Slide 1: Investor Presentation Half Year Results
Downer Group a | Investor Presentation Downer Half Year Results Relationships creating success Utilities Facilities 11 February
Slide 2: Highlights
Highlights Statutory NPAT of $75.6m (statutory EBIT of $162.4m) Underlying NPATA1,2 of $119.1m, up 3.1% ($99.0m statutory) Underlying EBITA1,2 of $221.0m, up 2.9% ($195.8m statutory) Margin improvement of 0.5 percentage points to 3.6% Cash conversion of 97.4% (84.1% statutory) Gearing re
Slide 3: 1H21 performance overview
1H21 performance overview Underlying EBITA of $221.0m, up 2.9%, $m 1H20 2H20 1H21 Change and EBITA margin up 0.5pp to 3.6% 1H20% Transport 112.5 123.1 99.7 (11.4) Urban Services businesses have Utilities 63.0 51.6 54.1 (14.1) continued to show resilience despite Facilities3 68.7 56.2 62.5 (9.0)
Slide 4: Road Services, Rollingstock Services, Projects
Road Services ̶ Strong operating performance in surfacing, bituminous products and network maintenance ̶ Expanded SA road network management contract Rollingstock Services ̶ Strong operating performance in maintenance and projects, offset by: o reduced Waratah profit contribution ($16.2m) due to
Slide 5: $16.8 billion work-in-hand
$16.8 billion work-in-hand WIH profile ($bn) 5.0 Top 5 Contracts Remaining 4.0 1. Maintaining Waratah trains until 2044 3.0 2. Operating Yarra Trams until 2024 (Keolis Downer) 2.0 3. Maintaining HCMT trains until 2053 4. Maintaining Sydney Growth Trains until 2044 1.0 5. Operating Adelaide Passenger
Slide 6: Telecommunications, Water, Power and Gas
Telecommunications ̶ Rebuilding contract book following roll-off of NBN and UFB construction contracts ̶ Unified Field Operations (Network) contract with NBN ($320m over eight years) ̶ Telstra Field Services contract ($330m over five years) ̶ Vodafone contract in NZ (~$150m over five years) Wate
Slide 7: $5.2 billion work-in-hand
$5.2 billion work-in-hand WIH profile ($bn) 2.0 Top 5 Contracts Remaining 1.5 1. Sydney Water until 2030 (Confluence Water JV) 2. AusNet (power) until 2024 (plus extensions for 6 years) 1.0 3. Logan City Council until 2025 (plus 2x2yrs extensions) 0.5 4. AusNet (gas) until 2026 5. Unified Field Oper
Slide 8: Government, Health and Education, Defence
Government ̶ Strong performance across State Government contracts benefiting from COVID-19 response ̶ Joint bidding success with the Keolis Downer Adelaide Passenger Rail Network ̶ Strong pipeline of first generation FM / maintenance contracts by governments Health and Education ̶ Strong perform
Slide 9: $12.7 billion work-in-hand
$12.7 billion work-in-hand WIH profile ($bn) 6.0 Top 5 Contracts Remaining 5.0 1. New Royal Adelaide Hospital PPP until 2046 (contract 4.0 reset 30 June 2022) 3.0 2. Dept of Defence Estate Maintenance and Operations 2.0 3. NSW Whole of Government (cross agency FM) 1.0 4. Sunshine Coast University Ho
Slide 10: Oil and Gas, Power Generation, Industrial
Oil and Gas ̶ Industry deferral of non-essential maintenance and capital works ̶ Some improvement through remainder of FY21 with increased demand expected in FY22 Power Generation ̶ Performance impacted by deferred shutdowns and deferral of non-essential maintenance and capital works, offset by
Slide 11: $1.5 billion work-in-hand
$1.5 billion work-in-hand WIH profile ($bn) 0.5 Top 5 Contracts Remaining 0.4 1. CS Energy until 2024 0.3 2. BHP Port Hedland until 2023 0.2 3. Chevron infrastructure maintenance until 2023 4. Santos onshore development services until 2023 0.1 5. Origin Energy Eraring Power Station until 2022 0.0 2H
Slide 12: Driving value for shareholders
Driving value for shareholders Business Aligned to growing markets and serving Increased exposure to low capital, service Strategic acquisitions growth quality customers oriented businesses High proportion Government revenue Portfolio mix adjusted to low Market leading positions Economic and social
Slide 13: Sustainability
Sustainability Shifting our investment focus away from Mining and Laundries supports our decarbonisation pathway and our push to ensure Downer thrives in a low-carbon emissions economy Downer will reduce Scope 1 and 2 GHG emissions by 206k tCO2-e or 35% on FY20 following the exit of Mining and Lau
Slide 14: Immediate priorities
Immediate priorities Completion of asset sales ̶ Settlement of sales already announced ($526m1) ̶ Sale of Mining’s Open Cut East and Otraco Capital Management ̶ Reset optimal capital structure at Net Debt: 2-2.5x EBITDA ̶ Provide capital return to shareholders following asset sales Refinement
