Good morning, ladies and gentlemen. Welcome to the annual general meeting of Macmahon Holdings Limited. My name is Eva Skira, and I am the Chair of Macmahon. Before we start, I wish to acknowledge the traditional custodians of the land on which we meet today, the Whadjuk people, and pay my respects to elders past, present, and emerging. We extend that respect to the traditional custodians of the lands on which our online participants join us from, and to all Aboriginal and Torres Strait Islander people and non-Indigenous persons here today. Today's annual general meeting is a hybrid meeting. It is being held physically at the Macmahon offices, and I welcome shareholders and visitors that have attended in person. The meeting is also being conducted online via the Computershare meeting platform to permit non-person-based shareholders and stakeholders to attend.
This allows shareholders, proxies, and guests to attend the meeting virtually and watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. I would like to extend my welcome to you, our shareholders and visitors attending virtually. Instructions on participating in the online meeting can be found in the notice of meeting available on the ASX platform. If you experience any difficulties during the meeting, please refer to the notice of meeting, which is also available on the Computershare website and on Macmahon's website. Now, to make sure you're in the right AGM, we are going to start with a pre-brief video of Macmahon's operations, the heart of what we do. It is great to see our people and operations in action.
I would like to introduce your Non-Executive Directors, Denise McComish, Bruce Munro, Arief Widyawan Sidarto, Hamish Tyrwhitt, and Alexander Ramlie. I have with me in attendance our Managing Director, Mick Finnegan, our Chief Financial Officer, Ursula Lummis, as well as other members of our executive leadership team and our Company Secretary, Sophie Raven. Representatives from the company's auditor, KPMG, are also in attendance and will be available to answer questions on the financial statements and in relation to the audit. I would like to take this opportunity to thank you all for taking the time to attend today's meeting. Your support and interest in the company's affairs are appreciated by the board. Online attendees can submit questions at any time. When the question function is available, the Q&A icon will appear at the top right of the screen.
To ask a question, select the Q&A icon at the top of the screen, type your question in the allocated box, select a topic from the dropdown list, and press the Send button. You will get a record of this question, and it will be sent immediately to Macmahon for review. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or, if we receive multiple questions on one topic, amalgamated together. For those online shareholders who wish to ask a verbal question, an audio question facility is available during this meeting. To use this service, please follow the instructions under the heading Asking Verbal Questions. This will provide a telephone number for you to call, and you will enter a waiting room.
You will listen to the meeting in this waiting room until you are asked to introduce yourself and ask your question. If you have any issues using this system, please return to the Computershare meeting platform. After you complete your question, or if you opt to leave the audio lobby, the video feed will be restored. Finally, due to time constraints, we may run out of time to answer all your questions. If this happens, we encourage you to contact us via email or telephone after the meeting so that we can respond in due course. Voting today will be conducted by way of a poll on all items of business. Rod Soames from Computershare has agreed to be Returning Officer today. Following confirmation by Computershare, the final results of the poll will be announced to the ASX later today. This release will also be available on Macmahon’s website.
In order to provide you with enough time to vote, I will shortly open voting for all resolutions for shareholders eligible to vote at this meeting. For shareholders present at the Macmahon office, please ensure you have received your green voting paper. Please see the Computershare representative if you have not. Completed voting papers will be collected by Computershare at the conclusion of the voting process. For shareholders attending online, please select the Vote icon and the voting options will appear on your screen. To vote, select your voting direction. A tick will appear to confirm receipt of your vote. There is no Submit or Send button. Your selection is automatically recorded. To change your vote, select Click Here to Change Your Vote and press a different option to override.
If you have any questions about casting your vote online, please refer to the online meeting guide or call Computershare on the number set out in the guide. I now declare voting on all items of business is open. The Voting tab will soon appear. Please submit your votes at any time. I'll give you a warning before I move to close voting. The company secretary, Sophie Raven, has informed me that we have a quorum present. I therefore declare this annual general meeting of Macmahon Holdings Limited open. I would like to explain the format of today's meeting. Firstly, I will give the Chair's Address. I will then invite our Managing Director and Chief Executive Officer, Mick Finnegan, to provide an operational update. After Mick's presentation, we will move to the formal business of the meeting to consider the resolutions outlined in the notice of meeting.
