Downer Edi Limited · ASX:DOW
Downer Edi — HY22 Earnings Presentation
25 slides from Downer Edi's earnings presentation, 2022
Slide 1: Downer Half Year results
| Downer Half Year results |
Slide 2: Highlights and priorities
Highlights and priorities Highlights Priorities Growth in core earnings with strong cash Maintaining high quality service delivery conversion Navigating Working proactively with customers Core revenue up with demand strong COVID-19 Minimise risk in new contracts Financial strength with g
Slide 3: COVID-19 management
COVID-19 management Labour Significant variation in % of employees in isolation by business unit shortages Business continuity strategies well managed with % in isolation now stabilising or declining Limited impact on Downer’s ability to service customers Customer labour shortages impacting
Slide 4: Price adjustments designed to mitigate cost escalation in long term contracts
Price adjustments designed to mitigate cost escalation in long term contracts Transport Utilities Facilities Long term road maintenance contracts Telco construction cost risk largely born Substantial portfolio of long-term PPP ̶ Rise and fall mechanisms for costs by delivery partners (sub-cont
Slide 5: Transport
Transport 50% of HY22 Core Revenue 34% 46% Roads Rail & Transit Systems 20% Projects Highlights Priorities Revenue up 14.6% ($359m) with strong Asphalt and surfacing volumes impacted in the performance across the portfolio Navigating Eastern States – mostly customer related EBITA up 15.9% ($16
Slide 6: Utilities
Utilities 15% of HY22 Core Revenue 31% 38% Power & Gas Water 31% Telco Highlights Priorities Revenue down 5.6% ($51m) due to lower work Significant impact on work volumes as volumes and a change in mix away from higher Navigating customers focus on priority areas margin capital projects due to C
Slide 7: Facilities
18% 17% Facilities 35% of HY22 Core Revenue 16% 30% Health & Education Government Defence Asset Services 19% Building Highlights Priorities Revenue up 22.2% ($351m) driven by: Shutdown and turnaround project delays ̶ COVID-19 volumes in Health and Education Navigating Increased volumes in Heal
Slide 8: Work-in-hand
Work-in-hand Core WIH1,2 ($35.0bn) Core WIH1 by contract type3 Long-dated Facilities $14.7b Transport $16.1b Diversified by industry (42%) (46%) 91% Government or Utilities Government regulated $4.2b (90% June-21) (12%) Core WIH1 profile 14 12 10 8 6 4 2 0 2H22 FY23 FY24 FY25 FY26 FY27+ 1 Tran
Slide 9: Group financials
Group financials 9
Slide 10: Summary of HY22 financial results
Summary of HY22 financial results ► Statutory NPAT of $89.0m, up 17.7% (statutory EBIT of $172.0m) ► Underlying NPATA1,2 of $97.6m, down 18.1% ($99.0m statutory) ► Underlying EBITA1,2 of $181.6m, down 17.8% ($186.2m statutory) ► Core Urban Services EBITA1,2 of $238.0m, up 4.4% ► Normalised cash conv
Slide 11: Group underlying financial performance
Group underlying financial performance Change $m HY213 HY223 (%) Revenue1 2.3% lower, primarily due to declines in non-core revenue, particularly Mining. Core revenue Total revenue1 6,116.0 5,974.9 (2.3) increased 13.3%. EBITDA 454.5 345.7 (23.9) Group Underlying EBITA margin 3.0%, impacted by D
Slide 12: Business unit performance overview
Business unit performance overview Change Core Urban Services EBITA of $238.0m, $m HY21 HY22 (%) up 4.4% Transport 99.7 115.6 15.9 Diversity of Core Urban Services Utilities3 45.3 33.3 (26.5) portfolio delivered growth Facilities3 82.9 89.1 7.5 Transport earnings strong across the Core Urban S
Slide 13: Reconciliation of underlying to statutory results
