16 August 2018 Company Announcements Office ASX Limited Exchange Centre Level 4, 20

188 Pages·2017·3.42 MB·English

Downer EDI Limited
ABN 97 003 872 848
Triniti Business Campus
39 Delhi Road
North Ryde NSW 2113
1800 DOWNER
www.downergroup.com
16 August 2018

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 4E – results for announcement to the market for the year ended 30 June 2018;
2. 2018 Annual Report;
3. Market release dated 16 August 2018;
4. Investor Presentation; and
5. Appendix 4G – Key to Disclosures Corporate Governance Principles and
Recommendations.

Yours sincerely,
Downer EDI Limited

Peter Tompkins
Company Secretary

Page 1 of 1
Results for announcement to the market
for the year ended 30 June 2018
Appendix 4E
2018 2017 %
$'m $'m change
Revenue from ordinary activities 12,016.6 7,267.1
Other income 14.3 20.3
Total revenue and other income from ordinary activities 12,030.9 7,287.4 65.1%
Total revenue including joint ventures and other income 12,620.2 7,812.3 61.5%
Earnings before interest and tax 204.8 277.8 (26.3%)
Earnings before interest and tax and amortisation of acquired intangible
assets (EBITA) 271.5 285.2 (4.8%)
Profit from ordinary activities after tax attributable to members of the
parent entity 71.4 181.5 (60.7%)
Profit from ordinary activities after tax before amortisation of acquired
intangible assets (NPATA) 117.9 186.6 (36.8%)
2018 2017 %
cents cents change
Basic earnings per share 10.7 35.8 (70.1%)
Diluted earnings per share(i) 10.7 35.0 (69.4%)
Net tangible asset backing per ordinary share(ii) 26.0 93.4 (72.2%)
(i) At 30 June 2018, the ROADS are deemed anti-dilutive and consequently, diluted EPS remained at 10.7 cents per share.
(ii) June 2017 balance was restated to reflect the impact of acquisition accounting adjustments made during the period on opening
balances.
Dividend 2018 2017
Final Final
Dividend per share (cents) 14.0 12.0
Franked amount per share (cents) 7.0 12.0
Conduit foreign income (CFI) 50% -
Dividend record date 30/08/2018 12/09/2017
Dividend payable date 27/09/2018 10/10/2017
Redeemable Optionally Adjustable Distributing Securities (ROADS)
Dividend per ROADS (in Australian cents) 4.01 4.28
New Zealand imputation credit percentage per ROADS 100% 100%
ROADS payment date Quarter 1 Quarter 2 Quarter 3 Quarter 4
Instalment date FY2018 15/09/2017 15/12/2017 15/03/2018 15/06/2018
Instalment date FY2017 15/09/2016 15/12/2016 15/03/2017 15/06/2017
Downer EDI's Dividend Reinvestment Plan (DRP) has been suspended.
For commentary on the results for the year and review of operations, please refer to the Directors' Report and separate
media release attached.
Annual
Report
2018
H O S P I T A L
HOTEL
GAS CO LAUNDRY CLEANO
SCHOOL
This Annual Report includes
the Downer EDI Limited
Directors’ Report, the
Annual Financial Report and
Independent Audit Report
for the financial year ended
30 June 2018. The Annual
Report is available on
the Downer website
www.downergroup.com.
