Half Yearly Report and Accounts

Half Year Results6 February 2019DOWIndustrials

Page 1 of 1

7 February 2019

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 2018;
2. Condensed Consolidated Half-year Financial Report dated 31 December 2018;
3. Market release dated 7 February 2019; 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 DOW NER
www.downergroup.com

Results for announcement to the market
for the half-year ended 31 December 2018
Appendix 4D
31 Dec 2018
31 Dec 2017
%
$'m
$'m
change
Revenue from ordinary activities6,304.6 5,798.5
Other income19.9 4.6
Total revenue and other income from ordinary activities6,324.5 5,803.1
9.0%
Total revenue including joint ventures and other income
6,623.0 6,100.5
8.6%
236.6 52.3 352.4%
268.0 83.0 222.9%
134.2 (11.1)1309.0%
163.4 5.7 2766.7%
31 Dec 2018
31 Dec 2017
%
cents
cents
change
Basic earnings per share22.0 (2.6)946.2%
Diluted earnings per share
(i)
21.7 (2.6)934.6%
Net tangible asset backing per ordinary share(17.7) 36.1 (149.0%)
(i)
At 31 December 2017, the ROADS are deemed anti-dilutive and consequently, diluted EPS remained at (2.6) cents per share.
Dividend
31 Dec 2018
31 Dec 2017
Interim
Interim
Dividend per share (cents)14.013.0
Franked amount per share (cents)
7.0
6.5
Conduit foreign income (CFI)50%50%
Dividend record date21/02/20197/03/2018
Dividend payable date21/03/20194/04/2018
Redeemable Optionally Adjustable Distributing Securities (ROADS)
Dividend per ROADS (in Australian cents)2.06 1.99
New Zealand imputation credit percentage per ROADS 100%100%
ROADS payment dateQuarter 1Quarter 2
Instalment date FY201917/09/201817/12/2018
Instalment date FY201815/09/201715/12/2017
For commentary on the results for the period and review of operations, please refer to the Directors' Report and separate
media release attached.
Earnings before interest and tax
Profit from ordinary activities after tax before amortisation of acquired
intangible assets (NPATA)
Downer EDI's Dividend Reinvestment Plan (DRP) has been suspended.
Earnings before interest and tax and amortisation of acquired
intangible assets (EBITA)
Profit / (loss) from ordinary activities after tax attributable to members
of the parent entity

ended 31 December 2018
Downer EDI Limited
ABN: 97 003 872 848
Condensed Consolidated
Financial Report
for the half-year

Condensed Consolidated Financial Report
for the half-year ended 31 December 2018
Contents
Directors' Report
Page 2
Auditor's signed reports
Page 18Auditor's Independence Declaration
Page 19Independent Auditor's Report
Financial Report
Page 21Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
Page 22Condensed Consolidated Statement of Financial Position
Page 23Condensed Consolidated Statement of Changes in Equity
Page 24Condensed Consolidated Statement of Cash Flows
Notes to the condensed consolidated financial report
A About this
report
B Business
performance
CCapital structure
and financing
DOther
disclosures
EOther
Page 25
B1
Segment
information
C1
Borrowings
D1
Trade and other
receivables
E1
New accounting
standards
B2
Profit from
ordinary activities
C2
Financing facilities
D2
Trade and other
payables
B3
Earnings per
share
C3
Issued capital
D3
Property, plant
and equipment
B4
Subsequent
events
C4
Reserves
D4
Intangible assets
C5
Dividends
D5
Joint
arrangements and
associate entities
D6
Contingent
liabilities
D7
Acquisition and
disposal of
businesses
Directors' Declaration
Page 51
Page 26 - 29Page 30 - 35Page 36 - 42Page 43 - 50
1

DIRECTORS’ REPORT
For the half-year ended 31 December 2018

The Directors of Downer EDI Limited (Downer) submit the condensed consolidated financial report of the
Company for the half-year ended 31 December 2018. 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:

R M Harding (Chairman, Independent Non-executive Director)
G A Fenn (Managing Director and Chief Executive Officer)
S A Chaplain (Independent Non-executive Director)
P S Garling (Independent Non-executive Director)
T G Handicott (Independent Non-executive Director)
N M Hollows (Independent Non-executive Director)
C G Thorne (Independent Non-executive Director)

REVIEW OF OPERATIONS

PRINCIPAL ACTIVITIES

Downer EDI Limited (Downer) is a leading provider of integrated services in Australia and New Zealand.
Downer 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 more than 53,000 people, mostly in Australia and New
Zealand but also in the Asia-Pacific region, South America and Southern Africa. Downer reports its results
under five service lines and an outline of each service line is set out below.

TRANSPORT

Transport comprises Downer’s Road Services, Transport I nfrastructure, and Rail 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. 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.

31.2%
Total revenue
1
(HY19)
30.0%
EBITA
2
(HY19)
2

Road Services

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 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 planning and intelligent transport
systems. The Company continues to invest in state-of-the-art technology to drive innovation and
performance, including asphalt plants that use more recycled products and substantially less energy.

Downer is also a leading manufacturer and supplier of bitumen based products and a provider of soil and
pavement stabilisation, pressure injection stabilisation, pavement recycling, pavement profiling, spray sealing
and asset management.

Downer’s Road Services customers include all of Australia’s State Road Authorities, the New Zealand
Transport Agency and the majority of local government councils and authorities in both countries.

Transport Infrastructure

Transport Infrastructure includes rail construction, light rail construction, rail systems, transport mechanical
and electrical construction, car park construction, airport pavements, port construction and associated
maintenance services.

