4 August 2016 Company Announcements Office ASX Limited Exchange Centre Level 4, 20 Bridge ...

157 Pages·2016·5.17 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
4 August 2016

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 2016;
2. 2016 Annual Report;
3. Market release dated 4 August 2016;
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 2016
Appendix 4E
2016 2015 %
$'m $'m change
Revenue from ordinary activities 6,846.2 7,014.9
Other income 3.8 5.0
Total revenue and other income from ordinary activities 6,850.0 7,019.9 (2.4%)
Total revenue including joint ventures and other income 7,393.9 7,430.1 (0.5%)
Earnings before interest and tax 276.9 309.7 (10.6%)
Profit from ordinary activities after tax attributable to members of the
parent entity 180.6 210.2 (14.1%)
2016 2015 %
cents cents change
Basic earnings per share 40.3 46.6 (13.5%)
Diluted earnings per share 37.8 44.9 (15.8%)
Net tangible asset backing per ordinary share 263.3 258.0 2.1%
Dividend 2016 2015
Final Final
Dividend per share (cents) 12.0 12.0
Franked amount per share (cents) 12.0 12.0
Dividend record date 18/08/2016 20/08/2015
Dividend payable date 15/09/2016 17/09/2015
Redeemable Optionally Adjustable Distributing Securities (ROADS)
Dividend per ROADS (in Australian cents) 4.81 5.32
New Zealand imputation credit percentage per ROADS 100% 100%
ROADS payment date Quarter 1 Quarter 2 Quarter 3 Quarter 4
Instalment date FY2016 15/09/2015 15/12/2015 15/03/2016 15/06/2016
Instalment date FY2015 15/09/2014 15/12/2014 16/03/2015 15/06/2015
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.
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Annual
Report 2016
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 2016. The Annual Report is available on
the Downer website www.downergroup.com.
Contents
Directors’ Report
Page 2
Auditor’s signed reports
Page 43 Auditor’s Independence Declaration
Page 44 Independent Auditor’s Report
Financial Statements
Page 49 C onsolidated Statement of Profit or Loss and Other Comprehensive Income
Page 50 C onsolidated Statement of Financial Position
Page 51 Consolidated Statement of Changes in Equity
Page 52 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 53-54 Page 55-62 Page 63-71 Page 72 Page 73-79 Page 80-86 Page 87-96
B1 C1 D1 E1 F1 G1
Segment Reconciliation of Employee benefits Borrowings Joint arrangements New accounting
information cash flow from and associate standards
operating activities 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 subsidiary assets and liabilities
construction
contracts
B4 C4 E4 F4
Taxation Inventories Issued capital Controlled entities
B5 C5 E5 F5
Remuneration Trade and other Dividends Related party
of auditors payables information
B6 C6 F6
Subsequent events Property, plant Parent entity
and equipment disclosures
C7
Intangible assets
C8
Provisions
C9
Contingent
liabilities
Page 97 Directors’ Declaration
Other information
Page 98 Sustainability Performance Summary 2016
Page 100 Corporate Governance
Page 109 Information for Investors
Annual Report 2016 1
Directors’ Report
for the year ended 30 June 2016
The Directors of Downer EDI Limited submit the Annual Financial S A CHAPLAIN (58)
Report of the Company for the financial year ended 30 June
Independent Non-executive Director since July 2008
2016. In compliance with the provisions of the Corporations Act
Ms Chaplain is a former investment banker with extensive
2001 (Cth), the Directors’ Report is set out below.
experience in public and private sector debt financing. She also
Board of Directors has considerable experience as a Director of local and state
government-owned corporations involved in road, water and port
R M HARDING (67) infrastructure.
Chairman since November 2010, Independent
Ms Chaplain is Chairman of Queensland Airports Limited and
Non-executive Director since July 2008
a Director of Seven Group Holdings Limited and the Export
Mr Harding has held management positions around the world
Finance and Insurance Corporation. Ms Chaplain is also
with British Petroleum (BP), including President and General
Chairman of Canstar Pty Ltd, a financial services research and
Manager of BP Exploration Australia.
ratings company. Ms Chaplain is a former Director of PanAust
Limited, Coal & Allied Industries Limited and Keolis Downer Pty
Mr Harding is currently the Chairman of Lynas Limited and a
Ltd, a joint venture between Downer and Keolis SA, and a former
Director of Cleanaway Waste Management Limited, a former
member of the Board of Taxation.