Reconciliation of underlying to statutory results Net Amortisation of Tax $m EBITA1 interest NPATA1 acquired intangibles NPAT expense2 expense (post-tax) Underlying3 results 181.6 (45.8) (38.2) 97.6 (10.0) 87.6 Fair value increase on Downer Contingent (5.4) - - (5.4) - (5.4) Share Option (DCSO)4 Div
Slide 14: Cash flow
Cash flow Underlying cash $99.0m of shares Core net capex conversion of bought back of $65.2m 91.2% during the period Underlying cash conversion of 91.2%1 Change Funds from operations of $78.7m $m HY21 HY22 (%) ̶ Cash conversion impacted by ISI’s Total operating cash flow 350.2 270.4 (22.8) book
Slide 15: Outlook
Outlook 15
Slide 16: Key messages and outlook
Key messages and outlook With the arrival of Omicron it has been a tougher six months to navigate than we predicted in August 2021 Despite the challenges, Downer has delivered solid earnings and strong cash conversion for the first half of 2022 Our market positions and diversity give us streng
Slide 17: Supplementary Information
Supplementary Information 17
Slide 18: WIH profile
WIH profile ($bn) 6.0 Top 5 Contracts Remaining 5.0 1. Maintaining Waratah trains until 2044 4.0 3.0 2. Maintaining HCMT until 2053 2.0 1.0 3. Maintaining Sydney Growth Trains until 2044 0.0 2H22 FY23 FY24 FY25 FY26 FY27+ 4. Operating Yarra Trams until 2024 (Keolis Downer) Total WIH of $16.1bn 5.
Slide 19: WIH profile
WIH profile ($bn) 1.5 Top 5 Contracts Remaining 1. Sydney Water until 2030 (Confluence Water JV) 1.0 2. AusNet (power) until 2024 (plus extensions for 6 years) 0.5 3. Logan City Council until 2025 (plus 2x2yrs extensions) 0.0 2H22 FY23 FY24 FY25 FY26 FY27+ 4. AusNet (gas) until 2026 Total WIH of $
Slide 20: WIH profile
WIH profile ($bn) 7.0 Top 5 Contracts Remaining 6.0 1. New Royal Adelaide Hospital PPP until 2046 (contract 5.0 reset 30 June 2022) 4.0 3.0 2. Bendigo Hospital PPP until 2042 2.0 3. Dept of Defence Estate Maintenance and Operations 1.0 until August 2024 0.0 2H22 FY23 FY24 FY25 FY26 FY27+ 4. Sunshine
Slide 21: Operating cash flow
Operating cash flow Change Core Urban Services business delivering $m HY21 HY22 (%) strong cash flows across the portfolio Underlying1 EBIT 187.6 167.4 (10.8) Underlying1 EBITDA conversion of 91.2% (statutory 85.1%) after adjusting for items Add: depreciation and amortisation 266.9 178.3 (33.2)
Slide 22: Capital expenditure and D&A
Capital expenditure and D&A Change Core net capex declined 2.1% $m HY21 HY22 (%) Core depreciation and amortisation Net Capital expenditure – core 66.6 65.2 (2.1) of $142.8m Net Capital expenditure – non-core 40.8 8.1 (80.1) IT 17.4 22.8 31.0 Capital expenditure / IT 124.8 96.1 (23.0) Change $m
Slide 23: Balance sheet
Balance sheet Net assets reduced by $66.4m or 2.2% $m Jun-21 Dec-21 since June 2021 to $2.89bn Current assets 3,403.2 2,860.1 Reduction driven by divestment of Mining Non-current assets 4,668.9 4,452.7 businesses and repayment of debt - Goodwill 2,280.8 2,290.8 - Acquired intangible assets 267.8
Slide 24: Group debt profile
Group debt profile Weighted average debt duration of 4.2 years1 Debt maturity profile (A$m) (3.8 years at 30 June 21) A$m 800 1H22 refinancing has extended debt duration and achieved a more balanced debt maturity profile 600 Current borrowings include $50m of term loan debt maturing June 2022
Slide 25: Reconciliation to prior period financials
Reconciliation to prior period financials Downer has finalised the structure of Transport, Utilities and Facilities which has resulted in some business units being reclassified To provide comparable information and a reconciliation, the below tables have been provided HY21 HY21 Reported Reclassi