Investor Day Presentation

Investor
Day
2018
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO

Our Purpose, Promise and Pillars
At Downer, our customers
are at the heart of
everything we do.
Our Purpose is to create
and sustain the modern
environment by building
trusted relationships
with our customers.
Our Promise is to
work closely with our
customers to help
them succeed, using
world-leading insights
and solutions.


Safety
Zero Harm is
embedded in
Downer’s culture
and is fundamental
to the company’s
future success


Delivery
We build trust by
delivering on our
promises with
excellence while
focusing on safety,
value for money

and efficiency

Thought
leadership
We remain at the
forefront of our
industry by employing
the best people and
having the courage

to challenge the
status quo


Relationships
We collaborate
to build and
sustain enduring
relationships based on
trust and integrity
Our Pillars
2

Increasing urbanisation
Growing population
Technology proliferation
Government outsourcing
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
Trends shaping Downer’s strategy
3

The Downer ecosystem
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
4

Transport
Surfacing
Network
Management
Bitumen &
Logistics
Infrastructure
Projects
Utilities
Power
Gas
Water
Renewable Energy
Communications



Mining
Open Cut
Underground
Blasting
Asset & Tyre
Management


Engineering,
Construction
& Maintenance
(EC&M)
Engineering
Construction
Operations &
Maintenance


Rail
Manufacturing
Maintenance
Public Transport
Operations




Our service lines
Spotless
Health, Education
& Government
Commercial
& Leisure
Base & Township
Laundries & Linen





$2.5bn revenue
$5.7bn WIH
5,000 people
$1.1bn revenue
$8.7bn WIH
1,500 people
$1.7bn revenue
$2.8bn WIH
2,000 people
$3.0bn revenue
$17.5bn WIH
36,000 people
$2.4bn revenue
$2.5bn WIH
6,000 people
$1.4bn revenue
$2.0bn WIH
5,000 people
Note: revenue is annualised 1H FY18, WIH is at December 2017
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
5

Transport
Surfacing
Network
Management
Bitumen &
Logistics
Infrastructure
Projects
Utilities
Power
Gas
Water
Renewable Energy
Communications
Mining
Open Cut
Underground
Blasting
Asset & Tyre
Management
EC&M
Engineering
Construction
Operations &
Maintenance
Rail
Manufacturing
Maintenance
Public Transport
Operations
Organisation structure
Infrastructure Services (Transport, Rail, Utilities)
Sergio Cinerari
Spotless
Dana Nelson
Mining, Energy and Industrial
Brendan Petersen
New Zealand
Steve Killeen
Governance and oversight
Spotless
Health, Education
& Government
Commercial
& Leisure
Base & Township
Laundries & Linen
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
6

Transport
Transport
(Australia)
Surfacing
Network
Management
Bitumen &
Logistics
Infrastructure
Projects
Transport
Customer
alignment
Scale and
efficiency
Multi-modal focus
Increasing
government
investment
Rail
Manufacturing
Maintenance
Public Transport
Operations



$1.9bn revenue
$3.1bn WIH
$3.0bn revenue
$11.8bn WIH
$1.1bn revenue
$8.7bn WIH
7

Mining, Energy and Industrial
EC&M
(Australia)
Engineering
Construction
Operations &
Maintenance
MEI
Customer
alignment
Scale and
efficiency
Extend service
offering
Accelerated
change program
Mining
Open Cut
Underground
Blasting
Asset & Tyre
Management
$1.4bn revenue
$2.1bn WIH
$2.8bn revenue
$5.1bn WIH
$1.4bn revenue
$3.0bn WIH
WIH includes contract wins since 1H FY18 results
8

Business planning and governance
Annual three year plan
Bottom up/top down
Target setting/guidance
Common management systems and processes
Focus on capital allocation, returns, cash conversion
Monthly business performance reviews
Management by forecast exception
Managing for success
Risk management
Safety
Risk aversion
Legal team
Bid approval process
Project Management Office
Internal audit
Accountability framework
CEO’s accountable for business performance
Remuneration structure drives consistent safety,
earnings, cash and people focus
High level of CEO decision rights
Transparency highly valued
High level KPIs
Talent and capability
Employer of choice
Remuneration
Stability
Culture
Innovation
Business breadth
Opportunity
9

Managing for success
Board
CEO
CEO
New Zealand
CEO
Spotless
CEO
MEI

(Mining and EC&M)
CEO
Infrastructure Services
(Transport, Rail, Utilities in Australia)
Zero Harm Committee
Audit and Risk Committee
Tender Risk Evaluation Committee
Rail Projects Committee
Other Committees
Zero Harm
Legal
Human Resources
Corporate Affairs & Investor Relations
Chief Financial Officer
Strategy, Growth & Innovation
Project Management Office
Executive Committee
10

