Half Yearly Report and Accounts
Page 1 of 1
10 February 2022
Company Announcements Office
ASX Limited
Exchange Centre
Level 4, 20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
Please find attached the following documents:
1. Appendix 4D – results for announcement to the market for the half-year ended
31 December 2021;
2. Condensed Consolidated Half-year Financial Report dated 31 December 2021;
3. Market release dated 10 February 2022; and
4. Investor Presentation.
Yours sincerely,
Downer EDI Limited
Robert Regan
Company Secretary
Downer EDI Limited
ABN 97 003 872 848
Triniti Business Campus
39 Delhi Road
North Ryde NSW 2113
1800 DOWNER
www.downergroup.com
Results for announcement to the market
for the half-year ended 31 December 2021
Appendix 4D
31 Dec 2021
31 Dec 2020
%
$'m
$'m
change
Revenue from ordinary activities5,443.3 5,789.7
Other income131.6 36.6
Total revenue and other income from ordinary activities5,574.9 5,826.3 (4.3%)
Total revenue including joint ventures and other income 5,974.9 6,116.0 (2.3%)
172.0 162.4 5.9%
Earnings before interest and tax and amortisation of acquired intangible assets (EBITA)
186.2 195.8 (4.9%)
Profit from ordinary activities after tax attributable to members of the parent entity
88.6 73.9 19.9%
99.0 99.0 -
31 Dec 2021
31 Dec 2020
%
cents cents change
Basic earnings per share12.4 10.3 20.4%
Diluted earnings per share12.3 10.2 20.6%
Net tangible asset backing per ordinary share31.3 29.1 7.6%
Dividend
31 Dec 2021
31 Dec 2020
Interim Interim
Dividend per share (cents)12.0 9.0
Franked amount per share (cents) - -
Conduit foreign income (CFI) (%)29% 100%
Dividend record date24/2/2022 25/2/2021
Dividend payable date24/3/2022 25/3/2021
Redeemable Optionally Adjustable Distributing Securities (ROADS)
Dividend per ROADS (in Australian cents)1.51 1.45
New Zealand imputation credit percentage per ROADS 100% 100%
ROADS payment dateQuarter 1 Quarter 2
Instalment date FY202215/9/2021 15/12/2021
Instalment date FY202115/9/2020 15/12/2020
Downer EDI's Dividend Reinvestment Plan (DRP) has been suspended.
For commentary on the results for the period and review of operations, please refer to the Directors' Report and separate media release.
Profit from ordinary activities after tax and before amortisation of acquired intangible
assets (NPATA)
Earnings before interest and tax
1
Downer EDI Limited
ABN: 97 003 872 848
Condensed Consolidated
Financial Report
for the half-year ended
31 December 2021
ContentsHalf-year Report 2022
Contents
Directors' Report
Page 2
Auditor’s Signed Reports
Page 15Auditor's Independence Declaration
Page 16Independent Auditor's Review Report
Financial Statements
Page 18Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
Page 19Condensed Consolidated Statement of Financial Position
Page 20Condensed Consolidated Statement of Changes in Equity
Page 21Condensed Consolidated Statement of Cash Flows
Notes to the condensed consolidated financial statements
Page 22-23Page 24-30Page 31-36Page 37-43
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Directors' Declaration
Page 44
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Contingent
liabilities
Equity accounted
investments
#N/AAcquisition of
businesses
#N/ADisposal of
businesses
Trade payables
and contract
liabilities
Issued capitalProperty, plant and
equipment
ReservesIntangible assets
Revenue
Employee benefits
expense
Individually
significant items
Earnings per share
Subsequent
events
ABCD
________________________________________________________________________
Segment
information
Trade receivables
and contract
assets
#N/A
#N/A
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Borrowings
Financing facilities
Dividends
#N/A
About this
report
Business
performance
Capital structure
and financing
Other
disclosures
1
2
DIRECTORS’ REPORT
For the half-year ended 31 December 2021
The Directors of Downer EDI Limited (Downer) submit the condensed consolidated financial report of the Company
for the half-year ended 31 December 2021. In accordance with the provisions of the Corporations Act 2001 (Cth),
the Directors’ Report is set out below:
Directors
The names of the Directors of the Company during, or since the end of the half-year are:
Richard Michael Harding (Chairman, Independent Non-executive Director) – retired 30 September 2021
Mark Peter Chellew (Chairman, Independent Non-executive Director) – appointed 1 September 2021, Chairman
since 1 October 2021
Grant Anthony Fenn (Managing Director and Chief Executive Officer)
Philip Stuart Garling (Independent Non-executive Director)
Teresa Gayle Handicott (Independent Non-executive Director)
Nicole Maree Hollows (Independent Non-executive Director)
Peter Lawrence Watson (Independent Non-executive Director)
REVIEW OF OPERATIONS
COVID-19
Downer continues to comply with all Government regulations and advice in relation to the COVID-19 pandemic and
has robust Business Continuity Plans in place. Senior managers communicate regularly with their teams to ensure
they are fully informed about the evolving situation and putting in place appropriate strategies. Downer is committed
to working closely with its customers and partners to minimise the impact on operations while keeping its employees
and communities safe.
Detailed and up-to-date information about Downer’s response to COVID-19 is provided on the home page of the
Company’s website (www.downergroup.com).
During the six-months to 31 December 2021, there was no material impact on demand for the businesses within the
Group’s Transport service line. The Hospitality business within the Facilities service line continues to be significantly
affected by COVID-19 regulations, some Asset Services customers continue to defer non-essential work and the
Utilities service line in New Zealand has been impacted from level-4 lockdowns.
PRINCIPAL ACTIVITIES
Downer EDI Limited (Downer) is a leading provider of integrated services in Australia and New Zealand. Downer
employs approximately 41,000 people, mostly in Australia and New Zealand.
Downer operates in sectors that are closely connected to the investment that is being driven by population growth
and urbanisation. These sectors include roads, rail, light rail, other public transport, power, gas, water,
telecommunications, health, education, defence and other government sectors.
These sectors are served by Downer’s Urban Services businesses – Transport, Utilities and Facilities.
These Urban Services businesses have:
• Demonstrated strength and resilience
• Leading market positions and attractive medium and long-term growth opportunities
• A high proportion of government and government-related contracts
• A capital light, services-based business model generating lower risk, more predictable revenues and cash
flows.
In the six-months to 31 December 2021, Downer completed the divestment of its Mining portfolio of businesses, with
the sale of Open Cut Mining East and Otraco.
3
SUSTAINABILITY
At Downer, sustainability means sustainable and profitable growth, providing value to our customers, delivering our
services in a safe and environmentally responsible manner, helping our people to be better and advancing the
communities in which we operate.
Our commitments to sustainability are outlined in our policies, which are accessible from the Downer website
(www.downergroup.com). Our 2021 Sustainability Report detailing Downer’s sustainability-related performance
for the financial year ended 30 June 2021 can be found on the Company website
(https://sustainability.downergroup.com/2021/).
A core element of Downer’s sustainability approach is to focus on our customers’ success. Our core operating
philosophy, ‘Relationships creating success’, encapsulates this theme. With our services impacting millions of lives
every day, the sustainability of our operations is paramount – for our people, our partners, our shareholders, our
customers and their customers. We deliver these services while managing the impacts of our activities on our people,
the environment and communities in which we operate and working collaboratively with our supply chain. Downer’s
extensive capability is well-placed for the decarbonisation effort that is required to meet Australia and New Zealand’s
Net Zero emissions target. We understand that our ability to do this is fundamental to Downer’s long-term success.
4
GROUP FINANCIAL PERFORMANCE
For the six-months ended 31 December 2021, Downer reported a decrease in total revenue and earnings before
interest, tax and amortisation of acquired intangibles (EBITA) driven by the loss of contribution from the Mining and
Laundries divestments made in the current and prior periods, in addition to the COVID-19 impact on operations,
particularly in non-core Hospitality.
The main features of the result for the six-months ended 31 December 2021 were:
• Total revenue
1
of $6.0 billion, down 2.3%
• Core Urban Services business EBITA of $238.0 million, up 4.4%
• Statutory EBITA of $186.2 million, down 4.9% from $195.8 million
• EBITA margin of 3.1% down from 3.2% at 31 December 2020
• Statutory earnings before interest and tax (EBIT) of $172.0 million, up 5.9% from $162.4 million
• Statutory net profit after tax and before amortisation of acquired intangible assets (NPATA) stable at $99.0
million
• Statutory net profit after tax (NPAT) of $89.0 million, up 17.7% from $75.6 million.
Gearing has decreased since 30 June 2021 by 2.5 percentage points (pp) from 19.0% to 16.5% reflecting the strong
operating cash flows and proceeds from the divestment program partially offset by the impact of the share buy-back
program.
Cash conversion for the period was 85.1% up from 84.1% in the prior corresponding period (pcp), and 91.2% once
adjusted for $21.1 million of cash outflows relating to Individually Significant Items (ISIs) recognised in FY20.
Corporate costs increased by $4.2 million or, 8.8%, to $52.0 million mainly due to higher information technology
security and insurance costs.
Net finance costs decreased by $10.3 million or, 18.4%, to $45.8 million driven by lower average debt drawn and
lower lease interest expense.
Effective tax rate of 29.5% is lower than the statutory corporate tax rate of 30.0% due to the impact of items including
non-taxable distributions from joint ventures and lower tax rates in overseas jurisdictions (e.g. New Zealand).
ISIs totalled $4.6 million profit before interest and tax for the period, ($1.4 million profit after-tax). These ISIs relate
to:
• The fair value movement of the Downer Contingent Share Option (DCSO) issued in FY21 as part of the
acquisition of the remaining 12.2% interest in Spotless
• Divestments and exit costs
• Portfolio restructure costs
• Bid costs
• Gain on sale of PP&E.
Refer to Note B4 to the Financial Report for further details.
1
Total revenue is a non-statutory disclosure and includes revenue, other income and notional revenue from joint ventures and other alliances
not proportionately consolidated.
5
The table below provides a comparison of the underlying
1
earnings for HY22 versus the results for HY21 and a
reconciliation to statutory NPAT.
Underlying
1
EBITA (A$m)
Segment
HY22 HY21
Variance
(%)
Transport Transport 115.6 99.7 15.9%
Utilities
2
Utilities 33.3 45.3 (26.5%)
Facilities
2
Facilities 89.1 82.9 7.5%
Core Urban Services Businesses 238.0 227.9 4.4%
Engineering & Construction All other segments - (2.6) 100%
Mining All other segments 8.1 38.7 (79.1%)
Laundries Facilities - 4.5 (100%)
Hospitality Facilities (12.5) 0.3 >(100%)
Non-core businesses (4.4) 40.9 >(100%)
Corporate Unallocated (52.0) (47.8) (8.8%)
Group Underlying EBITA
2
181.6 221.0 (17.8%)
Amortisation of acquired intangibles
(pre-tax)
(14.2) (33.4) 57.5%
Underlying EBIT 167.4 187.6 (10.8%)
Net interest expense (45.8) (51.8) 11.6%
Tax expense (34.0) (40.1) 15.2%
Underlying NPAT 87.6 95.7 (8.5%)
Amortisation of acquired intangibles
(post tax)
10.0 23.4 (57.3%)
Underlying NPATA
3
97.6 119.1 (18.1%)
Items outside of underlying NPATA 4.6 (29.5) >100%
Tax effect on items outside NPATA (3.2) 9.4 >(100%)
Statutory NPATA 99.0 99.0 0.0%
Amortisation of acquired intangibles
(post tax)
(10.0) (23.4) 57.3%
Statutory NPAT 89.0 75.6 17.7%
1- The underlying result is a non-IFRS measure that is used by Management to assess the performance of the business. Non-IFRS measures
have not been subject to audit or review.
2- The Group has restated the previously reported segment information for the period ended 31 December 2020 to align it with the current
segment presentation.
3- Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense.
Group HY22: $14.2 million, $10.0 million after-tax. (HY21: $33.4 million, $23.4 million after-tax).
6
STATUTORY EARNINGS
Statutory earnings before interest and tax (EBIT) of $172.0 million, up 5.9% from $162.4 million.
Statutory EBITA of $186.2 million, down 4.9% from $195.8 million.
Underlying EBITA of Group $181.6 million, down 17.8% from $221.0 million.
A reconciliation of the 1H22 underlying result to the statutory result is provided in the table below:
A$m EBITA
Net
Interest
expense
Tax
expense
NPATA
Amortisation of
acquired
intangibles
(post-tax) NPAT
Underlying result 181.6 (45.8) (38.2) 97.6 (10.0) 87.6
Fair value on Downer Contingent
Share Option (DCSO)
1
(5.4) - - (5.4) - (5.4)
Divestments and exit costs (65.4) - 19.4 (46.0) - (46.0)
Portfolio restructure costs (7.6) - 2.3 (5.3) - (5.3)
Bid costs
2
(2.8) - 0.8 (2.0) - (2.0)
Gain on sale of PP&E 85.8 - (25.7) 60.1 - 60.1
Total items outside underlying
performance 4.6 - (3.2) 1.4 - 1.4
Statutory result - Profit/(loss) 186.2 (45.8) (41.4) 99.0 (10.0) 89.0
1
The Downer Contingent Share Option (DCSO) issued as part of the acquisition of the minority interest in Spotless in August 2020 are required
to be recorded at fair value with changes in fair value recorded through profit or loss. Since 30 June 2021, the fair value of the DCSO has increased
by $5.4 million, which has been expensed through 'Other expenses' in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income during the period. This expense is primarily driven by the increase in Downer’s share price from $5.59 at 30 June 2021 to $5.96 at 31
December 2021.
2
Downer is in the process of tendering for the State of Queensland’s Rollingstock Expansion Program, for which ongoing bid costs are being
incurred. $2.8 million in bid costs were incurred during the period.
Refer to Note B4 to the Financial Report for further details.
EXPENSES
Total expenses decreased by $247.7 million or 4.4% compared to the prior corresponding period (pcp) and includes
$100.2 million of Individually Significant Items (ISIs). This decrease is largely in line with decrease in revenue as
explained by segment below.
Downer’s cost base by type of expense compared to the pcp is as follows:
7
Employee benefits expenses decreased by 5.4%, or $108.9 million, to $1.9 billion and represent 34.9% of Downer's
cost base. The decrease is mainly driven by lower costs following the completion of Mining divestments, contract
completions and reduced activities in Hospitality due to COVID-19 impacts together with a shift in the mix of labour
from direct labour to subcontractors. Accordingly, subcontractor costs increased by 8.4%, or $161.3 million,
to $2.1 billion and represents 38.3% of Downer's cost base (33.8% in the pcp).
Raw materials and consumables costs decreased by 26.1%, or $232.0 million, to $0.7 billion and represent 12.1%
of Downer's cost base. The decrease is mainly due to contract completions, particularly in the Utilities segment and
from lower activities in Mining due to its divestment.
Plant and equipment costs decreased by 23.4%, or $76.2 million, to $0.2 billion and represent 4.6% of Downer's cost
base. The decrease in plant and equipment costs is attributed to a less capital-intensive business following disposals
in FY21 and HY22 as well as from initiatives to drive efficient plant and equipment utilisation and maintenance
practices.
