Downer Edi Limited · ASX:DOW
Downer Edi — Macquarie Conference 2021
17 slides from Downer Edi's conference presentation, May 5, 2021
Slide 1: Macquarie Conference
Macquarie Conference For personal use only 5 May 2021
Slide 2: Understanding Downer
Understanding Downer For personal use only Our Purpose Our Pillars To create and sustain the modern environment by building trusted relationships with our customers Our Promise To work closely with our customers to help them succeed, using world leading insights and solutions 2
Slide 3: Urban Services journey
Urban Services journey For personal use only Revenue 2010 2015 Post-divestments Transport Utilities $6.1bn $7.4bn 49% Facilities 38% 41% Asset Services 15% 18% EC&M 26% 32% 27% Mining 17% 21% 6% Work-in-hand $20.4bn $18.5bn $36.2bn as at 31/12/20 3
Slide 4: Urban Services journey
Urban Services journey For personal use only Acquisition Acquisition of Hawkins of Spotless Acquisition Relationships creating success of UrbanGrid Acquisition (Utilities) of RPQ Acquisition October 2014 Acquisition Acquisition of (Road Services) of ITS Sale of CPG Asia Acquisition of Tenix Acquisit
Slide 5: Urban Services work-in-hand $36.2 billion
Urban Services work-in-hand $36.2 billion For personal use only WIH by Service Line Customers 10% Facilities $12.7bn (35%) Utilities Transport $5.2bn (14%) $16.8bn (47%) 90% Asset Services $1.5bn (4%) Govt / Govt-backed Non Govt 5
Slide 6: WIH reflects long term contract profile
WIH reflects long term contract profile For personal use only WIH profile ($bn) 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2H21 FY22 FY23 FY24 FY25 FY26+ Transport Utilities Facilities Asset Services 6
Slide 7: Strategy shaped by four major trends – Are they still relevant?
Strategy shaped by four major trends – Are they still relevant? For personal use only Growing population Increasing urbanisation Government outsourcing Technology 7
Slide 8: Population
Population For personal use only Australia’s population is expected to Components of Australian population growth be 667,000 smaller by FY25 than the pre-COVID trajectory Net overseas migration (NOM) has been the largest contributor to population growth over the past 10 years, and has also been
Slide 9: Market outlook
Market outlook For personal use only Australian economic growth Transport sector output Utilities sector output Construction sector output Source: Australian Bureau of Statistics; Deloitte Access Economics 9 © 2021 Deloitte Access Economics. Deloitte Touche Tohmatsu
Slide 10: Market outlook
Market outlook For personal use only Kilometres of major new road by completion date Government spending on transport and communication infrastructure Square metres of major new office facilities by completion date Source: 2020-21 Commonwealth Budget © 2021 De loitte Access Economics. Deloitte Touch
Slide 11: New macro trends
New macro trends For personal use only Bigger Government at all levels ̶ Unprecedented levels of fiscal stimulus ̶ Infrastructure and services key delivery methods Decarbonisation of the economy (accelerating) ̶ Driven by capital providers (banks and equity) ̶ Business way ahead of Government ̶
Slide 12: Climate resilience and decarbonisation
Climate resilience and decarbonisation For personal use only Downer’s Urban Services strategy delivers environmental and social benefits including a move to lower capital intensive and lower carbon activities, supporting Downer’s decarbonisation pathway There are considerable opportunities for D
Slide 13: Climate resilience and decarbonisation (cont'd)
Climate resilience and decarbonisation (cont’d) For personal use only Downer has committed to reduce our Scope 1 and 2 GHG emissions by 45-50% by 2035 and be net zero by 2050. This commitment was registered with the SBTi on 21/3/2021 Downer is well positioned to contribute to Australia and New Z
Slide 14: Capital management
Capital management For personal use only Maintenance of BBB Fitch rating Net Debt managed within 2-2.5x EBITDA Dividends increasing to 60-70 % of NPATA over time On-market buy-back ~$400 million ̶ the most EPS accretive option for shareholders No major refinancing required in the next 24 m
Slide 15: Cash generation
Cash generation For personal use only Diversified and resilient earnings from critical service revenues; unable to be turned off Agile and robust risk systems and business model Expectation of 90-100% normalised EBITDA cash conversion No net reduction through the cycle in Free Cash Flow due
Slide 16: Immediate priorities
Immediate priorities For personal use only FY21 Earnings and Cash performance ̶ Strong performance year to date Sale of remaining non-core assets (Mining Open Cut East and Hospitality) FY22 – FY24 Business Planning (underway) Implementation of The Downer Standard Growth ̶ Organic o Increas
Slide 17: Macquarie Conference
Macquarie Conference For personal use only 5 May 2021