Chairman of Roc Oil Company Limited and Clough Limited and a
former Director of Santos Limited.
A Fellow of the Australian Institute of Company Directors, Ms
Chaplain holds a Bachelor of Arts degree majoring in Economics
Mr Harding holds a Masters in Science, majoring in
and Mandarin in addition to a Masters of Business Administration
Mechanical Engineering.
(MBA) from the University of Melbourne.
Mr Harding lives in Sydney.
Ms Chaplain lives on the Gold Coast.
G A FENN (51)
P S GARLING (62)
Managing Director and Chief Executive Officer since
Independent Non-executive Director since November 2011
July 2010
Mr Garling has over 35 years’ experience in the infrastructure,
Mr Fenn has over 20 years’ experience in operational and
construction, development and investment sectors. He was
financial management as well as strategic development. He
most recently the Global Head of Infrastructure at AMP Capital
joined Downer in October 2009 as Chief Financial Officer and
Investors, a role he held for nine years. Prior to this, Mr Garling
was appointed Chief Executive Officer in July 2010.
was CEO of Tenix Infrastructure and a long-term senior executive
Prior to joining Downer, Mr Fenn had a 14-year career at Qantas at the Lend Lease Group, including five years as CEO of Lend
Airways Limited during which he held a number of senior roles Lease Capital Services.
and was a Member of the Executive Committee for 10 years.
Mr Garling is currently the Chairman of Tellus Holdings Limited
These roles included Executive General Manager of Strategy
and Energy Queensland and a Director of Charter Hall Limited
and Investments and Executive General Manager – Associated
and the New South Wales electricity distributors. Mr Garling is
Businesses, responsible for the Airports, Freight, Flight Catering
also the President of Water Polo Australia Limited.
and Qantas Holidays businesses.
Mr Garling holds a Bachelor of Building from the University of
Mr Fenn is currently a Director of Sydney Airport Limited and he
New South Wales and the Advanced Diploma from the Australian
was previously Chairman of Star Track Express and a Director of
Institute of Company Directors. He is a Fellow of the Australian
Australian Air Express.
Institute of Building, Australian Institute of Company Directors
Mr Fenn holds a Bachelor of Economics from Macquarie and Institution of Engineers Australia.
University and is a member of the Australian Institute of
Mr Garling lives in Sydney.
Chartered Accountants. He worked at KPMG for eight years
before he joined Qantas.
Mr Fenn lives in Sydney.
2 Downer EDI Limited
E A HOWELL (70) C G THORNE (66)
Independent Non-executive Director since January 2012 Independent Non-executive Director since July 2010
Ms Howell has over 40 years’ experience in the oil and gas Dr Thorne has over 36 years’ experience in the mining and
industry in a number of technical and managerial roles. She was extraction industry, specifically in senior operational and
most recently Executive Vice President for Health, Safety & executive roles across a broad range of product groups and
Security at Woodside Energy Limited and served as Executive functional activities in Australia and overseas. Dr Thorne has
Vice President of North West Shelf at Woodside. Before joining previously held a number of senior roles at Rio Tinto, including
Woodside she was Managing Director of Apache Energy Ltd. as a group executive reporting to the Chief Executive Officer, as
head of its coal businesses in Indonesia and Australia, and as
Ms Howell is currently a Director of MMA Offshore Limited and
global head of its technology, innovation and project engineering
Buru Energy Limited. She is a Senior Advisor of Miro Advisors
functions. From 2006 to 2009, he was Group Executive
Ltd and African Geopolitics.
Technology and Innovation and a member of Rio Tinto’s
Executive and Investment Committees.
She has previously served on a number of boards, including
EMR Resources Pty Ltd where she held the position of
Dr Thorne is a former Director of JK Tech and Queensland
Chairman, Tangiers Petroleum Limited where she held the
Energy Resources Limited. He is a Fellow of both the
position of Executive Chair, the Fremantle Port Authority, the
Australasian Institute of Mining and Metallurgy and the
Australian Petroleum Production & Exploration Association
Australian Academy of Technological Science and Engineering.
where she chaired the Environmental Affairs Committee and
Dr Thorne also holds directorships with a number of
as a board member and President of the Australian Mines and
private companies.
Metals Association.