Contents
Directors’ Report
Page 2
Auditor’s signed reports
Page 52 Auditor’s Independence Declaration
Page 53 Independent Auditor’s Report
Financial Statements
Page 62 C onsolidated Statement of Profit or Loss and Other Comprehensive Income
Page 63 Consolidated Statement of Financial Position
Page 64 Consolidated Statement of Changes in Equity
Page 65 Consolidated Statement of Cash Flows
Notes to the consolidated financial statements
A B C D E F G
About this Business Operating assets Employee Capital structure Group Other
report performance and liabilities benefits and financing structure
Page 66-67 Page 68-77 Page 78-87 Page 88 Page 89-95 Page 96-106 Page 107-120
B1 C1 D1 E1 F1 G1
Segment Reconciliation Employee benefits Borrowings Joint arrangements New accounting
information of cash and and associate standards
cash equivalents entities
B2 C2 D2 E2 F2 G2
Profit from Trade and other Key management Financing facilities Acquisition of Capital and financial
ordinary activities receivables personnel businesses risk management
compensation
B3 C3 D3 E3 F3 G3
Earnings per share Rendering of Employee discount Commitments Disposal of Other financial
services and share plan business assets and liabilities
construction
contracts
B4 C4 E4 F4
Taxation Inventories Issued capital Controlled entities
B5 C5 E5 F5
Remuneration Trade and other Reserves Related party
of auditors payables information
B6 C6 E6 F6
Subsequent events Property, plant Dividends Parent entity
and equipment disclosures
C7
Intangible assets
C8
Provisions
C9
Contingent
liabilities
Page 121 Directors’ Declaration
Other information
Page 122 Sustainability Performance Summary 2018
Page 127 Corporate Governance
Page 136 Information for Investors
Annual Report 2018 1
Directors’ Report
for the year ended 30 June 2018
The Directors of Downer EDI Limited submit the Annual S A CHAPLAIN (60)
Financial Report of the Company for the financial year
Independent Non‑executive Director since July 2008
ended 30 June 2018. In compliance with the provisions
Ms Chaplain is a former investment banker with extensive
of the Corporations Act 2001 (Cth), the Directors’ Report
experience in public and private sector debt financing. She also
is set out below.
has considerable experience as a Director of local and state
Board of Directors government-owned corporations involved in road, water and
port infrastructure.
R M HARDING (69)
Ms Chaplain is Chairman of Queensland Airports Limited and a
Chairman since November 2010, Independent
Director of Seven Group Holdings Limited. Ms Chaplain is also
Non‑executive Director since July 2008
Chairman of Canstar Pty Ltd, a financial services research and
Mr Harding has held management positions around the world
ratings company and a Director of Credible Labs Inc and The
with British Petroleum (BP), including President and General
Australian Ballet. Her former board roles include being a member
Manager of BP Exploration Australia.
of the Board of Taxation, a Director of EFIC, Australia’s export
credit agency and a Director of PanAust .
Mr Harding is currently the Chairman of Lynas Limited and a
Director of Cleanaway Waste Management Limited, a former
A Fellow of the Australian Institute of Company Directors,
Chairman of Roc Oil Company Limited and Clough Limited
Ms Chaplain holds a Bachelor of Arts degree majoring in
and a former Director of Santos Limited.
Economics and Mandarin from Griffith University in addition to
a Masters of Business Administration (MBA) from the University
Mr Harding holds a Masters in Science, majoring in
of Melbourne. She holds an honorary doctorate from Griffith
Mechanical Engineering.
University for her service to banking and finance, and to the
Mr Harding lives in Sydney. Gold Coast community.
G A FENN (53) Ms Chaplain lives on the Gold Coast.
Managing Director and Chief Executive Officer since
P S GARLING (64)
July 2010
Independent Non‑executive Director since November 2011
Mr Fenn has over 30 years’ experience in operational
Mr Garling has over 35 years’ experience in the infrastructure,
management, strategic development and financial management.
construction, development and investment sectors. He was
He joined Downer in October 2009 as Chief Financial Officer and
the Global Head of Infrastructure at AMP Capital Investors,
was appointed Chief Executive Officer in July 2010.
a role he held for nine years. Prior to this, Mr Garling was CEO
He was previously a member of the Qantas Executive of Tenix Infrastructure and a long-term senior executive at the
Committee, holding a number of senior roles over 14 years, Lend Lease Group, including five years as CEO of Lend Lease
as well as Chairman of Star Track Express and a Director of Capital Services.
Australian Air Express. He worked at KPMG for eight years
Mr Garling is currently the Chairman of Tellus Holdings Limited,
before he joined Qantas.
Energy Queensland Limited and Newcastle Coal Infrastructure
Mr Fenn is currently a Director of Sydney Airport Limited Group and a Director of Charter Hall Limited and the NSW
and Spotless Group Holdings Limited and a Member of the electricity distributor, Essential Energy. He is a former Director of
UTS Engineering and IT Industry Advisory Board. Spotless Group Holdings Limited and a past President of Water
Polo Australia Limited.
Mr Fenn holds a Bachelor of Economics from Macquarie
University and is a member of the Australian Institute of Mr Garling holds a Bachelor of Building from the University of
Chartered Accountants. New South Wales and the Advanced Diploma from the Australian
Institute of Company Directors. He is a Fellow of the Australian
Mr Fenn lives in Sydney. Institute of Building, Australian Institute of Company Directors
and Institution of Engineers Australia.
Mr Garling lives in Sydney.