Other expenses, which include communication, travel, occupancy and professional fees costs, increased by
31.0%, or $78.1 million and represent 6.1% of Downer's cost base. Other expenses include $49.6 million of pre-tax
ISIs (1H21: $21.3 million) in relation to fair value movement on DCSO liability and divestment results (including
transaction and divestment costs) as described in Note B4 to the Financial Report. The increase is mainly due to
higher information technology security and insurance costs.
CASH FLOW
Operating Cash Flow
Operating cash flow of $270.4 million represents a cash conversion of 85.1% of adjusted earnings before interest,
tax, depreciation and amortisation (EBITDA).
The decrease in cash was predominantly driven by lower contributions from Mining due to lower EBITDA as a result
of divestment activities and some impact from COVID-19 across the Group.
Included within the operating cash flow, there is $21.1 million of cash outflows in relation to ISIs recognised in FY20
(Portfolio restructure and exit costs). Excluding these cash outflows, cash conversion would be 91.2%.
Investing Cash Flow
Total investing cash inflow of $118.0 million was $369.6 million higher than pcp, mainly driven by $247.6 million
proceeds from disposal activities during the period. Proceeds from disposal activities include: $76.2 million net
proceeds from Otraco, $137.6 million net proceeds from Open Cut Mining East and $33.8 million deferred proceeds
received in relation to Open Cut Mining West and Blasting (divestments completed in FY21).
Excluding payments for the purchase of and proceeds from the disposal of businesses, investing cash outflow
decreased by 24.9% to $106.7 million, largely due to lower capex requirements following the divestment of the
Laundries and Mining businesses.
DEBT AND BONDING
The Group’s performance bonding facilities totalled $1,982.1 million at 31 December 2021 with $583.0 million
undrawn. There is sufficient available capacity to support the ongoing operations of the Group.
As at 31 December 2021, the Group had liquidity of $2.1 billion comprising cash balances of $676.7 million and
undrawn committed debt facilities of $1.4 billion.
A buyback of Downer’s shares was announced to the market on 27 April 2021 and the buyback commenced
on 8 June 2021. During the period ended 31 December 2021, a total of 15,764,293 shares were purchased for total
consideration of $99.0 million. Since announcement, $123.7 million has been spent on the buyback program with
20,127,691 shares bought back.
The Group continues to be rated BBB (Stable) by Fitch Ratings.
8
BALANCE SHEET
Since 30 June 2021, the net assets of the Group decreased by $66.4 million or 2.2% to $2.9 billion driven by the
impact of Mining divestments (now concluded), offset by lower net debt balances as shown below:
Net debt is calculated as borrowings (excluding lease liabilities) less cash and cash equivalents. Net debt has
decreased by $112.0 million mainly driven by $246.7 million lower borrowings following debt repayments made,
partially offset by lower cash position since 30 June 2021.
The Mining divestment program reduced net assets of the Group by $240.0 million as described in Note D7 to the
Financial Report.
Excluding the impact from the disposal of Mining, Property plant and equipment increased by $51.1 million or 5.1%,
as capital expenditure in Transport includes assets from Fowlers’ acquisition. Right of use assets decreased by $28.5
million or 5.2% representing the normal depreciation of assets over the lease term.
Total Equity decreased by $66.4 million mainly driven by the $99.0 million in shares bought back and $86.7 million
dividends paid during the period. This was partially offset by $89.0 million net profit after tax, vesting of Downer
Contingent Share Option of $16.0 million recognised in Reserves and lower FCTR reserve following disposal of
Mining businesses.
9
SEGMENT FINANCIAL PERFORMANCE
TRANSPORT
Transport comprises Downer’s Road Services, Rail & Transit Systems and Projects businesses.
Transport
1 Total revenue is a non-statutory disclosure and includes revenue, other income and notional revenue from joint ventures and other alliances
not proportionately consolidated.
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles amortisation expense. Due to rounding, divisional percentages
do not add up precisely to 100%.
Transport revenue increased by 14.6%, or $358.9 million, to $2.8 billion due to higher level of activities in Australia
and higher contribution from Keolis Downer JV due to the patronage increase following the easing of COVID-19
restrictions and the commencement of the Adelaide Metro contract.
Transport EBITA increased by 15.9% to $115.6 million due to new contracts within the Project business and an
increased contribution from the Keolis Downer JV. This was partially offset by a decrease in contribution from Rail &
Transit Systems following completion of Sydney Growth Trains (SGT) construction phase and reduction in New
Zealand Project activity.
Road Services
Downer manages and maintains road networks across Australia and New Zealand and manufactures and supplies
products and services to create safe, efficient and reliable journeys. Downer offers one of the largest non-government
owned road infrastructure services businesses in Australia and New Zealand, maintaining more than 33,000
kilometres of road in Australia and more than 25,000 kilometres in New Zealand.
Downer creates and delivers solutions to our customers’ challenges through strategic asset management and a
leading portfolio of products and services. Downer is a leading manufacturer and supplier of bitumen-based products
and an innovator in the sustainable asphalt industry and circular economy, using recycled products and
environmentally sustainable methods to produce asphalt.
Rail and Transit Systems
Downer has over 100 years’ rail experience providing end-to-end, innovative transport solutions. Downer is a leading
provider of rollingstock asset management services in Australia, with expertise in delivering whole-of-life asset
management support to our customers. Downer’s capability spans all sectors, from rollingstock to infrastructure, and
every project phase, from design and manufacture to through-life-support,
fleet maintenance, operations and comprehensive overhaul of assets.
The Keolis Downer joint venture is Australia’s largest private provider of multi-modal public transport solutions, with
contracts to operate and maintain Yarra Trams in Melbourne, the Gold Coast light rail system in Queensland,
Adelaide Metro and an integrated public transport system for the city of Newcastle in New South Wales. Keolis
Downer is also one of Australia’s most significant bus operators.
10
Projects
Downer delivers multi-disciplined infrastructure solutions to customers within the transport sector. The services
provided by Downer include the design and construction of light rail, heavy rail, signalling, track and station works,
rail safety technology, bridges and roads as well as design and construct steel lattice transmission towers and designs
and builds substations.
Downer has a long history of delivering transport infrastructure projects under a variety of contracting
models. Downer’s integrated capabilities enable intelligent transport solutions, road network management and
maintenance, facility maintenance, utilities services and renewable energy technologies.
UTILITIES
Downer offers a range of services to customers across the power and gas, water, telecommunications and
renewables sectors.
Utilities
1 Total revenue is a non-statutory disclosure and includes revenue, other income and notional revenue from joint ventures and other alliances
not proportionately consolidated.
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles amortisation expense. Due to rounding, divisional percentages
do not add up precisely to 100%.
Utilities revenue decreased by 5.6%, or $50.7 million, to $0.9 billion, largely due to project completions and
COVID-19 lockdowns in Australia and New Zealand impacting water and telecommunication services; partially offset
by increased activities in Power and Gas.
Utilities EBITA decreased $12.0 million or 26.5% to $33.3 million due to lower contribution from Water Services in
Australia and from Telecommunications and Energy in New Zealand; partially offset by an increase in
Telecommunications activities in Australia.
Power and Gas
Downer’s services include planning, designing, constructing, operating, maintaining, managing and decommissioning
power and gas network assets. A collaborative approach has made Downer a benchmark end-to-end service provider
to owners of utility assets.
Downer constructs and maintains electricity and gas networks, provides asset inspection and monitoring services,
connects tens of thousands of new power and gas customers each year and provides meter, energy and water
efficiency services for governments, utilities and corporations.
Water
Downer is dedicated to delivering complete water lifecycle solutions for municipal and industrial water users.
11
Downer’s expertise includes water treatment, wastewater treatment, water and wastewater network construction and
rehabilitation, desalination and biosolids treatment.
As a leading provider of asset management services, Downer supports its customers across the full asset lifecycle
from conceptual development through to design, construction, commissioning and into operations and maintenance.
Telecommunications
Downer is a leading provider of end-to-end technology and communications service solutions, offering integrated civil
construction, electrical, fibre, copper and radio network deployment capability throughout Australia and New Zealand.
Key capabilities include designing, engineering, maintenance, operations and smart metering.
FACILITIES
The Facilities service line operates in Australia and New Zealand across a range of industry sectors including
defence, education, health, government and hospitality.
Facilities
1 Total revenue is a non-statutory disclosure and includes revenue, other income and notional revenue from joint ventures and other alliances
not proportionately consolidated.
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles amortisation expense. Due to rounding, divisional percentages
do not add up precisely to 100%.
Facilities revenue increased by 14.0%, or $247.1 million, to $2.0 billion largely driven by increased activities in
Building Projects in New Zealand and in Australia from new contracts and higher activities in Health & Education,
including COVID-19 cleaning activities. This was partially offset by loss of revenue contribution from Laundries
(disposed in FY21 – 1H21 contribution $126.0 million) while COVID-19 impacted activities in Hospitality and in Asset
Services due to deferral of plant shutdown and critical maintenance.
Facilities EBITA decreased by $11.1 million or 12.7% to $76.6 million mainly driven by the impact of COVID-19
restrictions during the period on several sectors particularly in Hospitality, loss of contribution from the Laundries
business following disposal in FY21, partially offset by higher contribution from projects in New Zealand.
Facilities
Downer is the largest integrated facilities management services provider in Australia and New Zealand, delivering
property and facilities management services to government departments, agencies and authorities at the Federal,
State and municipal level. With around 21 Public Private Partnership projects across the defence, education, health
and leisure sectors, Downer provides innovative management of its customers’ assets across their lifecycle.
Downer has a 40-year history of supporting the daily operations of hospitals across Australia and New Zealand,
delivering a range of services that create a safe environment for hospital staff, patients and their guests. At leading
schools and tertiary institutions, Downer helps to create world-class learning environments through integrated
services such as catering, building and grounds maintenance, conserving energy with air-conditioning and lighting
solutions and ensuring a secure environment.
12
Asset Services
Downer is a leading provider of asset maintenance and specialist services to Australia's critical economic
infrastructure including the oil and gas, power generation and industrial sectors. As a trusted partner with a leading
safety record, Downer optimises the reliability, efficiency and whole-of-life costs of its customers’ assets through long
term relationship-based contracts.
Mineral Technologies
Downer’s Mineral Technologies business is the world leader in fine physical mineral separation solutions, including
spiral gravity concentrators and magnetic and electrostatic separation technology. Mineral Technologies delivers
innovative process solutions for iron ore, mineral sands, silica sands, coal, chromite, gold, tin, tungsten, tantalum and
several other fine materials.
ALL OTHER SEGMENTS
All other segments comprise the Group’s Mining activities prior to divestment as well as 30% interest in Laundries
Joint Venture, and in the comparative period also includes the Engineering and Construction business unit which
was previously reported as ‘businesses in wind down’.
All other segments
1 Total revenue is a non-statutory disclosure and includes revenue, other income and notional revenue from joint ventures and other alliances
not proportionately consolidated.
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles amortisation expense. Due to rounding, divisional percentages
do not add up precisely to 100%.
All other segments revenue decreased by 72.0%, or $702.0 million, to $0.3 billion and EBITA decreased by 77.6%
or $28.0 million to $8.1 million due to cessation of revenue and EBITA contribution from the remaining Mining
businesses disposed in FY21 and HY22 as part of the Group’s Urban Services strategy.
Engineering and Construction
Downer announced in February 2020 that it would focus its construction efforts on areas where it has a competitive
differentiation. As a result, Downer no longer tenders for “hard dollar” construction contracts in the coal, iron ore and
industrial E&I (Electrical & Instrumentation) and SMP (Structural, Mechanical, and Piping) sectors.
Mining
Downer has completed the divestment of Mining operations. The results for the period ended 31 December 2021
include contribution from the Mining business units to the point of disposal.
13
DIVIDENDS
The Downer Board resolved to pay an interim dividend of 12.0 cents per share, unfranked, payable on 24 March
2022 to shareholders on the register at 24 February 2022. The portion of the unfranked dividend amount that will be
paid out of Conduit Foreign Income (CFI) is 29%.
1
The Board also determined to continue to pay a fully imputed dividend on the ROADS security, which having been
reset on 15 June 2021 has a yield of 4.42% per annum payable quarterly in arrears, with the next payment due on
15 March 2022. As this dividend is fully imputed (the New Zealand equivalent of being fully franked), the actual cash
yield paid by Downer will be 3.18% per annum until the next reset date.
Consistent with the prior year, the Company’s Dividend Reinvestment Plan remains suspended.
ZERO HARM
Downer’s Lost Time Injury Frequency Rate (LTIFR) increased to 0.97 from 0.95 and its Total Recordable Injury
Frequency Rate (TRIFR) decreased to 2.57 from 2.68 per million hours worked
2
.
Downer Group Safety Performance (12-month rolling frequency rates)
OUTLOOK
In August 2021 we predicted that our core Urban Services revenue and earnings would grow in FY22. In the first
half our core revenue was up 13.3% and earnings were up 4.4%.
The impact of Omicron on the supply chain, work volumes and revenue mix is difficult to predict and presents risk
for the second half.
We will do our best to manage that risk with our customers and we will provide an update at our Investor Day in
April.
1
This is relevant only for non-resident shareholders. The effect is that the portion of the unfranked dividend paid out of CFI is not subject to
Australian dividend withholding tax.
2
Lost time injuries (LTIs) are defined as injuries that cause the injured person (employee or contractor) to be unfit to perform any work duties for
one whole day or shift, or more, after the shift on which the injury occurred, and any injury that results, directly or indirectly, in the death of the
person. The Lost Time Injury Frequency Rate (LTIFR) is the number of LTIs per million hours worked. Total Recordable Injuries (TRIs) are the
number of LTIs plus medically treated injuries (MTIs) for employees and contractors. Total Recordable Injury Frequency Rate (TRIFR) is the
number of TRIs per million hours worked.
2.68
2.57
0.95
0.97
0.50
1.00
1.50
2.00
1.50
2.00
2.50
3.00
Dec-20
Jan-21
Feb-21Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21Sep-21
Oct-21
Nov-21Dec-21
LTIFR
TRIFR
Downer Group Safety Performance
(12-month rolling frequency rates)
TRIFRLTIFR
14
SUBSEQUENT EVENTS
At the date of this report, the Group has been managing the workforce impacts and remaining COVID-19
restrictions across Australia and New Zealand. Management will continue to monitor the changing nature of the
COVID-19 pandemic.
Outside the above, at the date of this report, there is no other matter or circumstances that has arisen since the
end of the financial period, that has significantly affected, or may significantly affect, the operations of the Group,
the results of those operations, or the state of affairs of the Group in subsequent financial periods.
Auditor’s independence declaration
The auditor’s independence declaration, as required under Section 307C of the Corporations Act 2001, is set out
o
n page 15.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors
M P Chellew
Chairman
Sydney, 10 February 2022
15
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used
under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional
Standards Legislation.