Rail

Downer is Australia's leading provider of passenger rolling stock asset management services. Downer
partners with its customers to deliver reliable and safe solutions across all transport domains including heavy
rail, electric and diesel trains, light rail, bus and multi-modal transport solutions.

Downer’s track record spans project management services, engineering design, systems engineering,
supply chain engagement, systems integration, manufacturing, logistics, testing, commissioning, asset
management, fleet maintenance, rail infrastructure design and construction, and through-life-support and
operations.

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, and a new 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 with operations in South Australia,
Western Australia and Queensland. Keolis Downer provides more than 210 million passenger trips each
year.

Downer’s Rail customers include Sydney Trains, Transport for NSW, Public Transport Authority (WA), Metro
Trains Melbourne, Public Transport Victoria, and Queensland Rail.

Downer is currently working on the Sydney Growth Trains (SGT) project in New South Wales and the High
Capacity Metro Trains (HCMT) project in Victoria.

3

UTILITIES

The Utilities service line provides complete lifecycle solutions to customers in the power, gas, water,
renewable energy and communications 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. 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.

Power and Gas

Downer offers customers a wide range of services including planning, designing, constructing, operating,
maintaining, managing and decommissioning power and gas network assets.

Downer maintains over 110,000 kilometres of electricity and gas networks across more than 185,000 square
kilometres and connects tens of thousands of new power and gas customers each year for customers across
all States of Australia and both islands in New Zealand. Downer also designs and constructs steel lattice
transmission towers, designs and builds substations, and maintains large and complex power and gas
reticulation networks.

Customers include AusNet, ElectraNet, Transgrid, Powerco, Wellington Electricity and Powerlink.

Water

Downer provides complete water lifecycle solutions for municipal and industrial water users, with expertise
including waste and waste water treatment, pumping and water transfer, desalination, water re-use,
abstraction and dewatering.

Downer supports its customers across the full asset lifecycle from the conceptual development of a project
through design, construction, commissioning and optimisation.
Customers include Auckland Council, Invercargill City Council, 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).

Renewable energy

Downer is one of Australia’s largest and most experienced providers in the renewable energy market,
offering design, build and maintenance services for wind farms and solar farms.

Downer offers the services required for the entire asset life-cycle including procurement, assembly,
construction, commissioning and maintenance.

Communications

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.
Customers include nbn™, Telstra, Chorus, Spark, Enable and Vodafone.
18.4%
Total revenue
1
(HY19
)
22.1%
EBITA
2
(HY19)
4

FACILITIES
The Facilities service line operates in Australia and New Zealand providing outsourced facility services,
hospitality, catering and laundry services, building, technical and engineering services, maintenance and
asset management services and refrigeration solutions to various industries.

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. 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.

Facilities delivers services to customers in a diverse range of industry sectors including: defence; education;
government; healthcare; senior living; sports and venues; resources; leisure and hospitality; airports;
industrial; commercial; property; utilities and public private partnerships.

Facilities businesses includes Spotless, AE Smith, Alliance, Ensign, EPICURE, Hawkins, Mustard, Nuvo,
Skilltech, Taylors and TGS.

Its customers include corporations and government departments, agencies and authorities at the Federal,
State and Municipal level.

Infrastructure & Construction
M&E (mechanical and electrical) and HVAC (heating, ventilation and air conditioning) services are provided
to customers in markets including health, education, commercial & industrial, defence, justice and transport.

AE Smith and Nuvo provide services across the asset lifecycle from design through to commissioning, fine-
tuning and maintenance to more than 2,000 commercial facilities in Australia and New Zealand.

Key customers include Probuild, Watpac, Lendlease, John Holland, Crown Casino, Honeywell and University
of Melbourne.

Government
Integrated facilities management, business process outsourcing, and operational support services are
provided to a range of government customers.

Key customers include NSW Department of Education, Victorian Department of Education, SA Department
of Planning, Transport and Infrastructure, SA Health, The Housing Authority of WA and Children’s Health
Partnership.

25.3%
Total revenue
1
(HY19
)
27.7%
EBITA
2
(HY19)
5

Hospitality & Facilities Management
Integrated facilities management services are provided to customers in markets including education,
healthcare, airports, business and industry, hospitality, retail, stadia, functions, and special events.

Key customers include Melbourne Cricket Club, Virgin Airlines, Taronga Zoo, Brisbane City Hall and
Emirates.

Laundries
Linen and garment services are provided to social infrastructure, industry, accommodation and resources
customers in Australia and New Zealand, with 16 laundries processing more than 100,000 tonnes of laundry
a year.

Key customers include Ramsay Health, HealthScope, WA Health, SA Health, St John of God, and Inghams.

Defence
Downer delivers a range of facilities and asset management services for the Australian Government
Department of Defence and the New Zealand Defence Force. These services include management services,
cleaning and housekeeping, estate upkeep, pest and vermin control and treatment, reprographic services,
sport and recreation, training area and range services, and transport and air operations.
Key customers include the Australian Department of Defence and NZ Defence Force.

ENGINEERING, CONSTRUCTION AND MAINTENANCE (EC&M)

Downer works with customers in the public and private sectors delivering services including design,
engineering, construction, maintenance and ongoing management of critical assets.

EC&M

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%.
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles amortisation expense.

Multi-disciplined teams project manage and self-execute a wide range of services for greenfield and
brownfield projects across a range of industry sectors including: oil and gas; power generation; commercial /
non-residential; iron ore; coal; and industrial materials. T hese services are delivered on complex resources
and industrial sites as well as commercial operations with critical infrastructure requirements such as data
centres, airport facilities and hospitals.