He holds Bachelor and Doctoral degrees in Metallurgy from the
Ms Howell holds a Bachelor of Science (with Honours in Geology
University of Queensland and is a Graduate of the Australian
and Mathematics) from the University of London, an MBA from
Institute of Company Directors.
Edinburgh Business School and is a Graduate of the Australian
Institute of Company Directors. Dr Thorne lives on the Sunshine Coast.
Ms Howell lives in Perth.
J S HUMPHREY (61)
Independent Non-executive Director since April 2001
Mr Humphrey is currently the Executive Dean of the Faculty
of Law at Queensland University of Technology and a Legal
Consultant to King & Wood Mallesons of which he is a former
Deputy Chairman, and partner specialising in corporate, mergers
and acquisitions and infrastructure project work.
Mr Humphrey is currently the Chairman of Horizon Oil Limited
and Auswide Bank Limited. He was appointed to the Board of
Evans Deakin Industries Limited in 2000 and, subsequently, to
the Board of Downer EDI Limited. He is also a former member of
the Australian Takeovers Panel.
Mr Humphrey holds a Bachelor of Laws from the
University of Queensland.
Mr Humphrey lives in Brisbane.
Mr Humphrey will retire as a Non-executive Director at the
conclusion of the 2016 Annual General Meeting.
Annual Report 2016 3
Directors’ Report – continued
for the year ended 30 June 2016
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 10,150 – –
G A Fenn* 626,492 1,426,257 –
S A Chaplain 74,142 – –
P S Garling 12,100 – –
E A Howell 10,000 – –
J S Humphrey 68,367 – –
C G Thorne 59,230 – –
* Performance rights granted to Mr Fenn are subject to performance and/or service period conditions over the period 2013 to 2018. Further details regarding the conditions
relating to these 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 Principal activities
that the Company complies with its statutory duties and Downer EDI Limited (Downer) is a leading provider of services to
maintains proper documentation, registers and records. It customers in markets including: Transport Services; Technology
also provides advice to Directors and officers about corporate and Communications Services; Utilities Services; Rail;
governance and gives practical effect to any decisions Engineering, Construction and Maintenance (EC&M); and Mining.
made by the Board. Downer employs about 19,000 people, mostly in Australia and
New Zealand but also in the Asia-Pacific region, South America
Mr Peter Tompkins was appointed Company Secretary on
and Southern Africa.
27 July 2011. He has qualifications in law and commerce
from Deakin University and corporate governance from the
Divisional activities
Governance Institute of Australia and is an admitted solicitor in
Downer reports its financial results under six service lines:
New South Wales. Mr Tompkins joined Downer in 2008 and was
Transport Services; Technology and Communications Services;
appointed General Counsel in 2010.
Utilities Services; Rail; EC&M and Mining. An outline of each
Mr Peter Lyons was appointed joint Company Secretary on service line is set out below.
27 July 2011. A member of CPA Australia and the Governance
Institute of Australia (formerly Chartered Secretaries 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 Services Other transport infrastructure
Transport Services comprises Downer’s road, rail infrastructure, Downer provides a range of rail infrastructure services to its
bridge, airport and port businesses. It features a broad range customers including earthworks, civil and rail track construction
of transport infrastructure services including earthworks, civil and signalling and electrification works.
construction, asset management, maintenance, surfacing and
Downer also provides integrated services to its airport and
stabilisation, supply of bituminous products and logistics, open
port customers including pavement construction, facilities
space and facilities management and rail track signalling and
maintenance, communications technologies, open space and
electrification works.
asset management and turnkey electrical and communication
Total revenue1 (FY16) EBIT (FY16) systems. It also provides whole-of-life asset solutions for
associated infrastructure such as roads, rail lines and car parks.
24.9% 28.2%
Technology and Communications Services
Downer provides an end-to-end infrastructure service
offering comprising feasibility, design, civil construction,
network construction, commissioning, testing, operations and
maintenance across fibre, copper and radio networks in Australia
and New Zealand.
Transport Services
Total revenue1 (FY16) EBIT (FY16)
Road Services
6.5% 8.1%
Downer offers one of the largest non-government owned road
infrastructure services businesses in Australia and New Zealand,
maintaining more than 40,000 kilometres of road in Australia
and more than 32,000 kilometres in New Zealand.
