Good morning, ladies and gentlemen. Welcome to the Annual General Meeting of McMahon Holdings Limited. My name is Eva Skira, and I am the Chair of McMahon. I would like to introduce your non executive directors, Arie Sedato, Alex Ramele, Bruce Munro, Denise Pekomish and Hamish Turret, who have joined online today. I have with me in attendance at our office in Perth our Managing Director, Mick Finegan our Chief Financial Officer, Peter Pollard our incoming Chief Financial Officer, Bircela Loomis and our company secretary, Greg Gatingby.
Representatives from the company's auditor, KPMG, are also in attendance at our Perth office and will be available to answer questions on financial statements and in relation to the audit. I would like to take this opportunity to thank those present for taking the time to attend today's meeting. Your support and interest in the company's affairs are appreciated by the Board. The Annual General Meeting is being conducted online to permit non Perth based shareholders and stakeholders to attend and to assist with the measures required to contain the spread of COVID-nineteen. My fellow Board members and I regret that we are unable to meet with shareholders in person today.
Today's meeting is being held via the Lumi platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. If you experience any difficulties during the meeting, please refer to the online meeting guide attached as Schedule 2 to the notice of meeting, which is available on the Luby and ASX platforms and on McMahon's website.
Online attendees can submit questions at any time. To ask a question, select the messaging tab at the top of the Lumi platform. At the top of that tab, there is a section for you to type your question. Once you have finished typing, please hit the arrow symbol to send. 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, amalgamate it together. For those shareholders who wish to ask a verbal question, an audio questions facility is available during this meeting. To use this service, please pause the broadcast on the Lumi platform and then click on the link under asking audio questions. A new page will open where you will be prompted to enter your name and the topic of your question before being connected. You will listen to the meeting on this page while waiting to ask your question.
If you have any issues using this system, please return to the Nuvi platform. 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 e mail or telephone after the meeting so we can respond in due course. Voting today will be conducted by way of a poll on all items of our business. Rod Soames from Computershare has agreed to be returning officers today.
And 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 McMahon's website. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. Once voting has opened, if you are eligible to vote at this meeting, a new voting tab will appear. Selecting this tab will bring up a list of resolutions and present you with voting options.
To cast your vote, simply select one of the options. There is no need to either submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote by simply selecting another voting option up until the time I declare voting closed. If you have any questions about casting your vote online, please refer to the online meeting guide or call computer share on the number set up in the guide. I will now I now declare voting open on all of business.
The voting tab will soon appear. Please submit your votes at any time. I will give you a warning before I move to close voting. The company secretary, Greg Gettingbee, has informed me that we have a quorum present. I therefore declare this Annual General Meeting of McMahon 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 consider the resolutions outlined in the notice of meeting. Firstly, my chair's address.
I am pleased to say that McMahon's business performed very well again in 2021, delivering on earnings guidance for the 4th consecutive year. This is another excellent result and follows the company's strong performance last financial year. The business continues to demonstrate resilience during an extended period of uncertainty and volatility in many sectors of the economy. This has been guided by our strategy to build a diversified and scalable binding services business where we have made significant progress. 12 months from our last AGM, the impact of the COVID-nineteen pandemic continues to be a global challenge.
It is likely to remain so in the foreseeable future. Importantly, the mining and mining services industry has demonstrated its ability to adapt swiftly and protect the well-being of its people and the broader communities in which it operates. We will continue to carefully implement risk management measures to protect our workforce and stakeholders and safeguard business continuity. Having said that, border restrictions to contain COVID-nineteen have stretched the labor market across the industry, and our key focus remains on the recruitment, training and retention of our people to ensure we continue to deliver for our clients and shareholders. As always, our people's safety and well-being are at the core of how we do business.
It continues to be a critical focus area for McMahon. It is with great sadness that we reported the passing of 2 employees during the year, Pac Abdul Hakim and Paul Martin, who tragically passed away whilst on-site. Our thoughts continue to be with the family, friends and colleagues impacted by these tragedies. I would like to note the Western Australian parliamentary inquiry into sexual harassment against women in the FIFO Mining Industry, which commenced in July this year. McMahon fully supports this inquiry.