14.3%
Total revenue
1
(HY19)
7.6%
EBITA
2
(HY19)
6

Downer supports customers across all stages of the project lifecycle with services including:
 feasibility studies;
 engineering design;
 civil works;
 structural, mechanical and piping;
 electrical and instrumentation;
 mineral process equipment design and manufacture;
 commissioning;
 maintenance;
 shutdowns, turnarounds and outages;
 strategic asset management; and
 decommissioning.

Customers include Chevron, Alcoa, Bechtel, BHP Billiton, Newcrest, Orica, Origin Energy, Powerlink
Queensland, Rio Tinto, and Santos.

MINING

Downer is one of Australia’s leading diversified mining contractors serving its customers across more than 50
sites in Australia, Papua New Guinea, South America and Southern Africa.

Mining

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%.
2 Downer calculates EBITA by adjusting EBIT to add back acquired intangibles amortisation expense.

Downer’s Mining division generates its revenues primarily from open cut mining and blasting services, with
contributions also from tyre management and underground mining. Downer supports its customers at all
stages of the mining lifecycle including:

 asset management;
 blasting services, explosives manufacture and supply;
 civil projects (mine site infrastructure);
 crushing;
 exploration drilling;
 mine closure and mine site rehabilitation;
 mobile plant maintenance;
 open cut mining;
 training and development for ATSI employees;
 tyre management (through the subsidiary Otraco International); and
 underground mining.

Customers include BHP Mitsubishi Alliance, Roy Hill Iron Ore, Glencore, Karara Mining, Millmerran Power
Partners, Newmarket Gold, Newmont, Rio Tinto, Stanwell Corporation, OZ Minerals and Yancoal Australia.

10.8%
Total revenue
1
(HY19)
12.6%
EBITA
2
(HY19)
7

GROUP FINANCIAL PERFORMANCE

For the six months ended 31 December 2018, Downer reported increases in total revenue, in earnings
before interest, tax and amortisation of acquired intangibles assets (EBITA) and in net profit after tax (NPAT).

The main features of the result for the six months ended 31 December 2018 were:
• Total revenue of $6.6 billion, up 8.6%;
• EBITA of $268.0 million, up from $83.0 million;
• Earnings before interest and tax (EBIT) of $236.6 million, up from $52.3 million;
• Statutory net profit after tax and before amortisation of acquired intangible assets (NPATA) of $163.4
million, up from $5.7 million and up 23.8% from underlying NPATA of $132.0 million; and
• Statutory net profit after tax (NPAT) of $141.4 million.

REVENUE

Total revenue for the Group increased by $522.5 million, or 8.6%, to $6.6 billion.

Transport revenue increased by 0.8% or $16.2 million to $2.1 billion despite the revenue lost following the
divestment of the freight rail business in the prior period. This was mainly driven by continuing strong
performance in the Road Services business in both Australia and New Zealand, ongoing investment in
transport projects in Australia and strong performance in the Rail business, mainly from the Sydney Growth
Trains and High Capacity Metro Trains projects but also from the Waratah maintenance contract.

Utilities revenue increased by 27.5% to $1.2 billion, due to continuing strong contributions from nbn
TM
contracts in Australia as well as new renewable energy projects.

Facilities revenue decreased 2.8% to $1.7 billion. The major contributors to this result were Government-
related contracts, Public Private Partnerships (PPPs), construction projects and lifecycle maintenance
contracts in Spotless and contribution from building activities in New Zealand.

EC&M revenue increased by 34.1% to $945.1 million as a result of increased activities on the Ichthys project
in the Northern Territory and the six month contribution from MHPS following acquisition. This increase was
partially offset by a reduction in activities on the Wheatstone project in Western Australia following
completion.

Mining revenue increased by 3.6% to $714.2 million, mainly due to increased activities at Blackwater and
Carrapateena and contribution from new contracts, although this was partially offset by the completion of the
Boggabri contract in the first half of 2018.

EXPENSES

Total expenses increased by 5.9% compared to the prior corresponding period (pcp) which includes $139.3
million of Individually Significant Items (ISIs). Excluding these ISIs, total expenses increased by 8.5% which
is in line with the increase in total revenue and as explained below.

Employee benefits expenses increased by 13.7%, or $272.1 million, to $2.3 billion and represent 37.0% of
Downer’s cost base. This increase is mainly due to higher activity across the Group and a more labour
intensive contract base compared to pcp.

Subcontractor costs increased by 12.1% or $210.4 million to $1.9 billion and represent 31.9% of Downer’s
cost base. This increase is a result of higher contract activities and the change in the subcontractor mix on
some contracts during the period.

Raw materials and consumables costs decreased by 2.3% to $1.1 billion and represent 17.3% of Downer’s
cost base. The decrease is driven by the net impact of the divestment of Freight Rail, lower material
requirements and the completion of contracts in Mining.

8

Plant and equipment costs decreased by 2.6% to $339.1 million and represent 5.6% of Downer’s cost base.
The lower increase in plant and equipment costs compared to other types of expenses reflects a less capital-
intensive business coupled with more efficient maintenance practices.

Depreciation and amortisation decreased by 4.8% or $8.8 million to $176.4 million and represent 2.9% of
Downer’s cost base. This decrease is mainly due to project completion in Mining partially offset by an
additional $0.7 million in amortisation on acquired intangible assets following several bolt-on acquisitions.