Firstly, my Chair's Address. Macmahon has delivered another year of positive performance in the 2022 financial year at both the operational and financial level, underpinned by the successful execution of the company's growth strategy. The business achieved record underlying EBITDA and underlying EBITA, and again met revenue and earnings guidance for the year. I'm very pleased to say that this is the fifth consecutive year that the company has met or exceeded market guidance. This consistency is particularly important in the current business environment, given the ongoing business challenges and uncertainty from COVID-19, cost inflation, and skilled labor shortages, both in Australia and globally. We achieved revenue of AUD 1.7 billion and underlying EBITA of AUD 101 million.
Importantly, Macmahon ended the year with AUD 5 billion of contracted work in hand and maintained a liquidity position of AUD 256 million as at 30 June. This positions the company well for financial year 2023 and beyond, with a high level of secured revenue and earnings, and provides the capacity to capitalize on further growth opportunities as they arise. During financial year 2022, there was significant growth in our workforce to nearly 8,000 people, despite the tight labor market. This was facilitated by the rollout of additional training and development initiatives to supplement external recruiting. An ongoing and important focus for the Macmahon business, particularly in periods of rapid workforce expansion, is the safety and wellbeing of our people. I am delighted that we are able to report a significant improvement in safety performance during the year.
This year, Macmahon also participated in the Western Australian Parliamentary inquiry into sexual harassment against women in the FIFO mining industry. We have reinforced our commitment, backed by tangible action, to ensure all our people feel safe and comfortable at work. While we acknowledge the considerable effort from our people to deliver our improved safety performance, we are not taking this result for granted and will continue to pursue improving health and safety outcomes. We have again provided a standalone sustainability report for financial year 2022, which expands upon the information provided in our annual report and further outlines progress on environmental, social, and governance activities and initiatives. The materiality assessment carried out last year allowed us to consider various sustainability topics within Macmahon's operations, leading to further planning and review.
Topics include our greenhouse gas emissions, land rehabilitation, recycling, diversity and training, mental health and safety, and a new sexual harassment policy. We remain focused on our commitment and advancing disclosure across the ESG spectrum with a view to continuous improvement. Macmahon's capital allocation policy seeks to balance maintaining financial strength, investment in long-term growth, and returning cash to shareholders. As a part of this, we have a commitment to paying a sustainable dividend, and the policy is currently targeting a payout ratio of 10%-25% of underlying earnings per share. I am pleased to advise that the Board declare the final dividend for the 2022 financial year of AUD 0.0035 per share, which brought the full-year dividend to AUD 0.0065 per share.
This is in line with the previous year's FY 2021 dividend and represents a payout ratio of 21.7% of the company's underlying earnings per share. Our capital allocation policy reflects the importance of paying dividends to our shareholders, balanced with the priority of retaining financial flexibility to enable the continued execution of our growth strategy. We achieve this while maintaining a healthy balance sheet and investing AUD 131 million on growth capital expenditure on contract awards. Our solid order book, coupled with strong mining industry demand conditions and a robust tender pipeline, positions the business well for continued sustainable growth. In closing, before I hand over to Mick Finnegan for his CEO and Managing Director's address, I would like to say some thank yous.
Firstly, on behalf of our board and the business, thank you to our clients for their ongoing support and trust in our business. To all our employees, I would like to thank you for the dedication, professionalism, and contribution shown in financial year 2022. This, of course, includes Mick and the senior management team for all their efforts in delivering another excellent result. I said that we are well-positioned for the future with a solid order book and growth capacity, but this is only made possible by the quality workforce and leadership we have in place. Finally, this business would not be possible without the ongoing support of our shareholders. I would like to again sincerely thank you for your investment, confidence, and ongoing support in our business and our people. I will now hand over to Mick. Thank you.