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Downer EDI Limited
I declare that, to the best of my knowledge and belief, in relation to the review of Downer EDI Limited
for the half-year ended 31 December 2021 there have been:
i.no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the review; and
ii.no contraventions of any applicable code of professional conduct in relation to the review.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01
KPMG
Nigel Virgo
Partner
Sydney
10 February 2022
16
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
Independent Auditor’s Review Report
To the Shareholders of Downer EDI Limited
Conclusion
We have reviewed the accompanying
Condensed Consolidated Half-year
Financial Report
of Downer EDI Limited.
Based on our review, which is not an
audit, we have not become aware of any
matter that makes us believe that the
Condensed Consolidated Half-year
Financial Report of Downer EDI Limited
does not comply with the Corporations Act
2001, including:
•
giving a true and fair view of the
G
roup’s
financial position as at 31
D
ecember 2021 and of it
s
per
formance for the Half-year
ended
on
that date; a
nd
•
complying with Australian Accounting
Standard AASB 134 Interim Financi
al
R
eporting and the Corporations
Regulations 2001.
The
C
ondensed Consolidated Half-year Financial
Report
comprises:
•
Condensed Consolidated Statement of Financial
Position as at 31 December 2021
•
Condensed Consolidated Statement of Profit or
Loss and Other Comprehensive Income,
Condensed Consolidated Statement of Changes i
n
Eq
uity and Condensed Consolidated Statement of
Cash Flows for the Half-year ended on that date
•
Notes A to D comprising a summary of significant
accounting policies and other explanatory
information
•
The Directors’ Declaration.
The
G
roup
comprises Downer EDI Limited (the
Company) and the entities it controlled at the Half
year’s end or from time to time during the Half-year.
Basis for Conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by
the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s
Responsibilities for the Review of the Financial Report section of our report.
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with these requirements.
1
7
Responsibilities of the Directors for the Condensed Consolidated Half-year Financial Report
The Directors of the Company are responsible for:
•
the preparation of the Condensed Consolidated Half-year Financial Report that gives a true a
nd
f
air view in accordance with Australian Accounting Standards and the Corporations Act 2001
•
s
uch internal control as the Directors determine is necessary to enable the preparation of t
he
C
ondensed Consolidated Half-year Financial Report that gives a true and fair view and is free fro
m
m
aterial misstatement, whether due to fraud or error.
Auditor’s Responsibilities for the Review of the Condensed Consolidated Half-year Financial
Report
Our responsibility is to express a conclusion on the Half-year Financial Report based on our review.
ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us
believe that the Condensed Consolidated Half-year Financial Report does not comply with the
Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31
December 2021 and its performance for the Half-year ended on that date, and complying with
Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations
Regulations 2001.
A review of a Condensed Consolidated Half-year Financial Report consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit conducted in
accordance with Australian Auditing Standards and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
KPMG
Nigel Virgo
Partner
Stephen Isaac
Partner
Sydney
10 February 2022
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive IncomeHalf-year Report 2022
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the half-year ended 31 December 2021
Dec Dec
2021 2020
Note $'m $'m
5,443.3 5,789.7
131.6 36.6
B2
5,574.9 5,826.3
B3 (1,892.2)(2,001.1)
(2,074.5)(1,913.2)
(655.8)(887.8)
(249.0)(325.2)
(83.9)(89.3)
D3,D4 (94.4)(177.6)
B4
(38.8)(20.2)
(329.7)(251.6)
(5,418.3)(5,666.0)
D5
15.4 2.1
172.0 162.4
1.1 2.6
(11.7)(14.4)
(35.2)(44.3)
(45.8)(56.1)
126.2 106.3
(37.2)(30.7)
89.0 75.6
0.4 1.7
88.6 73.9
89.0 75.6
1.9 3.4
1.6 2.1
9.4 (3.6)
(3.2)0.5
9.7 2.4
(0.3)0.3
10.0 2.1
9.7 2.4
98.7 78.0
B5 12.4 10.3
B5 12.3 10.2
- Net gain/(loss) on cross currency and interest rate swaps taken to equity
Other comprehensive income for the period
Total comprehensive income for the period
The condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes on pages 22 to 43.
- Income tax effect of items above
Other comprehensive income for the period (net of tax)
Other comprehensive income for the period is attributable to:
- Non-controlling interest
- Members of the parent entity
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
- Exchange differences arising on translation of foreign operations
- Net gain on foreign currency forward contracts taken to equity
Profit for the period is attributable to:
- Non-controlling interest
- Members of the parent entity
Profit for the period
Other depreciation and amortisation
Impairment of non-current assets
Profit after income tax
Share of net profit of joint ventures and associates
Earnings before interest and tax
Finance income
Other finance costs
Net finance costs
Profit before income tax
Income tax expense
Lease finance costs
Earnings per share (cents)
Basic earnings per share
Diluted earnings per share
Total expenses
Revenue
Other income
Total revenue and other income
Employee benefits expense
Subcontractor costs
Raw materials and consumables used
Plant and equipment costs
Depreciation on leased assets
Other expenses from ordinary activities
18
Condensed Consolidated Statement of Financial PositionHalf-year Report 2022
Condensed Consolidated Statement of Financial Position
as at 31 December 2021
Dec Jun
2021 2021
Note $'m $'m
676.7 811.4
D1 1,897.7 2,121.0
42.1 62.7
207.0 254.2
- 0.1
3.0 48.6
33.6 63.7
- 41.5
2,860.1 3,403.2
D1
120.7 109.2
D5
158.9 155.1
D3 871.7 994.7
476.3 546.5
D4
2,765.0 2,782.9
15.3 7.8
37.7 65.3
7.1 7.4
4,452.7 4,668.9
7,312.8 8,072.1
D2 2,058.6 2,363.0
C1 46.1 296.2
146.1 157.7
38.1 49.0
307.6 353.6
70.9 64.4
13.8 7.9
- 17.2
2,681.2 3,309.0
D2 38.4 34.2
C1
1,188.8 1,185.4
444.7 505.1
13.7 18.3
31.3 35.3
20.4 21.6
3.3 5.8
1,740.6 1,805.7
4,421.8 5,114.7
2,891.0 2,957.4
C3 2,703.8 2,802.6
C4 3.8 (31.2)
183.4 181.5
2,891.0 2,952.9
- 4.5
2,891.0 2,957.4
Assets held for sale
Prepayments and other assets
Lease receivables
Non-controlling interest
The condensed consolidated statement of financial position should be read in conjunction with the accompanying notes on pages 22 to
43.
Total equity
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Retained earnings
Parent interests
Total non-current liabilities
Other financial liabilities
Employee benefits provision
Total current liabilities
Non-current liabilities
Trade payables and contract liabilities
Borrowings
Liabilities held for sale
Total current assets
Other financial liabilities
Employee benefits provision
Deferred tax liabilities
Other provisions
Lease liabilities
Lease liabilities
Borrowings
Equity accounted investments
Property, plant and equipment
Intangible assets
Other financial assets
Deferred tax assets
Current tax liabilities
Trade payables and contract liabilities
Right-of-use assets
Trade receivables and contract assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Prepayments and other assets
Other provisions
ASSETS
Current assets
Cash and cash equivalents
Trade receivables and contract assets
Non-current assets
Other financial assets
Inventories
Current tax assets
19
Condensed Consolidated Statement of Changes in EquityHalf-year Report 2022
Condensed Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2021
Dec 2021
$'m
Issued
capitalReserves
Retained
earnings
Total
attributable
to owners
of the
parent
Non-
controlling
interestTotal
Balance at 1 July 2021
2,802.6 (31.2)181.5 2,952.9 4.5 2,957.4
Profit after income tax
- - 88.6 88.6 0.4 89.0
Other comprehensive income for the period (net of
tax)
- 10.0 - 10.0 (0.3)9.7
Total comprehensive income for the period
- 10.0 88.6 98.6 0.1 98.7
Vested executive incentive share transactions
0.2 (0.2)- - - -
Vested Downer Contingent Share Option
(i)
- 16.0 - 16.0 - 16.0
Share-based employee benefits expense
- 2.0 - 2.0 - 2.0
Group on-market share buy-back
(99.0)- - (99.0)- (99.0)
Disposal of business
- 7.2 - 7.2 (4.6)2.6
Payment of dividends
(ii)
- - (86.7)(86.7)- (86.7)
Balance at 31 December 2021
2,703.8 3.8 183.4 2,891.0 - 2,891.0
Dec 2020
$'m
Issued
capitalReserves
Retained
earnings
Total
attributable
to owners
of the
parent
Non-
controlling
interestTotal
Balance at 30 June 20202,429.7 (47.7)94.3 2,476.3 144.2 2,620.5
Opening balance adjustment on application of
IFRS Interpretation Committee decision
(i)
- - (25.5)(25.5)- (25.5)
Restated balance at 1 July 20202,429.7 (47.7)68.8 2,450.8 144.2 2,595.0
Profit after income tax- - 73.9 73.9 1.7 75.6
Other comprehensive income for the period (net of
tax)
- 2.1 - 2.1 0.3 2.4
Total comprehensive income for the period
- 2.1 73.9 76.0 2.0 78.0
Capital raising (net of transaction costs and tax)393.4 - - 393.4 - 393.4
Vested executive incentive share transactions4.5 (4.5)- - - -
Share-based employee benefits expense- 0.2 - 0.2 - 0.2
Income tax relating to share-based transactions - 1.3 - 1.3 - 1.3
Acquisition of Non-controlling interest (net of tax)- (6.2)- (6.2)(140.9)(147.1)
Payment of dividends
(ii)
- - (2.9)(2.9)- (2.9)
Balance at 31 December 2020
2,827.6 (54.8)139.8 2,912.6 5.3 2,917.9
The condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes on pages 22 to
43.
(ii) Relates to the 2021 final dividend and $3.0 million ROADS dividends paid during the financial period.
(ii) Relates to the $2.9 million ROADS dividends paid during the financial period.
(i) On 24 August 2021, the Target Price Condition of the Tranche 1 Series Downer Contingent Share Option was satisfied resulting in 2,499,264 shares exercised at
$6.382 per share.
(i) 2020 balances have been restated to reflect the Group’s change in accounting policy for costs related to configuration and customisation of Software-as-a-Service
(SaaS) arrangements. Refer to Annual Report as at 30 June 2021 for details on opening balance adjustments made on application of new accounting standards.
20
Condensed Consolidated Statement of Cash FlowsHalf-year Report 2022
Condensed Consolidated Statement of Cash Flows
for the half-year ended 31 December 2021
Dec Dec
2021 2020
Note $'m $'m
6,349.8 6,660.0
(6,067.3)(6,280.5)
D5 11.6 2.8
294.1 382.3
1.0 1.4
(11.7)(14.4)
(37.1)(39.4)
24.1 20.3
270.4 350.2
44.6 16.9
(117.9)(117.6)
(22.8)(17.4)
- (134.5)
(0.1)(0.1)
D6
(22.8)-
D7 247.6 6.3
- 18.8
(0.8)(9.8)
(9.8)(7.5)
- (6.7)
118.0 (251.6)
C3
(99.0)-
- 390.7
5,214.8 2,619.0
(5,468.5)(2,968.4)
(85.0)(93.7)
(86.7)(86.2)
(524.4)(138.6)
(136.0)(40.0)
811.4 588.5
1.3 1.9
676.7 550.4
Proceeds from sale of equity accounted investments
Investment in equity accounted and other investments
Payment to acquire remaining shares in NCI
Payments of deferred consideration on acquisition of businesses
Proceeds from sale of business (net of cash disposed)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Interest paid on lease liabilities
Interest received
Income tax received
Interest and other costs of finance paid
Net cash generated by operating activities
Cash flows from operating activities
Receipts from customers
Distributions from equity accounted investees
Payments to suppliers and employees
The condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes on pages 22 to 43.
Repayments of borrowings
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Payment of principal of lease liabilities
Cash and cash equivalents at the end of the period
Net cash generated by operating activities before interest and tax
Effect of exchange rate changes
Payments for intangible assets
Payments for acquisition of businesses (net of cash acquired)
Group on-market share buy-back
Advances to equity accounted investments
Payments for property, plant and equipment
Purchases of assets as a lessor
Proceeds from borrowings
Net cash generated by/(used in) investing activities
Cash flows from financing activities
Proceeds from issue of shares (net of costs)
21
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
(a) New and amended accounting standards and interpretations adopted by the Group
(b) New accounting standards and interpretations not yet adopted
Accounting policies are selected and applied in a manner that ensures the resulting financial information satisfies the concepts of
relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The accounting
policies and methods of computation applied in the Financial Report are consistent with those of the previous financial year and
corresponding interim period.
- AASB 2021-5 Amendments to Australian Accounting Standards - Deferred Tax related to Assets and Liabilities arising from a Single
Transaction.
- AASB 17 Insurance Contracts (effective for annual reporting periods beginning on or after 1 January 2023).
- AASB 2020-1 and 2020-6 Classification of liabilities as current or non-current.
None of the above new and amended accounting standards have had a significant impact on the Group's consolidated financial
statements.
Amounts in the Financial Report are presented in Australian dollars unless otherwise noted and has been prepared on a historical cost
basis, except for revaluation of certain financial instruments.
The Financial Report was authorised for issue by the Directors on 10 February 2022.
New Accounting Standards
The following standards, amendments to standards and interpretations are relevant to current operations. They are available for early
adoption but have not been applied by the Group in this Financial Report.
Management continues to assess the impact of AASB 17 Insurance Contracts
on the Group, and has not yet quantified the effect of the
new standard. With the exception of AASB 17 Insurance Contracts, these new or amended standards are not expected to have a
significant impact on the Group’s consolidated financial statements when they are adopted.
During the period, the Group has applied a number of new and revised accounting standards issued by the Australian Accounting
Standards Board (AASB) that are mandatorily effective for an accounting period that begins on or after 1 July 2021, as follows:
- AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements 2018-2020 and Other Amendments.
- AASB 2020-8 Amendments to Australian Accounting Standards - Interest Rate Benchmark Reform - Phase 2.
- AASB 2020-4 Covid-19 Related Rent Concessions Beyond 30 June 2021 (AASB 2020-4).
- AASB 2021-2 Amendments to Australian Accounting Standards - Disclosure of Accounting Policies and Definition of Accounting
Estimates.
- AASB 2021-3 Amendments to Australian Accounting Standards - Covid-19 Related Rent Concessions Beyond 30 June 2021.
Statement of compliance
The condensed consolidated half-year Financial Report (Financial Report) represents the consolidated results of Downer EDI Limited
(ABN 97 003 872 848).
The Financial Report is a general purpose financial statement which has been prepared in accordance with AASB 134 Interim Financial
Reporting and the Corporations Act 2001 (Cth), and with IAS 34 Interim Financial Reporting.
A
About this report
The Financial Report does not include all the information required for an annual financial report and should be read in conjunction with
the 2021 Annual Report.
22
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Basis of Preparation
Certain comparative balances have been reclassified to ensure consistency with the classification in the 30 June 2021 Financial Report.