As an organization, we are committed to providing a safe and positive working environment for our people, an environment where harassment and bullying of any form will not be tolerated. McMahon is committed to building a sustainable business through the consideration of social, ethical and environmental aspects in all that we do as well as upholding high corporate governance standards. We continue to elevate ESG as a focus in the way we do business, and we're pleased to recently release a standalone sustainability report this year. This will continue to evolve as a part of our reporting regime, and we look forward to reporting on our future progress. During the year, we were pleased to welcome Denise McComish to our Board as an independent Non Executive Director.
Denise adds diversity to the Board, fitting her extensive financial and commercial experience, including audit, reporting, assurance, M and A and sustainability. Effective from Wednesday, Denise takes on the role of Chair of the Audit and Risk Committee in addition to becoming a member of the Remuneration Committee. Denise replaces Birrell Beller, who resigned from the Board effective 20 October. I would like to take this opportunity to thank Virell for his contribution to Macbarn over many years since his first involvement with the company in 2,007. Virell has been an excellent director, a staunch supporter and will be missed by everyone who worked with him at McMahon.
We wish Viral a very happy and healthy retirement and all the best for the future. In line with our capital allocation policy, the Board declared a final dividend for the 2021 financial year of 0.35 dollars per share. This brought the total dividend for 2021 to 0.65 dollars per share, which represents an 8% increase over the prior year. The total dividend represents a payout ratio of 18% of underlying net profit after tax, which is in line with our current target payout ratio range of 10% to 25%. Our capital allocation policy reflects the importance of paying dividends to our shareholders, balanced with the priority of retaining the financial flexibility to enable the continued execution of our growth strategy.
With over $2,000,000,000 of new work secured during financial year 'twenty one, our order book remains strong and long dated. Coupled with a robust tender pipeline, this positions the business well for continued sustainable growth in the years ahead. I would like to close by again thanking on behalf of our Board, our CEO, Mick Finnegan the senior management, executive team and all of our people for another outstanding contribution. The quality of our people gives me confidence that the business is in good hands to continue performing well into the future. Finally, without the support of our shareholders, our business would not be possible.
I would like to thank all our shareholders for your investment and ongoing support. I will now hand over to McVinny Finegan for his CEO and Managing Director address. Thank you.
Thanks, Aoife, and good morning, everyone. Thanks for joining us today for our 2021 Annual General Meeting. I'd like to take this opportunity to thank Eva and the Board for your continued support and confidence in our team. And I'd also like to thank Viral from the management team and myself personally. His courage, experience and guidance has been invaluable for us all.
Can I start by saying how incredibly proud I am of the Holmec Martin team? To achieve a record financial result and progress against our strategic objectives in the current uncertain and challenging climate is particularly pleasing. I think this reflects the underlying strength of the business and the tremendous team that we have in place. I'll begin with some comments on our financial performance for the year. As an overview, the business delivered on our market guidance for a pleasing 4th consecutive year.
We achieved record earnings, excellent cash conversion and maintained a solid balance sheet. Reported revenue was $1,350,000,000 for the year, which was down slightly from the prior period, primarily due to the removal of non cash revenue at Barahijia. If you exclude this change, revenue grew approximately 6%. Underlying EBITDA was up 5% to a record $250,000,000 and underlying EBITDA was up 4% to $95,200,000 Cash conversion was again a highlight with underlying operating cash flow of $269,000,000 representing a conversion rate of 108% of underlying EBITDA. The strong cash flow performance enabled us to increase our full year dividend payment to $0.65 per share, up 8% from the prior year.
