MACMAHON HOLDINGS LIMITED — M&A Activity 2008

Aug 26, 2008

==> picture [143 x 63] intentionally omitted <==

27 August 2008

Dear Ausdrill Shareholder,

Macmahon recommends you ACCEPT the increased and final Offer for Ausdrill

As Chairman of Macmahon, I am pleased to inform you of a material increase in the consideration for your Ausdrill Shares under Macmahon’s Offer. Based on Ausdrill’s price of $1.95 before Macmahon’s Offer was announced and Macmahon’s closing price on 22 August 2008 of $1.71, our increased Offer delivers an implied premium of nearly 45% and equates to $2.82 for each of your Ausdrill Shares.

Under Macmahon’s increased Offer:

• Ausdrill Shareholders will now receive 1.65 Macmahon shares per Ausdrill Share, representing an increase in scrip consideration of 13.8% to Macmahon’s initial Offer terms;

• Macmahon will waive some of its rights under the Offer so that Ausdrill Shareholders will retain (or receive the benefit of) the Final Dividend of 6¢ per Ausdrill Share.

Importantly, Macmahon’s Offer has now been declared final which means that the price will not be increased in the absence of a competing proposal.

Macmahon’s initial Offer of 1.45 Macmahon shares had already delivered a premium of 32.7% to Ausdrill’s pre-bid share price. Based on Macmahon’s closing price on 22 August 2008 of $1.71 Macmahon’s increased Offer implies a price for your Ausdrill Shares of $2.82.

Since that time, equity markets have suffered significant weakness and the S&P/ASX 300 index has dropped by almost 17%. If you choose not to accept the Offer and it lapses, Macmahon believes the price of your Ausdrill Shares will fall substantially. This is explained in more detail in the First Supplementary Bidder’s Statement.

Macmahon offers you a considerably more attractive investment proposition than Ausdrill. Macmahon recently announced record results for the 2008 financial year and an increase in earnings per share for its shareholders of 43.8%. By comparison, Ausdrill’s earnings per share for the 2008 financial year increased by only 12.6%. We have also noted that despite spending over $193 million in capital expenditure over the last two years, Ausdrill’s revenues grew by only $22 million in 2008. Further information regarding Ausdrill’s 2008 financial year results is set out in the First Supplementary Bidder’s Statement.

Ausdrill’s Board has suggested that Ausdrill Shareholders will receive lower dividends if they accept Macmahon’s Offer. However, Macmahon’s final dividend for the 2008 year of 3.5 cents equates to 5.8 cents for each Ausdrill Share (after applying the 1.65 ratio) which is comparable to the final dividend of 6 cents per share declared by Ausdrill.

Macmahon believes that the Ausdrill directors have made a number of claims in their correspondence to you that are selective and incomplete and which are material to your decision to accept the Offer. We have provided details of these claims in the First Supplementary Bidder’s Statement and suggest you consider these closely.

Macmahon has also announced that it has waived certain conditions attached to its Offer, including the condition related to the performance of the S&P/ASX 300 index.

Macmahon’s increased final Offer will close on Tuesday, 16 September unless otherwise extended.

We urge you to review the information in the First Supplementary Bidder’s Statement and to accept Macmahon’s increased and final Offer immediately.

Yours faithfully,

==> picture [103 x 38] intentionally omitted <==

Richard Carter Chairman

Macmahon Holdings Ltd ABN 93 007 634 406 Level 3, Durack Centre, 263 Adelaide Tce, Perth WA 6000 PO Box 198, Cannington WA 6987 Telephone: (08) 9365 1111 Facsimile: (08) 9365 1199 Web: www.macmahon.com.au

==> picture [72 x 50] intentionally omitted <==

Key reasons why you should accept Macmahon’s Increased Offer

1. Macmahon’s Increased Offer provides an increase in scrip consideration to Ausdrill Shareholders of 13.8% from Macmahon’s Initial Offer. Macmahon’s Initial Offer had already provided a premium of 32.7% to Ausdrill’s pre-bid share price

2. Macmahon’s Increased Offer is the ONLY offer currently available to Ausdrill Shareholders and is FINAL[1]

3. The Ausdrill share price is likely to drop significantly if Macmahon’s Increased Offer lapses

4. By accepting the Increased Offer, you have an opportunity to become an investor in Macmahon, a stronger performing and better diversified

company than Ausdrill

1. Ausdrill’s 2008 financial results raise a number of significant issues which have not been highlighted to you by Ausdrill

1 Macmahon’s Increased Offer will not be further increased in the absence of a competing proposal.

==> picture [596 x 274] intentionally omitted <==

FIRST SUPPLEMENTARY BIDDER’S STATEMENT

by

Macmahon Holdings Limited ABN 93 007 634 406

in respect of the offer to acquire all of your shares in

Ausdrill Limited

ABN 95 009 211 474

==> picture [71 x 50] intentionally omitted <==

First Supplementary Bidder’s Statement

This statement is the first supplementary bidder’s statement (First Supplementary Bidder’s Statement) to the bidder’s statement (the Bidder’s Statement) of Macmahon Holdings Limited ABN 93 007 634 406 (Macmahon) dated 22 May 2008 given in connection with a takeover offer by Macmahon for all the fully paid ordinary shares (Ausdrill Shares) in Ausdrill Limited ABN 95 009 211 474 (Ausdrill).

This First Supplementary Bidder’s Statement must be read together with the Bidder’s Statement.

A copy of this First Supplementary Bidder’s Statement was lodged with the Australian Securities and Investments Commission (ASIC) on 27 August 2008. Neither ASIC nor its officers takes any responsibility for the contents of this First Supplementary Bidder’s Statement.

Defined terms

Unless the context requires otherwise, defined terms used in this First Supplementary Bidder’s Statement have the same meaning given to them in the Bidder’s Statement. Section 13.2 of the Bidder’s Statement also applies to the interpretation of this First Supplementary Bidder’s Statement.