Rounding of amounts
Downer is a company of the kind referred to in ASIC Corporations (Rounding in Financial / Directors’ reports) Instrument 2016/191
relating to the “rounding off” of amounts in the Directors' Report and consolidated financial statements. Unless otherwise expressly
stated, amounts have been rounded off to the nearest whole number of millions of dollars and one place of decimals representing
hundreds of thousands of dollars in accordance with that Instrument. Amounts shown as $- represent amounts less than $50,000 which
have been rounded down.
Significant judgement, estimates and assumptions about future events are made by management when applying accounting policies
and preparing the Financial Report which are consistent with those described in the 2021 Annual Report.
Accounting estimates and judgements
23
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
B1. Segment informationB4. Individually significant items
B2. RevenueB5. Earnings per share
B3. Employee benefits expenseB6. Subsequent events
Segment
Transport
Utilities
Facilities
All other
segments
B
Business performance
B1. Segment information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Group CEO in
assessing performance and in determining the allocation of resources. The operating segments are identified by the Group based on
the nature of the services provided. Discrete financial information about each of these operating businesses is reported to the Group
CEO on a recurring basis.
The reportable segments are based on a combination of operating segments determined by the similarity of the services provided, the
sources of the Group’s major risks that could therefore have the greatest effect on the rates of return and their quantitative contribution
to the Group's results.
During the period, the composition of business units within operating segments was realigned to better reflect how the Group’s chief
operating decision maker currently assesses performance and allocates Group resources. As a result, the Asset Services business unit
(previously reported as part of the EC&M segment), was reallocated to the Facilities segment; the Mining business unit (previously a
separate reportable segment) and the Engineering and Construction business unit (previously reported as part of the EC&M segment),
have been included within All other segments following the reduction in their contribution to the Group’s performance following
divestments and wind-down of contracts. The new structure better aligns the segment reporting with Downer’s end markets and
management reporting structure.
The Group has restated the previously reported segment information for the period ended 31 December 2020.
An operating segment is a component of an entity that engages in business activities from which it may earn revenue and incur
expenses, whose operating results are regularly reviewed by the Group’s chief operating decision maker in order to effectively allocate
Group resources and assess performance.
Segment description
Comprises the Group's road services, transport infrastructure and rail businesses. Downer’s road and transport
infrastructure services include: road network management; routine road maintenance; asset management systems;
spray sealing; asphalt laying; manufacture and supply of bitumen-based products and asphalt products; the use of
recycled products and environmentally sustainable methods to produce asphalt; landfill diversion solutions; intelligent
transport systems; design and construction of light rail and heavy rail networks; signalling; track and station works; rail
safety technology; and bridges. The Rail business spans all light rail and heavy rail sectors, from rollingstock to
infrastructure; from design and manufacture to through-life-support including fleet maintenance, operations and
comprehensive overhaul of assets.
Comprises the Group's power, gas, water and telecommunications businesses. This includes: planning, designing,
constructing, operating, maintaining, managing and decommissioning power and gas network assets; providing complete
water lifecycle solutions for municipal and industrial water users including water and wastewater treatment, network
construction and rehabilitation; and end-to-end technology and communications solutions including design, civil
construction, network construction, operations and maintenance across fibre, copper and radio networks.
Facilities operates in Australia and New Zealand and provides outsourced facility services to customers across a diverse
range of industry sectors including: defence; education; government; healthcare; resources; leisure; assets services and
hospitality. Facilities provides technical and engineering services; maintenance and asset management services
including shutdowns, turnaround and outage delivery; operations maintenance, refrigeration solutions and ongoing
management of strategic assets across a range of sectors. It also provides feasibility studies; engineering design;
procurement and construction; commissioning and decommissioning services; and design and manufacture of mineral
process equipment as well as building and construction solutions across a variety of sectors in New Zealand. The
laundries business within the facilities segment was disposed of on 31 March 2021.
Other operations include the Group's Mining, Engineering and Construction operating segments, as well as the interest
in the Laundries Joint Venture.
The reportable segments identified within the Group are outlined as follows:
24
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021
$'m
Transport Utilities Facilities
All other
segments
UnallocatedTotal
Segment revenue and other income2,451.8 860.3 2,012.3 242.8 7.7 5,574.9
369.2 - 0.3 30.5 - 400.0
2,821.0 860.3 2,012.6 273.3 7.7 5,974.9
115.6 33.3 76.6 8.1 (47.4)186.2
Amortisation of acquired intangibles
(2.2)(0.1)
(2.9)- (9.0)(14.2)
Total reported segment results (EBIT)113.4 33.2 73.7 8.1 (56.4)172.0
Dec 2020
(restated)
$'m
Transport Utilities Facilities
All other
segments
UnallocatedTotal
Segment revenue and other income2,182.2 911.0 1,763.2 967.8 2.1 5,826.3
279.9 - 2.3 7.5 - 289.7
2,462.1 911.0 1,765.5 975.3 2.1 6,116.0
99.7 45.3 87.7 36.1 (73.0)195.8
Amortisation of acquired intangibles
(3.6)(0.3)
(4.7)- (24.8)(33.4)
Total reported segment results (EBIT)96.1 45.0 83.0 36.1 (97.8)162.4
Restated
(i)
Dec Dec
2021 2020
Note $'m $'m
228.4 260.2
B4 (5.4)(14.0)
B4 (65.4)(7.2)
B4 (7.6)-
B4 (2.8)-
B4 85.8 -
B4 - (4.0)
(9.0)(24.8)
(52.0)(47.8)
(56.4)(97.8)
172.0 162.4
(45.8)(56.1)
126.2 106.3
(37.2)(30.7)
89.0 75.6
Gain on sale of PP&E
Divestments and exit costs
Bid costs
Total revenue including joint ventures and
other income
(i)
Segment EBIT
Unallocated:
Amortisation of Spotless and Tenix acquired intangible assets
Corporate costs
Laundries transaction costs
Total unallocated
Profit after income tax
Profit before income tax
Income tax expense
Fair value movement on DCSO liability
Portfolio restructure costs
Segment results
Reconciliation of segment EBIT to net profit/(loss) after tax:
(i) This is a non-statutory disclosure as it relates to Downer’s share of revenue from equity accounted joint ventures and associates.
Share of sales revenue from joint ventures and
associates
(i)
Total revenue including joint ventures and
other income
(i)
EBIT before amortisation of acquired
intangibles (EBITA)
Share of sales revenue from joint ventures and
associates
(i)
EBIT before amortisation of acquired
intangibles (EBITA)
Earnings before interest and tax
Net finance costs
(i) Unallocated segment has been restated for the change in allocating individually significant items.
25
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021
$'m
Transport Utilities Facilities
All other
segments
Unallocated Total
1,253.2 504.8 1,565.5 240.9 - 3,564.4
983.4 349.6 419.1 0.3 - 1,752.4
93.7 1.1 20.5 0.7 - 116.0
2,330.3 855.5 2,005.1 241.9 - 5,432.8
3.0 - 0.1 1.5 5.9 10.5
2,333.3 855.5 2,005.2 243.4 5.9 5,443.3
Government grants
(i)
8.0 4.5 4.3 - - 16.8
Insurance recoveries- - - - 1.8 1.8
Gain on sale of PP&E104.8 - - - - 104.8
Other5.7 0.3 2.8 (0.6)- 8.2
118.5 4.8 7.1 (0.6)1.8 131.6
2,451.8 860.3 2,012.3 242.8 7.7 5,574.9
369.2 - 0.3 30.5 - 400.0
2,821.0 860.3 2,012.6 273.3 7.7 5,974.9
Dec 2020
Restated
(iii)
$'m
Transport Utilities Facilities
All other
segments
Unallocated Total
1,206.2 548.7 1,534.7 721.2 - 4,010.8
877.5 358.9 196.2 206.9 - 1,639.5
86.1 3.1 28.3 15.9 - 133.4
2,169.8 910.7 1,759.2 944.0 - 5,783.7
2.7 - 0.1 1.1 2.1 6.0
2,172.5 910.7 1,759.3 945.1 2.1 5,789.7
Government grants
(i)
0.1 0.1 3.3 - - 3.5
Gain on divestments of equity accounted investee- - - 10.7 - 10.7
Insurance recoveries7.8 - - - - 7.8
1.8 0.2 0.6 12.0 - 14.6
Other income9.7 0.3 3.9 22.7 - 36.6
Total revenue and other income2,182.2 911.0 1,763.2 967.8 2.1 5,826.3
279.9 - 2.3 7.5 - 289.7
2,462.1 911.0 1,765.5 975.3 2.1 6,116.0
Other
(i) Government grants represents incentives received under the New Zealand Government’s wage subsidy scheme available to eligible businesses impacted by the
COVID-19 pandemic.
(ii) This is a non-statutory disclosure as it relates to Downer’s share of revenue from equity accounted joint ventures and associates.
(iii) Revenue disclosures have been restated for the change in Operating Segments detailed in Note B1, which includes the classification of certain contracts revenue
between services and construction.
Total revenue from contracts with customers
Other revenue
Total revenue
B2. Revenue
Revenue and other income
Construction contracts
Total revenue from contracts with customers
Share of sales revenue from joint ventures and
associates
(ii)
Total revenue including joint ventures and
other income
(ii)
Construction contracts
Sale of goods
Other revenue
Total revenue
Rendering of services
Total revenue and other income
Other income
Share of sales revenue from joint ventures and
associates
(ii)
Total revenue including joint ventures and
other income
(ii)
Sale of goods
Rendering of services
26
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021
$'m
Transport Utilities Facilities
All other
segments
Unallocated Total
Geographical location
(i)
1,738.0 614.9 1,495.8 228.3 - 4,077.0
592.3 240.6 497.3 - - 1,330.2
- - 12.0 13.6 - 25.6
2,330.3 855.5 2,005.1 241.9 - 5,432.8
Dec 2020
Restated
(ii)
$'m
Transport Utilities Facilities
All other
segments
Unallocated Total
Geographical location
(i)
1,532.3 631.9 1,435.0 917.3 - 4,516.5
637.5 278.8 324.2 - - 1,240.5
- - - 26.7 - 26.7
2,169.8 910.7 1,759.2 944.0 - 5,783.7
Dec Dec
2021 2020
$'m $'m
101.0 123.9
2.0 0.2
1,789.2 1,877.0
1,892.2 2,001.1
Australia
Revenue from contracts with customers by geographical location
(i) Revenue is allocated based on the geographical location of the legal entity.
B3. Employee benefits expense
Defined contribution plans costs
Share-based employee benefits expense
Other employee benefits
Total employee benefits expense
(ii) Revenue disclosures have been restated for the change in Operating Segments detailed in Note B1.
New Zealand and Pacific
Rest of World
Total revenue from contracts with
customers
Total revenue from contracts with
customers
New Zealand and Pacific
Rest of World
Australia
27
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021
$'m
Fair value
movement
on DCSO
liability
Divestments
and exit
costs
Portfolio
restructure
costsBid costs
Gain on
sale of
PP&ETotal
- - - - (104.8)(104.8)
- 13.1 - - - 13.1
- 38.8 - - - 38.8
- 3.5 7.6 0.7 - 11.8
5.4 10.0 - 2.1 19.0 36.5
Loss/(profit) before interest and tax5.4 65.4 7.6 2.8 (85.8)(4.6)
Income tax (benefit)/expense- (19.4)(2.3)(0.8)25.7 3.2
5.4 46.0 5.3 2.0 (60.1)(1.4)
Divestments and exit costs
The Downer Contingent Share Option (DCSO) issued as part of the acquisition of the minority interest in Spotless in August 2020 are
required to be recorded at fair value with changes in fair value recorded through profit or loss. Since 30 June 2021, the fair value of the
DCSO has increased by $5.4 million, which has been expensed through 'Other expenses' in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income during the period. This expense is primarily driven by the increase in Downer’s share price
from $5.59 at 30 June 2021 to $5.96 at 31 December 2021.
B4. Individually significant items
The following material items of expenses, forming part of the unallocated segment are relevant to an understanding of the Group's
financial performance.
Fair value movement on Downer Contingent Share Option (DCSO) liability
Other expenses from ordinary activities
Loss/(profit) after income tax
Gain on sale of Property, Plant & Equipment
Downer received notice from Sydney Metro of its intention to compulsorily acquire Downer’s land at 1A Unwin Street, Rosehill for the
purposes of the Sydney Metro West project.
The site is used to operate Downer’s primary Asphalt and recycling operations in Sydney.
In December 2021, Sydney Metro and Downer reached agreement under the Land Acquisition (Just Terms Compensation) Act on the
compensation payable to Downer for the acquisition.
The transaction has resulted in Sydney Metro reimbursing Downer, on a like for like basis, for the actual costs incurred on the
construction and commissioning of a replacement facility. Downer expects the compulsory acquisition and reinstatement of operations
at the new site to be cash neutral in net terms.
Downer is advanced in its construction of replacement facilities, also in Rosehill, which are expected to be completed in May 2022, and
does not expect any disruptions to its operations.
The difference between the historical written down book value of the existing facility, the reimbursement of costs for the replacement
facility and relocation costs has been recognised as a $60.1 million after tax gain for the period ended 31 December 2021.
Bid costs
Downer is in the process of tendering for the State of Queensland’s Rollingstock Expansion Program, for which ongoing bid costs are
being incurred. $2.8 million in bid costs were incurred during the period.
Portfolio restructure costs
As a result of the divestment program, Downer has reduced management overhead with restructuring costs of $7.6 million expensed
during the period.
Other income
Loss on disposal of businesses
Impairment of non-current assets
Employee benefits expense
The divestment program has been completed following the disposal of Otraco on 1 December 2021, the sale of Open Cut Mining East
on 17 December 2021, and the exit from a number of Hospitality contracts. Additionally, assets previously utilised by those businesses
will no longer be utilised by the Group and consequently were written-off. The material elements of divestment and exit costs include:
- $13.1 million net pre-tax loss (including disposal costs) from the disposal of Otraco and Open Cut East (OCE). Refer to Note D7.
- $52.3 million pre-tax of exit costs, relating to impairments of IT infrastructure and applications ($25.5 million), impairment of
right of use assets and leasehold improvements for leased properties ($13.3 million); and inventory write-offs and other exit costs
totalling $13.5 million.
28
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2020
Restated
(i)
$'m
Fair value
movement
on DCSO
liability
Termination
of Spotless
financing
arrange-
ments
Laundries
transaction
costs
Mining
divestmentsTotal
Other Income- - - (5.6)(5.6)
Loss on disposal of businesses- - - 2.3 2.3
Gain on divestment of equity accounted investee- - - (10.7)(10.7)
Impairment of non-current assets- - - 20.2 20.2
Other expenses from ordinary activities14.0 - 4.0 1.0 19.0
Loss before interest and tax14.0 - 4.0 7.2 25.2
Other finance costs- 4.3 - - 4.3
Income tax benefit- (1.3)(1.0)(7.1)(9.4)
Loss after income tax14.0 3.0 3.0 0.1 20.1
- $1.0 million transaction costs incurred to date on the divestment program.
- $20.2 million impairment charge to adjust the carrying value of the Property, plant and equipment and other assets of the
Open Cut Mining West business to its expected recoverable value on the classification of this business as a Disposal group
held for sale.