Other expenses, which include communication, travel, occupancy and professional fees costs, decreased
$99.0 million due to the once-off pre-tax ISIs in pcp. Excluding ISIs, other expenses would have increased by
12.8% to $328.8 million and represent 5.4% of Downer’s cost base. The increase is due to bid costs incurred
during the period and the continuous investment in governance and risk management functions.

EARNINGS

Statutory EBITA for the Group increased by 20.6% to $268.0 million compared to underlying EBITA of
$222.3 million in pcp. The increase is primarily from Mining, Utilities, Transport and Facilities, partially offset
by a lower contribution from EC&M. The six month EBITA result includes a $17.0 million fair value gain on
revaluation of existing interest in the Downer Mouchel joint venture. This gain arises from the revaluation of
the proportion of the joint venture already owned by Downer.

NPATA for the Group increased by 23.8% to $163.4 million.

Transport EBITA increased by 9.7% to $87.9 million due to continued strong performance in road
maintenance in Australia and New Zealand and higher contributions from the Waratah TLS contract and
from the SGT and HCMT projects. This was partially offset by the divestment of Freight Rail in 2H18 and
lower performance by the New Zealand infrastructure projects business.

Utilities EBITA increased by 19.6% to $64.7 million, driven by a strong performance from Communications
and higher contribution from the Water business in Australia and New Zealand partially offset by
underperformance in a solar contract.

Facilities EBITA increased by 5.6% to $81.3 million mainly driven by growth in Hospitality & FM related
contracts.

EC&M EBITA decreased by 4.7% to $22.4 million due to the completion of contracts (including Gorgon and
Wheatstone). This was partially offset by strong performance at Ichthys, contribution from the MHPS
acquisition, and improved results from the resources related consultancies (QCC Resources and Mineral
Technologies).

Mining EBITA increased by 76.6% to $36.9 million predominantly due to continued strong performance on
ongoing and new contracts.

Corporate costs increased by $8.9 million to $42.2 million mainly due to continuous investment in business
development, systems, governance and risk management functions.

The effective tax rate is 27.3% which is lower than the statutory rate of 30.0% due to the impact of non-
taxable distributions from joint ventures and lower overseas tax rates (e.g. New Zealand).

9

GROUP FINANCIAL POSITION
Funding, liquidity and capital are managed at Group level, wit h Divisions focused on working capital and
operating cash flow management.
OPERATING CASH FLOW
Operating cash flow was strong at $355.3 million, up 15.7% from pcp due to strong contract performance,
distributions from equity accounted investment and contribution from acquisitions, representing cash
conversion of 90.7% of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA).
INVESTING CASH
Total investing cash flow was $265.7 million, $381.7 million lower than pcp as the prior period included an
$391.8 million payment in relation to the additional interest acquired in Spotless. Excluding the Spotless
payment, investing cash flow increased by 4.0% or $10.1 million reflecting payments made for acquisitions
during the period, offset by lower capital expenditure requirements.
The business, however continued to invest in capital equipment to support the existing contracted operations
and future operations, resulting in net capital expenditure of $175.4 million and $16.3m payment for lease
assets.
DEBT AND BONDING
The Group’s performance bonding facilities totalled $2,269.7 million at 31 December 2018 with $752.8
million undrawn. There is
sufficient available capacity to support the ongoing operations of t he Group.
As at 31 December 2018, the Group had liquidity of $1.4 billion comprising cash balances of $505.3 million
and undrawn committed debt facilities of $855.0 million.
The Group continues to be rated BBB (Stable) by Fitch Ratings.
BALANCE SHEET
The net assets of Downer decreased by 5.9% to $3.0 billion, predominantly due to the impact of the adoption
of AASB 15 Revenue from Contracts with Customers. This resulted in an opening retained
earnings adjustment of $258.0 million (after-tax). Adjusting for the impac
t of AASB 15, net assets increased
by $70.5 million.
Cash and cash equivalents decreased by $100.9 million, or 16.6%, to $505.3 million reflecting $106.3 million
of external borrowing repayments made during the period, $52.9 million consideration paid in relation to
business acquisitions and final working capital adjustment on the divestment of Freight Rail in FY18; offset
by continued strong operating cash flows.
Net debt of $940.0 million has remained consistent to 30 June 2018 as lower borrowing levels (following
Spotless debt and MTNs repayments) were offset by reduced cash balances. Gearing at 31 December 2018
of 23.8% is higher than 30 June 2018 (22.7%) but lower compared to 1H18 (24.6%). This increase is due to
a lower equity balance of $258.0 million following adoption of AASB15. Adjusting for the impact of the
AASB15 adoption, gearing would have been 22.3%.
Current trade and other receivables decreased by $135.7 million to $1,986.2 million reflecting the impact on
adoption of AASB 15 and strong cash collections.
Inventories increased by $38.3 million to $307.1 million reflecting higher activities
and higher bitumen levels.
Current tax
assets decreased by $68.9 million due to the timing of cash tax payments.
10

Interest in joint ventures and associates decreased by $0.4 million. This represents, $4.0 million interest
reduction in MHPS Plant Services Pty Ltd following the 100% ownership acquired during the period, $10.1
million of distributions received, offset by Downer’s share of net profits from joint ventures and associates of
$13.5 million.

Property Plant and Equipment increased by $58.2 million as capital expenditure incurred during the period
exceeded the depreciation expense.
Intangible assets increased by $70.1 million arising from $97.2 million in additional goodwill and other
acquired intangible assets recognised from the acquisitions made during the period; offset by $46.4 million
amortisation in the period mainly related to Spotless’ acquired intangible assets.
Total trade and other payables increased by $105.5 million or 4.6% primarily due to higher business activity
and timing of payments. Trade and other payables represent 51.9% of Downer’s total liabilities.