Offer Information Line

For information regarding your Ausdrill Shares, the Offer or how to accept the Offer please read the Bidder’s Statement and this First Supplementary Bidder’s Statement. If you still need assistance please contact the Offer Information Line on:

For Australian callers: 1300 726 037 For international callers: +61 3 9415 4345

==> picture [72 x 50] intentionally omitted <==

1. Increased Offer

On 20 August 2008, Macmahon announced that it has varied its Offers dated 6 June 2008 (Initial Offer) to increase the consideration payable (Increase Announcement) so that each Ausdrill Shareholder who accepts an Offer will receive 1.65 Macmahon Shares for every Ausdrill Share (Increased Offer).

Macmahon also announced that it will vary its Offer so that Ausdrill Shareholders who are on the Ausdrill share register as at close of business on the record date (Dividend Record Date) for Ausdrill’s final dividend for the financial year ended 30 June 2008 (Final Dividend) will be able to retain the whole of that Final Dividend, in addition to the consideration offered under the Increased Offer. Any Ausdrill Shareholders who accept Macmahon’s Offer and who are not on the Ausdrill share register as at close of business on the Dividend Record Date will nevertheless be entitled to receive a cash amount equal to the Final Dividend. Further details in relation to the variation of Macmahon’s Offer in respect of the Final Dividend will be provided to Ausdrill Shareholders in a formal variation notice.

The Increase Announcement is set out in Annexure A to this First Supplementary Bidder’s Statement. The notice of variation to give effect to the variation to the Offers is set out in Annexure B to this First Supplementary Bidder’s Statement.

2. Key reasons why you should accept the increased offer

1. Macmahon’s Increased Offer provides an increase in scrip consideration to Ausdrill Shareholders of 13.8% from Macmahon’s Initial Offer. Macmahon’s Initial Offer had already provided a premium of 32.7% to Ausdrill’s pre-bid share price

Macmahon’s Initial Offer has already provided a premium of 32.7%[1] to Ausdrill’s pre-bid share price.

Under the Increased Offer:

• Ausdrill Shareholders will now receive 1.65 Macmahon Shares per Ausdrill Share, representing an increase in scrip consideration of 13.8% compared to the Initial Offer terms; and

• Macmahon will waive some of its rights under the Offer so that Ausdrill Shareholders will retain (or receive the benefit of) the Final Dividend of 6 cents per Ausdrill Share.

Macmahon’s Increased Offer implies the following prices for Ausdrill Shares:

• $2.45 based on the closing price of Macmahon Shares on 19 August 2008 (the day before Macmahon announced the Increased Offer); and

• $2.73 based on the volume weighted average price (VWAP) of Macmahon Shares between the announcement of Macmahon’s Initial Offer on 20 May 2008 and 19 August 2008; and

• $2.82 based on the closing price of Macmahon Shares on 22 August 2008 (the last practical day before Macmahon released this First Supplementary Bidder’s Statement).

The premiums implied by these prices relative to Ausdrill’s closing share price on 20 May 2008 (the day before Macmahon’s Initial Offer was announced) and 19 August 2008 (the day before Macmahon’s Increased Offer was announced) are set out below.

1 Based on an Initial Offer of 1.45 shares for every Ausdrill Share, and prices of $1.785 (Macmahon) and $1.95 (Ausdrill) on 20 May 2008, the day before the announcement of Macmahon’s Initial Offer.

1

==> picture [71 x 50] intentionally omitted <==

Implied premiums for Ausdrill Shareholders based on Macmahon’s Increased Offer

==> picture [390 x 165] intentionally omitted <==

----- Start of picture text -----

Premiums based on close price
Premiums based on VWAP of of Macmahon Shares on
Macmahon Shares from 22 August 2008
Premiums based on close price 21 May 2008 to 19 August 2008
of Macmahon Shares on
19 August 2008 2.73 2.82
25.2% 29.4%
12.4% 2.45 40.0% 44.6%
25.6%
2.18 2.18 2.18
1.95 1.95 1.95
Ausdrill Ausdrill Offer value Ausdrill Ausdrill Offer value Ausdrill Ausdrill Offer value
share price share price implied by share price share price implied by share price share price implied by
on 20 May on 19 August Macmahon’s on 20 May on 19 August Macmahon’s on 20 May on 19 August Macmahon’s
share price VWAP since share price
on 19 August 21 May on 22 August
----- End of picture text -----

As the chart below shows, the implied value of the Increased Offer (based on the closing prices of Macmahon Shares) has been materially higher than the Ausdrill share price on every trading day during 2008 prior to 22 August 2008 (the last practical date prior to the issue of this First Supplementary Bidder’s Statement).

Implied value of Increased Offer based on Macmahon closing prices2

==> picture [387 x 208] intentionally omitted <==

----- Start of picture text -----

3.50
3.30
Macmahon annouces Offer for Ausdrill
3.10
2.90
2.70
2.50
2.30
2.10
1.90
1.70
1.50
01-Jan 01-Feb 01-Mar 01-Apr 01-May 01-Jun 01-Jul 01-Aug
Ausdrill close price Implied value of Increased Offer
A$
----- End of picture text -----

1. Macmahon’s Increased Offer is the ONLY offer currently available to Ausdrill Shareholders and is FINAL

Macmahon’s Increased Offer is the ONLY offer currently available to Ausdrill Shareholders and it is unlikely that another bid will emerge.

Macmahon’s Increased Offer is FINAL, meaning that it will not be further increased in the absence of a competing proposal (ie. any proposal from or involving a third party in relation to Ausdrill by way of takeover bid, scheme of arrangement, material placement or other transaction having substantially similar effect) for your Ausdrill Shares.

As illustrated below, Ausdrill has consistently traded below $2.00 a share, except in circumstances where there has been takeover speculation or activity. The failure of these past discussions to generate an offer, together with statements from Ausdrill’s Managing Director, Mr Ron Sayers, stating

2 The implied value of the Increased Offer applies the exchange ratio to the closing prices of Macmahon Shares on each trading day prior to 22 August 2008 (the last practical date prior to the issue of this First Supplementary Bidder’s Statement)

2

==> picture [72 x 50] intentionally omitted <==

that there was no ‘white knight’ being sought to counter Macmahon’s Offer, suggest that the probability of an alternative bidder to Macmahon emerging is very low.