Laundries transaction costs
Mining divestments
The divestment program for the Mining division had resulted in a number of material transactions netting to $7.2 million expense noted
above. These include:
- $5.6 million gain on sale of property, plant and equipment.
As part of the consideration to acquire the shares in Spotless that it did not already own, the Group granted three tranches of 2.5 million
share options to the previous minority interest shareholders which are exercisable within four years of issue on achievement of three
prescribed share price targets (Downer Contingent Share Option). The fair value at issue date of these options was recognised as a
liability arising on the acquisition of the shares. The DCSO are classified as a liability, with subsequent changes in the fair value
recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Since grant date, and primarily driven by
the movement in Downer’s share price from $4.30 to $5.33 at 31 December 2020, the fair value of the DCSO increased by
$14.0 million, which has been expensed through 'Other expenses' in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income during the period.
Fair value movement on Downer Contingent Share Option (DCSO) liability
Termination of Spotless financing arrangements
- $2.3 million net loss made from the disposal of Open Cut Mining West and Snowden businesses.
- $10.7 million gain on the divestment of the equity accounted investment in RTL JV.
To 31 December 2020, the Group had incurred transaction costs and stamp duty of $4.0 million ($3.0 million after tax) relating to the
agreement to dispose of the Laundries business.
Following the purchase of the Non-controlling interest (NCI) in Spotless, the Group extinguished the Spotless financing arrangements.
As a result, the unamortised deferred financing costs related to the extinguished facilities were immediately written-off to the 'Other
finance costs' line in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, with the tax effect of $1.3 million
being credited to the 'Income tax expense' line.
(i) Individually significant items have been restated to ensure consistency with full year FY21 classifications.
29
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec Dec
2021 2020
88.6 73.9
(3.0)(2.9)
85.6 71.0
690.8 686.2
12.4 10.3
Dec Dec
2021 2020
88.6 73.9
690.8 686.2
31.8 41.4
722.6 727.6
12.3 10.2
Weighted average number of ordinary shares
– Weighted average number of ordinary shares (WANOS) on issue (m’s)
(i)
(ii)
– WANOS adjustment to reflect potential dilution for ROADS (m’s)
(iii)
Diluted earnings per share (cents)
WANOS used in the calculation of diluted EPS (m’s)
Weighted average number of ordinary shares (WANOS) on issue (m’s)
(i)
Basic earnings per share (cents)
Basic earnings per share
Profit attributable to members of the parent entity ($’m)
Diluted earnings per share
The calculation of diluted earnings per share is based on the following profit attributable to ordinary shareholders and the weighted-
average number of ordinary shares outstanding after adjustments for the effects of all dilutive potential ordinary shares.
B6. Subsequent events
(i) The WANOS on issue has been adjusted by the weighted average effect of the unvested executive incentive shares.
(iii) The WANOS adjustment is the value of ROADS that could potentially be converted into ordinary shares at the reporting date. It is calculated based on the issued value of
ROADS in New Zealand dollars converted to Australian dollars at the spot rate prevailing at the reporting date, which was $188.4 million (December 2020: $187.6 million),
divided by the average market price of the Company’s ordinary shares for the period 1 July 2021 to 31 December 2021 discounted by 2.5% according to the ROADS contract
terms, which was $5.91 (December 2020: $4.53).
At the date of this report, the Group has been managing the workforce impacts and remaining COVID-19 restrictions across Australia
and New Zealand. Management will continue to monitor the changing nature of the COVID-19 pandemic.
Outside the above, at the date of this report, there is no other matter or circumstances that has arisen since the end of the financial
period, that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the
state of affairs of the Group in subsequent financial periods.
The calculation of basic earnings per share (EPS) is based on the profit attributable to ordinary shareholders and the weighted-average
number of ordinary shares outstanding.
B5. Earnings per share
Profit attributable to members of the parent entity ($’m)
Adjustment to reflect ROADS dividends paid ($’m)
Profit attributable to members of the parent entity used in calculating basic EPS ($’m)
(ii) For diluted earnings per share, the WANOS has been further adjusted by the potential vesting of executive incentive shares.
30
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
C1. BorrowingsC4. Reserves
C2. Financing facilitiesC5. Dividends
C3. Issued capital
Dec Jun
2021 2021
$'m $'m
50.0 50.0
- 250.0
(3.9)(3.8)
46.1 296.2
400.0 400.0
137.9 133.0
30.0 30.0
509.6 510.7
119.8 120.4
(8.5)(8.7)
1,188.8 1,185.4
1,234.9 1,481.6
1,324.6 1,611.5
(i) Excludes lease liabilities.
– JPY medium term notes
– Deferred finance charges
– AUD medium term notes
Total non-current borrowings
Fair value of total borrowings
(i)
Capital structure and financing
C1. Borrowings
C
– Bank loans
– USD private placement notes
– AUD private placement notes
Current
Unsecured:
– Bank loans
– AUD medium term notes
Total current borrowings
– Deferred finance charges
Non-current
Unsecured:
Total borrowings
31
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec Jun
2021 2021
$'m $'m
1,100.0 1,100.0
327.0 327.0
Total unutilised loan facilities1,427.0 1,427.0
90.5 148.1
492.5 484.9
583.0 633.0
Maturing in the period
$’m
Bilateral
Loan
Facilities
Syndicated
Loan
Facilities
USD Private
Placement
Notes
AUD Private
Placement
Notes
Medium
Term
NotesTotal
To 30 June 2022
50.0 - - - - 50.0
1 July 2022 to 30 June 2023
90.0 - - - - 90.0
1 July 2023 to 30 June 2024
125.0 - - - - 125.0
1 July 2024 to 30 June 2025
212.0 500.0 - - - 712.0
1 July 2025 to 30 June 2026
- - 137.9 30.0 500.0 667.9
1 July 2026 to 30 June 2027
- 600.0 - - - 600.0
1 July 2027 to 30 June 2028
- 300.0 - - - 300.0
1 July 2032 to 30 June 2033
- - - - 119.8 119.8
Total477.0 1,400.0 137.9 30.0 619.8 2,664.7
– The carrying value of the AUD MTN maturing April 2026 includes a premium of $9.6 million over the face value owing to the
differential between the coupon rate for that instrument and the prevailing market interest rate at the date of issue.
– The JPY denominated principal and interest amounts have been fully hedged against the Australian dollar through a cross-currency
interest rate swap.
The Group has a total of $477.0 million in bilateral loan facilities which are unsecured, committed facilities.
Syndicated loan facilities:
The Group has $1,400.0 million of syndicated bank loan facilities which are unsecured, committed facilities.
Summary of borrowing arrangements
Bank loan facilities
USD private placement notes
USD unsecured private placement notes are on issue for a total amount of US$100.0 million with a maturity date of July 2025. The USD
denominated principal and interest amounts have been fully hedged against the Australian dollar through cross-currency interest rate
swaps.
AUD private placement notes
AUD unsecured private placement notes are on issue for a total amount of $30.0 million with a maturity date of July 2025.
Medium Term Notes (MTNs)
The Group has the following unsecured MTNs on issue:
The above loan facilities and note issuances are supported by guarantees from certain Group subsidiaries.
The maturity profile of the Group’s borrowing arrangements by financial year is represented in the below table by facility limit:
– $500.0 million maturing April 2026
– JPY 10.0 billion maturing May 2033
C2. Financing facilities
Syndicated loan facilities
Total unutilised bonding facilities
At reporting date, the Group had the following facilities that were unutilised:
The Group’s borrowing arrangements are as follows:
Syndicated bank guarantee facilities
Bilateral bank guarantees and insurance bonding facilities
Bilateral loan facilities:
Bilateral loan facilities
32
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Refinancing requirements
Covenants on financing facilities
Downer Group’s financing facilities contain undertakings to comply with financial covenants and ensure that Group guarantors of these
facilities collectively meet certain minimum threshold amounts of Group EBITA and Group Total Tangible Assets.
Bank guarantees and insurance bonds
The Group has $1,982.1 million of bank guarantee and insurance bond facilities to support its contracting activities. $1,067.4 million of
these facilities are provided to the Group on a committed basis and $914.7 million on an uncommitted basis.
The Group has flexibility in respect of certain committed facility amounts (shown as part of the unutilised bilateral loan facilities) which
can, at the election of the Group, be utilised to provide additional bank guarantees capacity.
The main financial covenants which the Group is subject to are Net Worth, Interest Service Coverage and Leverage.
Financial covenants testing is undertaken monthly and reported at the Downer Board meetings. Reporting of financial covenants to
financiers occurs semi-annually for the rolling 12-month periods to 30 June and 31 December. Downer Group was in compliance with
all its financial covenants as at 31 December 2021.
The underlying risk being assumed by the relevant financier under all bank guarantees and insurance bonds is corporate credit risk
rather than project specific risk.
The Group will negotiate with existing and, where required, with new financiers to extend the maturity date or refinance facilities
maturing within the next 12 months. The Group’s financial metrics and credit rating as well as conditions in financial markets and other
factors may influence the outcome of these negotiations. As at 31 December 2021, the Group has a $50 million Term Loan facility that
matures in June 2022. Whilst the means of refinancing has not yet been determined, the Group’s strong liquidity, investment grade
credit rating and extensive bank relationships are expected to provide it with sufficient flexibility to either repay this maturity from existing
undrawn committed debt facilities or refinance it with new facilities prior to maturity. On 13 December 2021, the Group has exercised its
right to redeem the $250 million MTN that was due to mature in March 2022.
The Group’s facilities are provided by a number of banks and insurance companies on an unsecured and revolving basis.
$1,399.1 million (refer to Note D8) of these facilities were utilised as at 31 December 2021 with $583.0 million unutilised. These facilities
have varying maturity dates between financial years 2022, 2023, 2024 and 2025.
Credit ratings
The Group has an Investment Grade credit rating of BBB (Outlook Stable) from Fitch Ratings. Where the credit rating is lowered or
placed on negative watch, customers and suppliers may be less willing to contract with the Group. Furthermore, banks and other
lending institutions may demand more stringent terms (including increased pricing, reduced tenors and lower facility limits) on all
financing facilities, to reflect the weaker credit risk profile.
33
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021 Jun 2021
$'m $'m
Ordinary shares
2,532.5
2,631.5
Unvested executive incentive shares
(7.3)
(7.5)
Distributing Securities (ROADS)
178.6
178.6
Total2,703.8 2,802.6
(a) Fully paid ordinary share capital
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
m's$'m m's$'m
696.9
2,631.5
594.7 2,263.1
- - 106.6 399.7
- - - (6.5)
(15.7)
(99.0)
(4.4)(24.8)
2.5 - - -
683.7 2,532.5 696.9 2,631.5
m's$'m m's$'m
1.25
(7.5)
2.23 (12.0)
(0.06)
0.2
(0.98)4.5
1.19 (7.3)
1.25 (7.5)
683,663,927
Group on-market share buy-back
Balance at the end of the financial period / year
Unvested executive incentive shares
(ii) On 24 August 2021, the Target Price Condition of the Tranche 1 Series Downer Contingent Share Option was satisfied resulting in 2,499,264 shares exercised at
$6.382 per share. Refer to Note C4.
(i) On 30 July 2020, 88,585,611 shares were issued with net proceeds of $332.2 million, and on 20 August 2020 18,004,231 shares were issued with net proceeds of
$67.5 million being received.
No.
696,928,956
C3. Issued capital
(c) Redeemable Optionally Adjustable Distributing Securities (ROADS)
ROADS are perpetual, redeemable, exchangeable preference shares. In accordance with the terms of the ROADS preference shares,
the dividend rate for the one year commencing 15 June 2021 is 4.42% per annum (2020: 4.32% per annum) which is equivalent to the
one year swap rate on 15 June 2021 of 0.37% per annum plus the step-up margin of 4.05% per annum.
1,193,978
200,000,000
Balance at the beginning of the financial period / year
Vested executive incentive share transactions
(iii)
Balance at the end of the financial period / year
Vested Downer Contingent Share Option
(ii)
Unvested executive incentive shares are stock market purchases and are held by the Executive Employee Share Plan Trust under the
Long Term Incentive (LTI) plan. From the 2011 LTI plan onwards, no dividends will be distributed on shares held in trust during the
performance measurement and service periods. Accumulated dividends will be paid out to executives after all vesting conditions have
been met. Otherwise, excess net dividends are retained in the trust to be used by the Company to acquire additional shares on the
market for employee equity plans.
(iii) December 2021 figures relate to the second deferred component of the 2019 STI award of 55,277 vested shares for a value of $252,571.
June 2021 figures relate to the 2017 LTI plan, second deferred component of the 2018 STI award and first deferred component of the 2019 STI award totalling 982,377
vested shares for a value of $4,488,658.
Jun 2021 Dec 2021
(b) Unvested executive incentive shares
Dec 2021
Capital raising costs net of tax
1,249,255
200,000,000
No.
Jun 2021
Fully paid ordinary share capital
Balance at the beginning of the financial period / year
Capital raising
(i)
34
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021
$'m
Hedge
Reserve
Foreign
currency
translation
reserve
Employee
benefits
reserve
Equity
reserve
Fair value
through OCI
reserve
Total
Reserves
Balance at 1 July 2021(23.1)(29.7)14.7 9.5 (2.6)(31.2)
Foreign currency translation difference- 2.1 - - - 2.1
Change in fair value of cash flow hedges (net of
tax)
7.7 - - - - 7.7
Change in fair value of available-for-sale assets
- - - - 0.2 0.2
Total comprehensive income for the period7.7 2.1 - - 0.2 10.0
Vested executive incentive share transactions- - (0.2)- - (0.2)
Vested Downer Contingent Share Option
- - - 16.0 - 16.0
Share-based employee benefits expense
- - 2.0 - - 2.0
Disposal of business
- 7.2 - - - 7.2
Balance at 31 December 2021(15.4)(20.4)16.5 25.5 (2.4)3.8
Jun 2021
$'m
Hedge
Reserve
Foreign
currency
translation
reserve
Employee
benefits
reserve
Equity
reserve
Fair value
through OCI
reserve
Total
Reserves
Balance at 1 July 2020(29.4)(30.6)14.9 - (2.6)(47.7)
Foreign currency translation difference- 0.7 - - - 0.7
Actuarial movement on defined benefit plan
obligations
- - 5.0 - - 5.0
Income tax effect of actuarial movement on defined
benefit plan obligations
- - (1.5)- - (1.5)
Change in fair value of cash flow hedges (net of
tax)
6.8 - - - - 6.8
Total comprehensive income for the year6.8 0.7 3.5 - - 11.0
Vested executive incentive share transactions- - (4.5)- - (4.5)
Share-based employee benefits expense- - (0.4)- - (0.4)
Income tax relating to share-based transactions
during the period
- - 1.2 - - 1.2
Acquisition of Non-controlling interest (net of tax)(0.5)0.2 - 9.5 - 9.2
Balance at 30 June 2021(23.1)(29.7)14.7 9.5 (2.6)(31.2)
Hedge reserve
Foreign currency translation reserve
Employee benefits reserve
Equity reserve
Fair value through OCI reserve
The employee benefit reserve is used to recognise the fair value of share-based payments issued to employees over the vesting period,
and to recognise the value attributable to the share‑based payments during the reporting period. This reserve also includes the actuarial
gain/loss arisen on the defined benefit plan.
