Slide 1: Investor Presentation
Investor Presentation For the half year ended 31 December 2023 14 February 2024
Slide 2: Agenda
Agenda Peter Tompkins (CEO) Key messages Results summary & segment updates Malcolm Ashcroft (CFO) Financial results Financial priorities Peter Tompkins (CEO) EBITA margin recovery Outlook Q&A DOWNER HY24 RESULTS 2
Slide 3: Purpose, promise and pillars
Purpose, promise and pillars Our Purpose Our Promise Safety is our first priority. Zero Harm to our people, communities and environment is embedded in our culture. We will leave a positive legacy for future generations. Delivery Our Pillars We build trust by delivering on our promises with excellenc
Slide 4: Improvement in H1 performance
Improvement in H1 performance Earnings Margin Cost out Improvement +29% +0.5pp $80m across earnings, Pro forma EBITA1,2 of $149.0m Pro forma EBITA1,2 margin of 2.6% of $100m target margins and cash metrics Op Cash Leverage NPAT 88% 1.8x +6% Normalised3 cash Net debt to EBITDA4 Statutory NPAT convers
Slide 5: Key highlights
Key highlights Improved Utilities turnaround Strategies to realise performance ahead of schedule shareholder value Pro forma margins, earnings Return to profitability in H1 Progress on Full Potential and cash conversion all Strategic Planning improved Good progress on resolution of problem projects
Slide 6: Transport
Transport Well positioned with a healthy $3.0bn $98.1m 3.3% forward pipeline across Transport Revenue EBITA EBITA % core markets 15.2% 23.2% 0.2pp QTMP mobilising well, with continued ramp up First half result reflects normal expected into H2 seasonality and impact of lower Transport Agenc
Slide 7: Utilities
Utilities Turnaround ahead of expectations $1.2bn $17.9m 1.5% – targeting continued improvement Revenue EBITA EBITA % in H2 6.7% >100% 2.0pp Solid win rates consistent with refined risk Telco continues to perform well appetite Result impacted by run-off of Preferred on major QLD water
Slide 8: Facilities
Facilities Realigned portfolio and operating $1.6bn $87.9m 5.6% model for margin improvement Revenue EBITA EBITA % 5.7% 2.8% 0.2pp Downer JV awarded the Woomera Defence Base Redevelopment Project Portfolio of Government Health & EMOS Defence contract extended by 12 Education PPPs stable
Slide 9: $37.5bn of work-in-hand
$37.5bn of work-in-hand ~90% Government Long-dated related Diversified by industry 88% Services5 Work-in-hand movement13 Work-in-hand by segment Work-in-hand profile 14 $38.1bn 1.6% $37.5bn Utilities 12 $3.9bn 12.9 10% 10 13.5 $ billion Transport 8 4.4 3.9 $20.1bn 54% 6 Facilities $13.5bn 4
Slide 10: ESG update
ESG update Sustainability Linked Loan refinance Environmental 490 tCO2-e 3,850 tCO2-e Successful refinancing of the $500 million tranche of the $1.4 billion syndicated SLL Focus on investment in savings per annum reduction in FY24 facility and establishment of a new renewable energy to reduce sustai
Slide 11: Group financials
Group financials DOWNER HY24 RESULTS 11
Slide 12: Summary of 1H24
Summary of 1H24 Revenue1,6 Work in hand Improved half-on-half $5.8bn 7.3% $37.5bn 1.6% performance EBITA1,2 EBITA margin $149.0m 29.3% 2.6% 0.5pp NPATA1,2 Statutory NPAT $74.9m 39.0% $72.1m 5.9% Normalised3 cash conversion Net Debt to EBITDA4 87.7% 79.2pp 1.8x 2.0x at Jun-23 All number
Slide 13: Reconciliation to statutory results
Reconciliation to statutory results Pro forma to statutory EBITA ($m)1,2,7 Impairment and other asset write-downs on IT and other assets that will no longer be utilised or provide future economic benefit Removing net EBITA contribution from divestments completed in the period (not in go forward earn
Slide 14: Portfolio update
Portfolio update We are finalising our full potential plans in H2 which will establish the strategic and financial parameters for our portfolio going forward Divestments ($m) Total Good progress in reshaping Proceeds on disposal (net of transaction costs) $136.3m portfolio in H1 Net gain on disposal
Slide 15: Cash flow
Cash flow 2 3 1 4 5 6 Opening Operating Capex Payment of IT Other Cash after Dividends Net Borrowings Closing cash cash cash flow lease funds from divestments and FX liabilities operations 1. Operating cash 2. Capex 3. Payment of lease 4. Information 5. Dividends 6. Net divestments flow Primarily ma
Slide 16: Group debt profile
Group debt profile Commitment to maintain an investment grade credit profile Debt maturity profile (A$m) Successful refinance of the Syndicated Sustainability 1,000 Linked Loan Facility ($500m tranche) Bilateral bank facilities Weighted average debt duration of 3.3 years8 800 A$ MTN (3.0 years
