MADER GROUP LIMITED — Interim / Quarterly Report 2020

Feb 25, 2020

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ASX ANNOUNCEMENT

Mader re-affirms IPO guidance of $19.3m NPAT[2] for FY20

KEY HIGHLIGHTS

• Prospectus forecasts re-affirmed.

• First half results slightly below expectations at the time of the IPO:

• $9.0m adjusted NPAT[2] forecast

• $8.7m adjusted NPAT[2] actual

• 2H20 NPAT of $10.6m anticipated

• First half revenues and EBITDA ahead of expectations at the time of IPO.

• Macro trends remain robust with strong January trading.

• Strong revenue growth in US and Eastern Australian operations partially offset by reductions in the other International division.

• Fully franked dividend of 1.5 cents per share payable on 17 March 2020.

Perth, Australia – 26 February 2020 : The Directors of Mader Group Limited ( Mader or the Company ) (ASX:MAD) are pleased to announce the Company’s half year financial results for the six months ended 31 December 2019. Financial highlights for the half include:

• Revenue of $132.7m, representing a 20.2% increase from $110.4m in 1H19.

• EBITDA[2] of $16.0m, representing a 27.5% increase from $12.6m in 1H19.

• Adjusted net profit after tax[2] (NPAT) of $8.7m, representing a 9.3% increase from $7.9m in 1H19.

The 1H20 results show:

• Solid revenue growth in Western Australia of 26% in 1H20 over 1H19.

• Strong revenue growth in Eastern Australia (43% over 1H19) and USA (+A$4.3m over 1H19). The strong growth in USA is particularly pleasing and expected to continue in 2H20.

• A greater than anticipated reduction in International (Africa/Asia/South America) revenue of 47% over 1H19. The International division is expected to stabilise and now represents only 6.5% of Mader’s revenue. It is not expected to continue having an adverse impact in future periods.

Overall, the Company’s revenues and EBITDA are ahead of expectations at the time of preparing the FY20 prospectus forecast. As a result of the reduced relative contribution from International, margins have been modestly impacted and tax expense increased, with adjusted NPAT for 1H20 ($8.7m) lower than expected at the time of the IPO ($9.0m). On that basis, and with results and continuing revenue growth into January 2020 ($23.5m revenue, representing 37% growth over January 2019), the Company is pleased to re-affirm its IPO forecast of $19.3m of adjusted NPAT[2]

HEAD OFFICE T: (08) 9353 3393 A1/ 2 George Wiencke Dr F: (08) 9353 1966 Perth Airport WA 6105 madergroup.com.au

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MADER GROUP LIMITED ABN: 51 159 340 397 ACN: 159 340 397 ASX: MAD

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for FY20, subject to the assumptions set out in its prospectus. This implies a 2H20 forecast NPAT of $10.6m.

The Directors have declared a 1.5 cent fully franked interim dividend, with a record date of 3 March 2020 and payable on 17 March 2020.

Adjusted results summary2	1H20 A$‘000	1H19 A$‘000	Change
Revenue	132,719	110,398	20.2%
EBITDA	16,010	12,557	27.5%
EBITDA margin	12.1%	11.4%
EBIT	12,984	10,942	18.7%
EBIT margin	9.8%	9.9%
Net profit after tax	8,661	7,921	9.3%
NPAT margin	6.5%	7.2%
Operating cash flow	3,725	(5,177)

Commenting on the result, Executive Director Luke Mader said, “Following our successful IPO in October 2019, Mader has been able to continue to capitalise on its position as a leading global provider of quality tradespeople for the maintenance of mobile mining equipment. Pleasingly, we’ve exceeded our revenue expectations versus those at the time of our prospectus forecast. Trading in Q3 FY2020 has continued to grow strongly and with record recruitment and workflow in January we remain confident of achieving our prospectus forecasts, subject to the assumptions outlined at the time of our IPO.”

The Company is pleased to provide the following operational update by region:

North America

Revenue in the United States has continued to increase quarter on quarter:

USA region	Revenue A$‘000	Change
Q4 FY2019	0.9
Q1 FY2020	1.8	107%
Q2 FY2020	2.5	39%

Operations in the United States continue to be profitable only 11 months after commencement of customer engagement in the region.

HEAD OFFICE T: (08) 9353 3393 A1/ 2 George Wiencke Dr F: (08) 9353 1966 Perth Airport WA 6105 madergroup.com.au

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MADER GROUP LIMITED ABN: 51 159 340 397 ACN: 159 340 397 ASX: MAD

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“Mader Group’s USA revenue growth has been faster than originally anticipated. In a span of less than twelve months we have grown our US business from zero to servicing just under 30 mine sites,” said Mader CEO Patrick Conway.

Mader is reiterating its strong organic growth forecast in its US operations, with its systems and culture now well embedded. The Company has access to just under 30 mine sites across Wyoming, Nevada, Arizona and Tennessee. Mader is also in contract negotiations with two large gold mining houses with sites located in Nevada and expects these contracts to be executed late Q3 FY20.

