Downer Group Investor Day Challenges and Opportunities 6 May 2014
CEO Presentation
Challenges and opportunities Underlying markets are subdued and navigating the cycle will be difficult for all in the sector There is a clear opportunity for Downer to emerge as the strongest and best investment choice To…
Engineering construction spend BIS Shrapnel 5 year outlook b (constant 2011/12) 140 Other engineering construction 120 Resource-related associated infrastructure 100 Mining and heavy industry 80 60 40 20 0 2002 2004…
Build on our strengths Market leading positions Balance sheet capacity Strong cash conversion High level of secured work (work-in-hand) Best people Costs and productivity 7
Balance sheet 1 On-balance sheet gearing = net debt / net debt plus equity. 2 Off-balance sheet debt includes the present value of plant and equipment operating leases. 8
Cash flow 9
Work-in-Hand 10
Our customers success is our core goal Major strategic initiative to develop a highly customer focused organisation Top 50 customers have provided detailed feedback We can improve dramatically in this area 11
How our customers see us Current position: How we need to be perceived by our customers to outperform: Safe Innovative/ new ideas Deliver a quality project/ dont give Technology leaders up Offering proactive customer Technically…
Opportunities will arise We will take advantage of the right M&A opportunities Robust risk and opportunity assessment Watching market developments closely Must be strategic, the right price and grow our capability There is…
Full year guidance maintained Full year guidance of NPAT of around 215 million 14
Downer Infrastructure - Australia
Business mix Based on revenue for 1H 2014 16
Major contracts Proportion of Business Description Examples of current major contracts Divisional revenue (approx.)1 Name Value Duration 22% Road Asphalt manufacture & surfacing, WA Integrated Services 660m 2011-16 Infrastructure…
Major contracts Proportion of Business Description Examples of current major contracts Divisional revenue (approx.)1 Name Value Duration 17% Structural Steel & pipework erection, Santos GLNG 650m 2011-15 Mechanical & Piping…
Downer Infrastructure New Zealand
Current market Conditions are improving, but remain challenging due to changing customer requirements Downer is well positioned with long term contracts in key markets: New infrastructure maintenance contracts with Auckland…
Business mix 21
Cost reduction and productivity In this market, we must reduce our costs and improve productivity: Fit 4 Business initiatives Rationalisation of business structures Achieving a sensible balance between insourcing and outsourcing…
Transport (road, rail, airports, ports) Downer is a market leader challenges due to The Transport Agency continuing to tender its remodelled NOC contracts Constrained Central Government funding for Local Authority infrastructure…
Telecommunications Downer is a market leader the service provider of choice to Vodafone and Telecom mobile and one of three Chorus service providers Growth opportunities have been created due to delivery of the UFB project and…
Water and Irrigation Water (reticulation and treatment): Local Authority budget constraints Downer is a significant player, regarded as a one-stop shop with good experience in both operations and maintenance Many Local Authorities…
Energy (oil and gas, power, renewables) Revenue growth constrained by an oversupply of power generation capacity There is expected to be further strong investment in the transmission network over the next 3 to 5 years Transmission…
Major contracts Proportion of Business Description Examples of major contracts Divisional revenue (approx.) Name Value Duration 52% Road Infrastructure Asphalt manufacture & surfacing, Auckland Transport Maintenance surface…
Downer Mining
Recent Ongoinghighlights improvement in Zero Harm Project wins: Roy Hill (iron ore) - 500 million over 4.5 years Cosmo Deeps (gold) - 70 million over 2 years Commodore (coal) - 200-250 million over 5 years Boggabri (coal)…
Ongoing improvement Ongoing improvement in Zero in Zero HarmHarm 21% YOY improvement in TRIFR1 Total Recordable Injury Frequency Rate 18…
Cost reduction Cost-reduction strategies strategies - plant Plant Standardising fleet/ fleet matching/ ultra class machines Reduction in hired gear/ relocation plan FY12 FY12 FY11 Disposal of aged fleet Back to Basics…
Cost reduction strategies - operations Operational excellence and business improvement Strategic partners Focus on peopleFY12 FY12 and FY11 training Procurement and sourcing FY12 FY11 FY12 FY11 32
Major contracts Proportion of Business Description Major contracts Divisional revenue (approx.)1 Name Value Duration 85% Open cut Mine engineering, scheduling and Christmas Creek - Fortescue 3.1b 2010-16 planning, load and haul…
Downer Rail
Operating divisions Maintenance and Services Components and Overhauls After Market Parts - passenger trains - engines - spare parts - light rail/trams - wheels - new build and - passenger operations - bogies rotable parts with…
Capabilities KEY CUSTOMERS Over 25 operations and maintenance depots for public and private sector customers across Australia Freight Pacific National Operations and maintenance of public transport systems BHP Billiton through the…
Locations 37
Current focus Complete Waratah Train Project (RSM) last train due to be delivered to Sydney Trains in May 2014 Complete business restructure Become a 365 days a year, 24/7 service provider for rolling stock across Australia and…
Pathway to Success Customers depend on Downer Rail for reliable and available rolling stock, associated equipment, maintenance and technical support Dedicated, experienced, highly skilled workforce Global brand Innovative…
Strategy Integrate our service/maintenance business with our customers Provide new rolling stock, overhauls and refurbishment packages and technical support, with investment in key component overhaul depots Supply what operators…
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