Downer Edi Limited · ASX:DOW

Downer Edi — H1 2019 Earnings Presentation

32 slides from Downer Edi's earnings presentation, Feb 7, 2019

1. Slide 1: Downer Group Investor Presentation Half Year Results

   Downer Group Investor Presentation Half Year Results i 7 | 7 February 2019 .

2. Slide 2: Our financial results

   HY19 Financial Results Delivering operationally and financially Safety Earnings growth Cash conversion Balance sheet LTIFR of 0.68 and 23.8% NPATA1 Operating cash flow Gearing of 23.8% v Our focus areas TRIFR of 3.09, growth v HY183 of $355.3m, cash 24.6% in HY18 and improving on HY18 conversion of

3. Slide 3: Downer's earnings are heavily weighted to the growing Urban Services markets

   HY19 Financial Results Downer’s earnings are heavily weighted to the growing Urban Services markets Urban Services Mining, Energy and Industrial Services 75% 80% 4.7% 25% 20% 3.6% Revenue EBITA1 EBITA margin 12% Revenue EBITA1 EBITA margin — Road services 30% Mining Mining — Bitumen and logistics 8%

4. Slide 4: Urban Services

   HY19 Financial Results Urban Services Transport, Utilities, Facilities Work-in-hand Leveraged to the long-term trends of increasing urbanisation, growing population, government outsourcing and technology proliferation $38.5bn Transport spend ($bn)1 Population (m)2 26 29 2017 2030 24 25 24 24 18 6.1

5. Slide 5: Mining, Energy & Industrial Services

   HY19 Financial Results Mining, Energy & Industrial Services Mining and Engineering, Construction & Maintenance (EC&M) Work-in-hand Leading engineering, construction, operations and contract mining provider experiencing improved conditions due to favourable global resources outlook Mining capital and

6. Slide 6: Downer's strategic focus on services has reduced construction to just 17% of EBITA

   HY19 Financial Results Downer’s strategic focus on services has reduced construction to just 17% of EBITA EBITA composition1 Services:  Continued transformation to integrated services business  High proportion of long term services based contracts  Higher margin and more stable and defensive earn

7. Slide 7: Downer's shareholder value proposition

   HY19 Financial Results Downer’s shareholder value proposition Business Aligned to growing Increased exposure to 23.8% NPATA markets and serving low capital, service Strategic acquisitions growth quality customers oriented businesses growth v HY181,2 Efficient use Continue strong Strategic capital Ma

8. Slide 8: Managing for success

   HY19 Financial Results Managing for success Culture and people Accountability framework  Focus on employee well-being  CEOs accountable for business performance  Employer of choice for high quality people  Systems focused on transparency  Scale, innovation and opportunity  Managers accountable

9. Slide 9: Group results

   HY19 Financial Results Group results 9

10. Slide 10: Financial performance

    HY19 Financial Results Financial performance $m Group HY19 Group HY181 Change (%)  Revenue growth of $523 million Total revenue2 6,623.0 6,100.5 8.6 or 8.6% EBITDA 413.0 376.8 9.6  EBITA margin improvement EBITA3 268.0 222.3 20.6 from 3.6% to 4.0% EBIT 236.6 191.6 23.5  Dividend up 7.7% to 14 cps

11. Slide 11: Summary of earnings HY19

    HY19 Financial Results Summary of earnings HY19 Add back amortisation Net interest $m EBIT Tax expense NPAT of acquired NPATA1 expense intangibles post-tax Statutory result 236.6 (42.1) (53.1) 141.4 22.0 163.4 Less: Fair value gain on existing (17.0) - - (17.0) - (17.0) Downer Mouchel JV Adjusted re

12. Slide 12: AASB 15 – impact on Downer

    HY19 Financial Results AASB 15 – impact on Downer Disclosure As $m of estimate Adjustment reported  Opening retained earnings impact substantially at 30 Jun 18 31 Dec 18 as reported at 30 June 2018 Contract modifications (claims and 198.9 5.9 204.8 variations)  Earnings not materially different wh

13. Slide 13: Operating cash flow

    HY19 Financial Results Operating cash flow Group Group $m Change (%) HY19 HY18  Cash flow conversion increased from 88% to 91% EBIT 236.6 191.61 23.5  Downer Group cash remains predictable and Add: depreciation and amortisation 176.4 185.2 (4.8) reliable Less: Non-cash fair value gain (17.0) - 100

14. Slide 14: Cash flow

    HY19 Financial Results Cash flow $m Group HY19 Group HY18 Change (%) Total operating 355.3 307.1 15.7 Net capital expenditure (191.7) (188.4) (1.8)  Continued investment in growth and strategic bolt-on acquisitions Spotless acquisition1 - (391.8) 100  Continued strong liquidity to fund future grow

15. Slide 15: Balance sheet and capital management

    HY19 Financial Results Balance sheet and capital management $m Dec-18 Jun-18  Balance sheet well positioned for Current assets 2,886.9 3,133.6 growth Non-current assets 4,775.2 4,654.6  Gearing remains in target range - Goodwill 2,422.3 2,351.5  Increase in net PPE primarily in 457.2 Transport an

16. Slide 16: Debt maturity profile (Downer and Spotless)

    HY19 Financial Results Debt maturity profile (Downer and Spotless)  Weighted average debt duration of 3.8 years1 1,000 (4.0 years at Jun-18) 900  Diversified funding sources 800  Improvement in both key credit 700 metrics since Jun-18 A$m 600  Spotless net debt continues to 500 reduce 400 Metric

