Downer Edi Limited · ASX:DOW
Downer Edi — FY2019 Earnings Presentation
27 slides from Downer Edi's earnings presentation, Aug 22, 2019
Slide 1: Downer Group Investor Presentation
Downer Group Investor Presentation Full Year Results 22 August 2019
Slide 2: Strong operational and financial performance
Strong operational and financial performance Earnings growth Cash conversion Margin growth Outlook 14.7% Underlying1 Operating cash flow Group underlying1 2020 Outlook: NPATA growth v FY18 of $630.2m EBITA margin of 4.2%, $365 million NPATA, Underlying NPATA $340.1m up 0.4% v FY18 growth of 7.3% Cas
Slide 3: Strong growth for Urban Services; Rebound in Mining Services
Strong growth for Urban Services Rebound in Mining Services Urban Services Mining, Energy and Industrial Services 76% 83% 5.4% 24% 17% 3.5% Revenue EBITA1 EBITA margin Revenue EBITA1 EBITA margin Transport EBITA +22.5% 11.6% 300 Mining EBITA +52.2% 242.4 250 200 197.9 5.1% 100 150 Mining 80 76.7 100
Slide 4: Continuing to increase work-in-hand: $44.3 billion
Continuing to increase work-in-hand: $44.3 billion 88% Urban Services 6.5% 5.5% 12% Mining, Energy & Industrials Mining EC&M Work-in-hand $bn 40.0% 44.3 43.5 Transport 42.0 Facilities 37.5% Utilities Jun-19 Dec-18 Jun-18 10.5% 4
Slide 5: New Royal Adelaide Hospital
New Royal Adelaide Hospital Performance continues to improve Agreement reached with South Australian Government and Celsus (SPV) The term sheet, which remains subject to approvals, includes: o settlement of historical abatement claims o revised KPI and abatement regime o increase in Spotless m
Slide 6: Spotless
Spotless Multi-billion dollar pipeline of new opportunities driven by macro-economic trends of increasing urbanisation, growing population and government outsourcing Leading positions in Health, Education, Justice, Defence, Critical Infrastructure, Hospitality Continuing to strengthen business
Slide 7: Group financials
Group financials 7
Slide 8: Underlying financial performance
Underlying financial performance Change $m FY19 FY18 Revenue up 6.6% to $13.4bn (%) driven by Utilities (25.0%), EC&M (23.7%), Mining (8.8%) Total revenue1 13,448.3 12,620.2 6.6 EBITDA 850.2 783.1 8.6 Group underlying EBITA margin 4.2%, up 0.4% EBITA2 560.6 479.6 16.9 EBIT 490.2 412.9 18.7 Tot
Slide 9: Reconciliation of Underlying and Statutory NPATA to guidance
Reconciliation of Underlying and Statutory NPATA to guidance $m Statutory NPATA guidance provided at half year results 352.0 Subtract fair value gain on revaluation of existing interest in Downer Mouchel JV (17.0) Underlying NPATA guidance from half year results 335.0 Reported underlying NPATA 340.1
Slide 10: Unallocated Costs (Corporate Costs)
Unallocated Costs (Corporate Costs) $m FY19 FY18 Corporate costs (98.4) (86.0) Amortisation of acquired intangible assets (47.0) (48.2) Murra Warra wind farm loss (45.0) - FV gain on revaluation of existing interests in Downer Mouchel JV1 17.0 - Mining goodwill impairment - (76.4) Divestment of Frei
Slide 11: Operating cash flow
Operating cash flow $m FY19 FY18 Change (%) Eighth year of cash flow conversion in excess Underlying EBIT 490.2 412.9 18.7 of 88% of EBITDA Add: depreciation and 360.0 370.2 (2.8) Spotless conversion 84.2% of EBITDA amortisation (excluding nRAH) Underlying EBITDA 850.2 783.1 8.6 Limited receiv
Slide 12: Cash flow
Cash flow $m FY19 FY18 Change (%) Total operating 630.2 583.3 8.0 Net capital expenditure (395.1) (360.7) (9.5) Continued investment in growth and strategic bolt-on acquisitions Spotless acquisition1 - (391.8) 100.0 Continued strong liquidity to fund future growth Other acquisitions (71.5) (84.1
Slide 13: Balance sheet and capital management
Balance sheet and capital management $m Jun-19 Jun-18 Strong Balance Sheet position Current assets 3,164.7 3,133.6 Gearing remains in target range Non-current assets 4,843.3 4,654.6 Reduction in net assets and - Goodwill 2,454.5 2,351.5 increase in gearing primarily a result of adoption of AAS