==> picture [405 x 158] intentionally omitted <==

----- Start of picture text -----

Price inflated during mid 2007 due to
3.50 20 May 2008:
takeover speculation
Macmahon announces Offer
3.00
2.50
$2.18 (ASL close on 19 August)
2.00 $1.95 (ASL close on 20 May)
1.50
1.00
3-Jul-06 23-Nov-06 15-Apr-07 6-Sep-07 27-Jan-08 19-Jun-08
Ausdrill share price
Ausdrill share price (A$)
----- End of picture text -----

1. The Ausdrill share price is likely to drop significantly if Macmahon’s Increased Offer lapses

Ausdrill’s share price is currently supported by Macmahon’s Offer and an embedded takeover premium. If Macmahon’s Offer were to lapse, Macmahon believes Ausdrill’s share price would drop to well below the $1.95 level at which Ausdrill Shares had been trading prior to the Offer, given recent equity market falls.

Applying a market decline of 17% (being the decline in the S&P/ASX index 300 since Macmahon’s Initial Offer was announced) to Ausdrill’s pre-bid share price of $1.95 implies an Ausdrill share price of approximately $1.62 per share in the absence of the Macmahon bid. A fall to these levels may be further exacerbated by Ausdrill’s historical lack of liquidity, particularly as arbitrage investor positions are unwound.

==> picture [419 x 190] intentionally omitted <==

----- Start of picture text -----

$2.60
$2.40
$2.30
17.9%
$2.20
$2.00
$1.80
$1.62
$1.60 (16.7)%
$1.40
$1.20
20-May-08 03-Jun-08 17-Jun-08 01-Jul-08 15-Jul-08 29-Jul-08 12-Aug-08
S&P/ASX 300 Ausdrill share price
Index performance
(rebased to ASL price on 20 May)
----- End of picture text -----

Ausdrill’s Board has to date elected not to commission an Independent Expert’s report. An Independent Expert’s report would have provided you with an objective view on the value of Ausdrill Shares. This could have provided some guidance as to the likely trading levels of Ausdrill Shares in the absence of Macmahon’s Offer.

3

==> picture [71 x 50] intentionally omitted <==

1. By accepting the Increased Offer, you have an opportunity to become an investor in Macmahon, a stronger performing and better diversified company than Ausdrill

Macmahon represents a compelling investment, with a strong management team, high quality earnings and solid growth prospects. Full details of Macmahon, its operations and its growth prospects are set out in Macmahon’s Bidder’s Statement.

Some of the key benefits of an investment in Macmahon, relative to Ausdrill, are:

• Increased equity market scale and liquidity – Macmahon is included in more S&P/ASX indices (in particular the S&P/ASX 200 index), has more extensive broker coverage and is significantly more liquid than Ausdrill.

• Enhanced line of business diversification – Macmahon has established a sizeable presence in the Australian civil construction sector and is well placed to benefit from the material planned increases in Australian infrastructure spending, whilst the diversification of Macmahon’s contract mining business by commodity provides a strong balance to Ausdrill’s high degree of exposure to gold.

• Better geographic balance – Macmahon generates the majority of its earnings from Australia and New Zealand, which are both low sovereign risk economies. Based on statements from Ausdrill, it appears that Ausdrill could be generating over half of its future earnings from African activities. Due to political instability, African revenues are inherently higher risk than those generated from Australia and New Zealand.

• Stronger earnings per share growth – On 20 August 2008, Macmahon announced an increase in underlying basic earnings per share for the 2008 financial year of approximately 43.8%, which compares to the 12.6% growth for Ausdrill over the comparable period. Macmahon has provided guidance for the 2009 financial year of profit growth in the range of 20–30%, underpinned by $1.2 billion of revenue which is already secured for 2009.

• Ausdrill’s 2008 financial results raise a number of significant issues which have not been highlighted to you by Ausdrill

Ausdrill’s 2008 financial results demonstrate that, despite raising nearly $100 million in equity in November 2007, Ausdrill’s net indebtedness is back to where it was in June 2007. It is unclear how Ausdrill will achieve sustainable growth without relying on further capital raisings.

==> picture [434 x 223] intentionally omitted <==

----- Start of picture text -----

Issue Comment
1. Ausdrill’s $98 million equity raising from In November 2007, Ausdrill completed a $98
November 2007, the purpose of which was million equity raising to fund organic growth.
to fund growth, appears to have already
Despite this significant injection of equity,
been fully deployed.
Ausdrill’s net debt position at 30 June 2008
is $47.0 million — a minimal change
compared to Ausdrill’s net debt at 30 June
2007 of $48.9 million.
This suggests that Ausdrill’s equity raising has
been fully deployed.
Based on Ausdrill’s current funding model it
can only be assumed that the planned future
growth will be funded by debt and/or further
equity raisings.
----- End of picture text -----

4

==> picture [72 x 50] intentionally omitted <==

==> picture [434 x 716] intentionally omitted <==

----- Start of picture text -----

Issue Comment
2. Despite Ausdrill’s significant deployment Ausdrill has spent a total of $193 million of
of capital, 2008 revenues grew by only capital expenditure [3] over the last two years.
$22.8 million, and revenue from Africa
Despite this significant investment of
actually decreased.
shareholders’ funds, Ausdrill’s revenues grew
by only $22.8 million in 2008.
Of particular concern is Ausdrill’s execution
of its strategy of investing in Africa. Despite
continuing to refer to opportunities for growth
in Africa and having invested $48 million in
Africa during the 2008 financial year, Ausdrill’s
revenues from African operations decreased
by $17 million, or 10.9%, during 2008.
In contrast to Ausdrill’s low revenue growth
of 6%, Macmahon’s delivered 29% top line
revenue growth for 2008.
3. Ausdrill’s 2008 EPS growth of 12.6% is Earnings per share growth is a critical
substantially less than Macmahon’s 2008 measure of growth to shareholders, since
EPS growth of 43.8%. it weighs the benefits of earnings growth
attributable to shareholders against the costs
to shareholders of achieving that growth.
Ausdrill delivered growth in earnings per share
for 2008 of 12.6%. Macmahon considers this
low for the sector, particularly when
considering the “buoyant” market conditions
identified by Ausdrill’s Chairman.
In contrast, Macmahon delivered EPS growth
of 43.8% for 2008.
Ausdrill’s lower growth in EPS reflects the
dilutionary nature of its growth, which has
required capital raisings to be funded.
4. Macmahon queries Ausdrill management’s In order to fund its growth, Ausdrill has raised
ability to deliver sustained growth without capital from equity markets in both 2006
continuing to ask equity investors for and 2007. Macmahon’s analysis suggests
more cash. that Ausdrill may have already fully deployed
its capital from the 2007 placement.
Given Ausdrill’s history of requiring capital
raisings to deliver growth, Macmahon queries
Ausdrill’s ability to continue to deliver growth
without raising more equity.
In stark contrast to Ausdrill, due to
Macmahon’s disciplined approach to capital
management, Macmahon has not had to
engage in an equity raising to fund growth
since 2005, despite almost doubling
revenues over that period.
----- End of picture text -----

