Slide 1: Downer EDI Limited 2005 First Half Results and Outlook
Downer EDI Limited 2005 First Half Results and Outlook 22 February 2005 STEPHEN GILLIES - MANAGING DIRECTOR AND GEOFF BRUCE - CHIEF FINANCIAL OFFICER
Slide 2: Overview & Highlights
OVERVIEW & HIGHLIGHTS Stephen Gillies 2 Downer EDi Limited 2005 Haif Year Financial Results
Slide 3: Overview
Overview The Group’s exposure to key growth sectors of energy, resources, rail and infrastructure has produced record sales and a solid result for H1. Our market presence in these sectors combined with major infrastructure expansion and refurbishment and impending skilled labour shortages will susta
Slide 4: Downer EDI businesses and employees
CPG Corporation >2,500 employees EDI Rail >1,000 employees ESSENTIAL operate design maintain INFRASTRUCTURE SERVICES Roche Mi >3,000 employees Engineering >5,000 employees wD Works >3,500 employees ae Downer 4 Downer EDi Limited 2005 Haif Year Financial Results
Slide 5: Introduction
Introduction «Gross sales revenue of $1.8b, up 16% pcp « NPAT of $35.6m, up 41% pcp « — Interim dividend of 6.0 cps, up 50% pcp « Forward orders healthy « — All divisions performing and in line with expectations « Safety on track to beat long run average of 2.5 LTIFR « — [mproved full year financial
Slide 6: Sales Growth - Stronger Than Expected & Broadly Based
Sales Growth - Stronger Than Expected & Broadly Based Sales up and momentum to continue into H2 Mining was up strongly, and infrastructure reached record levels reflecting buoyancy in those sectors Rail - several contract announcements were in line with expectations and underpin future earnings grow
Slide 7: Divisional Highlights
Divisional Highlights Mining — improved earnings quality with services now 35% of revenue Infrastructure — solid performance with revenue and margins improving in NZ and Australia Engineering — on track for full year, with scale and presence emerging as acore strength: - power - benefiting from buoy
Slide 8: Management Highlights
Management Highlights Free float increased to 94% No need for additional capital to fund current growth prospects Selective growth and not at the expense of increased gearing Credit Rating re-affirmed at BBB -; outlook raise to positive IFRS (and corporate governance) impact On labour shortages — th
Slide 9: Financial Performance
FINANCIAL PERFORMANCE Geoff Bruce Downer 9 Downer EDi Limited 2005 Haif Year Financial Results EDI.
Slide 10: Reported Earnings Up 41%
10 Reported Earnings Up 41% Dec04 Dec 03 Half Year Ended December 2004 * $m $m Be Revenue ** 1,784.6 1,541.8 16 Turnover 1,868.7 1,643.9 14 EBITA 73.4 55.7 32 Net Interest 17.7 13.1 35 Profit Before Tax 46.3 33.7 37 Net Profit After Tax 35.6 25.2 41 Goodwill Amortisation 9.4 8.9 6 Net Profit (pre go
Slide 11: Financials — Key Points
Financials — Key Points Revenue up strongly with Infrastructure and Mining being highlights EBITA margin up strongly, reflecting pcp anomolies. Normalised EBITA margins are ahead of pcp Margins for Infrastructure, Mining and Rail all up strongly on pcp Net interest expense up on pcp due to slightly
Slide 12: Financials — Key Points
Financials — Key Points «On track to deliver another year of strong operating cash. Delivery of final 5 4GT sets will release additional cash in H2 ($55m) « Guidance of at least 12% NPAT growth remains « 42% growth is not at risk and reflects discipline: we will continue to live inside our growth en
Slide 13: Divisional EBITA
Divisional EBITA Half Year to End December 2004 ($m) | 2004 | 2003 Zz % Mining & Resources 27.9 14.8 89 Engineering 26.1 28.7 (9) Works Infrastructure 14.8 9.5 56 Rail 11.0 6.6 65 Corporate / Unallocated * (6.4) (3.5) (81) Total 13.4 56.1 31 * 2004 impacted by PPP, IFRS costs, insurance premiums, di
Slide 14: Mining — Highlights