Thanks, Eva. Good morning, everyone, and thanks for joining us today for our 2022 annual general meeting. Before I provide an overview of Macmahon's performance for the FY 2022 year, Eva acknowledged the contribution of Macmahon's people in delivering another excellent result. It's also important to acknowledge the continued support and confidence in our team by Eva and the board. This support is at the heart of our leadership and our strategy is a significant factor in our performance for the year. Turning to our financial performance for FY 2022, a key factor enabling Macmahon to achieve positive results was a consistent track record of growth and the disciplined execution of our strategy. The strategy was delivered during considerable challenges, including COVID-related sickness, absenteeism, supply chain disruption, a tight skilled labor market in Australia, almost record low unemployment rates, and rising cost and wage inflationary environment.
Despite these challenges, Macmahon delivered record earnings in FY 2022, with underlying revenue of AUD 1.7 billion, up 26%, and underlying EBITDA of AUD 101 million. This is the fifth consecutive year, as Eva said, the business has met or exceeded guidance, and I'm incredibly proud of the whole Macmahon team for maintaining this track record. This performance was driven by increased activity across all business areas, including new project startups in Australia and of course, the impact of escalation cost recovery. Underlying EBITDA growth was 17% to AUD 291 million, a new record for the company, and margins remained resilient at 17.2%. Cash flow generation remained steady at AUD 270 million, which equated to a healthy EBITDA cash conversion of 92.6%.
Net debt was reduced by over 10% from the first half position to AUD 216 million. Our solid cash flow generation supported the full-year dividend payout of 6.5 cents per share, which was in line with the prior year. Our current expectations for FY 2023 are for revenue guidance in the range of AUD 1.6 billion-AUD 1.7 billion and underlying EBITDA guidance of between AUD 105 million-AUD 125 million, reflecting our focus on delivering improving earnings while also allowing for the challenging industry cost environment. Health and safety, again, as Eva said, is our highest priority, and we're always looking to implement measures to improve safety outcomes.
We're extremely pleased to report a significantly improved safety performance during FY 2022, especially given the number of new industry entrants and new team members we had this year. Macmahon's total recordable injury frequency rate for FY 2022 decreased to 4.8 from 6.39 in the previous year. This is terrific improvement. However, there's always much work to do in this space. Hand in hand with physical safety is mental health and well-being, which continues to be an essential part of our safety efforts. We've been extending our leading Strong Minds Strong Mines program to our wider community and are proud to be recognized as the Mental Health Organization of the Year in WA for 2022 by Mental Health Foundation Australia. We're now also piloting a Strong Minds Strong Schools program.
Eva mentioned our participation in the Western Australian Parliamentary inquiry into sexual harassment against women in the FIFO mining industry. We are delivering on our commitment to do more in addressing this issue through the implementation of tangible actions and roadmaps. Recently, we introduced enhanced respectful workplace behavior and bystander training for our team, which has already yielded positive results, including an increased incidence of bystanders stepping forward to call out inappropriate behavior. Additionally, we have strengthened reporting mechanisms and policies and broadened our pre-employment background checks. We know that as we mature in this area, we will learn more, and our approach is designed to be agile and adaptive to ensure we can apply the learnings to our program quickly.
It's critical to us that we ensure all our people are safe and comfortable at work. In a workplace of nearly 8,000 people, it's essential we have clear values and a strong, positive workplace culture to retain our people and improve our performance. I believe very few factors contribute more to our success than our people and culture, and we wanna turn this into a competitive advantage for growth and to secure the company's future. For us, this has meant a lot of work to understand what winning at Macmahon's really looks like, including a culture review by leaders across all areas of our business to ensure alignment to our strategy. This work has resulted in a winning at Macmahon formula that has been launched to our workforce. It includes an evolved set of company values, as well as a winning statement and equation.
The intention of the winning at Macmahon formula is to develop our culture in a way that enhances employee engagement and commitment to high performance, which will contribute to delivering long-term success. I'd now like to introduce our evolved values, which reflects our team's diverse voices and perspectives with a short video.
To build a united Macmahon, I am committed to welcoming new people and taking the time to find out something about them, to help them connect with their new team and succeed in their role.
Being relatively new to Macmahon, I've experienced the challenges of starting a new role in the company. I'm committed to welcoming new members and assisting them to unite with the existing Macmahon team and do my best to help them thrive in their new position.