3 Acquisitions of property, plant and equipment, intangibles and other non-current segment assets.

5

==> picture [71 x 50] intentionally omitted <==

What Ausdrill’s Directors have not told you

In rejecting Macmahon’s Increased Offer in a release to the Australian Securities Exchange on 20 August 2008, Ausdrill’s Board made a number of claims that Macmahon believes are selective and incomplete.

==> picture [434 x 662] intentionally omitted <==

----- Start of picture text -----

Claim from Ausdrill’s Board Comment
1. According to Ausdrill’s Chairman, As at the close on 22 August 2008, the last
Macmahon’s Increased Offer is lower than practical day before publication of this
the value of Macmahon’s Initial Offer at Bidder’s Statement, Macmahon’s share price
announcement which, “… is a consequence was $1.71. This price implies a value of
of Macmahon’s share price falling 16.8% Macmahon’s Increased Offer of $2.82 per
over this period and reflects the uncertain Ausdrill Share. This represents a 44.6%
value of Macmahon’s shares.” premium to the Ausdrill price of $1.95
on 20 May 2008, the day before the
announcement of the Initial Offer.
Macmahon’s share price has dropped by
4.2% between 20 May 2008 (the day prior
to the Initial Offer) and 22 August 2008.
Ausdrill’s Chairman has omitted to acknowledge
that since announcing Macmahon’s Initial Offer,
the S&P/ASX 300 index (the index of which
Ausdrill is a member) has declined by 16.7%.
By contrast, since announcing the Offer
Macmahon’s shares have dropped by
only 4.2%.
This means that Macmahon shares have
materially outperformed this index over the
relevant period, despite the criticism that has
been leveled at Macmahon during this time
by Ausdrill’s Chairman. Given the widely
publicised decline in equity markets over
the past few months, Macmahon can only
believe that this omission by the Chairman
of Ausdrill is deliberate.
At no stage has the Ausdrill Board explained
to Ausdrill Shareholders the risk of Ausdrill’s
share price dropping in the absence of
Macmahon’s bid. Macmahon believes that
this information is material to the decision
of Ausdrill Shareholders whether to accept
Macmahon’s Increased Offer.
2. “Under Macmahon’s revised offer, Ausdrill As Macmahon has previously indicated (in
shareholders would still only own 34.5% of its response to Ausdrill’s Target’s Statement),
the combined group, despite Ausdrill Macmahon’s earnings have been consistently
contributing 55% of the combined group’s valued by the market on a higher earnings
net tangible assets and at least 43% of multiple than Ausdrill because Macmahon’s
the combined earnings…”. earnings stream is higher growth, less risky
and of a higher quality than Ausdrill’s.
Specifically, Macmahon’s earnings stream:
• delivers significantly higher growth rates
than Ausdrill;
• has a significant component of low capital
intensity civil construction activities;
----- End of picture text -----

6

==> picture [72 x 50] intentionally omitted <==

==> picture [434 x 716] intentionally omitted <==

----- Start of picture text -----

Claim from Ausdrill’s Board Comment
• is exposed to less sovereign risk than
Ausdrill;
• is less cyclical, particularly given Ausdrill’s
exposure to exploration drilling; and
• has a better funding model which does not
require shareholder funds for organic growth.
Macmahon’s higher growth and return on
equity during the 2008 financial year are set
out in the table below. Macmahon believes
this demonstrates why investors value
Macmahon on higher multiples than Ausdrill:
FY08 ASL MAH
Revenue growth 6% 29%
Earnings per share growth 13% 44%
Return on equity [4] 13% 20%
Further, Macmahon’s 2008 financial dividend
of 3.5 cents per share is equivalent to a
dividend of 5.8 cents per Ausdrill share, which
is comparable with Ausdrill’s final dividend of
6 cents per share. Combining Macmahon’s
dividend policy with its strong growth
performance explains why Macmahon’s Total
Shareholder Return for the 2008 financial year,
which measures the increase in value of an
investment to shareholders over the period, was
32%, compared to Ausdrill’s Total Shareholder
Return over that same period of 3%.5
Macmahon believes that this information
is material to the decision of Ausdrill
Shareholders whether to accept Macmahon’s
Increased Offer.
3. “Ausdrill’s directors and other shareholders On 6 June 2008, Ausdrill’s Chairman wrote
representing at least 25% of Ausdrill’s shares to shareholders and claimed that
have again stated that they will not accept shareholders controlling 39.1% of Ausdrill
the revised and final offer”. Shares “have confirmed in writing to Ausdrill
that they will not accept Macmahon’s
(initial) offer”.
Ausdrill’s Chairman has not updated the
market on the attitude to Macmahon’s
Increased Offer of the shareholders
controlling the 14% balance of Ausdrill
Shares (ie the difference between the 39%
referred to by Ausdrill’s Chairman in June
and the 25% he has referred to in August).
Indications to Macmahon suggest that at
least some of these Ausdrill Shareholders
may have since changed their previously
stated positions.
Macmahon believes that the position of these
shareholders towards Macmahon’s Increased
Offer is material to the decision of Ausdrill
Shareholders whether to accept
Macmahon’s Increased Offer.
----- End of picture text -----

• 4 Calculated as profit attributable to members divided by closing book equity.

5 Total shareholder return is calculated by measuring the increase in the value of an investment in the company, assuming all dividends were reinvested.