The United States labour market continues to be receptive to the Mader model and the Company is actively recruiting quality personnel.

Mader continues to plan for an expansion into the Canadian market in FY21.

Western Australia

Mader’s home state remains robust with continued growth, solid demand and strong recruitment expected to continue for the Company’s core services.

Demand and growth for complementary ancillary trades and Mader’s premium reactive services continue to be healthy. The Company continues to add to its service offerings in established markets including rollingstock (rail) maintenance and committed trade upgrade programs.

“Maintenance spend in Western Australia’s mining sector continues to grow, backed by production growth and project development in key commodities including gold and iron ore, which has resulted in solid demand for Mader’s services,” said Mr Conway.

Western Australia recorded revenue growth of 26% in 1H20 (from $69.3m in 1H19 to $87.3m in 1H20).

Eastern Australia (Queensland and New South Wales)

Mader continues to grow its presence in Queensland and New South Wales, demonstrating the Company’s transition to a nationally recognised provider of skilled mobile equipment maintenance tradespeople.

The Company recently extended a key contract for 12 months with a large mining service provider with operations in both Queensland and New South Wales, and is currently in negotiations with a large miner based in Queensland.

Mader has also expanded operations to central west New South Wales as it looks to diversify its revenue mix in the region towards hard rock.

HEAD OFFICE T: (08) 9353 3393 A1/ 2 George Wiencke Dr F: (08) 9353 1966 Perth Airport WA 6105 madergroup.com.au

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MADER GROUP LIMITED ABN: 51 159 340 397 ACN: 159 340 397 ASX: MAD

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The region recorded a 43% increase in revenue in Queensland and New South Wales in 1H20 (from $15.7m in 1H19 to $22.5m in 1H20).

Central Australia (South Australia and Northern Territory)

Mader has experienced steady demand and is looking to grow its client base in the region.

The central region of combined South Australia and Northern Territory recorded revenue growth of 8% in 1H20 (from $9.2m in 1H19 to $9.9m in 1H20).

International (Africa, Asia and South America)

The Company recorded a 47% decrease in revenue in the International segment (from A$16.6m in 1H19 to A$8.7m in 1H20), which was a larger decrease than expected.

The Company has entered into new contracts in West Africa in Q2 FY20 and Southeast Asia in Q3 FY20 and will deliver further services to Papua New Guinea late Q3 FY20. These contracts will be offset by a reduction of work at Oyu Tolgoi. The Company continues to negotiate further scopes of work in Central Africa, which is expected to lead to a stronger Q4 FY20.

Overall, the International division is expected to stabilise and will not have the same adverse impact on results in future periods.

Mader will continue to focus on the delivery of its services to the Central African Copperbelt, leveraging existing client relationships in West Africa, as well as further development of the work delivered in Papua New Guinea.

Notes:

1. Earnings before Interest, tax, depreciation and amortisation (“EBITDA”) is a non-IFRS term which has not been subject to audit or review but has been determined using information presented in the Company’s results.

2. Adjusted earnings include income tax effected adjustments for One-off Offer Costs, Public company costs and the impact of AASB16; refer to the reconciliation on page 2 of the Company’s Interim Financial Report for the half-year ended 31 December 2019.

3. Adjusted numbers have not been subject to audit or review and are based on numbers contained in the Company’s financial statements.

4. Ends -

Authorised by the Board of Mader Group Limited

HEAD OFFICE T: (08) 9353 3393 A1/ 2 George Wiencke Dr F: (08) 9353 1966 Perth Airport WA 6105 madergroup.com.au

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MADER GROUP LIMITED ABN: 51 159 340 397 ACN: 159 340 397 ASX: MAD

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About Mader Group Limited

Mader Group Limited (ASX:MAD) is Australia’s largest independent maintenance labour service provider for heavy mobile equipment. Now operating in over 15 regions across eight countries, the Company has a demonstrated history of sustained revenue and earnings growth since inception in 2005. Mader’s well established and leading position in the market allows it to service a broad global network of over 200 customers. Mader was named 2019 Mining Contractor of the Year by Mining Monthly.

Chief Executive Officer

Patrick Conway patrick.conway@madergroup.com.au

Investor Relations

investor.relations@madergroup.com.au

Media Contact

Heidi Cuthbert heidi.cuthbert@multiplier.com.au +61 411 272 366

Forward Looking Statements

This announcement may include “forward looking statements”. Such forward looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Mader and their respective officers, employees, agents or associates that may cause actual results to differ materially from those expressed or implied in such statement. Actual results, performance or achievements may vary materially from any projections and forward looking statements and the assumptions on which those statements are based. Mader assumes no obligation to update such information.

HEAD OFFICE T: (08) 9353 3393 A1/ 2 George Wiencke Dr F: (08) 9353 1966 Perth Airport WA 6105 madergroup.com.au

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MADER GROUP LIMITED ABN: 51 159 340 397 ACN: 159 340 397 ASX: MAD