I believe in promoting our people's success, and I look for opportunities to share their stories across our business to showcase the truly unique and exciting experiences that make Macmahon great.
Unity for me is working with my Macmahon colleagues across the business, external partners, and our clients to achieve the very best outcomes for our projects.
I commit to speaking up and calling out poor behaviors to ensure all our people and the people we work with are safe, respected, and accepted.
I commit to speaking up and will support anyone to do the same. Let's work together to call out poor behaviors and drive a safe culture based on mutual respect.
Pushing each other to the next level, holding each other accountable, challenging the norm takes courage. That's what we're about at Macmahon.
I commit to speaking up and calling out poor behaviors to ensure our people are safe and are treated fairly and respectfully.
Courage is not a fleeting moment. It's an inner strength that endures. When it's time to be courageous, you call upon it. Courage is being fearless when it matters, like standing up for what's right, accepting and driving change that's valuable, and having the confidence to believe that your actions will make a positive difference.
Integrity is a true measure of an individual's character. To me, integrity represents trust and respect.
When dealing with challenging situations, I respect others with open two-way communication and seek all points of view to come to an agreeable solution for everyone.
Integrity to me is extremely important as it fosters open, honest engagement that allows our team to achieve the best combined result through leveraging each other's strengths.
Integrity to me is more than just honesty. It's taking our commitment seriously, taking responsibility for our mistakes, and delivering on our promises.
I am immensely privileged to work with my team, and I am committed to ensuring we all recognize their value and contributions to group success. We are flexible and support our colleagues to deliver a win-win for all.
Taking pride is important to me in the work that we do and the services we provide to our clients, and most importantly, the way we treat each other. I pride myself on being a miner, as I believe we add a valuable service to the community.
It's always exciting times when an organization rolls out a set of values, and the one that resonates with me at the moment is pride. When we win work in local communities, we create jobs, we forge relationships with local industry, we get involved in some of the town activities. It's these sort of things that makes me feel proud to be part of Macmahon.
I value the diverse members of our team who all contribute to our success and commit to celebrating the small wins along the way to reach our long-term goals.
Some key operational highlights for the year include, as you can see on the slide here, on the civil side of things, Calidus Resources for the construction of their new Warrawoona mine site, the Tailings Storage Facility buttress at Fimiston for Northern Star Resources, and various mine services and rehabilitation projects on the east coast of Australia. In relation to mining, we have ramped up Foxleigh to steady state and the commencement of Dawson South Warrawoona and King of the Hills surface and underground projects has gone well.
The Telfer contract following renegotiation in FY 2021 is now delivering satisfactory performance and commercial results, and advancing our mining equipment technology deployment roadmap in both the surface and underground operations to enhance safe and efficient productivity is progressing well. Importantly, we ended FY 2022 with a AUD 5 billion order book, including AUD 1.45 billion of that secured for FY 2023. I mentioned earlier that the disciplined execution of our strategy has been key to delivering our positive track record. We advanced our strategy during FY 2022 by continuing to diversify our business mix, predominantly growing our mining support services and underground divisions. Significant progress in the year included the underground division increasing its contribution to 25% of group revenue and ramping up at the King of the Hills project.
We continue to expand our civil offering into Western Australia through projects such as Warrawoona and Fimiston, and formally entering into teaming and partnering arrangements with parties that have complementary skills to accelerate our growth and build scale in our mining support services business. Macmahon's use of technology is also evolving, which will further boost operational efficiency and sustainability outcomes. This includes progressing the deployment of our advanced data and mine digitalization technologies in both underground and surface mining, with the ability to expand the offering in the future. People deliver strategy, and in FY 2022, Macmahon welcomed new executives who bolster the diversity, breadth, and depth of our capabilities among our leadership group. This included the promotion of Ursula Lummis to CFO, the appointment of Donald James at the back to our commercial.