7

==> picture [71 x 50] intentionally omitted <==

3. Results Announcement

On 20 August 2008, Macmahon announced its financial results for the financial year ended 30 June 2008 (Results Announcement).

The Results Announcement is set out in Annexure C to this First Supplementary Bidder’s Statement.

Further information in relation to Macmahon’s results for the financial year ended 30 June 2008 is available from the Macmahon’s website at www.macmahon.com.au.

4. Financial Information in relation to Macmahon

Section 6 of the Bidder’s Statement contains Historical Financial Information for each of Macmahon and Ausdrill on a stand alone basis, as well as the Combined Group Aggregated Income Statements for the year ended 30 June 2007 and the Combined Group Pro Forma Balance Sheets as at 31 December 2007, and accompanying notes.

Section 6 is replaced entirely by the updated section 6 attached as Annexure D to this First Supplementary Bidder’s Statement, which has been updated to take into account events which have occurred since the date of the Bidder’s Statement which are material and to the extent they are known to Macmahon.

5. Institutional Acceptance Facility

5.1 Acceptance Facility

Macmahon encourages all Ausdrill Shareholders to accept the Offer now, but recognises that there may be some Ausdrill Shareholders who may not be willing or able to accept the Offer before it becomes unconditional.

Accordingly, in order to enable certain Ausdrill Shareholders to indicate their intention to accept the Offer, Macmahon has arranged for the establishment of an acceptance facility (Acceptance Facility) open by invitation only to wholesale clients (as defined in section 761G of the Corporations Act) who hold at least $500,000 worth of Ausdrill Shares (Eligible Shareholders).

Ausdrill Shareholders who are not Eligible Shareholders cannot participate in the Acceptance Facility. The terms of the Acceptance Facility will be advised to Eligible Shareholders invited to participate.

The key features of the Acceptance Facility are summarised below.

5.2 Facility Agent

UBS Securities Australia Limited (Facility Agent) has been appointed to act as acceptance collection and lodgement agent under the Acceptance Facility.

5.3 How the Acceptance Facility operates

• (a) Eligible Shareholders who wish to take advantage of the Acceptance Facility will be able to lodge acceptance instructions with the Facility Agent in the form of Acceptance Forms and/or directions to custodians to accept the Offer in respect of the Ausdrill Shares which the Eligible Shareholder holds (Acceptance Instructions).

• (b) The Facility Agent will hold the Acceptance Instructions as collection and lodgement agent only and will not acquire a “relevant interest” in any of the Ausdrill Shares the subject of the Acceptance Instructions.

• (c) Eligible Shareholders who lodge Acceptance Instructions retain all rights in relation to, and full control over, their Ausdrill Shares and may withdraw their Acceptance Instructions at any time until the Facility Agent receives a Confirmation Notice (as defined in paragraph (e) below) from Macmahon. Whilst Acceptance Instructions are held by the Facility Agent, they will not constitute acceptances of the Offer.

• (d) Eligible Shareholders who lodge Acceptance Instructions with the Facility Agent will have directed the Facility Agent to deliver the Acceptance Instructions as formal acceptances of the Offer once the Facility Agent receives a Confirmation Notice (as defined in paragraph (e) below) from Macmahon.

8

==> picture [72 x 50] intentionally omitted <==

• (e) The Facility Agent will deliver the Acceptance Forms in accordance with the instructions set out in the Acceptance Forms and the custodian directions to the relevant custodians if the Facility Agent receives a written notice (Confirmation Notice) from Macmahon that:

• (i) Macmahon has declared the Offer free from all defeating conditions that have not been fulfilled; or

• (ii) Macmahon will declare the Offer free from all defeating conditions that have not been fulfilled (Declaration) once all the delivered Acceptance Instructions are validly processed or implemented (as appropriate).

• (f) If a Confirmation Notice is provided by Macmahon on the basis that Macmahon will make the Declaration referred to in paragraph (e) (ii) above, Macmahon reserves the right to make a Declaration before the processing or implementation of all the Acceptance Instructions is complete.

• (g) If the Facility Agent does not receive a Confirmation Notice from Macmahon by the end of the Offer Period, it will return all Acceptance Instructions to the relevant Eligible Shareholders.

• (h) Macmahon will use its reasonable endeavours to ensure that the Acceptance Instructions are processed or implemented as soon as practicable following the issue of the Confirmation Notice.

5.4 Disclosure of Acceptance Instructions

Macmahon will disclose details of the number of Ausdrill Shares the subject of Acceptance Instructions held in the Acceptance Facility to the market and Ausdrill on the business day following any movement of at least 1% in the aggregate of the number of Ausdrill Shares for which Acceptance Instructions have been received under the Acceptance Facility and the number of Ausdrill Shares in which Macmahon has a relevant interest, together with a breakdown of the aggregate amount between these two categories.

Macmahon has reserved the right to declare the Offer to be free from all defeating conditions at any time (subject to the Corporations Act) irrespective of the number of acceptances received by Macmahon under the Offer or the number of Acceptance Instructions held by the Facility Agent.

6. Defeating Conditions

Macmahon has waived condition 5.1(f) (the S&P/ASX 300 index condition) and condition 5.1(g) (the Change in control condition) set out in Appendix A – The Offer Terms to the Bidder’s Statement. Formal notification of this waiver has been announced to ASX.

Macmahon confirms that it will not rely on condition 5.1(e)(ix) (No material transactions or other changes) in respect of the full final dividend of 6¢ per Ausdrill Share announced by Ausdrill on 22 August 2008.

Macmahon notes that condition 5.1(b) (Foreign investment approval) has been satisfied.

Important note: an additional acceptance form is enclosed for your use. If you have already accepted the Offer you will automatically be entitled to the increased consideration under the Increased Offer (once the Offer becomes unconditional) and do not need to do anything further.

DATED 27 August 2008

SIGNED on behalf of Macmahon Holdings Limited by Nick Bowen, being a director of Macmahon Holdings Limited who is authorised to sign by a resolution unanimously passed at a meeting of the directors of Macmahon Holdings Limited.