The fair value through OCI reserve comprises the cumulative net change in the fair value of equity investments designated as FVOCI.
Until the assets are derecognised or reclassified, this amount is reduced by the amount of loss allowance.
The equity reserve accounts for the difference between the fair value of, and the amounts paid or received for, equity transactions with
non-controlling interests including the fair value of vested DCSO.
C4. Reserves
The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
relating to future transactions.
The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements
of operations where their functional currency is different to the presentation currency of the Group.
35
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
2022 2021 2021 2020
Interim Final Interim Final
12.0 12.0 9.0 -
0%0%0%-
82.0 83.7 63.1 -
24/2/22 26/8/21 25/2/21 -
24/3/22 23/9/21 25/3/21 -
Total
2022Quarter 1Quarter 2to date
0.76 0.75 1.51
100% 100% 100%
1.5 1.5 3.0
15/9/21 15/12/21
2021Quarter 1Quarter 2Quarter 3Quarter 4Total
0.72 0.73 0.71 0.72 2.88
100% 100% 100% 100% 100%
1.4 1.5 1.5 1.4 5.8
15/9/20 15/12/20 15/3/21 15/6/21
Dividend per ROADS (in Australian cents)
New Zealand imputation credit percentage
Cost (in A$'m)
Payment date
The interim 2022 dividend has not been declared as at reporting date and therefore is not reflected in the condensed consolidated
financial report.
Dividend per ROADS (in Australian cents)
New Zealand imputation credit percentage
Cost (in A$'m)
Payment date
Dividend per share (in Australian cents)
Franking percentage
Cost (in $'m)
Dividend record date
Payment date
(a) Ordinary shares
(b) Redeemable Optionally Adjustable Distributing Securities (ROADS)
C5. Dividends
36
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
D1. Trade receivables and contract assetsD5. Equity accounted investments
D2. Trade payables and contract liabilitiesD6. Acquisition of businesses
D3. Property, plant and equipmentD7. Disposal of businesses
D4. Intangible assetsD8. Contingent liabilities
Dec Jun
2021 2021
$'m $'m
551.8 685.4
1,349.5 1,493.8
1,901.3 2,179.2
126.0 71.6
(8.9)(20.6)
2,018.4 2,230.2
1,897.7 2,121.0
120.7 109.2
Dec Jun
2021 2021
$'m $'m
656.7 670.5
385.4 444.3
930.2 1,091.5
124.7 190.9
2,097.0 2,397.2
2,058.6 2,363.0
38.4 34.2
D
Other disclosures
D1. Trade receivables and contract assets
Trade receivables
Included in the financial statements as:
Total
Contract assets
(i)
Other receivables
Loss allowance on trade receivables and contract assets arising from contracts with
customers
Non-current
(i) Current contract assets: $1,230.4 million (June 2021: $1,386.5 million).
Current
Non-current
Total
D2. Trade payables and contract liabilities
Trade payables
Contract liabilities
Accruals
Other payables
Current
(i)
Included in the financial statements as:
37
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021
$'m
Freehold
land and
buildings
Plant,
equipment
and
leasehold
improve-
ments
Total
67.1 927.6 994.7
22.6 105.1 127.7
6.3 9.3 15.6
(12.2)(14.7)(26.9)
- (165.1)(165.1)
(1.1)(66.9)(68.0)
- (7.2)(7.2)
0.2 0.7 0.9
82.9 788.8 871.7
113.6 1,714.2 1,827.8
(30.7)(925.4)(956.1)
Jun 2021
$'m
Freehold
land and
buildings
Plant,
equipment
and
leasehold
improve-
ments
Laundries
rental stock
Total
123.1 1,187.9 39.2 1,350.2
0.7 281.4 27.6 309.7
(1.8)(59.6)- (61.4)
(52.2)(247.7)(40.9)(340.8)
(2.6)(196.2)(25.8)(224.6)
- (20.2)- (20.2)
- (9.4)- (9.4)
- (8.2)- (8.2)
(0.1)(0.4)(0.1)(0.6)
67.1 927.6 - 994.7
96.5 2,005.4 - 2,101.9
(29.4)(1,077.8)- (1,107.2)
Item
Freehold land
Buildings
Leasehold improvements
Plant and equipment – mining, power and gas
Plant and equipment - other
Laundries rental stock
Additions
Disposals at net book value
Disposal of businesses
Depreciation expense
Impairment charge
(i)
(ii) Reclassifications of software from Capital work in progress to Intangible assets.
Transferred to disposal group assets held for sale
Reclassification at net book value
(ii)
Net foreign currency exchange differences at net book value
Cost
Net book value as at 30 June 2021
Accumulated depreciation and impairment
(i) Impairment relates to the divestment of Open Cut Mining West.
Working hours
3 to 25 years
D3. Property, plant and equipment
Impairment charge
Net book value as at 31 December 2021
20 to 50 years
Balance as at 1 July 2021
Cost
Additions
Acquisition of businesses
Disposals at net book value
Disposal of businesses
Depreciation expense
Net foreign currency exchange differences at net book value
18 months to 5 years
No depreciation
Straight-line
Straight-line
Based on hours of use
Straight-line
Straight-line
Useful lifeDepreciation method
n/a
Life of lease
The expected useful life and depreciation methods used are listed below:
Balance as at 1 July 2020
Accumulated depreciation and impairment
38
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021
$'mGoodwill
Customer
contracts
and
relation-
ships
Brand
names on
acquisition
Intellectual
property on
acquisition
Software
and system
develop-
ment
Total
Balance as at 1 July 2021
2,280.8 203.2 63.0 1.6 234.3 2,782.9
Additions
- - - - 22.8 22.8
Acquisition of businesses
8.5 - - - - 8.5
Amortisation expense
- (12.2)(2.0)- (12.2)(26.4)
Impairment charge
- - - - (24.6)(24.6)
Net foreign currency exchange differences
at net book value
1.5 - 0.2 - 0.1 1.8
Net book value as at 31 December 2021
2,290.8 191.0 61.2 1.6 220.4 2,765.0
Cost
2,608.2 515.3 79.2 2.4 493.5 3,698.6
Accumulated depreciation and impairment
(317.4)(324.3)(18.0)(0.8)(273.1)(933.6)
Jun 2021
$'mGoodwill
Customer
contracts
and
relation-
ships
Brand
names on
acquisition
Intellectual
property on
acquisition
Software
and system
develop-
ment
Total
Restated Balance as at 1 July 2020
(i)
2,281.3 280.6 67.0 1.8 229.3 2,860.0
Additions
- - - - 28.4 28.4
Disposal of businesses
- (15.4)- - (8.2)(23.6)
Amortisation expense
- (62.0)(4.0)(0.2)(23.0)(89.2)
Transferred to disposal group assets held for sale
- - - - (0.5)(0.5)
Reclassification at net book value
(ii)
- - - - 8.2 8.2
Net foreign currency exchange differences
at net book value
(0.5)- - - 0.1 (0.4)
Net book value as at 30 June 2021
2,280.8 203.2 63.0 1.6 234.3 2,782.9
Cost
2,598.2 471.2 79.0 2.4 436.6 3,587.4
Accumulated depreciation and impairment
(317.4)(268.0)(16.0)(0.8)(202.3)(804.5)
(i) 2020 balances have been restated to reflect the Group’s change in accounting policy for costs related to configuration and customisation of Software-as-a
Service (SaaS) arrangements. Refer to Annual Report as at 30 June 2021 for details on opening balance adjustments made on application of new
accounting standards.
(ii) Reclassifications of software from Capital work in progress to Intangible assets.
D4. Intangible assets
39
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec Jun
2021 2021
$'m $'m
24.1 32.1
10.7 12.9
(10.6)(11.6)
- (9.3)
24.2 24.1
131.0 78.5
4.7 9.3
(1.0)-
- 9.8
- 33.4
134.7 131.0
158.9 155.1
Dec Jun
Country of
2021 2021
Name of arrangementoperation% %
Joint ventures
Allied Asphalt LimitedNew Zealand
50
50
Bitumen Importers Australia Joint VentureAustralia
50
50
Bitumen Importers Australia Pty LtdAustralia
50
50
EDI Rail-Bombardier Transportation Pty LtdAustralia
50
50
Emulco LimitedNew Zealand
50
50
Isaac Asphalt LimitedNew Zealand
50
50
Repurpose It Holdings Pty LtdAustralia
45
45
Waanyi Downer JV Pty Ltd
(i)
Australia
-
50
ZFS Functions (Pty) LtdAustralia
50
50
Associates
Keolis Downer Pty LtdAustralia
49
49
HT HoldCo Pty LtdAustralia
30
30
Interest in associates at the beginning of the financial period / year
Share of net profit
Share of distributions
Contract mining services
Catering for functions at Federation
Square
Principal activity
Asphalt plant
Bitumen importer
Bitumen importer
Sale and maintenance of railway
rollingstock
Emulsion plant
Manufacture and supply of asphalt
Waste recycling
Investment in associates
Total equity accounted investments
Additional associate interest acquired
Interest in associates at the end of the financial period / year
(i) Downer's interest in this joint venture was disposed of during the financial period ended 31 December 2021.
Operation and maintenance of Gold
Coast light rail, Melbourne tram network,
Adelaide metro and bus operation
Laundries services
Ownership interest
D5. Equity accounted investments
Interest in joint ventures at the beginning of the financial period / year
Interest in joint ventures at the end of the financial period / year
Share of net profit
Share of distributions
Interest in joint venture divested
The Group's equity accounted investments relate to the interest in the following joint ventures and associates:
40
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Measurement of fair values
Asset/liability acquiredValuation technique
Trade and other receivables
Property, plant and equipment
Intangible assets
Trade and other payables
Borrowings
Provisions
Multi-period excess earnings method - considers the present value of net cash
flows expected to be generated by the customer contracts and relationships,
intellectual property and brand names, excluding any cash flows related to
contributory assets. For the valuation of certain brand names, discounted cash flow
under the relief from royalty valuation methodology has been utilised.
Cost technique - considers the expected economic benefits receivable when due.
Market comparison technique and cost technique - the valuation model considers
quoted market prices for similar items when available and depreciated replacement
cost when appropriate.
Cost technique - considers the expected economic outflow of resources when due.
Cost technique - considers the expected economic outflow of resources when due.
Cost technique - considers the probable economic outflow of resources when the
obligation arises.
Current period
Fowlers
On 30 November 2021, the Group acquired 100% of Fowlers Asphalting Pty Ltd, Gippsland Asphalt Pty Ltd and Tarmac Linemarking
Pty Ltd (“Fowlers”) for total consideration of $24.9 million. Total consideration for this acquisition comprises a $22.8 million cash
payment (net of $0.8 million cash balances acquired) and $1.3 million deferred consideration. The fair value of the acquired net assets
amounts to $16.4 million resulting in intangibles of $8.5 million being recognised. Fowlers is an asphalting and civil construction
business operating in the Gippsland area of Victoria.
D6. Acquisition of businesses
The acquisition accounting for Fowlers remains provisionally accounted for as at 31 December 2021.
The valuation techniques used for measuring the fair value of material assets/liabilities acquired were as follows:
41
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec 2021
$'m
Mining
Divestments
Proceeds on disposal (net of transaction costs)229.5
Less cash disposed(15.7)
Proceeds net of disposal costs
(i)
213.8
Cash and cash equivalents15.7
Trade receivables and contract assets43.9
Property, plant and equipment174.1
Right-of-use assets41.7
Intangible assets0.5
Inventories40.3
Current tax assets1.7
Deferred tax assets9.2
Prepayments and other assets0.7
Assets disposed327.8
Trade payables and contract liabilities5.9
Borrowings43.2
Employee benefits provision38.5
Other provisions0.2
Liabilities disposed87.8
Net assets disposed240.0
Add non-controlling interest disposed4.6
Less FCTR held on businesses disposed7.2
Loss on disposal before tax(13.1)
As previously announced, Downer’s strategy is to focus on its core Urban Services businesses. Initiatives included the acquisition of
100% of Spotless and the disposal of non-core capital intensive Mining and Laundries businesses. During the financial period, the
Group completed the disposal of the remaining Mining businesses as described below.
D7. Disposal of businesses
On 11 October 2021, Downer entered into an agreement to sell its Open Cut Mining East business to an Australian subsidiary of PT
Bukit Makmur Mandiri Utama (BUMA), a large Mining services provider in Indonesia, for gross proceeds of $150 million. The sale
included the transfer of assets (including fleet and inventory) and liabilities; and the novation of the existing contracts to BUMA. Downer
received an initial deposit of $16 million at that date. On 17 December 2021, the sale of Open Cut Mining East was completed and
Downer received the remaining purchase price. As at 31 December 2021, net proceeds (after transaction costs) of $137.6 million had
been received with a $60.5 million pre-tax loss on disposal recognised.
Otraco business
The table below summarises the impact on divestment during the financial period:
On 26 April 2021, an agreement was reached for the sale of Mining’s tyre management business (Otraco) to Bridgestone Corporation
(Bridgestone). Otraco was disclosed as a disposal group held for sale in the Group's 2021 Annual Report. On 1 December 2021, the
sale of Otraco was completed and Downer received net proceeds (after transaction costs) of $76.2 million and recorded a net pre-tax
gain on disposal of $47.4 million.
Open Cut Mining East business
(i) A further $33.8 million proceeds in relation to Open Cut Mining West and Blasting businesses disposed during FY21 have been received during the period. Total
divestment proceeds received as at 31 December 2021 amounts to $247.6 million.
Disposal of Mining businesses
42
Notes to the condensed consolidated financial statementsHalf-year Report 2022
Notes to the condensed consolidated financial statements
for the half-year ended 31 December 2021
Dec Jun
2021 2021
BondingNote $'m $'m
C2 1,399.1 1,376.3
(iii) Controlled entities have entered into various joint arrangements under which the controlled entity is jointly and severally liable for the
obligations of the relevant joint arrangements.
D8. Contingent liabilities
(iv) The Group carries the normal contractors’ and consultants’ liability in relation to services, supply and construction contracts (for
example, liability relating to professional advice, design, completion, workmanship, and damage), as well as liability for personal
injury/property damage during the course of a project. Potential liability may arise from claims, disputes and/or litigation/arbitration by or
against Group companies and/or joint venture arrangements in which the Group has an interest. The Group is currently managing a
number of claims, arbitration and litigation processes in relation to services, supply and construction contracts as well as in relation to
personal injury and property damage claims arising from project delivery.
(v) Downer New Zealand, an entity in the Group, has been named as co-defendants in a ‘leaky building’ claim. The leaky building claim
where the Group entity is co
‑defendant relates to water damage arising from historical design and construction methodologies (and
certification) for residential and other buildings in New Zealand during the early to mid 2000s. The Directors are of the opinion that
disclosure of any further information relating to the leaky building claim would be prejudicial to the interests of the Group.
The Group is called upon to give guarantees and indemnities to counterparties, relating to the performance of contractual and financial
obligations (including for controlled entities and related parties). Other than as noted above, these guarantees and indemnities are
indeterminable in amount.