Our return on average capital employed of 13.5% was slightly down on the prior year of 14.8% due largely to new project starts in the second half of the year. Over the coming years, though, we still expect to achieve our stated return on average capital employed target of 15% or better. Before I provide some comments on people and safety, I also wish to acknowledge with great sadness the passing of 2 of our colleagues during the year. Our people are very important to us, and improving our safety performance is critical to our business and me personally. Our total recordable injury frequency rate increased to 6.39 during the year.
Now we regard any increase as a cause for concern and we're taking this very seriously. We're targeting improvement in FY 'twenty two with a laser light focus on improving the use and awareness of our proven safety system, workplace behaviors and culture and situational awareness to ensure a safer workplace. Pleasingly, we are already seeing good progress in this area this financial year. I would also like to reinforce the Chair's comment that sexual harassment is not contained in our business. We will continue to work with our clients and remain committed to ensuring all of our people feel safe and respected at work at all times.
The COVID-nineteen pandemic continued to provide a wide range of challenges for McMahon in 2021. Our teams are now well versed in measures to best protect themselves and their colleagues from this virus, which in turn will safeguard the continuity of our business as much as possible. Now despite our success to date in this area, rest assured that we are not taking our fortunate position for Granite, and we remain as proactive as possible in managing these potential risks. A real highlight during the year was securing $2,000,000,000 of new work for the business that aligns with key elements of our strategy. This has increased scale in our underground business and expanded our civil presence into Western Australia.
These wins add materially to our order book and provide us with a really high level of secured revenue for both FY 'twenty two and FY 'twenty three. We have commenced 5 of these new projects in the last 9 months, which include Warrawina Civil, Foxley, Qualia Underground, Streamline Civil and the Dawson project on the East Coast. In addition, we are currently focused on delivering the King of the Hills and Warrawoona Mining Projects, which will both commence in the second half of this financial year. We know skilled labor is a challenge for our sector in Australia at the moment with various border restrictions still in place. Having said that, these new projects were spread geographically and through different activities, which meant we were drawing on different talent pools, which did help.
However, to further assist in managing the current skill shortage, we continue to invest in training, development and retention programs, and importantly, we have worked with our clients to create deliverable ramp up schedules. Regarding the cost pressures evident in the current market, we are in a relatively fortunate position given the nature of our contracts. We have several aligned style contracts where costs and performance risks and opportunities are shared. The remaining contracts are a schedule of rate structure, which have rise and fall provisions to capture movements in labor rates, parts, freight and oil pricing. Now subsequent to the year end, we have continued our positive word winning momentum and added over $800,000,000 to our order book through the finalization of the Werrawuna Mining contract and the extension of the Tropicana and Telfer surface work.
Although COVID-nineteen has impacted our business and our industry in the short term, our strategy remains unchanged and is designed to deliver improved financial performance through modernizing and diversifying our business. We remain focused on optimizing our current projects and winning strategically along new projects and expansions, which will enhance our group margins. We continue to look to diversify and expand our service offering across the mining value chain with a specific focus on lower capital services such as civil contracting, engineering and underground mining. An end to end suite of services strengthens the solutions we can offer our clients, increases returns and scalability of our business and increases our addressable markets in our current jurisdictions. We have made good progress in this the last few years with our underground division growing to 22% of our revenue, with continued growth expected in FY 'twenty two following the award of strategically important contracts, including Qualia and King of the Hills.
Supporting this is the successful GBF acquisition, and we are pleased with the integration of this business with our own underground business unit, and we expect this growth trajectory of the combined underground business units to continue. We're currently finalizing the earn out payment for this acquisition, and we expect to update the market in the near future once this is concluded. We remain focused on modernizing our offering and continue to implement new tools that are improving and differentiating our business. This will play an increasingly important part in our future as the mining industry moves towards centralized remote operation, digital mine operating systems, automation and alternative energy solutions. Our longer term objective is to continue to diversify the business by targeting a more even mix across our underground, surface and mining support businesses.