Chief Commercial Officer, and Richard McLeod, just behind Rob here, as our new Chief Operating Officer. Our refreshed leadership team is increasing its focus on strategy execution and improvement in return on average capital employed as a key performance metric, and optimizing gearing to strengthen our balance sheet and targeting lower capital intensity growth to better leverage our balance sheet capacity. Our longer-term objective is to continue to diversify the business by targeting a more even mix across our surface underground and mining support businesses, with the latter two being less capital intensive compared to the surface. This approach creates a more scalable business that will support us in achieving and eventually exceeding our longer-term stated financial targets of EBITA margins of 8% and return on average capital employed of greater than 15%.
Of course, as we progress to a lower capital intensity business, depreciation will reduce and so will our EBITDA targets. This supports our focus moving forward on increasing our targeted return on average capital employed. Our strategy and our people remain focused on creating a stronger, more sustainable business and, most importantly, supporting our core objective of delivering higher quality investment returns for shareholders. FY 2023 is underpinned by a AUD 5 billion order book comprised of increasingly diverse mix of surface underground and mining support service contracts, with a significant concentration of alliance contracts that provide greater operational and commercial flexibility. We also have a strong pipeline of opportunities worth approximately AUD 8.4 billion, in addition to numerous targeted contract extensions and continuing contracts that are expected to build on FY 2022's performance.
This will support capital investment, including for the Buttedge our phase VIII extension in the current financial year. On a macroeconomic level, the tight labor market across Australia and the global inflationary pressures are key issues, and the business is managing these challenges. Our workforce requirements will continue to be carefully managed, and we have already successfully implemented significant training, upskilling, and well-being programs to facilitate the longer-term retention of employees. Our focus and investment in our people will continue to be a priority moving forward. Macmahon's commitment to the safe and efficient execution of both its pipeline and order book positions the business well to navigate current and emerging challenges and capitalize on meaningful, strategically aligned opportunities.
Our current expectations for FY 2023 are for the revenue guidance in the range of AUD 1.6 billion-AUD 1.7 billion and underlying EBITA guidance increasing to between AUD 105 million and AUD 125 million. In closing, I'd like to thank all of our stakeholders for their ongoing support, particularly our clients, for their trust in us and their shared approach in supporting and protecting the health and well-being of our people. I'd also like to commend our people for their crucial contribution and resilience over the year and for being a vital part of the Macmahon winning formula. With that, I'd now like to hand back to the chair.
Okay. Thank you, Mick. This now brings us to the formal part of the meeting. The items of business to be considered at this meeting have been listed in the notice of meeting. The notice of meeting has been made available to shareholders on the nineteenth of September 2022, and I'll take it as read. There will be an opportunity to ask questions in relation to the various items of business when each item is considered, and I will also take any other questions at the end of formal proceedings before the meeting closes. Before we consider the items of business, there are a number of procedural matters I wish to draw to your attention.
While our visitors and guests are most welcome here today, this is a shareholders' meeting, and only shareholders, their attorneys, proxies, and authorized company representatives are entitled to ask questions and vote at this meeting. I'm holding undirected proxies in my capacity as chair, and it is my intention to vote all such proxies in favor of all resolutions. Any directed proxies that are not voted at the meeting will automatically default to me as chair of the meeting, and I am required to vote those proxies as directed. The specific voting proxies indicated by valid.
I repeat, the specific voting preferences indicated by valid proxies holding approximately 1,443,264,638 shares who have either directed their voting preferences or have left their voting preferences open to be cast by the nominated representative or the chair are set out in the slide that appears before you. I propose to take this slide as read. The first item of business deals with the financial statements and reports. These have been forwarded to shareholders who requested them and are now laid before the meeting. These financial statements and reports are for the financial year ended 30 June 2022. This is not a resolution and no vote is required on it.
As I have advised, representatives of the company's auditors are in attendance to answer any questions shareholders may wish to direct to them in relation to the conduct of their audit or in relation to the preparation of the financial statements. I invite any questions from shareholders regarding the financial statements. I will start with any questions from the floor to give our shareholders online a moment to submit any questions on this. Do we have any questions from the floor? No questions. Sophie, as company secretary, can you please read out any online questions received regarding this item?
No questions have been received.
Have we received any questions from verbal, those wishing to ask verbal questions?
No verbal questions at this time.