2 Downer EDI Limited
T G HANDICOTT (55) A Fellow of the Australian Institute of Company Directors
and a Member of Chief Executive Women and the Institute
Independent Non‑executive Director since September 2016
of Chartered Accountants, Ms Hollows holds a Bachelor of
Ms Handicott is a former corporate lawyer with over 30 years’
Business – Accounting and a Graduate Diploma in Advanced
experience in mergers and acquisitions, capital markets and
Accounting (Distinction) from the Queensland University of
corporate governance. She was a partner of national law firm
Technology and is a Graduate of Harvard Business School’s
Corrs Chambers Westgarth for 22 years, serving as a member
Program for Management Development.
of its National Board for seven years including four years
as National Chairman. She also has extensive experience in Ms Hollows lives in Brisbane.
governance of local and state government organisations.
C G THORNE (68)
Ms Handicott is currently the Chairman of listed company
Independent Non‑executive Director since July 2010
PWR Holdings Limited and a Director of LGE Holding Company
Dr Thorne has over 36 years’ experience in the mining and
Pty Ltd trading as Peak Services, which is the subsidiary of the
extraction industry, specifically in senior operational and
Local Government Association of Queensland that is responsible
executive roles with Rio Tinto. His experience spanned a range
for its commercial operations. Ms Handicott is also a Director
of product groups and functional activities in Australia and
of Bangarra Dance Theatre Limited and a Divisional Councillor
overseas. After serving in London as Group Mining Executive
of the Queensland Division of the Australian Institute of
from 1996 to 1998, Dr Thorne moved to Indonesia as President
Company Directors.
Director of Kaltim Prima Coal and then returned to Australia
Ms Handicott is a former Director of CS Energy Limited, a former to manage Rio Tinto’s Australian coal business as Managing
member of the Queensland University of Technology (QUT) Director of Rio Tinto Coal Australia and the publicly listed Coal
Council, the Takeovers Panel and Corporations and Markets and Allied Industries. He was President of the Queensland
Advisory Committee and a former Associate Member of the Resources Council in 2001-2003.
Australian Competition and Consumer Commission.
In 2006, Dr Thorne was appointed global head of Rio Tinto’s
A Senior Fellow of Finsia and Member of the Australian Institute technology, innovation and project engineering functions,
of Company Directors and Chief Executive Women, Ms Handicott reporting to the Chief Executive. He was a member of Rio Tinto’s
holds a Bachelor of Laws (Hons) degree from the Queensland Executive Committee and Investment Committee. He retired
University of Technology. from Rio Tinto in 2011.
Ms Handicott lives in Brisbane. Dr Thorne is a Director of Spotless Group Holdings Limited and
a former Director of Wesley Research Institute, JK Tech and
N M HOLLOWS (47)
Queensland Energy Resources Limited. He is a Fellow of the
Independent Non‑executive Director since June 2018 Australasian Institute of Mining and Metallurgy.
Ms Hollows has over 20 years’ experience in the resources
Dr Thorne also holds directorships with a number of
sector in a number of senior managerial roles across both the
private companies.
public and private sectors, including in mining, utilities and rail.
Her experience spans operational management, accounting He holds Bachelor and Doctoral degrees in Metallurgy from the
and finance, mergers and acquisitions, capital management University of Queensland and is a Graduate of the Australian
and corporate governance. Institute of Company Directors.
Ms Hollows is currently the Chief Executive Officer of SunWater Dr Thorne lives on the Sunshine Coast.
Limited, a Queensland Government owned corporation. She is
the Chair of The Salvation Army Brisbane Red Shield Appeal
Committee and an advisory committee member of the Salvation
Army Queensland Advisory Council and also a board member of
the Water Services Association of Australia and a member of the
CEO Advisory Committee for Dean of Queensland University of
Technology Business School.
She was formerly the Chief Financial Officer and subsequently
Chief Executive Officer of Macarthur Coal Limited, Managing
Director of AMCI Australia and South East Asia and Interim Chair
of Queensland Rail Limited.
Annual Report 2018 3
Directors’ Report – continued
for the year ended 30 June 2018
Directors’ shareholdings
The following table sets out each Director’s relevant interest (direct and indirect) in shares, debentures, and rights or options in shares
or debentures (if any) of the Company at the date of this report. No Director has any relevant interest in shares, debentures and rights
or options in shares or debentures, of a related body corporate as at the date of this report.