This approach creates a less capital intensive business and more scalable business that will support us in achieving and eventually exceeding our longer term stated financial targets of EBITDA margins of 20%, EBITDA margins of 8% and return on average capital employed of 15%. Our focus for the remainder of the financial year remains on the safety and well-being of our workforce, managing our people and resource requirements as we continue to grow the business, finalizing the Buttigiegia Phase 8 extension, continuing to progress our operational technology solutions and further evolving our strategy to expand and diversify our earnings. We have demonstrated the quality of our team and the resilience of our business by maintaining our earnings growth over a number of years through unprecedented challenges. I'm excited by the business outlook that our amazing team of over 7,000 people have worked incredibly hard to create. We are well positioned to continue growing into FY 'twenty two and beyond with a strong order book of $5,000,000,000 and over $9,000,000,000 of opportunities now in the tender pipeline.
Pleasingly, in line with our strategy, our pipeline is evolving to create a more diversified scalable business with more opportunities in underground and mining support services. With that, I would like to reiterate our FY 'twenty two guidance of $1,400,000,000 to $1,500,000,000 in revenue and underlying EBITDA in the range of $95,000,000 to $105,000,000 I would like to close by again thanking everyone in the Med Mahon team for their ongoing commitment and significant contribution to the business. It is acknowledged and very much appreciated, particularly during these challenging times. I wish to also extend my appreciation to our clients and join the chair in thanking our shareholders for their ongoing support. I will now hand back to the chair.
Thank you.
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 21st September 2021, and I will 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'll 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 on which 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 am holding undirected proxies in my capacity as chair, and it is my intention to vote all such proxies in favor of core resolutions. Any directed proxies that are not voted at the meeting will automatically default to me as chair of the meeting, and I'm required to vote those proxies as directed. The specific voting preferences indicated by proxies holding approximately 724,000,000 193,490 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 2021. This is not a resolution, and no vote is required on it.
As I have advised, representatives for 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. If you have a question on this item and have not yet submitted it using the chat box, please tap on the question icon on your screen and type your question in the chat box now. I will give you a moment to do this. Greg, as company secretary, can you please read out any questions received regarding this item?
There are no questions on that item.
Thank you. As there are no questions, we will now move on to the formal resolutions. The next slide of our business asks shareholders to adopt the company's remuneration report for the year ended 30 June 2021. The remuneration report is included on Pages 56 to 71 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.
Whilst this is a nonbinding 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 at the notice of meeting. The Board recommends that shareholders vote in favor of this resolution. If you have a question on-site and have not yet submitted it using the chat box, please tap on the question icon on your screen and type your question in the chat box now. I will give you a moment to do this.
Great. As company secretary, can you please read out any questions received regarding Resolution 1?
There are no questions on that item.
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 site of business that requires voting is the election of Denise McComish.
Details of Denise's qualifications and experience are set out in the notice of meeting and the company's 2021 annual report. Ms. Mickomish joined the Board as an independent non executive director on the 1st March 2021 and was appointed as Chair of the Audit and Risk Committee on the 20th October 2021. On that note, I would like to play a brief video of Denise introducing herself.
With the support of our shareholders, I seek to be reelected as the Director of McMahon Holdings. With the support of our shareholders, I'm privileged to be appointed to the Board in March of this year. I I'm a member of the Audit and Risk Committee and have recently been appointed the Chair and a member of the Nomination Committee. In support of my nomination to continue to serve on the Board, I'll briefly comment on the skills and experience that I bring to McMahon. My executive background is as a 30 year partner with KPMG, specializing in audit and advisory services, working closely with major companies in many industries and on a global basis.
I also bring significant experience gained from numerous board roles as a non executive director. My current boards include ASX listed companies Webjet Limited and Gold Road Resources and not for profits Beyond Blue and Chief Executive Women. My previous board roles include the KPMG Australia Board and Edith Cowan University. I'm also a member of the Australian Takeovers Panel and Chair University School Advisory Board. My financial audit, risk and governance expertise my strong sector experience in mining, including as KPMG's mining leader and my corporate experience, including in strategy, M and A and International Operations are very relevant to McMahon.