The Group has bid bonds and performance bonds issued in respect of contract performance
in the normal course of business for controlled entities
(ii) The Group is subject to product liability claims. Provision is made for the potential costs of carrying out rectification works based on
known claims and previous claims history. However, as the ultimate outcome of these claims cannot be reliably determined at the date
of this report, contingent liability may exist for any amounts that ultimately become payable in excess of current provisioning levels.
(i) The Group is subject to design liability in relation to completed design and construction projects. The Directors are of the opinion that
there is adequate insurance to cover this area and accordingly, no amounts are recognised in the financial statements.
Other contingent liabilities
43
Directors’ DeclarationHalf-year Report 2022
Directors’ Declaration
for the half-year ended 31 December 2021
M P Chellew
Chairman
In the opinion of the Directors of Downer EDI Limited:
(a) The condensed consolidated half-year financial statements and notes set out on pages 18 to 43 are in accordance with the
(i) Complying with Accounting Standard AASB134 Interim Financial Reporting, the Corporations Regulations 2001; and
(ii) The financial statements and notes thereto give a true and fair view of the Group's financial position as at 31 December 2021 and
of its performance for the six-month period ended on that date; and
(b) There are reasonable grounds to believe that Downer EDI Limited will be able to pay its debts as and when they become due and
payable.
Corporations Act 2001 (Cth), including:
Sydney, 10 February 2022
Signed in accordance with a resolution of the Directors:
On behalf of the Directors
44
Page 1 of 2
Media/ASX and NZX Release
10 February 2022
DOWNER REPORTS UNDERLYING NPATA OF $97.6 MILLION
Downer EDI Limited (Downer) today announced its financial results for the six months to 31 December 2021.
The core Urban Services businesses – Transport, Utilities and Facilities – performed well, despite the
impact of COVID-19, growing both revenue and earnings.
The main features of the results are:
Total revenue of $6.0 billion, down 2.3% from the prior corresponding period (pcp).
Statutory EBIT (earnings before interest and tax) of $172.0 million and statutory NPAT (net profit after
tax) of $89.0 million.
Core Urban Services revenue of $5.6 billion, up 13.3% on the pcp.
Core Urban Services EBITA (earnings before interest, tax and amortisation of acquired intangible
assets) of $238.0 million, up 4.4% on the pcp.
Underlying EBITA of $181.6 million, down 17.8% from the pcp; statutory EBITA of $186.2 million.
Underlying NPATA (net profit after tax and before amortisation of acquired intangible assets) of
$97.6 million, down 18.1% from the pcp; statutory NPATA of $99.0 million.
Underlying cash conversion of 91.2%; statutory cash conversion of 85.1%.
Net Debt to EBITDA of 1.5x and Gearing of 16.5% (19.0% at 30 June 2021).
Interim dividend of 12 cents per share (unfranked).
The Chief Executive Officer of Downer, Grant Fenn, said: “With the arrival of Omicron it has been a
tough six months to navigate. Despite the challenges, our core business has delivered solid earnings
and strong cash conversion for the first half of 2022.
“Our market positions and diversity give us strength that others do not have and confidence through to
the other side of COVID-19. Our brand and our relationships are very strong.”
Mr Fenn said “Downer had now completed its divestment program, with consideration totalling
$778 million in relation to the Mining and Laundries divestments.
The divestments of non-core Mining and Laundries businesses has allowed us to reduce our gearing to
16.5% and focus on growth in our Urban Services portfolio. Our liquidity and balance sheet are strong,
with Net Debt to EBITDA of 1.5x comfortably below the Group’s target range of 2-2.5x.”
Downer EDI Limited
ABN 97 003 872 848
Triniti Business Campus
39 Delhi Road
North Ryde NSW 2113
1800 DOWNER
www.downergroup.com
Page 2 of 2
Mr Fenn said Downer’s Urban Services portfolio was leveraged to the long term macro-economic trends
of expanding population, urbanisation, government outsourcing and decarbonisation.
“The level of investment required for our customers to meet Net Zero targets will provide many
opportunities for Downer,” Mr Fenn said. “The demand for decarbonisation solutions is huge, we have
extensive expertise in this area, our brand and relationships are strong, and we look forward to working
closely with our customers on their decarbonisation needs.”
Dividend
The Downer Board has declared an interim dividend of 12 cents per share, unfranked, payable on 24 March
2022 to shareholders on the register at 24 February 2022. The portion of the unfranked dividend amount
that will be paid out of Conduit Foreign Income (CFI) is 29%. The company’s Dividend Reinvestment Plan
(DRP) remains suspended and will not operate for this dividend.
Safety
Downer reported a Lost Time Injury Frequency Rate of 0.97 per million hours worked at 31 December 2021,
compared to 0.95 in the prior period, and a Total Recordable Injury Frequency Rate of 2.57 per million
hours worked, down from 2.68 per million hours worked.
Outlook
In August 2021 we predicted that our core Urban Services revenue and earnings would grow in FY22. In the
first half our core revenue was up 13.3% and earnings were up 4.4%.
The impact of Omicron on the supply chain, work volumes and revenue mix is difficult to predict and
presents risk for the second half.
We will do our best to manage that risk with our customers and we will provide an update at our Investor
Day in April.
For further information please contact:
Media: Mitchell Dale, Group Manager Corporate Affairs +61 448 362 198
Investors: Adam Halmarick, Group Head of Investor Relations and Strategic Planning +61 413 437 487
About Downer
Downer is the leading provider of integrated services in Australia and New Zealand and customers are at the heart of
everything it does. It exists to create and sustain the modern environment and its promise is to work closely with its
customers to help them succeed, using world-leading insights and solutions to design, build and sustain assets,
infrastructure and facilities. Downer employs approximately 41,000 people, primarily in Australia and New Zealand. For
more information visit www.downergroup.com
Highlights and priorities
2
Growth in core earnings with strong cash
conversion
Core revenue up with demand strong
Financial strength with gearing at 16.5%, Net
Debt 1.5x EBITDA
Completion of Rosehill Sustainable Resource
Centre
Acquisition of Fowlers Asphalting in Victoria
Successful reset of Reviewable Services at
Royal Adelaide and Bendigo Hospitals
Growing customer demand for decarbonisation
solutions
Interim dividend increased from 9 to 12 cents
Share buy-back program continuing with $123m
purchased to date ($400m program)
Pivot business to decarbonisation economy
Reduce carbon emissions
Leadership in ESG
Capital allocation
Margins / Free Cash Flow / Returns
Share Buy-back
Maintaining high quality service delivery
Working proactively with customers
Minimise risk in new contracts
Highlights
Navigating
COVID-19
Sustainability and
Decarbonisation
Value
Growth
Strong Urban Services demand
Decarbonisation opportunities
Bolt on acquisitions
Priorities
3
COVID-19 management
Labour
shortages
Significant variation in % of employees in isolation by business unit
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 work flow and delaying new projects
Workplace
management
Complex compliance effort with different safe work requirements across each State and Territory
Productivity impact increasing cost to service
Risk mitigation
Long established COVIDSafestandards, practices and mature continuity plans
Pro-active engagement with customers
Focus on supply chain management
Workforce directed to priority works / continuity of critical regulatory roles / areas with lower available
staffing
Use of alternate contract partners
Contract
management
Customers generally supportive and providing KPI relief where appropriate
COVID-19 related variation claims continue to progress
Volatility in materials and labour supply and pricing is making it difficult to commit to cost and program
timing for new contracts
Current circumstances are requiring a more collaborative approach to risk sharing with customers
Long term road maintenance contracts
̶Rise and fall mechanisms for costs
including bitumen and labour
Rollingstock maintenance contracts
̶Rise and fall mechanisms for costs
including labour
̶Long term OEM contracts for critical
component overhaul and
replacement
Public Transport Operations (5yrs)
̶Cost escalation priced
Fixed price construction (0 – 24mths)
̶Cost escalation priced
̶Sub-contractor prices fixed
Case Study – Waratah TLS
Contract pricing is escalated based on
CPI (quarterly) and wage index (bi-
annually)
Price adjustments designed to mitigate cost
escalation in long term contracts
TransportUtilitiesFacilities
Substantial portfolio of long-term PPP
contracts which include specific
escalation provisions and / or price
reset mechanisms throughout the
contract life
Other key non-PPP contracts with
Government customers typically
include specific labourand / or general
CPI adjustment mechanisms (such as
DefenceEstate Management, NZ
Public Housing and WA Housing)
Shorter term contracts, for example in
Asset Services and Building, are not
materially exposed to escalation risk
Minimal FIFO risk
4
Telco construction cost risk largely born
by delivery partners (sub-contractors)
once contracted
Telco maintenance is typically schedule
of rates contracts, with specific labour
and / or CPI escalation mechanisms
Longer term gas and electricity
maintenance contracts are based on
schedule of rates with agreed annual
escalation
Water maintenance contracts are
typically panel style, with rates
reviewed annually
Case Study – Major Water JV
Contract pricing (schedule of rates) is
reviewed and adjusted annually,
including labourrate increases. Cost
increases or decreases between annual
reviews are not adjusted
Case Study – Royal Adelaide Hospital
PPP contract pricing is adjusted for CPI
quarterly with a major pricing reset
negotiated each 5 years
Transport
5
Investment in bituminous products circular
economy and technical standards overhaul
Reduce energy consumption in existing and
new rolling stock fleets
Margins
Free Cash Flow
Returns
Asphalt and surfacing volumes impacted in the
Eastern States – mostly customer related
Customer resource constraints resulting in
lower volumes and project delays
Priorities
Navigating
COVID-19
Sustainability and
Decarbonisation
Value
Growth
50% of HY22
Core Revenue
Increasing government spend on road, rail,
light rail and bus infrastructure / maintenance
Investment in efficient low cost manufacturing
Bolt-on acquisitions in Road Services
46%
20%
34%
Roads
Rail & Transit Systems
Projects
Revenue up 14.6% ($359m) with strong
performance across the portfolio
EBITA up 15.9% ($16m) with increased
contribution from Rail and Transit Systems and
Projects
Road Services performed well but was impacted
by reduced volumes due to COVID-19 and La
Nina weather patterns in the Eastern States in the
second quarter
Positive start to Adelaide Metro and Region 8 bus
contract in Sydney
Secured Transurban CitiLinkroad management
contract in Melbourne
Completion of Rosehill Sustainable Resource
Centre
Acquisition of Fowlers Asphalting in the Gippsland
area in Victoria
Highlights
Utilities
6
Revenue down 5.6% ($51m) due to lower work
volumes and a change in mix away from higher
margin capital projects due to COVID-19
EBITA down 26.5% ($12m) due to the change in
revenue mix and volumes
More significant impact in NZ
Work volume and mix impacts are expected to be
temporary
Won three-year Chorus NZ field services contract
Significant and growing opportunities in energy
transition and decarbonisationfor existing and
new customers
Highlights
New energy opportunities with Utilities
customers
Leaders in decarbonisation infrastructure
(transmission, EV infrastructure, smart meters)
Margins
Free Cash Flow
Returns
Significant impact on work volumes as
customers focus on priority areas
Resource constraints impacting productivity
Priorities
Navigating
COVID-19
Sustainability and
Decarbonisation
Value
Growth
15% of HY22
Core Revenue
Increasing spend on water, power, telco, data
and decarbonisation infrastructure and
maintenance
Bolt-on acquisitions
38%
31%
31%
Power & Gas
Water
Telco
Facilities
7
Revenue up 22.2% ($351m) driven by:
̶COVID-19 volumes in Health and Education
̶industrial maintenance in Australia
̶building projects in NZ
Strong earnings performance from most areas but
EBITA up just 7.5% ($6m) due to COVID-19
impacts on project volumes in Asset &
Development Services and Power and Energy
Awarded $1bn NSW Police property portfolio
capital works contract
Contract reset at Royal Adelaide and Bendigo
Hospitals
Exited majority of hospitality contracts
Strong positions in hydrogen, fossil fuel transition,
energy management and power solutions
Highlights
Hydrogen
Energy systems
Power transition
Margins
Free Cash Flow
Returns
Shutdown and turnaround project delays
Increased volumes in Health and Education
Resourcing challenges particularly in Health
and Education and across State boundaries
Priorities
Navigating
COVID-19
Sustainability and
Decarbonisation
Value
Growth
17%
30%
19%
16%
18%
Health & Education
Government
Defence
Asset Services
Building
35% of HY22
Core Revenue
Government spend in new facilities
Government outsourcing
Industrial maintenance catch-up
Power generation and gas
Transport
$16.1b
(46%)
Utilities
$4.2b
(12%)
Facilities
$14.7b
(42%)
8
Core WIH
1,2
($35.0bn)
Core WIH
1
profile
Core WIH
1
by contract type
3
Long-dated
Diversified by industry
91% Government or
Government regulated
(90% June-21)
Work-in-hand
1
Transport, Utilities and Core Facilities (excluding Hospitality).
2
W IH classification between Utilities and Facilities reflects reclassification set out on slide 25.
3
Construction comprises of Projects businesses in Australia and New Zealand (Transport) and the Building business in New Zealand
(Facilities).
0
2
4
6
8
10
12
14
2H22FY23FY24FY25FY26FY27+
TransportUtilitiesFacilities
Group
financials
9
Summary of HY22 financial results
►Statutory NPAT of $89.0m, up 17.7% (statutory EBIT of $172.0m)
►Underlying NPATA
1,2
of $97.6m, down 18.1% ($99.0m statutory)
►Underlying EBITA
1,2
of $181.6m, down 17.8% ($186.2m statutory)
►Core Urban Services EBITA
1,2
of $238.0m, up 4.4%
►Normalised cash conversion of 91.2% (85.1% statutory)
►Strong balance sheet -Net Debt to EBITDA
3
well below target range at 1.5x
►Gearing
3
reduced to 16.5% (19.0% at June 2021)
►Underlying EPSA
4
of 13.6cps, down 18.6% (12.4cps statutory Basic EPS)
►Interim ordinary dividend 12 cents per share (unfranked, flat on FY21 final dividend)
10
1
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. Group HY22: $14.2m, $10.0m after-tax. (HY21: $33.4m, $23.4m after-tax).
2
The underlying result is a non-IFRS measure that is used by Management to assess the performance of the business. Non-IFRS measures have not been subject to audit or review.
3
Net debt to EBITDA ratio includes lease liabilities in Net Debt and is on a post-AASB 16 basis. Gearing ratio does not include leas e liabilities in Net Debt and is on a pre-AASB16 basis.
4
EPSA is calculated based on underlying NPATA adjusted by contributions from minority interests and ROADs dividends paid; divided by W ANOS.
Group underlying financial performance
11
Revenue
1
2.3% lower, primarily due to declines
in non-core revenue, particularly Mining. Core revenue
increased 13.3%.
Group Underlying EBITA margin 3.0%, impacted by
COVID-19, particularly Utilities and Hospitality
Interest expense savings from reduction in debt and
improved average cost of funds
Underlying effective tax rate of 28.0%
Interim dividend of 12cps declared (unfranked)
1
Total revenue is a non-statutory disclosure and includes revenue from joint ventures, other alliances and other income.