Number of Fully Paid Number of Fully Paid Number of Fully Paid
Director Ordinary Shares Performance Rights Performance Options
R M Harding 14,210 – –
G A Fenn1 1,164,203 1,547,403 –
S A Chaplain 103,799 – –
P S Garling 16,940 – –
T G Handicott 14,000 – –
N M Hollows – – –
C G Thorne 82,922 – –
1 Performance rights granted to Mr Fenn are subject to performance and/or service period conditions over the period 2015 to 2020. Further details regarding the conditions
relating to these restricted shares and performance rights are outlined in sections 6.4 and 9.2 of the Remuneration Report.
Company Secretary Review of operations
The Company Secretarial function is responsible for ensuring that Principal Activities
the Company complies with its statutory duties and maintains Downer EDI Limited (Downer) is a leading provider of integrated
proper documentation, registers and records. It also provides services in Australia and New Zealand. Downer exists to create
advice to Directors and officers about corporate governance and sustain the modern environment and its promise is to work
and gives practical effect to any decisions made by the Board. closely with its customers to help them succeed, using world
leading insights and solutions to design, build and sustain
Mr Peter Tompkins was appointed Company Secretary on
assets, infrastructure and facilities. Downer employs about
27 July 2011. He has qualifications in law and commerce
56,000 people, mostly in Australia and New Zealand but also
from Deakin University and corporate governance from the
in the Asia-Pacific region, South America and Southern Africa.
Governance Institute of Australia and is an admitted solicitor
Downer reports its results under six service lines and an outline
in New South Wales. Mr Tompkins joined Downer in 2008
of each service line is as follows:
and was appointed General Counsel in 2010.
Mr Peter Lyons was appointed joint Company Secretary on
27 July 2011. A member of CPA Australia and the Governance
Institute of Australia, he has qualifications in commerce from
the University of Western Sydney and corporate governance
from the Governance Institute of Australia. Mr Lyons was
previously Deputy Company Secretary and has been in
financial and secretarial roles at Downer for over 15 years.
4 Downer EDI Limited
Transport Utilities
Transport comprises Downer’s road, transport infrastructure, The Utilities division provides complete lifecycle solutions
bridge, airport and port businesses. It features a broad range to customers in the power, gas, water, renewable energy and
of transport infrastructure services including earthworks, civil communications sectors.
construction, asset management, maintenance, surfacing and
Total revenue1 (FY18) EBITA2 (FY18)
stabilisation, supply of bituminous products and logistics, open
space and facilities management and rail track signalling and 14.1% 16.8%
electrification works.
Total revenue1 (FY18) EBITA2 (FY18)
22.3% 25.3%
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
Transport consolidated. Due to rounding, divisional percentages do not add up precisely
to 100%.
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles
amortisation expense.
1 Total revenue is a non-statutory disclosure and includes revenue, other income
and notional revenue from joint ventures and other alliances not proportionately
Power and Gas
consolidated. Due to rounding, divisional percentages do not add up precisely
to 100%.
Downer offers customers a wide range of services including
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles
amortisation expense. planning, designing, constructing, operating, maintaining,
managing and decommissioning power and gas network assets.
Road Services
Downer maintains over 110,000 kilometres of electricity and
Downer offers one of the largest non-government owned road
gas networks across more than 185,000 square kilometres
infrastructure services businesses in Australia and New Zealand,
and connects tens of thousands of new power and gas
maintaining more than 33,000 kilometres of road in Australia and
customers each year for customers across all States of Australia
more than 25,000 kilometres in New Zealand.
and both islands in New Zealand. Downer also designs and
Downer delivers a wide range of tailored pavement treatments constructs steel lattice transmission towers, designs and builds
and traffic control services and also provides high-level substations, and maintains large and complex power and gas
capabilities in strategic and tactical asset management, network reticulation networks.
planning and intelligent transport systems. The Company
Customers include AusNet, ElectraNet, Transgrid, Powerco,
continues to invest in state-of-the-art technology to drive
Wellington Electricity and Powerlink.
innovation and performance, including asphalt plants that use
more recycled products and substantially less energy.
Water
Downer is also a leading manufacturer and supplier of bitumen Downer provides complete water lifecycle solutions for municipal
based products and a provider of soil and pavement stabilisation, and industrial water users, with expertise including waste and
pressure injection stabilisation, pavement recycling, pavement waste water treatment, pumping and water transfer, desalination,
profiling, spray sealing and asset management. water re-use, abstraction and dewatering.