I believe this makes me well placed to support McMahon's Board and management team and serve our shareholders and staff as the company continues to deliver on its strategy and at the same time safeguarding the long term governance, viability and sustainability of the company. I'm honored to be part of McMahon's Board and seek your support for my reelection.
Good. Thank you for that video, and apologies for the very slight glitch at the beginning. 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, with Ms. McCormick, recommends that shareholders vote in favor of this resolution.
If you have a question on this item and have not yet submitted it using the chat box, please tap on the question icon on your screen and type your question in the chat box now. I will give you a moment to do this. Greg, as company secretary, can you please read out any questions received regarding Resolution 2?
There are
no questions on that resolution.
Thank you. As there are no questions, I now draw your attention to Resolution 2 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 proposed increase of the maximum aggregate amount of directors' fees per annum that may be paid to non executive directors of $200,000 being an increase of $1,100,000 per annum to $1,300,000 per annum.
The Board has reviewed the current maximum aggregate fee limit for non executive directors, which has remained unchanged at the current level of $1,100,000 per annum since it was last increased following shareholder approval at the company's 2008 Annual General Meeting. Since then, there have been various changes to the Board, which now includes 6 non executive directors. The Board does not intend to utilize the increase in the maximum aggregate fee limit in the short term. Rather, the adjustment to the maximum aggregate fee limit is sought to create capacity to allow for the appointment of further non executive directors as and when that is appropriate in the life cycle of the company and to ensure that the company maintains the ability to pay non executive directors' remuneration at levels commensurate in market rates and, as necessary, to attract and retain directors of the highest caliber. The directors are satisfied that the proposed increase in the maximum aggregate fee limit is appropriate for the reasons set out above.
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. Given the interest of the non executive directors in this resolution, the Board makes no recommendation in relation to Resolution 3. If you have a question on this item and have not yet submitted it using the chat box, please type on the question icon on your screen and type your question in the chat box now. Greg, as company secretary, could you please read out any questions received regarding Resolution 3?
There are no questions on that resolution.
Thank you. As there are no questions, I now draw your attention to Resolution 3 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 items of the business before the Annual General Meeting.
I will shortly close the voting system. 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. After the votes of 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 have not been able to ask earlier. Greg, can you please read out any questions received?
The first question is from Mr. Alexander Beale on behalf of Matrix PTY Ltd. The question is, can the management team please comment on the progress of the Budahee Jiao Phase Act cutback delaying extension visibility?
Thank you for the question. I will hand that question over to the Managing Director.
Yes. Thanks, Eva. Thanks, Craig, and thanks, Alexander. As most people probably are aware, Phase 7 has really started to phase down next financial year. We had intentions prior to COVID of negotiating Phase 8 sooner, but given that the managing the COVID in that region was such a priority, we saw or paused those conversations.
Now that the site has done such an amazing job on managing COVID and they're stepping out of that with vaccine rates so high and now even starting to potentially wind back durations of rosters, that discussion is that we'll start to pick up momentum. So in terms of Phase 8, there's a high level of confidence in that proceeding. Eileen, there's been a lot of work done out there, but I can't talk on behalf of the client. I would think with where the copper price is now, the confidence on that proceeding would only be higher than what it was when we last gave an
update. Thank you. Greg, are there any other questions?
Yes. There is another question from the Greco family. The question is general question. Mick has provided guidance on revenue and EBITDA, both of which are increases on 2021. Can you give guidance on the dividend for 2022?
Naturally, shareholders will be hoping for an increase in dividends over time.
Thank you for that question. We don't give guidance on the dividend as such. However, our payout ratio range is 10% to 25%, and it is our intention to stay within that range. Mick, would you like to make any further comments?
No, I think that's it either.
Greg, any further questions?
No, there are no further questions.
Thank you. Thank you very much to shareholders for your questions. As mentioned earlier, the results of the poll will be available shortly and will be announced on the ASX and on the company's website. Thank you. 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.