Downer delivers a wide range of tailored pavement treatments
and traffic control services and also provides high-level
capabilities in strategic and tactical asset management, network
Technology and Communications Services
planning and intelligent transport systems. The Company
Downer’s expertise in the feasibility and design phases of the
continues to invest in state-of-the-art technology to drive
life cycle provides customers with a high level of assurance and
innovation and performance, including asphalt plants that use
reduces uncertainty at the beginning of the investment process.
more recycled products and substantially less energy.
Downer has a track record of delivering both fixed and mobile
Downer is also a leading manufacturer and supplier of bitumen
networks across Australia and New Zealand.
based products and a provider of soil and pavement stabilisation,
pressure injection stabilisation, pavement recycling, pavement
Downer also delivered Australia’s first fully integrated, multi-
profiling and asset management.
modal electronic fare payment system for public transport and
is a leader in intelligent transport technology systems (ITS) in
Customers include all of Australia’s State road authorities,
both countries.
the New Zealand Transport Agency and the majority of local
government councils and authorities in both countries.
Comprehensive project and program management capabilities
are supported by our world class engineering and technical
capabilities. This allows Downer to deliver projects safely, cost
effectively and on time.
Customers include nbn™, Telstra, Chorus, Spark and Vodafone.
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. Due to rounding, divisional percentages do not add up precisely to 100%.
Annual Report 2016 5
Directors’ Report – continued
for the year ended 30 June 2016
Utilities Services Renewable energy
The Utilities Services division provides complete lifecycle Downer is one of Australia’s largest and most experienced
solutions to customers in the power, gas, water and renewable providers in the renewable energy market, offering design, build
energy sectors. and maintenance services for: wind farms and wind turbine sites;
solar farms; landfill methane generation plants; sugar cane waste
Total revenue1 (FY16) EBIT (FY16)
(Bagasse) fired cogeneration plants; and other biomass fired
10.6% 11.3% cogeneration plants.
Downer offers the services required for the entire asset
life-cycle including procurement, assembly, construction
and commissioning.
Downer is currently working on the Ararat Wind Farm Project
(Victoria) and the Sunshine Coast Solar Farm while its previous
Utilities Services experience in wind farms includes Collgar (WA), Boco Rock and
Taralga (NSW), Lake Bonney (SA) and Mt Mercer (Victoria).
Power and Gas
Downer offers customers a wide range of services including Rail
planning, designing, constructing, operating, maintaining,
Downer provides total rail asset solutions including freight and
managing and decommissioning power and gas network assets.
passenger build, operations and maintenance, component
overhauls and after-market parts.
Over the past four years, Downer has erected over 1,000 steel
lattice transmission towers. It has designed and built over 100 Total revenue1 (FY16) EBIT (FY16)
substations and every year it connects 35,000 new power
11.1% 3.9%
and gas customers. It also maintains over 62,000 kilometres
of electricity and gas networks across more than 115,000
square kilometres.
Customers include United Energy, AusNet Services, Ergon
Energy, Powerco, Wellington Electricity and Powerlink.
Water
Rail
Downer provides complete water lifecycle solutions for municipal
and industrial water users, with expertise including waste and Downer provides services to a range of public and private
waste water treatment, pumping and water transfer, desalination sector rail customers with capabilities spanning the provision,
and water re-use, and abstraction and dewatering. maintenance and overhaul of passenger and freight rolling stock,
as well as importing and commissioning completed locomotive
Supporting its customers across the full asset lifecycle from units for use in the resources sector.
the conceptual development of a project through design,
construction, commissioning and optimisation, Downer also Downer’s Rail division has a strong national presence with
operates and maintains treatment, storage, pump station and approximately 1,200 workers employed across 20 facilities.
network assets. Downer operates two fleet control centres, focused on
monitoring and management of passenger and freight fleets on
Customers include Logan City Council, Mackay Regional behalf of its customers, and four manufacturing plants.
Council, Melbourne Water, Queensland Urban Utilities,
Tauranga City Council, Yarra Valley Water, Wagga Wagga City Downer has formed strategic joint ventures with leading
Council and Watercare. technology and knowledge providers to support its growth
objectives in the passenger and freight market. These include
partnerships with Keolis and Electro-Motive Diesel (owned
by Caterpillar).
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. Due to rounding, divisional percentages do not add up precisely to 100%.
6 Downer EDI Limited