Restructuring of business model to align
contracts and capability by sector
Investment in new leadership within
our growth markets
Alignment of tender management
and governance process to Downer
Increased investment and focus on pipeline
management and business development
Joint approach to procurement has led to
better buying across both businesses
Merged IT operations and business models
Capital structure strengthened
Spotless integration
11

Wins in core markets
More than $400m of new
customers in our core markets
Perth Zoo function centre DBFO
Victorian schools cleaning
BHP House and township FM
Over $2 billion added to Spotless order book
Joint approach to markets
Over $100m of work secured
through joint bidding
Victorian Police headquarters
M&E fit-out
Ballarat Energy Storage Project
Renewals and contract
extensions
Contracts extended and renewed
since offer close increases order
book by over $1.3bn
NSW Government facility management
SA Government facility management
Defence Estate facility management
Capture revenue leakage
Internal services provision
by Spotless captures $150m
previously outsourced revenues
Train cleaning and FM
NBN linework
Downer office and depot cleaning
and FM
12

Defence: Co-ordinated
approach to market as
one of Australia’s largest
and most diverse service
providers to Defence
Commercial and Social
M&E contracting:
integrated service
capability offering the
best of both Downer and
Spotless businesses

(AE Smith and Nuvo)
Aligned NZ model:
Aggregation of NZ

scale, appointment of
country leadership and

co-ordinated approach
to region
Transport services:
Combining capability
to self perform services
throughout the supply
chain for rail and
infrastructure PPPs
Integrated resources
offering: End to end
service offering to mineral
and Oil & Gas resource
customers, capable of
providing services from

pit to port
Joint Utilities sector
approach: Complementary
skills offering to a
significant combined

customer base
Joint bidding, market and
pipeline development
13

Royal Adelaide Hospital
Spotless commenced
facilities management
subcontract in

September 2017
Numerous issues
identified relating to
scope of services
and commercial issues
Currently cash negative
and with a higher number
of full time employees than
originally forecast
Commercial discussions
are ongoing with key
stakeholders – South
Australian Government,
Celsus (PPP project
company) and Spotless
14

Coordinated syndicated
loan refinancing launched
19 March:
– $400m for Downer

(tenor split between
4 and 5 years)
– $900m for Spotless

(tenor split between
3 and 4 years)
Book build completed
4 May with both
transactions significantly
over-subscribed and well
supported by both existing
and new lenders
Financial close scheduled
for the week commencing
14 May
Downer’s credit strength
and 87.8% equity interest
were pivotal to the
successful refinancing of
Spotless
Strategic goals achieved
include:
– increased lender
diversification
– for Spotless, a stable long
term funding platform
with extended debt
duration (increasing from
1.7 years at 31 December
2017 to more than 3 years
at 30 June 2018)
Overall reduction in
funding costs
Refinancing
15

Guidance
confirmed
Downer is targeting consolidated
underlying net profit after tax and
before amortisation of acquired
intangible assets (NPATA) of

$295 million before minority
interests for the 2018 financial year.
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Divisions
SCHOOL
HOSPITAL
HOTEL
LAUNDRYCLEANOGAS CO
17

Infrastructure Services
(Transport, Rail, Utilities in Australia)
Roads
Road network management;
asphalt production and asphalt
surfacing; spray seal and
micro-surfacing, specialist
binders and stabilisation;
bituminous products;
repurposing, recycling and
alternative material streams


Grow core services as
population grows
Continue to build road
network management
business
Expand intelligent transport
systems
Grow repurposing offerings
Infrastructure projects
Heavy and light rail construction
and maintenance; signalling;
bridges and structures; civil and
road infrastructure





Expand current footprint to
other States
Deliver new services
e.g. rail infrastructure
maintenance, signalling
Continue to grow bridge
strengthening and
rehabilitation offering
Utilities
Telecommunications and
technology; HV transmission;
power and gas distribution
network management and
maintenance; management
and renewal of water assets;
management, design and
construction of wastewater
treatment plants; design and
construction of solar and wind
farms; energy storage
Grow technology and
communications into new
markets e.g. 5G
Expand power and gas
distribution services
Continue to build an integrated
national Water business
Further development of
Renewables – generation,
storage and transmission
Rail
Passenger rail rolling
stock: long term through-
life-support; overhaul and
project management; digital
asset management and fleet
performance.
Keolis Downer: light rail, bus
and transport solutions


Successful delivery
of SGT and HCMT
Enhance TLS asset
management services –
digital and data
Build on key partnerships:
Keolis Downer and CRRC
Strategic
initiatives
18

