Slide 1: Market Presentation 1 June 2010
For personal use only Market Presentation 1 June 2010
Slide 2: Introduction
Introduction For personal use only • Confirmation that, excluding Waratah train provision and other impairments, FY10 results in line with guidance • Underlying business continues to perform well with solid performance projected for FY11 • Summary of provision and asset impairment – Update PPP Warat
Slide 3: FY10 financial performance update
FY10 financial performance update For personal use only Excluding Waratah provision and other impairments, based on the YTD performance Downer expects to meet full-year market guidance of +5% growth Analyst $m Consensus Average EBIT 282-332 316 Net Operating Profit After Tax 196-208 201 3
Slide 4: Business performance update – new contract wins
Business performance update – new contract wins Downer’s FY11 outlook is solid, with a number of substantial new contract recent announcements For personal use only Value Announced Contract (A$m) 24 May 2010 GoldlinQ consortium shortlisted on Gold Coast Light Rail Project 20 May 2010 N. Queensland t
Slide 5: Business performance update – work-in-hand
Business performance update – work-in-hand Work-in-hand remains solid, with strong coverage of forward revenue For personal use only 5
Slide 6: Business performance update – underlying market conditions
Business performance update – underlying market conditions • Underlying dynamics in Downer’s key markets remain strong For personal use only Commodity Production In Australia 1,400 1,200 1,000 800 Bauxite Iron Ore Black Coal 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: ABA
Slide 7: Summary of provision and asset impairment
Summary of provision and asset impairment For personal use only EBIT NPAT Cash Impact FY10 FY10 FY10 FY11 $m $m Provisions • Waratah train build (190) (133) No $34m Asset impairment • Assets held for sale (10) (10) No $10m • Works UK goodwill (20) (20) No No • Customer contracts (18) (14) No No • NZ
Slide 8: Waratah train project delivery review—manufacturing program
Waratah train project delivery review—manufacturing program For personal use only • Significant progress on project – PPTV on the network and exceeding expectations – Sets 1-2 in Cardiff facility – Expect first set to enter service in December 2010 – Set 3 on route – anticipated arrival Cardiff mid-
Slide 9: Waratah train project delivery review—cost review process
Waratah train project delivery review—cost review process For personal use only • Four stage process: – Assess supplier performance and relationships – Assess program management – Assess client relationship and issues – Cost review undertaken cognisant on findings of above phases 9
Slide 10: Waratah train project delivery review—provisioning and cashflow
Waratah train project delivery review—provisioning and cashflow For personal use only Provisioning • Provision represents professional forward forecast for a project of this size and complexity at this stage of completion • Key risks: – further delays, software integrity, train acceptance/quality is
Slide 11: Risk management within Downer
Risk management within Downer For personal use only • This is a 2006 contract • Current risk management processes within Downer are robust • Appropriate senior personnel dedicated to key projects • Tender review processes include comprehensive risk assessment – Commercial – Technical – Operational –
Slide 12: Reliance Rail funding update
Reliance Rail funding update Reliance Rail update Downer position For personal use only • If monoline wrappers become insolvent, • Reliance Rail debt is non-recourse to banks have option to terminate $357 million Downer project finance bank debt facility currently • All required equity has already b
Slide 13: Other Impairments – detail
Other Impairments – detail Impairment Remaining For personal use only ($m) goodwill ($m) Comments 10 NA • Conservative position to reflect estimated net asset position Asset Held For Sale 20 2 • Acquired in 2006 as part of previous management Works UK expansion plans goodwill • Very weak UK economy
Slide 14: Liquidity position and financial covenants
Liquidity position and financial covenants • Focus on maintaining a funding position with well diversified maturities and sources For personal use only Downer funding facility maturity profile 450 Bank Debt ECA Debt USPP A$MTN Works Bonds ROADS1 400 350 A$m equivalent 300 250 200 150 100 50 0 Jun-14
Slide 15: Conclusion
Conclusion For personal use only • Downer’s overall business continues to perform well, a strong pipeline of tender opportunities supporting continued demand for our services, however we continue to monitor our end markets closely • The Waratah provision reflects a detailed review of the project – t