Slide 15: Immediate priorities (continued)
Immediate priorities (continued) Implementation of The Downer Standard (TDS) ̶ Common processes / single certification ̶ Quality systems and IP capture Earnings Growth ̶ What will drive organic growth? o Increased spend in existing Urban Services markets. We are leveraged to the right sectors an
Slide 16: Group financials
Group financials 16
Slide 17: Underlying financial performance
Underlying financial performance Revenue down in Utilities, Facilities (primarily Change $m HY203 HY213 Hospitality) and Asset Services, offset by growth in (%) Transport Total revenue1 6,838.5 6,116.0 (10.6) Group EBITA margin 3.6%, up 0.5pp EBITDA 429.3 454.5 5.9 Resumption of ordinary divid
Slide 18: Summary of earnings
Summary of earnings Deduct: Net Tax Amortisation of $m EBITA1 interest NPATA1 NPAT expense2 acquired intangibles expense (post-tax) Underlying3 result 221.0 (51.8) (50.1) 119.1 (23.4) 95.7 Non-cash fair value movement on the Spotless minority acquisition Downer Contingent Share Obligation liability4
Slide 19: Operating cash flow
Operating cash flow Change $m HY20 HY21 Strong cash performance across portfolio (%) Underlying EBITDA conversion of 97.4% Underlying1 EBIT 180.4 187.6 4.0 after adjusting for items (totalling $60.3m) Add: depreciation and amortisation2 248.9 266.9 7.2 recognised in FY20 Underlying1 EBITDA 429.3
Slide 20: Cash flow
Cash flow $m HY20 HY21 Change (%) Total operating (4.5) 350.2 >100 Net capital expenditure reduced due Net capital expenditure – core (63.0) (66.6) (5.7) to lower spend on Laundries rental Net capital expenditure – non-core1 (101.7) (40.8) 59.9 stock and Mining equipment Spotless acquisition - (13
Slide 21: Balance sheet
Balance sheet Significant improvement in gearing $m Jun-20 Dec-20 and Net debt / EBITDA due to Current assets 3,404.7 3,576.1 completed capital raising and strong Non-current assets 5,267.8 4,680.8 underlying cash performance - Goodwill 2,281.3 2,281.7 Pro-forma adjustments for the divestments f
Slide 22: Group debt profile
Group debt profile Weighted average debt duration of 4.1 years1 (3.4 years at 30 June 20) No debt maturities within the next 12 months A$m 1200 Downer has established a new $1.4 billion syndicated sustainability linked loan facility 1000 The refinancing has extended debt duration, achieved a
Slide 23: Pro-forma metrics and capital management
Pro-forma metrics and capital management Gearing of 28.2% at Dec-20, down from 35.5% at Jun-20 as a $m Jun-20 Dec-20 result of capital raising and strong HY21 cash flows Net debt 1,480.5 1,183.3 Adjusting for divestments, pro-forma gearing of 18.3%3 Equity1 2,686.4 3,009.2 Downer to target opt
Slide 24: Significant progress on sale of non-core businesses
Significant progress on sale of non-core businesses Total proceeds to be received for sales to date of $526m in line with net book value Laundries Open Cut West Downer Blasting Underground RTL, Snowden and Services other equipment sales FY20 revenue: $246m FY20 revenue: $398m FY20 revenue: $150m F
Slide 25: Key messages
Key messages Our Urban Services businesses have proved their resilience – solid earnings and work-in-hand Transport, Utilities and Facilities end markets are enjoying tailwinds from increasing government infrastructure expenditure Our scale, leading capabilities and fit-for-purpose, capital li
Slide 26: Q&A
Q&A 26
Slide 27: Supplementary information
Supplementary information 27
Slide 28: Pro-forma metrics – estimated proceeds
Pro-forma metrics – estimated proceeds Gearing Net Debt Equity Gearing $m 31 December 2020 reported1 1,183.3 3,009.2 28.2% Open Cut West2 (205.0) - (3.7%) Blasting (62.0) - (1.2%) Underground – Carrapateena3 (70.0) - (1.4%) Mining – sale of idle fleet (18.0) - (0.4%) Laundries (155.0) - (3.3%) Profo
Slide 29: Reconciliation to segment financials
Reconciliation to segment financials Underlying EBITA1,2 ($m) HY20 HY21 Asset Services (EC&M) 22.4 11.6 Engineering & Construction (EC&M) (59.8) (2.6) EC&M Segment EBITA (37.4) 9.0 Facilities (core) 68.7 62.5 Laundries (Facilities) 7.0 4.5 Hospitality (Facilities) 0.2 0.3 Facilities Segment EBITA 75
Slide 30: Net debt / EBITDA calculation
Net debt / EBITDA calculation Net debt / EBITDA Dec-19 Jun-20 Dec-20 $m Pre-AASB 16 LTM EBITDA 805.6 686.2 682.9 Net debt 1,388.2 1,480.5 1,183.3 Net debt / EBITDA (x) 1.7 2.2 1.7 Post-AASB 16 LTM EBITDA 883.5 862.0 887.2 Net debt 2,136.5 2,243.7 1,867.3 Net debt / EBITDA (x) 2.4 2.6 2.1 30