Mining — Highlights* Half Year ended 31 December ($m) 2004 | 2003 | B% Turnover 598 462 29 EBITA 25.1 17.3 45 « Process engineering group is seeing particularly strong demand and is a major contributor to the improvement in sales « Mining services’ contribution to divisional sales up from 25% to 35%
Slide 15: Engineering - Highlights
15 Engineering - Highlights Half Year ended 31 December ($m) 2004 | 2003 | Bx Turnover 624 642 (3) EBITA 26.1 28.7 (9) « The engineering sector faces a critical shortage of skilled labour. In this environment our scale (7,500 employees) and coverage (depth and locations) are giving rise to unique gr
Slide 16: Infrastructure - Highlights
nfrastructure - Highlights Half Year ended 31 December ($m) 2004 2003 Zz % Turnover 411 338 22 EBITA 14.8 9.5 56 We Strong first half, with both turnover and margins improving in both Australia and NZ Turnover Australia - Australia accounted for $23m of the increase. Several bolt-on acquisitions mad
Slide 17: Rail - Highlights
17 Rail - Highlights Half Year ended 31 December ($m) 2004 | 2003 | B% Turnover 193 | 191 1 EBITA 11.0 6.6 65 « — Performing in line with guidance * — $600m in new contract wins in H1 reinforce EDI Rail's positioning in freight and passenger markets: « Secured outsourced maintenance for largest loco
Slide 18: Returns on Equity and Funds Employed
Returns on Equity and Funds Employed Strategy of improving earnings quality is delivering ROFE FY08 target of 15% now likely to be exceeded 16 16 14 13 12 11 returns % 10 Dec 00 dune 01 Dec 01 June 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 smmilieest ROFE we ROE Note: ROE (NPAT/Equity), ROFE (EBITA/AFE)
Slide 19: Dividends Per Share — Interim Up Strongly
Dividends Per Share — Interim § Strongly q 50 % pcp Interim dividend of 6.0 cps, up from 4.0 cps pcp Environment requires continued disciplined approach to emerging opportunities cents per share 2001 2002 2003 2004 2005 Downer 19 Downer EDi Limited 2005 Haif Year Financial Results EDI:
Slide 20: Outlook & Summary
OUTLOOK & SUMMARY Stephen Gillies 20 Downer EDi Limited 2005 Haif Year Financial Results
Slide 21: Outsourced Engineering Services Market is Evolving
21 Outsourced Engineering Services Market is Evolving Traditional Model « Motivated by cost » A means to an end: enforced cultural change « “Arms length” style arrangement Emerging Model « Motivated by skilled resource shortages « Organisational change more than cultural change « “Trusted partner” i
Slide 22: Operating Environment Is Evolving
Operating Environment Is Evolving Growth is not an issue The resource shortage is changing the relationship between outsourcer & client Quality the critical issue - of people; - of earnings; - of clients Infrastructure and engineering outlook to remain strong in Australian and NZ markets over a 2-3
Slide 23: A Team Focused on Quality
A Team Focused on Quality Earnings Quality Organic growth focus will deliver mel earnings « Consulting services based culture Best People and Team Performance Reliable, Sustainable Organic Growth « High value IP People Quality Attract, grow, « Training reward and keep the best quality « Strong safet
Slide 24: Guidance & Assumptions — FY05
24 Guidance & Assumptions — FY05 Guidance Intact Sales revenue > 12%. NPAT growth in line with sales >12% * EPS, 4 ROI, #4 ROE No Change to Underlying Assumptions No requirement for new share capital # EBITA/AFE (>12%) *# Non-mining revenues as % total revenue # Order Book ($6.3 - $6.5b) Continue to
Slide 25: Summary
Summary = —_H1 result in line with FYO5 guidance » Underlying sales growth is tracking target levels. » On track to deliver our FY target. But spend on business processes (including IT, IFRS) will require higher corporate overheads. Additional margin from sales will be invested to secure future sale
Slide 26: Questions & Answers
QUESTIONS & ANSWERS 26 Downer EDi Limited 2005 Haif Year Financial Results
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