==> picture [103 x 23] intentionally omitted <==

Nick Bowen Director

9

INCREASE ANNOUNCEMENT DATED 20 AUGUST 2008

Annexure A

==> picture [525 x 708] intentionally omitted <==

10

11

Annexure B

NOTICE OF VARIATION DATED 20 AUGUST 2008

==> picture [475 x 724] intentionally omitted <==

12

==> picture [431 x 620] intentionally omitted <==

13

Annexure C

RESULTS ANNOUNCEMENT DATED 20 AUGUST 2008

==> picture [510 x 734] intentionally omitted <==

14

==> picture [505 x 705] intentionally omitted <==

15

==> picture [71 x 50] intentionally omitted <==

Annexure D

UPDATED SECTION 6 OF BIDDER’S STATEMENT

6.1 Introduction

Section 6.2 sets out the Historical Income Statements of Macmahon and Ausdrill for the financial years ended 30 June 2007 and 30 June 2008, which present relevant information for Ausdrill shareholders to consider when assessing the Offer.

The Historical Income Statements in section 6.2 should be read in conjunction with the underlying financial information from which they have been extracted, the risk factors set out in section 9 of the Bidder’s Statement, the accounting policies of Macmahon as set out in Macmahon’s Annual Report for the year ended 30 June 2007 and other information contained within the Bidder’s Statement (as supplemented by the First Supplementary Bidder’s Statement).

The Historical Income Statements of Macmahon and Ausdrill have been prepared in accordance with Australian Accounting Standards and the accounting policies as set out in their respective Annual Reports for the year ended 30 June 2007. The accounting policies have been consistently applied over the historical periods presented.

The Historical Income Statements are presented in an abbreviated form and do not contain all the disclosures usually provided in an Annual Report prepared in accordance with the Corporations Act.

Further information in relation to the historical financial performance, cash flows and financial position of Macmahon and Ausdrill can be obtained from their respective Annual Reports for the year ended 30 June 2007 and their Preliminary Final Reports for the year ended 30 June 2008.

6.2 Historical Financial Information

6.2.1 Macmahon Historical Income Statements

The Historical Income Statements in this section relate to Macmahon on a stand alone basis and accordingly do not reflect any impact of the Offer. The Income Statement for the year ended 30 June 2007 has been extracted from the Annual Report of Macmahon for the year ended 30 June 2007, which was lodged with ASX on 4 September 2007. The Financial Statements for the year ended 30 June 2007 were audited with the audit opinion dated 31 August 2007 being unqualified.

The Income Statement for the year ended 30 June 2008 has been extracted from the unaudited Preliminary Final Report for the year ended 30 June 2008 which was lodged with ASX on 20 August 2008.

The Annual Report for the year ended 30 June 2007 and the Preliminary Final Report for the year ended 30 June 2008 can be found at www.macmahon.com.au .

16

==> picture [72 x 50] intentionally omitted <==

==> picture [440 x 331] intentionally omitted <==

----- Start of picture text -----

Macmahon Macmahon
30 June 08 30 June 07
12 Months 12 Months
$000’s $000’s
(unaudited) (audited)
Revenue 1,201,216 902,771
Other income 1,731 4,147
Materials (515,831) (399,536)
Labour (559,652) (400,080)
Depreciation and amortisation expenses (40,209) (34,813)
Finance income 5,253 3,470
Finance expenses (12,766) (13,901)
Other expenses (18,107) (24,102)
Share of profit of equity accounted investees 5,540 5,887
Profit before income tax 67,175 43,843
Income tax expense (17,797) (13,800)
Profit from continuing operations 49,378 30,043
–
Profit from discontinued operations 3,378
–
Profit from sale of discontinued operations 11,110
Profit for the period 49,378 44,531
----- End of picture text -----

On 21 August 2007, Macmahon announced an underlying net profit for the year ended 30 June 2007 of $33.421 million, being the sum of the profit from continuing operations ($30.043 million) and discontinued operations ($3.378 million) in the above income statement.

6.2.2 Ausdrill Historical Income Statements

The Historical Income Statements in this section relate to Ausdrill on a stand alone basis and accordingly do not reflect any impact of the Offer. The Income Statement for the year ended 30 June 2007 has been extracted from the Annual Report of Ausdrill for the year ended 30 June 2007, which was lodged with ASX on 27 September 2007. The Financial Statements for the year ended 30 June 2007 were audited with the audit opinion dated 24 September 2007 being unqualified.

The Income Statement for the year ended 30 June 2008 has been extracted from the unaudited Preliminary Final Report for the year ended 30 June 2008 which was lodged with ASX on 22 August 2008.

The Annual Report for the year ended 30 June 2007 and the Preliminary Final Report for the year ended 30 June 2008 can be found at www.ausdrill.com.au .

17

==> picture [71 x 50] intentionally omitted <==

==> picture [440 x 347] intentionally omitted <==

----- Start of picture text -----

Ausdrill Ausdrill
30 June 08 30 June 07
12 Months 12 Months
$000’s $000’s
(unaudited) (audited)
Revenue 390,984 368,162
Other income 2,309 2,833
Materials (153,875) (168,522)
Labour (116,039) (96,767)
Rental and hire (4,944) (4,411)
Depreciation and amortisation expenses (28,890) (26,996)
Bad and doubtful debts (726) (540)
Finance expenses (9,148) (7,547)
Other expenses (29,679) (30,363)
Takeover defence costs (379) –
Share of profit of equity accounted investees 861 740
Profit before income tax 50,474 36,589
Income tax expense (15,142) (9,970)
Profit from continuing operations 35,332 26,619
Profit from discontinued operations – 925
Profit attributable to members 35,332 27,544
----- End of picture text -----

6.3 The Combined Group

6.3.1 Introduction

The table below sets out the Combined Group Aggregated Income Statements for the year ended 30 June 2007 and 30 June 2008, and the Combined Group Pro Forma Balance Sheets as at 30 June 2008. This section should be read in conjunction with the underlying financial information from which it was extracted, the risk factors set out in section 9 of the Bidder’s Statement, the accounting policies of Macmahon as set out in Macmahon’s Annual Report for the year ended 30 June 2007 and other information contained within the Bidder’s Statement (as supplemented by the First Supplementary Bidder’s Statement).