2
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. Group HY22: $14.2m, $10.0m after-tax. (HY21: $33.4m, $23.4m after-tax).
3
The underlying result are non-IFRS measures that are used by Management to assess the performanc e of the business. Non-IFRS measures have not been subject to audit or review. Refer slide 13 for reconciliation to statutory results.
4
ROFE = 12 month rolling underlying EBITA divided by average funds employed (AFE); AFE = Average Opening and Closing Net Debt (excludes lease liability) + Equity.
$mHY21
3
HY22
3
Change
(%)
Total revenue
1
6,116.05,974.9(2.3)
EBITDA
454.5345.7(23.9)
Depreciation and amortisation
(233.5)(164.1)(29.7)
EBITA
2
221.0181.6(17.8)
Amortisation of acquired
intangibles
(33.4)(14.2)57.5
EBIT
187.6167.4(10.8)
Netinterestexpense
(51.8)(45.8)11.6
Profit before tax
135.8121.6(10.5)
Taxexpense
(40.1)(34.0)15.2
Netprofitaftertax
95.787.6(8.5)
N PATA
2
119.197.6(18.1)
Underlying EBITA margin
3.6%3.0%(0.6pp)
Effective taxrate
29.5%28.0%(1.5pp)
ROFE
4
9.9%11.3%1.4pp
Dividenddeclared(cps)
9.012.033.3
Interest costs
decreased by
$6m
12cps interim
dividend
(unfranked)
ROFE
increased 1.4pp
to 11.3%
Business unit performance overview
12
1
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. Group HY22: $14.2m, $10.0m after-tax. (HY21: $33.4m, $23.4m after-tax).
2
The underlying result is a non-IFRS measure that is used by Management to assess the performance of the business. Non-IFRS measures have not been subject to audit or review.
3
Refer to Supplementary Information (slide 25).
Core Urban Services EBITA of $238.0m,
up 4.4%
Diversity of Core Urban Services
portfolio delivered growth
Transport earnings strong across the
portfolio
Utilities EBITA affected by COVID-19
impact on meter reading and minor
capital works in Australia and NZ
Facilities (Core) earnings increased,
driven by Health, NZ Building and a
rebound in industrial maintenance
$mHY21HY22
Change
(%)
Transport
99.7115.6
15.9
Utilities
3
45.333.3
(26.5)
Facilities
3
82.989.1
7.5
Core Urban Services Businesses
227.9238.0
4.4
Engineering & Construction(2.6)-
100
Mining
38.78.1
(79.1)
Laundries
4.5-
(100)
Hospitality
0.3(12.5)
>(100)
Non-core businesses
40.9(4.4)
>(100)
Corporate
(47.8)(52.0)
(8.8)
Underlying EBITA
1,2
221.0181.6
(17.8)
Items outside of underlying EBITA
(25.2)4.6
>100
Statutory EBITA
1
195.8186.2
(4.9)
Underlying NPATA
1,2
119.197.6
(18.1)
Statutory NPAT
75.689.0
17.7
Reconciliation of underlying to statutory results
13
1
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. GroupHY22: $14.2m, $10.0m after-tax. (HY21: $33.4m, $23.4m after-tax).
2
Tax of $38.2m is calculated by adjusting underlying tax of $34.0m with $4.2m tax on amortisation of acquired intangible assets.
3
The underlying result is a non-IFRS measure that is used by Management to assess the performance of the business. Non-IFRS measures have not been subject to audit or review.
4
The fair value of the Downer Contingent Share Option (DCSO) has increased primarily driven by the movement in Downer’s share price from $5.59 at 30 June 2021 to $5.96 at 31 December 2021.
5
The divestment program has been completed following the disposal of Otracoon 1 December 2021, the sale of Open Cut Mining East on 17 December 2021 and the exit from various Hospitality contracts. Additionality, assets previously utilised by
those businesses will no longer by utilised by the Group and consequently were written-off (Refer to Note B4 to the Financial Report).
6
Downer is in the process of tendering for the State of Queensland’s Rollingstock Expansion Program, for which ongoing bid costs are being incurred. $2.8m in bid costs were incurred during the period.
$mEBITA
1
Net
interest
expense
Tax
expense
2
NPATA
1
Amortisationof
acquired intangibles
(post-tax)
NPAT
Underlying
3
results181.6(45.8)(38.2)97.6(10.0)87.6
Fair value increase on Downer Contingent
Share Option (DCSO)
4
(5.4)--(5.4)-(5.4)
Divestments and exit costs
5
(65.4)-19.4(46.0)-(46.0)
Portfolio restructure costs(7.6)-2.3(5.3)-(5.3)
Bid costs
6
(2.8)-0.8(2.0)-(2.0)
Gain on sale of PP&E85.8-(25.7)60.1-60.1
Total items outside underlying result
4.6-(3.2)1.4-1.4
Statutory results
186.2(45.8)(41.4)99.0(10.0)89.0
Underlying cash conversion of 91.2%
1
Funds from operations of $78.7m
̶Cash conversion impacted by ISI’s
booked in FY20
̶Portfolio transformation continues to
drive lower capital intensity
Repayment of borrowings totaling
$253.7m
Cash balance of $676.7m and total
liquidity of $2,103.7m
Net Debt to EBITDA of 1.5x well below
Downer’s capital allocation framework
target range of 2-2.5x
Cash flow
14
$mHY21HY22
Change
(%)
Total operating cash flow350.2270.4(22.8)
Net Capex (Core)(66.6)(65.2)2.1
Net Capex (Non-Core)(40.8)(8.1)80.1
Payment of principal lease liabilities (Core)(70.8)(75.4)(6.5)
Payment of principal lease liabilities (Non-Core)(22.9)(9.6)58.1
IT (17.4)(22.8)(31.0)
Advances to JVs, investment in associates and
Other
(17.3)(10.6)
38.7
Funds from operations114.478.7(31.2)
Dividends paid(86.2)(86.7)(0.6)
Divestments
2
25.1247.6>100
Acquisitions (Spotless and Other)(134.6)(22.9)83.0
Issue of shares (net of costs) / (share buyback)390.7(99.0)>(100)
Net (repayment) of borrowings(349.4)(253.7)27.4
Net (decrease) in cash(40.0)(136.0)>100
Cash at end of period550.4676.722.9
Total liquidity
1,877.42,103.712.1
1
Refer to Supplementary Information for reconciliation (Refer Slide 21).
2
Proceeds from disposal activities include: $76.2m net proceeds from Otraco, $137.6m net proceeds from Open Cut Mining East and $33.8m deferred proceeds received in relation to Open Cut Mining W est and Blasting (divestments
completed in FY21).
Core net capex
of $65.2m
$99.0m of shares
bought back
during the period
Underlying cash
conversion of
91.2%
Outlook
15
Key messages and outlook
16
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 strength that others do not have and confidence
through to the other side of COVID-19. Our brand and our relationships are very strong
The financial capacity of the Group has never been so robust, with gearing at just 16.5%
and Net Debt to EBITDA of 1.5x
In August 2021 we predicted that our Core Urban Services revenue and earnings would
grow in FY22. In the first half our core revenue was up 13.3% and earnings were up 4.4%
The impact of Omicron on the supply chain, work volumes and revenue mix is difficult to
predict and presents risk for the second half
We will do our best to manage that risk with our customers and we will provide an update
at our Investor Day in April
Supplementary
Information
17
18
Revenue $mEBITA $mEBITA margin
+14.6% v HY21+15.9% v HY21+0.1pp v HY21
4.0%
4.1%
0%
1%
2%
3%
4%
5%
6%
7%
1H211H22
2,462.1
2,821.0
0
500
1,000
1,500
2,000
2,500
3,000
1H211H22
99.7
115.6
0
20
40
60
80
100
120
140
1H211H22
WIH profile ($bn)
Top 5 Contracts Remaining
1. Maintaining Waratah trains until 2044
2. Maintaining HCMT until 2053
3. Maintaining Sydney Growth Trains until 2044
4. Operating Yarra Trams until 2024 (Keolis Downer)
5. Operating Adelaide Passenger Rail Network until 2033
(Keolis Downer)
Total WIH of $16.1bn
96% government WIH
1
1
W IH Government includes direct Government and Government-backed / regulated projects.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2H22FY23FY24FY25FY26FY27+
19
Revenue $mEBITA $mEBITA margin
(5.6)% v 1H21(26.5)% v 1H21(1.1)pp v 1H21
5.0%
3.9%
0%
1%
2%
3%
4%
5%
6%
7%
1H211H22
911.0
860.3
0
200
400
600
800
1,000
1H211H22
45.3
33.3
0
10
20
30
40
50
1H211H22
WIH profile ($bn)
Top 5 Contracts Remaining
1. Sydney Water until 2030 (Confluence Water JV)
2. AusNet (power) until 2024 (plus extensions for 6 years)
3. Logan City Council until 2025 (plus 2x2yrs extensions)
4. AusNet(gas) until 2026
5. Unified Field Operations (Network) contract with NBN
1
W IH Government includes direct Government and Government-backed / regulated projects.
Total WIH of $4.2bn
85% government WIH
1
0.0
0.5
1.0
1.5
2H22FY23FY24FY25FY26FY27+
20
Revenue
2
$mEBITA
2
$mEBITA
2
margin
WIH profile ($bn)
Top 5 Contracts Remaining
1. New Royal Adelaide Hospital PPP until 2046 (contract
reset 30 June 2022)
2. Bendigo Hospital PPP until 2042
3. Dept of Defence Estate Maintenance and Operations
until August 2024
4. Sunshine Coast University Hospital PPP until 2042
5. Orange Hospital PPP until 2036
1
W IH Government includes direct Government and Government-backed / regulated projects.
2
Excludes Hospitality and Laundries.
Total WIH of $14.7bn
88% government WIH
1
+22.2% v 1H21+7.5% v 1H21(0.7)pp v 1H21
5.3%
4.6%
0%
1%
2%
3%
4%
5%
6%
7%
1H211H22
1,578.7
1,929.9
0
500
1,000
1,500
2,000
2,500
1H211H22
82.9
89.1
0
20
40
60
80
100
1H211H22
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2H22FY23FY24FY25FY26FY27+
Operating cash flow
21
Core Urban Services business delivering
strong cash flows across the portfolio
Underlying
1
EBITDA conversion of 91.2%
(statutory 85.1%) after adjusting for items
recognised in FY20 ($21.1m)
Receivables factoring at 31 December 2021
was $79.4m ($104.7m at 31 December 2020)
1
The underlying result is a non-IFRS measure that is used by Management to assess the performance of the business. Non-IFRS measures have not been subject to audit or review.
$mHY21HY22
Change
(%)
Underlying
1
EBIT
187.6167.4(10.8)
Add: depreciation and amortisation
266.9178.3(33.2)
Underlying
1
EBITDA
454.5345.7(23.9)
Operating cash flow
350.2270.4(22.8)
Add: Net interest paid
52.447.8(8.8)
Deduct: Tax received
(20.3)(24.1)18.7
Adjusted operating cash flow
382.3294.1(23.1)
EBITDA conversion
84.1%85.1%1.0pp
Adjust for items booked in FY20
60.3
21.1 (65.0)
Underlying
1
adjusted operating
cash flow
442.6
315.2 (28.8)
Underlying
1
EBITDA conversion97.4%91.2%(6.2pp)
Capital expenditure and D&A
22
Core net capex declined 2.1%
Core depreciation and amortisation
of $142.8m
$mHY21HY22
Change
(%)
Net Capital expenditure – core66.665.2(2.1)
Net Capital expenditure – non-core40.88.1(80.1)
IT17.422.831.0
Capital expenditure / IT
124.896.1
(23.0)
$mHY21HY22
Change
(%)
Depreciation of PP&E - core52.354.4(4.0)
Depreciation of PP&E - non-core78.713.682.7
IT amortisation13.212.27.6
Depreciation of RouA- core72.276.2(5.5)
Depreciation of RouA- non-core17.17.755.0
Total depreciation & amortisation233.5164.129.7
Balance sheet
23
Net assets reduced by $66.4m or 2.2%
since June 2021 to $2.89bn
Reduction driven by divestment of Mining
businesses and repayment of debt
$mJun-21Dec-21
Current assets
3,403.22,860.1
Non-current assets
4,668.94,452.7
- Goodwill
2,280.82,290.8
- Acquired intangible assets
267.8253.8
- PP&E, Software and other
1,573.81,431.8
- Right-of-use assets
546.5476.3
Total liabilities
(5,114.7)(4,421.8)
- Lease liabilities
(662.8)(590.8)
- Other liabilities
(4,451.9)(3,831.0)
Net assets
2,957.42,891.0
Net debt
1
(708.2)(582.5)
Gearing: Net debt / Net debt plus
equity
2
19.0%16.5%
Net debt / EBITDA
3
1.51.5
1
Adjusted for the marked-to-market derivatives and deferred finance charges and excludes the lease liabilities of $590.8m at 31 December 2021 ($662.8m at 30 June 2021).
2
Equity adjusted to exclude the impact on adoption of AASB 16.
3
On a post-AASB16 basis.
Group debt profile
24
Weighted average debt duration of 4.2 years
1
(3.8 years at 30 June 21)
1H22 refinancing has extended debt duration
and achieved a more balanced debt maturity
profile
Current borrowings include $50m of term loan
debt maturing June 2022
1
Based on the weighted average life of debt facilities (by A$mlimit).
2
Excludes lease liabilities.
Debt facilities $mDec-20Jun-21Dec-21
Total limit
2
3,060.72,946.62,686.2
Drawn
2
1,733.71,519.61,259.2
Available1,327.01,427.01,427.0
Cash550.4811.4676.7
Total liquidity1,877.42,238.42,103.7
Net debt
2
1,183.3708.2582.5
0
200
400
600
800
Jun-22Jun-23Jun-24Jun-25Jun-26Jun-27Jun-28Jun-29Jun-30Jun-31Jun-32Jun-33
A$m
Syndicated bank facilities
USPPJPY MTNA$ MTNBilateral bank facilities
Debt maturity profile (A$m)
Reconciliation to prior period financials
25
HY21HY21 ReportedReclassifications
1
HY21 Restated
$mRevenueEBITARevenueEBITARevenueEBITA
Transport
2,462.199.7--2,462.199.7
Utilities
1,019.754.1(108.7)(8.8)911.045.3
Facilities (Core)
1,202.562.5376.220.41,578.782.9
Asset Services
267.511.6(267.5)(11.6)--
FY21FY21 ReportedReclassifications
1
FY21 Restated
$mRevenueEBITARevenueEBITARevenueEBITA
Transport
5,295.2250.2--5,295.2250.2
Utilities
2,106.3115.1(224.6)(20.3)1,881.794.8
Facilities (Core)
2,490.6140.0722.638.63,213.2178.6
Asset Services
498.018.3(498.0)(18.3)--
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
1
Asset Services, previously reported as part of the EC&M segment has been reclassified to Facilities. Downer Defence Systems, previously reported under Utilities has been reclassified to Facilities.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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