Other financial liabilities of $75.9 million decreased by $1.5 million and represent 1.6% of Downer’s total
liabilities. The decrease mainly reflects deferred consideration paid for acquisitions made during previous
periods.

Deferred tax liability of $110.0 million primarily represents temporary differences arising from work in
progress, property plant and equipment and the recognition of acquired intangibles.

Provisions of $578.8 million increased by $88.3 million mainly from the recognition of new Royal Adelaide
Hospital contract provision and increase in employee related provisions. Provisions represent 12.5% of
Downer’s total liabilities. Employee provisions (annual leave and long service leave) made up 66.6% of this
balance with the remainder covering surplus lease contracts provisions and return conditions obligations for
leased assets and property and warranty obligations.

Shareholder equity decreased by $189.8 million driven by a $258.0 million cumulative opening retained
earnings adjustment following adoption of AASB 15 and $87.4 million of dividend payments made during the
period. This was offset by the net profit after tax of $141.4 million. Net foreign currency gains on translation
of foreign operations, particularly in New Zealand, resulted in a movement in the foreign currency translation
reserve of $8.3 million.

11

DIVIDENDS

The Downer Board resolved to pay an interim dividend of 14.0 cents per share, 50% franked (13.0 cents per
share 50% franked in the prior corresponding period), payable on 21 March 2019 to shareholders on the
register at 21 February 2019. The unfranked portion of the dividend (50%) will be paid out of Conduit Foreign
Income (CFI).

The Board also determined to continue to pay a fully imputed dividend on the ROADS security, which having
been reset on 15 June 2018 has a yield of 6.15% per annum payable quarterly in arrears, with the next
payment due on 15 March 2019. As this dividend is fully imputed (the New Zealand equivalent of being fully
franked), the actual cash yield paid by Downer will be 4.43% per annum for the next 12 months.

ZERO HARM
Downer’s Lost Time Injury Frequency Rate (LTIFR) decreased from 0.69 to 0.68 and Total Recordable Injury
Frequency Rate (TRIFR) reduced from 3.38 to 3.09 per million hours worked.

OUTLOOK

Downer has increased its target guidance for FY19 to $352 million consolidated net profit after tax and
before amortisation of acquired intangible assets (NPATA) before minority interests.

The increase takes into account the fair value gain of $17 million from acquiring the remaining 50% of the
Downer Mouchel JV in late 1H19.

0.69
0.68
3.38
3.09
2.00
2.50
3.00
3.50
0.00
1.00
2.00
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18Sep-18
Oct-18
Nov-18Dec-18
TRIFR
LTIFR
Downer Group Safety Performance
(12-month rolling frequency rates)
LTIFRTRIFR
12

GROUP BUSINESS STRATEGIES AND PROSPECTS FOR FUTURE FINANCIAL YEARS

The Downer Group comprises a diverse collection of businesses. Downer’s Purpose is to create and sustain
the modern environment by building trusted relationships with customers. Downer’s Promise is to work
closely with its customers to help them succeed, using world-leading insights and solutions. Downer’s
business is founded on four Pillars which support our Purpose and Promise: Safety, Delivery, Relationships,
Thought Leadership.

Downer’s strategy focuses on Zero Harm, driving improvement in existing businesses and operations,
investing in targeted growth opportunities, and creating new positions in appropriate markets.

Downer’s strategic objectives, prospects, and the risks that could adversely affect the achievement of these
objectives, are set out in the table below.

Strategic
Objective
Prospects Risks and risk management
Maintain focus
on Zero Harm
as a
cornerstone of
the Safety pillar
Downer recognises that a sustainable
and embedded Zero Harm culture is
fundamental to the Company’s future
success.

Zero Harm means working in an
environment that supports the health
and safety of its people, allows it to
deliver its business activities in an
environmentally sustainable manner,
and advances the communities in
which it operates.

This requires strong commitment to
Downer’s Zero Harm objectives from
all levels of the business. Downer’s
Zero Harm culture is built on leading
and inspiring, managing risk,
rethinking processes, applying
lessons learnt, and adopting and
adapting practices that aim to achieve
zero work-related injuries and
minimise environmental harm.
Downer’s approach to Zero Harm enables the
Company to work safely, sustainably and
environmentally responsibly where there are
inherent hazardous environments.

Downer has implemented a strong Critical Risk
program throughout its business. This program
has provided Downer with the opportunity to
understand the risks in its business that could
cause serious injury to people or the
environment. That knowledge has enabled
Downer to implement a program to eliminate or
control those risks, and to monitor the
performance of those critical controls.

Each Downer Division has in place a Zero
Harm management system, certified as a
minimum to AS/NZS 4801 or BS OHSAS
18001, and ISO 14001. Each management
system is reviewed regularly, undergoing
internal and external audit.

Embed asset
management
and data
analytics as a
cornerstone of
the Delivery
pillar
Downer has established an Asset &
Data Management Office (ADMO) to
coordinate the Group’s extensive
asset management knowledge and
expertise and use it, for example, to
improve the efficiency of its
customers’ operations.

As a leader in asset management,
Downer aims to adopt and implement
world leading insights and solutions.
The proliferation of data points and
connected devices allows for more
data and business intelligence to be
captured. This information can be
used to drive service improvement
and improve asset performance.
The expectations of Downer’s customers, and
their customers, continue to grow with regards
to reliable, intuitive, and cost-effective assets
and services.

Downer has invested in capability and talent to
improve asset management, data analytics
and life cycle performance analytics. A number
of these investments have Group-wide
application in addition to their bespoke
customer benefit.