Slide 17: Good progress on cost reductions
Good progress on cost reductions Overall, targeting a net cost benefit which increases our EBITA margin by ~1% in FY25 ~$80m of $100m gross Targeting $75m+ additional Grosscost Gross cost out out phasing annualised cost out gross annualised cost out by $’m ($m, phasing annualised) (annualised) achie
Slide 18: Financial priorities
Financial priorities Continue to strengthen Downer’s balance sheet Reduced net debt to EBITDA to 1.8x (down 0.2x) Stabilise Downer’s Fitch credit rating (currently BBB negative watch) Improve consistency of quality of earnings Strong 88% normalised cash conversion – remains a focus for H2 $1
Slide 19: Outlook
Outlook DOWNER HY24 RESULTS 19
Slide 20: EBITA margin recovery underway
EBITA margin recovery underway >4.5% Driving a Performance culture reset underway Leadership performance Changes to Board composition and governance structures ~1% & culture culture Changes to key corporate and business unit leadership roles Net cost out ~1% Progress 2.6% 2.1% Project margins
Slide 21: Outlook
Outlook We anticipate continued EBITA margin percentage improvement in H2 through a combination of cost out and improving operational performance towards our management target of >4.5% in FY25 FY24 remains an important year in our turnaround program Labour market challenges remain, however they
Slide 22: Supplementary information
Supplementary information DOWNER HY24 RESULTS 22
Slide 23: Transport
Transport Road Services WIH profile ($bn) Top 5 Contracts Remaining 7.0 1. Queensland Train Manufacturing Program until 2042 Rail & Transit Systems 6.0 5.0 2. Maintaining Waratah trains until 2044 Projects 4.0 3.0 2.0 3. Maintaining HCMTs until 2053 1.0 0.0 4. Maintaining Sydney Growth Trains until
Slide 24: Utilities
Utilities Telecommunications WIH profile ($bn) Top 5 Contracts Remaining 2.0 Water 1. Sydney Water until 2030 (Confluence Water JV) 1.5 2. City of Gold Coast (water) until 2032 Power and Gas 1.0 3. AusNet (power) until 2025 (plus two 3-year 0.5 extensions) 0.0 4. Melbourne Water until 2028 2H24 FY25
Slide 25: Facilities
Facilities Government WIH profile ($bn) Top 5 Contracts Remaining Health & Education 7.0 1. New Royal Adelaide Hospital PPP until 2046 6.0 Defence 5.0 4.0 Industrial & Energy 3.0 2. Bendigo Hospital PPP until 2042 2.0 3. Sunshine Coast University Hospital PPP until 2042 1.0 0.0 4. Dept of Defence Es
Slide 26: 1H24 revenue composition
1H24 revenue composition Revenue diversified across Transport, Utilities and Facilities markets 1H24 Revenue $5.8 billion6,11 All numbers are on a pro forma underlying basis unless stated otherwise. Refer slide 28 DOWNER HY24 RESULTS 26
Slide 27: Cash flow
Cash flow Change in cash ($m) 1H24 1H23 Change Cash conversion ($m) 1H24 1H23 Change Total operating cash flow 168.2 (35.4) >100% Underlying7 EBIT 138.9 120.5 15.3% Net Capex (46.4) (70.1) 33.8% Add: Depreciation and amortisation 170.2 160.8 5.8% Payment of principal lease liabilities (79.9) (81.9)
Slide 28: Reconciliation of pro forma to statutory results
Reconciliation of pro forma to statutory results Amortisation of Net interest Tax acquired intangibles Reconciliation of pro forma to statutory results ($m) EBITA2 expense expense12 NPATA2 (post-tax) NPAT Pro forma results 149.0 (47.4) (26.7) 74.9 (8.1) 66.8 Net divestment contribution15 1.5 - (0.3)
Slide 29: Reconciliation pro forma to underlying results
Reconciliation pro forma to underlying results 1H24 1H2314 ($m) Pro forma Divestments Underlying7 Pro forma Divestments Underlying7 Transport Revenue 2,950.0 146.7 3,096.7 2,561.5 595.6 3,157.1 EBITA 98.1 2.7 100.8 79.6 22.3 101.9 EBITA % 3.3% 1.8% 3.3% 3.1% 3.7% 3.2% Utilities Revenue 1,206.6 4.9 1
Slide 30: Group underlying financial performance
Group underlying financial performance Underlying7 performance ($m) 1H24 1H23 Change Underlying7 segment performance ($m) 1H24 1H2314 Change Total revenue6 6,025.9 6,144.7 (1.9%) Transport 100.8 101.9 (1.1%) EBITDA 309.1 281.3 9.9% Utilities 18.7 (5.2) >100% Depreciation and amortisation (158.6) (14
Slide 31: Footnotes
Footnotes 1. Pro forma numbers are underlying and have been adjusted for the contribution from divested Business Units. The pro forma result is a non-IFRS measure that is used by Management to assess the performance of the business. Non-IFRS measures have not been subject to audit or review. Refer t
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