The Combined Group Aggregated Income Statements and the Combined Group Pro Forma Balance Sheets have been prepared based on the Historical Financial Statements of Macmahon and Ausdrill. Further, the Combined Group Pro Forma Balance Sheets have been prepared on the assumption that the pro forma adjustments set out in section 6.3.3 had occurred on 30 June 2008.

The Combined Group Aggregated Income Statements and the Combined Group Pro Forma Balance Sheets are presented in abbreviated form and do not contain all the disclosures usually provided in an annual report prepared in accordance with the Corporations Act.

6.3.2 Combined Group Aggregated Income Statements

The Combined Group Aggregated Income Statements for the years ended 30 June 2007 and 30 June 2008 have been prepared for illustrative purposes by aggregating the results of Macmahon and Ausdrill from 1 July 2006. They have been prepared using the significant accounting policies of Macmahon as detailed in Macmahon’s Annual Report for the year ended 30 June 2007.

18

==> picture [72 x 50] intentionally omitted <==

The Combined Group Aggregated Income Statements have been compiled based on the:

• (a) Macmahon and Ausdrill audited Income Statements for the year ended 30 June 2007;

• (b) Macmahon and Ausdrill unaudited Income Statements for the year ended 30 June 2008;

• (c) Two ownership scenarios being 50.1% and 100% acquisition by Macmahon; and

• (d) No other adjustments have been made to the aggregated numbers.

==> picture [440 x 497] intentionally omitted <==

----- Start of picture text -----

Combined Combined Combined Combined
Group Group Group Group
50.1% 100% 50.1% 100%
30-Jun-07 30-Jun-07 30-Jun-08 30-Jun-08
12 Months 12 Months 12 Months 12 Months
$000’s $000’s $000’s $000’s
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue 1,270,933 1,270,933 1,592,200 1,592,200
Other income 6,980 6,980 4,040 4,040
Materials (568,058) (568,058) (669,706) (669,706)
Labour (496,847) (496,847) (675,691) (675,691)
Rental and hire (4,411) (4,411) (4,944) (4,944)
Depreciation and amortisation expenses (61,809) (61,809) (69,099) (69,099)
Bad and doubtful debts (540) (540) (726) (726)
Finance income 3,470 3,470 5,253 5,253
Finance expenses (21,448) (21,448) (21,914) (21,914)
Other expenses (54,465) (54,465) (47,786) (47,786)
Takeover defence costs – – (379) (379)
Share of profit of equity accounted
investees 6,627 6,627 6,401 6,401
Profit before income tax 80,432 80,432 117,649 117,649
Income tax expense (23,770) (23,770) (32,939) (32,939)
Profit from continuing operations 56,662 56,662 84,710 84,710
– –
Profit from discontinued operations 4,303 4,303
Profit from sale of discontinued
– –
operations 11,110 11,110
Profit for the period 72,075 72,075 84,710 84,710
Attributable to:
Equity holders of the parent 58,331 72,075 67,079 84,710
– –
Profit attributable to Minority Interest 13,744 17,631
72,075 72,075 84,710 84,710
----- End of picture text -----

The only difference between the 50.1% and 100% ownership scenarios is the Minority Interest.

19

==> picture [71 x 50] intentionally omitted <==

6.3.3 Combined Group Pro Forma Balance Sheets

The Historical Balance Sheets of Macmahon and Ausdrill have been prepared in accordance with the recognition and measurement, but not all of the disclosure requirements of applicable Australian Accounting Standards.

The Combined Group Pro Forma Balance Sheets as at 30 June 2008 have been prepared for illustrative purposes and on the assumption that certain transactions (referred to below, including the acquisition of Ausdrill) had occurred on 30 June 2008.

The Combined Group Pro Forma Balance Sheets as at 30 June 2008 have been compiled based on the:

• Macmahon unaudited Balance Sheet as at 30 June 2008;

• Ausdrill unaudited Balance Sheet as at 30 June 2008; and

• Pro Forma adjustments required to give effect to certain pro forma transactions including the acquisition of Ausdrill by Macmahon under two ownership scenarios – 50.1% and 100%.

==> picture [440 x 407] intentionally omitted <==

----- Start of picture text -----

Macmahon Ausdrill Combined Group
Pro Forma
Balance Balance Balance Sheets
Sheet at Sheet at as at 30 June 2008
30 June 2008 30 June 2008 50.1% 100%
Notes $000s $000s $000s $000s
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Current Assets
Cash and cash equivalents 1,3 120,098 88,956 203,930 197,205
Trade and other receivables 180,999 72,030 253,029 253,029
Inventories 4(a) 33,452 55,074 88,526 88,526
Current tax receivables 268 – 268 268
Total Current Assets 334,817 216,060 545,753 539,028
Non-Current Assets
Trade and other receivables – 4,574 4,574 4,574
Investment in equity
accounted investees 4(b) 5,886 1,858 7,744 7,744
Available for sale
financial assets – 1,061 1,061 1,061
Property, plant and
equipment 4(c) 257,937 275,599 533,536 533,536
Deferred tax assets 359 82 441 441
Goodwill on acquisition
of Ausdrill 4(d) – – 107,923 216,939
Intangible assets 31,321 3,836 35,157 35,157
Total Non-Current Assets 295,503 287,010 690,436 799,452
Total Assets 630,320 503,070 1,236,189 1,338,480
----- End of picture text -----