17. Slide 17: Urban Services

    HY19 Financial Results Urban Services 17

18. Slide 18: Transport: Operational factors

    HY19 Financial Results Transport Revenue $m EBITA $m EBITA margin ROFE Financial results 2,500 100 87.9 5% 4.3% 25% 21.9% 2,061.0 2,044.8 80.1 3.9% 2,000 80 18.6% 4% 20% 1,500 60 3% 15% 1,000 40 2% 10% 500 20 1% 5% 0 0 0% 0% HY19 HY18 HY19 HY18 HY19 HY18 HY19 HY18 +0.8% v HY18 +9.7% v HY18 +0.4% v H

19. Slide 19: Utilities: Operational factors

    HY19 Financial Results Utilities Revenue $m EBITA $m EBITA margin ROFE 5.7% Financial results 1,400 70 64.7 6% 5.3% 35% 1,212.5 28.8% 1,200 60 54.1 5% 30% 950.9 24.7% 1,000 50 25% 4% 800 40 20% 3% 600 30 15% 400 20 2% 10% 200 10 1% 5% 0 0 0% 0% HY19 HY18 HY19 HY18 HY19 HY18 HY19 HY18 +27.5% v HY18 +

20. Slide 20: Facilities: Operational factors

    HY19 Financial Results Facilities1 Revenue $m EBITA $m EBITA margin ROFE 4.9% 15.0% Financial results 2,000 100 5% 4.5% 16% 14.8% 1,667.0 1,715.1 81.3 77.0 14% 80 4% 1,500 12% 60 3% 10% 1,000 8% 40 2% 6% 500 4% 20 1% 2% 0 0 0% 0% HY19 HY18 HY19 HY18 HY19 HY18 HY19 HY18 (2.8)% v HY18 +5.6% v HY18 +0.

21. Slide 21: Mining, Energy & Industrial Services

    HY19 Financial Results Mining, Energy & Industrial Services 21

22. Slide 22: Mining: Operational factors

    HY19 Financial Results Mining Revenue $m EBITA $m EBITA margin ROFE Financial results 800 714.2 40 36.9 6% 12% 11.1% 689.5 5.2% 9.5% 5% 10% 600 30 20.9 4% 8% 3.0% 400 20 3% 6% 2% 4% 200 10 1% 2% 0 0 0% 0% HY19 HY18 HY19 HY18 HY19 HY18 HY19 HY18 +3.6% v HY18 +76.6% v HY18 +2.2% v HY18 +1.6% v HY18 Op

23. Slide 23: EC&M: Operational factors

    HY19 Financial Results EC&M Revenue $m EBITA $m EBITA margin ROFE 945.1 23.5 Financial results 1,000 25 22.4 4% 25% 21.4% 3.3% 21.1% 800 704.8 20 20% 3% 2.4% 600 15 15% 2% 400 10 10% 200 5 1% 5% 0 0 0% 0% HY19 HY18 HY19 HY18 HY19 HY18 HY19 HY18 +34.1% v HY18 (4.7)% v HY18 (0.9)% v HY18 +0.3% v HY18

24. Slide 24: Outlook

    HY19 Financial Results Outlook 24

25. Slide 25: FY19 outlook and goals

    HY19 Financial Results FY19 outlook and goals FY19 Outlook Downer has increased its target guidance for FY19 to $352 million consolidated net profit after tax and before amortisation of acquired intangible assets (NPATA) before minority interests. The increase takes into account the fair value gain

26. Slide 26: Outlook supported by work-in-hand of $43.5bn

    HY19 Financial Results Outlook supported by work-in-hand of $43.5bn  WIH remains strong 7% 4%  Contracts secured in the period in excess of revenue Mining EC&M 41% Transport Work-in-hand 43.5 42.0 39.2 Facilities 40% Utilities Dec-18 Jun-18 Dec-17 8% 26

27. Slide 27: Supplementary information

    Supplementary information

28. Slide 28: Segment reporting

    HY19 Financial Results Segment reporting HY19 Transport Utilities Facilities EC&M Mining Unallocated1 Total $m Revenue and other income 1,792.6 1,212.5 1,663.0 945.1 688.1 23.2 6,324.5 Share of sales from JVs and 268.4 - 4.0 - 26.1 - 298.5 Associates Total revenue 2,061.0 1,212.5 1,667.0 945.1 714.2

29. Slide 29: Reconciliation of Facilities Segment to Spotless result

    HY19 Financial Results Reconciliation of Facilities Segment to Spotless result Less: Add: HY19 Facilities Hawkins Spotless Spotless $m segment Building Utilities Total Revenue1 1,667.0 (291.7) 86.0 1,461.3 EBITA2 81.3 (3.4) 4.3 82.2 EBIT 75.4 (2.9) 4.3 76.8 Net Interest Expense (20.3) Tax Expense (1

30. Slide 30: HY18 – Reconciliation of underlying to statutory result

    HY19 Financial Results HY18 – Reconciliation of underlying to statutory result Add back amortisation Net interest $m EBIT Tax expense NPAT of acquired NPATA expense intangibles post-tax Underlying result 191.6 (41.0) (40.2) 110.4 21.6 132.0 Loss on divestment of freight rail (49.3) - 9.3 (40.0) - (4

31. Slide 31: Debt and bonding facilities

    HY19 Financial Results Debt and bonding facilities SPOTLESS DEBT COVENANTS Debt facilities $m DOW SPO Group Net Leverage Interest Cover Total limit 1,233.1 1,067.2 2,300.3 < 3.5x Drawn (648.1) (797.2) (1,445.3) 2.9x 2.8x 2.8x Available 585.0 270.0 855.0 7.3x 7.5x 7.4x Cash 410.8 94.5 505.3 Total liq

32. Slide 32: Thank you

    Thank you

Downer EDI — H1 2019 Earnings Presentation on 6ix