New Zealand
Transport Services
Roads, rail, ports, airports,
open space management
Consolidate market leadership
position in airports
Leverage Australian capability
for rail maintenance activities
Disciplined delivery
Innovation e.g. recycling
and bitumen
New geographies e.g. Fiji
Infrastructure Projects
Civil, mechanical and electrical
services to transport, energy,
water and industrial sectors
Leverage Australian
capability into rail/light
rail market opportunities
Increase 3 Waters renewal
capability to align with
growth market
Position as preferred provider
of collaborative contract e.g.
ECIs and Alliances
Greater presence in
“thought leadership” aligned
with project planning and
government relations
Develop best in class
project controls and
associated governance
Building Projects
Non-residential building

Continue to develop preferred
position with long-term
institutional customers e.g.
universities and airports
Use market leading BIM
capability to secure premium
work with value focused
customers
Attract and retain the
industry’s best talent
Develop best in class
project controls and
associated governance
Utilities
Power, gas, water, technology
and communications, ITS
Focus on increasing renewal
work for ageing assets
Continued growth in high
demand Water sector
Multi-skilling capability
of workforce
Adapt to changing
technologies e.g. 5G
Outsourcing opportunity
in power distribution
Strategic
initiatives
19

Mining, Energy and Industrial
Engineering & Construction
Global minerals technology process
engineering and manufacturing
EPC services to the resources and
industrial sectors
Large scale mechanical and electrical
construction services to:
– Oil & Gas
– Resources
– Industrial
– Transport infrastructure
Engineering services, equipment supply
and EPC solutions to global mineral sands,
precious metals and ‘battery’ minerals (high
grade Fe, Zn, Li, Ni, Co)
EPC solutions to the growing Australian
base and precious metals (copper and
gold) market
Large scale mechanical and electrical
construction in iron ore, transport
infrastructure and waste to energy
Technology investment in BIM for
construction ‘Advanced Work Packaging’
Asset Services
Asset management, reliability engineering,
turnarounds, shutdowns and sustaining
capital programs for:
– LNG/CSG
– Power generation
– Mining
– Industrial markets
International mobile mining equipment
and tyre management
Grow annuity contracts across our sectors,
including LNG and CSG field services
Target turnaround and shutdown
services in power generation, resources
and oil & gas
Grow mining maintenance services for
fixed and mobile assets
Technology investment in field mobility
solutions, data capture and operational
analytics for optimising operating asset
performance and maintenance strategies
Contract Mining
Resource definition, exploration drilling
and mine feasibility studies
Open cut mining services to Australian
coal, iron ore and gold
Underground mining services to Australian,
PNG and South African copper and gold
Drilling, explosives supply, blasting
and crushing
Mine closure and rehabilitation

Contract extensions for open cut coking
coal and iron ore mining
Grow underground mining business
focusing on copper and gold, both in
Australia and Africa
Leverage vertical integration capability
of mining, blasting and tyre management
services
Leverage our global footprint in Africa and
South America
Technology investment in autonomous
operations and remote analytics
Strategic
initiatives
20

Spotless
Infrastructure &
Construction
Electrical, Mechanical
and HVAC


Build our integrated M&E
offering into New Zealand
leveraging Hawkins/
Downer supply chain
Transition discrete
Mechanical & Electrical
capability into integrated
M&E service offering
Create a ‘Project
Development’ capability
within our I&C business
which provides niche
building services
to Spotless and the
Downer Group
Hospitality & FM
Leisure, Business, Private
Education and Resources




Target growth
opportunities from single
service to integrated
offerings
Leverage Downer Group
synergies to grow in
Resources
Partner with property
management company
to deliver hospitality
services
Government
Social Housing, Whole
of Government, Local
Government, Education
(incl. Tertiary) and Health
Establish Justice sector
capability through forming
joint ventures and B2B
partnerships
Explore potential
export markets where
our capabilities can be
translated (Asia, America,
Europe and Middle East)
Leverage Downer
relationship to take our
FM capability to Utilities
customers
Target key, non-PPP
hospital projects and
infrastructure and
transport PPPs
Shape market around core
tenancy management
capabilities
Defence
Estate and
Infrastructure, CASG &
JLC and OEMs

Establish Defence Centre
of Excellence
Create OEM partnerships
within Defence to expand
our service offering
Explore potential
export markets where
our capabilities can be
translated (Canada and
America)
Laundries
Health Private and
Public, Industrial and
Accommodation


Reshape our offering
in Laundries market to
differentiate through
logistics, commercial
innovation and
technology
Develop Reusable, Barrier
Fabric (RFB) solution
to minimise impact of
surgical reductions
Develop smart hospital
model with Government
and I&C businesses
Target premium
opportunities in
accommodation market
Strategic
initiatives
21