Risks to be managed include: not delivering
value-added services to customers and so
reducing the need for integrated services
partners; scope reduction by customers who
elect to use pure maintenance / blue collar
services; and an inability to deliver obligations
in performance frameworks and service
outcome contracts.

13

Strategic
Objective
Prospects Risks and risk management
Improve
engagement
with customers
as a
cornerstone of
the
Relationships
pillar

Providing valuable and reliable
products and services to customers,
and their customers, is at the heart of
Downer’s culture. It enables Downer’s
customers to focus more on their core
expertise while Downer delivers non-
core operational services.

Through ongoing analysis of markets,
customers and competitors, Downer is
well positioned to improve value and
service for its customers and their
customers.
Relationships creating success continues to be
Downer’s core operating philosophy that drives
delivery of projects and services. It helps to
ensure investment, initiatives and activities are
focused on helping Downer’s customers to
succeed.

Building on existing expertise across the
Group, Downer is developing a more
coordinated and structured approach to
customer engagement, business development
and market participation. This will improve
Downer’s ability to compete and win in the
markets and sectors in which it operates.

Risks to be managed include: the threat of new
competitors and disruptors in traditional
markets; not keeping pace with changing
customer expectations; and the threat of
commoditisation of core products and services.

Embed
operational
technology into
core service
offerings as a
cornerstone of
our Thought
Leadership
pillar
Technology is an inherent feature of
today’s world and there is therefore
greater demand for technology in
Downer’s projects and services.

Customer operations are growing in
complexity and this creates
opportunities for Downer to connect,
manage, monitor and report on core
services and infrastructure.

Downer is investing in operational technology,
“apps”, platforms and partnerships to meet
customer needs. Downer is focused on
selecting the right operational technology
investments, for example those that can be
leveraged across a number of service lines to
maximise value for the greatest number of
customers.

Risks to be managed include: intensification of
competition as customers converge into large
single market procurement channels;
introduction of foreign and technology based
competitors that bring a different value
proposition; and a need for greater investment
in technology and data services.

14

The following table provides an overview of the key prospects relevant to each of Downer’s service lines and
summarises Downer’s intended strategic response across each sector to maximise the Company’s
performance and realise future opportunities.

Service line Prospects Downer’s response
Transport The multi-billion dollar market for
transport infrastructure and services
continues to exhibit good growth in both
Australia and New Zealand. Governments
in both countries continue to invest in a
range of projects to reduce congestion,
improve mobility, and provide better
linkages between communities.
The cost of bidding for major projects is
high and project risks can be significant,
so Downer is selective about the projects
for which it bids.
Looking forward, potential outsourcing
and franchising opportunities across the
transport sector may further expand
Downer’s portfolio in public transport
operations.

Downer is a market leader in road
services in both Australia and New
Zealand, light rail construction in Australia
and heavy rail construction and
maintenance in Australia.
In recent years, Downer’s strategy has
focused on journey management, asset
stewardship, congestion management,
and urban revitalisation. The ability to
deal with these issues through
infrastructure services and solutions is
critical to driving the Downer business
forward and to provide increasing value to
Downer’s customers and their end
customers.
Downer maintains strong strategic
partnerships with leading global transport
solutions providers and, through this
model, is pursuing opportunities in rolling
stock manufacture and maintenance, and
transport network operations and
maintenance.
The Keolis Downer joint venture is a
leading Australian multi-modal transport
operator, through its light rail and bus
operations.
Utilities Growth across power and gas utility
markets is multi-faceted with a good
pipeline of prospects in both Australia and
New Zealand.
Activity in telecommunications markets
continues to be dynamic, with large
capital builds in both Australia and New
Zealand coming to a close. Downer’s
view is that the timing of these large
network builds will extend beyond most
analysts’ predictions. However, increasing
demand for data services will see a solid
baseload of activity in this sector
remains.
Downer has market leading positions in
the electricity, water, gas and
telecommunications sectors in both
Australia and New Zealand.
Downer is strongly positioned to take
advantage of the growth opportunities
available in these sectors, with a
demonstrable track record of excellence
in service delivery, and a greater focus on
introducing operational technology to
improve the value Downer brings to
customers.
Facilities Large-scale and long-term outsourcing
contracts continue come to market,
however the long-term nature of contracts
in this sector means that a lot of work is
already under contract.
The defence, health, education,
corrections, and commercial markets
continue to provide a range of
opportunities on the short-to-medium term
horizon in both Australia and New
Zealand.
Through the acquisition of Spotless,
Downer is now a major force in both
Australia and New Zealand with market
leading positions across key sectors
including: defence; health; education;
corrections; commercial; stadia and open
space management; leisure; and
resources.
There is a focus on leveraging both
businesses’ scale and routes to market to
position the Group’s core services
offerings in an integrated way.
15

Service line Prospects Downer’s response
EC&M New resources-related infrastructure
projects have appeared on the horizon,
while Downer expects the next round of
LNG opportunities to be smaller,
brownfield expansions.