20

==> picture [72 x 50] intentionally omitted <==

6.3.3 Combined Group Pro Forma Balance Sheets (continued)

==> picture [440 x 559] intentionally omitted <==

----- Start of picture text -----

Macmahon Ausdrill Combined Group
Pro Forma
Balance Balance Balance Sheets
Sheet at Sheet at as at 30 June 2008
30 June 2008 30 June 2008 50.1% 100%
Notes $000s $000s $000s $000s
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Current Liabilities
Trade and other payables 168,533 59,964 228,497 228,497
Borrowings 32,550 37,131 69,681 69,681
Provision for dividend 2 – – 18,736 18,736
–
Employee benefits 35,096 35,096 35,096
Current tax liabilities 11,657 10,519 22,176 22,176
Provisions 6,354 2,728 9,082 9,082
254,190 110,342 383,268 383,268
Liabilities of a disposal
group held for sale – 56 56 56
Total Current Liabilities 254,190 110,398 383,324 383,324
Non-Current Liabilities
Deferred tax liability 6,434 11,995 18,429 18,429
Borrowings 116,771 98,777 215,548 215,548
Provisions – 1,168 1,168 1,168
–
Employee benefits 1,925 1,925 1,925
Total Non-Current Liabilities 125,130 111,940 237,070 237,070
Total Liabilities 379,320 222,338 620,394 620,394
Net Assets 251,000 280,732 615,795 718,086
Equity
Issued capital 1,3 240,880 191,528 484,329 726,703
Reserves (1,228) 10,822 (1,228) (1,228)
Retained Earnings 2,3 9,654 78,382 (9,083) (9,083)
Total Equity Attributable
to Equity Holders of
the Parent Entity 249,306 280,732 474,018 716,392
Minority Interest 4 1,694 – 141,777 1,694
Total Equity 251,000 280,732 615,795 718,086
----- End of picture text -----

21

==> picture [71 x 50] intentionally omitted <==

Notes:

The Macmahon and Ausdrill Balance Sheets as at 30 June 2008 have been extracted from their respective unaudited Preliminary Final Reports for the year ended 30 June 2008.

In preparing the Combined Group Pro Forma Balance Sheets as at 30 June 2008 the following pro forma adjustments were made:

• (1) The following share issues made by Macmahon subsequent to 30 June 2008 resulting in an increase in cash and issued capital of $100,263:

==> picture [434 x 53] intentionally omitted <==

----- Start of picture text -----

Number of options Exercise date Number of options Exercise date
42,188 11 July 2008 18,750 28 July 2008
100,000 11 July 2008 4,500 19 August 2008
----- End of picture text -----

• (2) Macmahon has declared a final dividend of 3.5 cents per share in respect of the year ended 30 June 2008. This was not provided for in the balance sheet at that date. The Directors have therefore recognised a liability for the dividend payment and a corresponding reduction in retained earnings of $18.736 million.

• (3) The acquisition of Ausdrill for a total consideration of $248,570,619 for 50.1% and $497,671,174 for 100% including costs of acquisition of $5,223,622 and $11,948,622 respectively.

In accordance with AASB 3, Macmahon has been identified for accounting purposes as the acquirer in the business combination of Macmahon and Ausdrill. Accordingly the fair value of the consideration has been determined by Macmahon and Macmahon is required to measure Ausdrill’s identifiable assets, liabilities and contingent liabilities at their fair value as at the date of acquisition. As the date of acquisition will be different to the date assumed for the purposes described here the actual results will differ from those presented in the Combined Group Pro Forma Balance Sheets as at 30 June 2008.

The assumed acquisition consideration for the Combined Group Pro Forma Balance Sheets as at 30 June 2008 have been calculated based on the terms of the Offer by Macmahon as follows:

==> picture [418 x 189] intentionally omitted <==

----- Start of picture text -----

50.1% 100%
No. No.
Number of Ausdrill Shares on Issue
as at 22 August 2008 172,150,470 172,150,470
Number of Ausdrill Shares to be acquired 86,247,385 172,150,470
Number of Macmahon Shares offered
for every Ausdrill share 1.65 1.65
Total Number of Macmahon Shares Issued 142,308,185 284,048,276
Fair Value of Macmahon Shares as at 22 August 2008 1.71 1.71
Share Consideration $243,346,997 $485,722,552
Costs of acquisition $5,223,622 $11,948,622
Fair Value of Consideration $248,570,619 $497,671,174
----- End of picture text -----*

The acquisition consideration is subject to change as the final number of Ausdrill Shares on issue and the value of the Macmahon Shares to be issued to effect the acquisition will be determined at the actual date of acquisition.

*Costs of acquisition for the 100% ownership scenario include an estimate of $6.7 million in relation to stamp duty.

22

==> picture [72 x 50] intentionally omitted <==

• (4) The fair value of the identifiable assets, liabilities and contingent liabilities are subject to change following a detailed assessment of the fair values at the time of acquisition of Ausdrill Shares which will be undertaken subsequent to the actual acquisition date. For the purposes of the preparation of the Combined Group Pro Forma Balance Sheets, the Directors have assumed the following:

• (a) Inventories have not been adjusted as the Directors do not have sufficient information from which to estimate fair value. The allocation of fair value to inventories will be required on completion of the acquisition.

• (b) Ausdrill holds investments in associates which under AASB 3 are required to be fair valued at the date of acquisition. No adjustment has been made as the Directors do not have sufficient information from which to estimate fair value as the associates are not listed entities. The allocation of fair value to the associates will be required on completion of the acquisition.

• (c) The Directors have assumed that the book value of the property, plant and equipment is indicative of fair value as detailed valuations have not been performed. The allocation of fair value will be revisited on completion of a detailed fair value exercise.

• (d) The Directors have allocated the excess of the fair value of the consideration over the fair value of the identifiable assets, liabilities and contingent liabilities acquired of $107.9 million for 50.1% and $216.9 million for 100% to Goodwill. The Directors have only had access to publicly available information in respect of Ausdrill which does not allow the identification of intangible assets that may be acquired as part of the business combination and may be required to be recognised separately from Goodwill. For the purpose of the preparation of the Combined Group Pro Forma Balance Sheets no deferred tax has been recorded in respect of the Goodwill arising on the business combination consistent with the requirements of AASB 3.

On completion of the detailed fair value exercise subsequent to acquisition, certain intangible assets may be identified and recorded separately to Goodwill. This may also result in the recognition of additional deferred tax liabilities. Further, any intangible assets with a finite life identified in the business combination will be required to be amortised over their useful lives.

==> picture [395 x 172] intentionally omitted <==

----- Start of picture text -----

50.1% 100%
$’000 $’000
Fair Value of Consideration 248,571 497,671
Current assets 216,060 216,060
Non-current assets (excluding Goodwill) 287,010 287,010
Current liabilities (110,398) (110,398)
Non-current liabilities (111,940) (111,940)
–
Minority Interest (140,084)
Fair Value of Assets and Liabilities Acquired 140,648 280,732
Goodwill on acquisition of Ausdrill 107,923 216,939
----- End of picture text -----

23