Downer Edi Limited · ASX:DOW
Downer Edi — Non-Deal Roadshow (November 2005)
23 slides from Downer Edi's roadshow presentation, Nov 10, 2005
Slide 1: Singapore & Hong Kong
iw Singapore & Hong Kong
Slide 2: Company Overview
i a ovo Company Overview
Slide 3: Introduction
Introduction Australia’s largest listed infrastructure engineering services company Focused on the design, operation and maintenance of essential public & private infrastructure 8 years consecutive earnings growth as a public company Market cap. > US$1.3bn ASX 100 listed company, MSCI Australia weig
Slide 4: What Do We Do?
Energy & Communications " Ranked Top 2 in Australia/NZ ® * ® What Do We Do? Transportation — Road/Rail = Ranked Top 2 in Australia/ NZ Rail Rollingstock » Turnover - $0.9bn » Road upgrades & maintenance * Ranked #1 in Australia » Bitumen supply » Turnover - $0.4b » Design, develop wet weather polyme
Slide 5: Downer: proportion of revenues in long term O&M contracts
Downer Bi: Proportion of revenues in long termO&M contracts today Mining 60-70% Engineering 50-60% Infrastructure 70-90% Rail 50-70% Developing the ‘front’ & ‘back’ end engineering business to drive improving returns
Slide 6: $100m Invested In FEED Bolt Ons
$100m Invested In FEED Bolt Ons (2001 — 2005) Resources JR Metalliferous Process Eng. -& Design (Aust: >1000 empl.) Qcc Coal Consulting, Mine Design & Development (Aust: 35) Snowden Mine Feasibility & Design, Consulting Services & Training (Aust, Canada, South Africa:.130) Infrastructure CPG Master
Slide 7: Why Are We There?
Why Are We There? Infrastructure sector offers growth with defensive qualities Outsourcing of essential engineering services is a growth business Operate & Maintain - Earnings quality - Earnings predictability through long term relationships Design & Consulting — Earnings quality - Client relationsh
Slide 8: Infrastructure Rehabilitation Spend > A$30bn
Downer BL Infrastructure Rehabilitation Spend > A$30bn (2005-2010) Road >$10bn Telco Sources: ABS, BIS Shrapnel, Government docs, >$5bn Power Company estimates >$15bn « Implies baseline organic revenue growth of 10% pa next 5 years « Opportunity to grow maintenance business as maintenance spend lags
Slide 9: Delivering Sustainable Annuity Style Earnings
Deli vering Sustainable Annuity Style Earnings Earnings Impact Contract duration LOW Contract renewal rate LOW Economic cycle LOW Cost pressures LOW Client credit risk LOW Interest rate cycle LOW Exchange rate LOW 70% are long term O & M Consistently > 80% Maintenance spend on essential infrastructu
Slide 10: Financial Performance
i a ovo Financial Performance
Slide 11: 2005 — Financial Highlights
2005 — Financial Highlights Sales NPAT EBITA EPS cps DPS cps Op Cash Flow Gearing ROFE Franking Payout ratio (19% 28% (’ 20% 23% > 15% Strong & steady Steady Steady $3,815m Record level $104m $189m 36.3 18.0 $186m 38% 16% 70% 50% Above consensus, 8 year of growth Core business up Double digit growth
Slide 12: Divisional Performance
Divisional Performance Mining & Resources 2006 2005 2004 Sales 1,500 1,316 935 EBITA 72.3 44.0 Engineering 2006 2005 2004 Sales 1,350 1,251 1,101 EBITA 58.4 64.2 Record EBITA Mining EBITA up 35% to $65m - higher volume & steady margins Mine engineering services up Reported EBITA down, underlying ear
Slide 13: Divisional Performance
Divisional Performance Infrastructure Record EBITA, up 17% yoy Strong sales growth in both NZ & Australia 2006 2005 2004 Sales 980 873 676 ; ; ; « Margins reflect sales mix, not underlying performance EBITA 49.7 426 ae . « Buoyant conditions to remain « Australia to account for 50% of earnings in 3
Slide 14: Financial Performance
Financial Performance Peer Comparison - Sales Revenue 300 4 — DOW © 9200 —sLEI x LLC ® B00 ~ AMEC = = t= CARILL 2001 2002 2003 2004 2005 DPS & EPS oO i= is] <= a i o Qa a] + c oO o 2001 2002 2003 2004 2005 wameet Interim * Final samme Special —=eon, EPS Peer Comparison - EBITA veo DOW —=LEl LLC wher
Slide 15: Strong Operating Cash Flow
i Bi Strong Operating Cash Flow CASH FLOW EBITA FROM OPERATIONS ($mil.) ($mil.) 2005 188.6 2005 186 3 year total = $486.3 3 year total = $592.5
Slide 16: Outlook & Summary
Outlook & Summary
Slide 17: Organic growth still a priority but in a controlled manner
* Organic growth still a priority but in a controlled manner « Selective approach to projects & clients * Focus on improving returns « Recognise the tightening bias for ongoing skill shortages « Invest in management, further succession planning 2 Years « Organic growth focus with M&A activity design
Slide 18: Shortage of resources plus strong demand
Shortage of resources + Strong demand i Owners of resources are well-placed Shortage of skilled labour Consumables (tyres, explosives) shortage Equipment shortages & long factory queues Unprecedented level of infrastructure spend Result: rebalancing of client & outsource provider relationship toward
Slide 19: Summary
Summary « Exposure to infrastructure with a bias towards long term recurring maintenance income flows « Significant and sizeable player in market segments for infrastructure maintenance « Know how to invest, all acquisitions trading at / better than forecast Reported NPAT REVENUE AS millions A$ mill
Slide 20: Summary
Summary Infrastructure capacity problems + Resource shortages + Buoyant rehabilitation market (Aged Infrastructure) + Strong spend by both Government & resource companies + Strong market share (DOW) + Strong balance sheet (DOW) = = Double Digit Earnings Growth (DOW)
Slide 21: Slide 21
Slide 22: Historical Data
HISTORICAL DATA
Slide 23: Historical financial data
w a 2005 2004 2003 2002 2001 i For year ended 30 June $mil $mil $mil $mil $mil / Tumover 3,972.3 3,417.5 2,867.9 2,585.6 1,718.1 Revenue -_ 3814.5 3,193.3 2,697.0 2,442.4 1,632.8 | Earnings before interest tax and amortisation of intangibles (EBITA) 188.6 140: 128.7 100.5 Net interest expense 36.3 2