 2020: $121.2 million).

Reported net profit after taxes for the half-year ended 31 December 2021 decreased by 92% to $3.3 million (31 December 2020: $43.1 million). The decrease was primarily due to one-off expenses, being the final GBF acquisition earn-out expense, Software as a Service (SaaS) costs and amortisation of customer contracts assets recognised on acquisitions.

Balance Sheet and Cash Flows

Net assets of $536.7 million have remained consistent as of 31 December 2021 (30 June 2021, restated: $535.9 million).

The Group's net tangible assets (NTA) increased by 1% across the half-year from $512.8 million (30 June 2021, restated) to $517.1 million at 31 December 2021. As a result, NTA per share rose from 23.8 cents per share (30 June 2021, restated) to 24.0 cents per share.

Working Capital

Investment in net working capital increased during the half-year by $40.6 million primarily due to the commencement of new projects and increased inventory for critical items to proactively manage COVID related supply chain pressures. At 31 December 2021, current trade and other receivables and inventories increased by $40.7 million and $15.9 million to $287.6 million (30 June 2021: $246.9 million) and $84.4 million (30 June 2021: $68.5 million), respectively, whilst current trade and other payables increased by $16.1 million to $234.6 million (30 June 2021: $218.5 million).

Capital Expenditure

Capital expenditure (excluding intangible assets) for the half-year was $152.7 million (31 December 2020: $138.9 million), comprising of $67.1 million acquired through finance and $85.6 million funded in cash.

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