Downer is a market leader in electrical
and instrumentation work, particularly in
the oil & gas sector, and is growing its
structural mechanical piping business.
Downer has experience working on all of
the recent Australian major oil & gas
developments. While the first phase of
major LNG construction comes to an end,
Downer is growing its market share in the
maintenance of these facilities.
Outside of oil & gas, Downer continues to
be a major player in the delivery of
resources related engineering,
construction and maintenance services
with long and enduring relationships with
all of Australia’s major mining and
industrial customers.
In 2018, Downer merged its Mining and
EC&M Divisions. This has enhanced
Downer’s ability to offer customers a
portfolio of complementary services in the
resources, energy, power generation and
industrial sectors. The Mining, Energy and
Industrial Division provides customers
with safe, quality, cost efficient and
technology-enabled solutions and
services.
Mining The contract mining sector has
experienced a recovery over the past 12
months, with volume increases at some
existing mines and new contracts also
coming to the market.
Mine owners are seeking to maximise
supply chain benefits, which opens
opportunities for contractors to work
collaboratively with them to drive
productivity improvements and reduce
production costs.
Downer is one of Australia's leading
diversified mining contractors offering
customers open cut mining services,
underground mining services, tyre
management, drill and blast, and asset
management.
In 2018, Downer merged its Mining and
EC&M Divisions. This has enhanced
Downer’s ability to offer customers a
portfolio of complementary services in the
resources, energy, power generation and
industrial sectors. The Mining, Energy and
Industrial Division provides customers
with safe, quality, cost efficient and
technology-enabled solutions and
services.

16

Auditor’s independence declaration

The auditor’s independence declaration, as required under Section 307C of the Corporations Act 2001, is set
out on page 18.

Signed in accordance with a resolution of the Directors.

On behalf of the Directors

R M Harding
Chairman
Sydney, 7 February 2019

17

KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.

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 is not in accordance with
the Corporations Act 2001, including:
•

giving a true and fair view

of the Group’s
financial position as at 31 December 2018
and of 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.
The Condensed Consolidated Half-year
Financial Report comprises:
•

Condensed Consolidated Statement of
Financial Position as at 31 December 2018
•

Condensed Consolidated Statement of Profit or
Loss and Other Comprehensive Income,
Condensed Consolidated Statement of
Changes in Equity and Condensed
Consolidated Statement of Cash Flows for the
half -year ended on that date
•

Notes A to E comprising a summary of
significant accounting policies and other
explanatory information
•

The Directors’ Declaration.
The Group 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.

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 and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001

•
for such internal control as the Directors determine is necessary to enable the preparation of the
Condensed Consolidated Half-year Financial Report that is free from material misstatement,
whether due to fraud or error.

19

KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under
Professional Standards Legislation.
Auditor’s responsibility for the review of the Condensed Consolidated Half-year Financial
Report
Our responsibility is to express a conclusion on the Condensed Consolidated Half-year Financial
Report based on our review. We conducted our review in accordance with Auditing Standard on
Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent
Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have
become aware of any matter that makes us believe that the Condensed Consolidated Half-year
Financial Report is not in accordance with the Corporations Act 2001 including: giving a true and fair
view of the Group’s financial position as at 31 December 2018 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. As auditor of Downer EDI Limited, ASRE 2410
requires that we comply with the ethical requirements relevant to the audit of the annual financial
report.
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.
In conducting our review, we have complied with the independence requirements of the Corporations
Act 2001.

KPMG

Cameron Slapp
Partner

Sydney
7 February 2019

20

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the half-year ended 31 December 2018
DecDec
2018
2017
Note
$'m
$'m
Revenue from ordinary activitiesB2(a)6,304.6 5,798.5
Other incomeB2(a)19.9 4.6
Total revenue and other income6,324.5 5,803.1
Employee benefits expenseB2(b)(2,254.5)(1,982.4)
Subcontractor costs(1,945.1)(1,734.7)
Raw materials and consumables used(1,057.5)(1,082.5)
Plant and equipment costs(339.1)(348.1)
Depreciation and amortisation D3,D4(176.4)(185.2)
Other expenses from ordinary activities (328.8)(427.8)
Total expenses(6,101.4)(5,760.7)
Share of net profit of joint ventures and associatesD513.5 9.9
Earnings before interest and tax236.6 52.3
Finance income4.1 3.4
Finance costs(46.2)(44.4)
Net finance costs(42.1)(41.0)
Profit before income tax194.5 11.3
Income tax expense(53.1)(27.2)
Profit / (Loss) after income tax141.4 (15.9)
Profit / (Loss) for the period is attributable to:
-Non-controlling interest7.2 (4.8)
-Members of the parent entity134.2 (11.1)
Profit / (Loss) for the period141.4 (15.9)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
-Exchange differences arising on translation of foreign operations7.8 (8.1)
-Net gain / (loss) on foreign currency forward contracts taken to equity4.2 (2.5)
-Net gain / (loss) on cross currency and interest rate swaps taken to equity1.3 (0.4)
-Available-for-sale reserve transferred to profit or loss - (0.6)
-Income tax relating to components of other comprehensive income(1.7)0.6
Other comprehensive income / (loss) for the period (net of tax)11.6 (11.0)
Other comprehensive income / (loss) for the period is attributable to:
-Non-controlling interest(0.6)0.7
-Members of the parent entity12.2 (11.7)
Other comprehensive income / (loss) for the period11.6 (11.0)
Total comprehensive income / (loss) for the period153.0 (26.9)
Earnings per share (cents)
-Basic earnings per shareB322.0 (2.6)
-
Diluted earnings per share
(i)
B321.7 (2.6)
(i)
The condensed consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes on pages 25 to 50.
At 31 December 2017, the ROADS are deemed anti-dilutive and consequently, diluted EPS remained at (2.6) cents per share.
21