Okay. Thank you. As there are no questions, we will now move on to the formal resolutions. The next item of business asks shareholders to adopt the company's remuneration report for the year ended 30 June 2022. The remuneration report is included on pages 50-65 of the annual report that has been made available to shareholders. Unless there is an objection, I will take the motion as being read and refer you to the screen for details of the proxies received for this resolution. While this is a non-binding advisory vote of shareholders, the views and comments of shareholders will certainly be taken into account by directors when further considering remuneration matters. I note that a voting exclusion applies to this resolution, as set out in the notice of meeting. The board recommends the shareholders vote in favor of this resolution.
I invite any questions from shareholders regarding this re-resolution. I will again start with any questions from the floor to give our shareholders online a moment to submit any questions on this. Do we have any questions from the floor? No questions. Do we have any, Sophie, as Company Secretary, have you received any online questions?
No online questions have been received.
Okay. Do we receive any online verbal questions?
No online verbal questions have been received.
Okay. Thank you. As there are no questions, I now draw your attention to the resolution and the proxies received on the screen. I now put the resolution to the meeting. If you have not done so, please now cast your vote on this item. The next item of business that requires voting is the re-election of Mr. Bruce Munro as a director of the company. Details of Mr. Munro's qualifications and experience are set out in the notice of meeting and the company's 2022 annual report. Unless there is an objection, I will take the motion as being read and refer you to the screen for details of the proxies received for this resolution. The board, other than Mr. Munro, recommends that shareholders vote in favor of this resolution. I invite any questions from shareholders regarding this resolution.
I will again start with any questions from the floor to give our shareholders online a moment to submit any questions on this. As there are no questions from the floor, Sophie, as Company Secretary, could you please read out any online questions received regarding this item?
No questions have been received on this resolution.
Thank you. Have we received any verbal questions online?
No verbal questions have been received.
Okay. Thank you. As there are no questions, I now draw your attention to the resolution and the proxies received on the screen. I now put the resolution to the meeting. If you have not done so, please now cast your vote on this item. The next item of business that requires voting is the re-election of Mr. Hamish Tyrwhitt as a director of the company. Details of Mr. Tyrwhitt qualifications and experience are set out in the notice of meeting and the company's 2022 annual report. Unless there is an objection, I will take the motion as being read and refer you to the screen for details of the proxies received for this resolution. The board, other than Mr. Tyrwhitt, recommends that shareholders vote in favor of this resolution. I invite any questions from shareholders regarding this resolution.
I will again start with any questions from the floor to give our shareholders online a moment to submit any questions on this. Do we have any questions from the floor? No questions. Sophie, as Company Secretary, could you please read out any online questions received regarding this item?
No online questions have been received.
Thank you. Have we received any online verbal questions?
No verbal questions have been received.
Thank you. As there are no questions, I now draw your attention to the resolution and the proxies received on the screen. I now put the resolution to the meeting. If you have not done so, please now cast your vote on this item. Ladies and gentlemen, that concludes our discussion on items of the business before this annual general meeting. I will shortly close the voting. Please ensure that you have cast your vote on all the resolutions. I will now pause to allow you time to finalize those votes. I now declare the poll closed and ask all shareholders attending in person to place their ballots in a ballot box being circulated by our representative from Computershare.
After the votes on the resolutions have been counted and reviewed, the results of the poll will be announced on the ASX via an ASX announcement and on the company's website. At an annual general meeting, shareholders are entitled to ask questions about or make comments on the management of the company. Before calling this meeting to a close, I would like to provide shareholders with this opportunity to ask any questions that you may not have been able to ask earlier. As before, I will start with any questions from the floor to give our shareholders online a moment to submit any questions. Do we have any questions from the floor? No, we have no questions from the floor. Sophie, as Company Secretary, can you please read out any online questions received?
No questions received online, in writing or verbally.
Right. Okay. We don't have any questions or comments received. As I mentioned earlier, the results of the poll will be available shortly and will be announced on the ASX and on the company's website. Can I thank you all for your attendance at this meeting and your interest in the company. On behalf of the board, we look forward to your continued support. I now declare the meeting closed.