Downer’s Road Services customers include all of Australia’s Downer supports its customers across the full asset lifecycle
State Road Authorities, the New Zealand Transport Agency and from the conceptual development of a project through design,
the majority of local government councils and authorities in construction, commissioning and optimisation. Downer
both countries. purchased ITS Pipetech in March 2017 and its principal activities
include pipe bursting, civil maintenance and robotics. Downer
Other transport infrastructure also operates and maintains treatment, storage, pump stations
Other transport infrastructure includes rail construction, light rail and network assets.
construction, rail systems, transport mechanical and electrical
construction, car park construction, airport pavements, port Customers include Auckland Council, Invercargill City Council,
construction and associated maintenance services. Logan City Council, Mackay Regional Council, Melbourne Water,
Queensland Urban Utilities, Tauranga City Council, Yarra Valley
Water, Wagga Wagga City Council, Watercare and Horowhenua
Council (Alliance).
Annual Report 2018 5
Directors’ Report – continued
for the year ended 30 June 2018
Renewable energy Infrastructure & Construction
Downer is one of Australia’s largest and most experienced Spotless provides M&E and HVAC services to customers in
providers in the renewable energy market, offering design, build markets including health, education, commercial & industrial,
and maintenance services for wind farms and solar farms. defence, justice and transport.
Downer offers the services required for the entire asset lifecycle Its AE Smith and Nuvo businesses provide services across
including procurement, assembly, construction, commissioning the asset lifecycle from design through to commissioning, fine-
and maintenance. tuning and maintenance to more than 2,000 commercial facilities
in Australia and New Zealand.
Communications
Downer provides an end-to-end infrastructure service Key customers include Probuild, Watpac, Lendlease, John Holland,
offering comprising feasibility, design, civil construction, Crown Casino, Honeywell and Melbourne University.
network construction, commissioning, testing, operations and
Government
maintenance across fibre, copper and radio networks in Australia
Spotless provides integrated facilities management, business
and New Zealand.
process outsourcing, and operational support to a range of
Customers include nbn™, Telstra, Chorus, Spark, government customers.
Enable and Vodafone.
Key customers include NSW Department of Education, Victorian
Spotless Department of Education, SA Department of Planning, Transport
Spotless operates in Australia and New Zealand and provides and Infrastructure, SA Health, The Housing Authority of WA and
outsourced facility services, catering and laundry services, Children’s Health Partnership.
technical and engineering services, maintenance and
Hospitality & Facilities Management
asset management services and refrigeration solutions to
Spotless provides integrated facilities management services to
various industries.
customers in markets including aged care, education, healthcare,
Total revenue1 (FY18) EBITA2 (FY18) airports, business and industry, hospitality, retail, stadia,
functions, and special events.
24.6% 29.6%
Key customers include Melbourne Cricket Club, Virgin Airlines,
Taronga Zoo, Brisbane City Hall, Emirates, and The Kings School.
Laundries
Spotless provides linen and garment services to social
infrastructure, industry, accommodation and resources
Spotless
customers in Australia and New Zealand, with 16 laundries
processing more than 100,000 tonnes of laundry a year.
1 Total revenue is a non-statutory disclosure and includes revenue, other income
and notional revenue from joint ventures and other alliances not proportionately Key customers include Ramsay Health, HealthScope, WA Health,
consolidated. Due to rounding, divisional percentages do not add up precisely
to 100%. SA Health, St John of God, and Inghams.
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles
amortisation expense. Defence
Spotless employs about 36,000 people who deliver services Spotless delivers a range of facilities and asset management
to customers in a diverse range of industry sectors including: services for the Australian Government Department of Defence
defence; education; government; healthcare; senior living; sports and the New Zealand Defence Force. These services include
and venues; resources; leisure and hospitality; airports; industrial; management services, cleaning and housekeeping, estate
commercial; property; utilities and public private partnerships. upkeep, pest and vermin control and treatment, reprographic
services, sport and recreation, training area and range services,
Spotless owns a number of businesses including AE Smith, and transport and air operations.
Alliance, Asset Services, Ensign, EPICURE, Clean Event, Clean
Domain, Mustard, Nuvo, Skilltech, Taylors, TGS, UAM and UASG. Key customers include the Australian Department of Defence
and NZ Defence Force.
Its customers include corporations and government
departments, agencies and authorities at the Federal, State and
Municipal level.
6 Downer EDI Limited