Slide 14: Debt maturity profile (Downer and Spotless)
Debt maturity profile (Downer and Spotless) Weighted average debt duration of 3.6 1000 years1 (4.0 years at 30 June 2018) 900 A$300m MTN issue in April 2019 800 Diversified funding sources 700 Improvement in both key credit metrics since Jun-18 600 A$m Spotless net debt continues to reduce
Slide 15: AASB 16 – Leases
AASB 16 – Leases Effective from 1 July 2019, new disclosure from FY20 onwards Most significant changes are to bring the majority of operating leases on balance sheet and to recognise the interest expense component of these leases FY20 outlook takes into account AASB 16: o Minimal FY20 NPATA im
Slide 16: Outlook
HY19 Financial Results Outlook 16
Slide 17: Shareholder value proposition
Shareholder value proposition Aligned to growing Increased exposure to Business markets and serving low capital, service Strategic acquisitions quality customers oriented businesses growth Leveraged to buoyant Growing exposure to Selective acquisitions in economic and social Urban Services Urban Ser
Slide 18: Outlook
Outlook Downer is targeting NPATA of around $365 million before minority interests for the 2020 financial year. 18
Slide 19: Supplementary information
Downer FY18 Results Investor Presentation Supplementary information 19
Slide 20: Transport and Utilities
Transport Revenue $m EBITA $m EBITA margin ROFE 300 7% 30% 26.4% 5,000 4,348.3 4,471.3 242.4 5.6% 250 6% 25% 21.3% 4,000 197.9 4.4% 200 5% 4.3% 20% 3,000 4% 150 15% 3% 2,000 100 10% 2% 1,000 50 1% 5% 0 0% 0% 0 FY19 FY18 FY19 HY19 FY18 FY19 FY18 FY19 FY18 (2.8)% v FY18 +22.5% v FY18 +1.2% v FY18 +5.1
Slide 21: Facilities
Facilities Revenue $m EBITA $m EBITA margin ROFE 5.0% 4.9% 4.9% 18.7% 4,000 200 5% 20% 3,392.7 3,421.2 170.5 166.7 16.9% 3,000 150 4% 15% 3% 2,000 100 10% 2% 1,000 50 5% 1% 0 0 0% 0% FY19 FY18 FY19 FY18 FY19 HY19 FY18 FY19 FY18 (0.8)% v FY18 2.3% v FY18 0.1% v FY18 +1.8% v FY18 21
Slide 22: Mining and EC&M
Mining Revenue $m EBITA $m EBITA margin ROFE 2000 100 6% 5.2% 5.2% 16% 14.5% 1,478.5 76.7 5% 14% 1,358.4 80 1500 3.7% 12% 4% 10% 8.6% 60 50.4 1000 3% 8% 40 6% 2% 500 4% 20 1% 2% 0 0 0% 0% FY19 FY18 FY19 FY18 FY19 HY19 FY18 FY19 FY18 +8.8% v FY18 +52.2% v FY18 +1.5% v FY18 +5.9% v FY18 EC&M Revenue $
Slide 23: Segment reporting
Segment reporting FY19 Transport Utilities Facilities EC&M Mining Unallocated Total $m Segment revenue 3,775.7 2,506.7 3,384.7 1,704.6 1,423.5 17.5 12,812.7 Share of sales from JVs and 572.6 - 8.0 - 55.0 - 635.6 Associates Total revenue1 4,348.3 2,506.7 3,392.7 1,704.6 1,478.5 17.5 13,448.3 EBITDA 3
Slide 24: Reconciliation of Facilities to Spotless result
Reconciliation of Facilities to Spotless result Less: Add: FY19 Facilities Hawkins Spotless Spotless $m segment Building Utilities Total Revenue1 3,392.7 (525.7) 167.1 3,034.1 EBITA2 170.5 (9.2) 8.7 170.0 EBIT 158.6 (8.3) 8.7 159.0 EBITA margin 5.0% 1.7% 5.2% 5.6% Net Interest Expense (39.2) Tax Exp
Slide 25: Debt and bonding facilities
Debt and bonding facilities SPOTLESS DEBT COVENANTS Debt facilities $m DOW SPO Group Net Leverage Interest Cover 25 Total limit 1,722.0 1,068.3 2,790.3 < 3.5x Drawn (925.0) (798.3) (1,723.3) 2.8x 2.8x 2.6x Available 797.0 270.0 1,067.0 8.0x 7.5x 7.4x Cash 600.8 109.9 710.7 Total liquidity 1,397.8 37
Slide 26: Focus on lifecycle asset services
Focus on lifecycle asset services Downer is focused on winning and delivering secure, long term contractual service revenue and leveraging its expertise to drive margin expansion over time Margin Revenue Operating Engineering Maintenance Procurement Servicing Construction Supply 2 years 5 years 10 y
Slide 27: Downer Group Investor Presentation
Downer Group Investor Presentation Full Year Results 22 August 2019