Condensed Consolidated Statement of Financial Position
as at 31 December 2018
DecJun
2018
2018
Note
$'m
$'m
ASSETS
Current assets
Cash and cash equivalents 505.3 606.2
Trade and other receivablesD11,986.2 2,121.9
Other financial assets45.5 18.6
Inventories307.1 268.8
Current tax assets0.4 69.3
Prepayments and other assets42.4 48.8
Total current assets2,886.9 3,133.6
Non-current assets
Trade and other receivables72.3 117.7
Interest in joint ventures and associatesD595.6 96.0
Property, plant and equipmentD31,338.6 1,280.4
Intangible assetsD43,120.8 3,050.7
Other financial assets23.3 15.5
Deferred tax assets108.4 75.5
Prepayments and other assets16.2 18.8
Total non-current assets4,775.2 4,654.6
Total assets7,662.1 7,788.2
LIABILITIES
Current liabilities
Trade and other payablesD22,359.8 2,281.6
BorrowingsC19.9 153.7
Other financial liabilities55.1 43.2
Employee benefits provision347.0 336.7
Provisions72.6 50.7
Current tax liabilities32.5 15.7
Total current liabilities2,876.9 2,881.6
Non-current liabilities
Trade and other payables53.8 26.5
BorrowingsC11,426.1 1,367.5
Other financial liabilities20.8 34.2
Employee benefits provision38.3 38.0
Provisions120.9 65.1
Deferred tax liabilities110.0 170.2
Total non-current liabilities1,769.9 1,701.5
Total liabilities4,646.8 4,583.1
Net assets3,015.3 3,205.1
EQUITY
Issued capitalC32,425.1 2,421.9
ReservesC4(15.3)(26.9)
Retained earnings456.6 655.1
Parent interests2,866.4 3,050.1
Non-controlling interestD7148.9 155.0
Total equity3,015.3 3,205.1
The condensed consolidated statement of financial position should be read in conjunction with the accompanying notes
on pages 25 to 50.
22

Condensed Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2018
Dec 2018
$'m
Issued
capitalReserves
Retained
earnings
Total
attributable
to owners
of the
parent
Non-
controlling
interestTotal
Balance at 30 June 2018
2,421.9 (26.9)655.1 3,050.1 155.0 3,205.1
Opening balance adjustment on application of
AASB 15
(i)
- - (245.3)(245.3)(12.7)(258.0)
Balance at 1 July 2018
2,421.9 (26.9)409.8 2,804.8 142.3 2,947.1
Profit after income tax
- - 134.2 134.2 7.2 141.4
Other comprehensive income / (loss) for the
period (net of tax)
- 12.2 - 12.2 (0.6)11.6
Total comprehensive income for the period - 12.2 134.2 146.4 6.6 153.0
Vested executive incentive share transactions
3.2 (3.2) - - - -
Share-based employee benefits expense
- 1.6 - 1.6 - 1.6
Income tax relating to share-based transactions
during the period
- 1.0 - 1.0 - 1.0
Payment of dividends
(ii)
- - (87.4)(87.4) - (87.4)
Balance at 31 December 2018
2,425.1 (15.3)456.6 2,866.4 148.9 3,015.3
Dec 2017
$'m
Issued
capitalReserves
Retained
earnings
Total
attributable
to owners
of the
parent
Non-
controlling
interestTotal
Balance at 1 July 20172,421.8 (10.9)740.4 3,151.3 435.2 3,586.5
Profit after income tax - - (11.1)(11.1)(4.8)(15.9)
Other comprehensive (loss) / income for the
period (net of tax)
- (11.7) - (11.7)0.7 (11.0)
Total comprehensive loss for the period - (11.7)(11.1)(22.8)(4.1)(26.9)
Capital raising costs net of tax(0.1) - - (0.1) - (0.1)
Vested executive incentive shares transactions0.2 (0.2) - - - -
Share-based employee benefits expense - 2.0 - 2.0 - 2.0
Income tax relating to share-based transactions
during the period
- 0.5 - 0.5 - 0.5
Payment of dividends
(i)
- - (75.3)(75.3) - (75.3)
Acquisition of non-controlling interest - - - - (280.6)(280.6)
Balance at 31 December 2017
2,421.9 (20.3)654.0 3,055.6 150.5 3,206.1
The condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes on
pages 25 to 50.
(i)
Refer to Note E1 for details on opening balance adjustments made on application of new accounting standards.
(ii)
Payment of dividend relates to the 2018 final dividend and $4.1m ROADS dividends paid during the financial period.
(i)
Payment of dividend relates to the 2017 final dividend and $4.0m ROADS dividends paid during the financial period.
23

Condensed Consolidated Statement of Cash Flows
for the half-year ended 31 December 2018
Dec
Dec
2018
2017
Note
$'m
$'m
Cash flows from operating activities
Receipts from customers7,260.7 6,446.5
Distributions from equity accounted investeesD510.1 7.3
Payments to suppliers and employees(6,911.7)(6,121.7)
Interest received3.8 4.1
Interest and other costs of finance paid(39.1)(38.4)
Income tax received31.5 9.3
Net cash generated by operating activities 355.3 307.1
Cash flows from investing activities
Proceeds from sale of property, plant and equipment7.7 13.1
Payments for property, plant and equipment(183.1)(201.5)
Payments for intangible assets(14.5)(29.2)
Payments for acquisition of Spotless - (391.8)
Payments for businesses acquiredD7(46.0)(37.6)
Divestment of Freight RailD7(6.9) -
Advances to joint ventures(8.3)(4.9)
Payments for leased assets(16.3) -
Proceeds from sale of assets - 4.5
Recovery of acquisition of business1.7 -
Net cash used in investing activities(265.7)(647.4)
Cash flows from financing activities
Issue of shares (net of costs) - (0.2)
Proceeds from borrowings 1,008.3 498.8
Repayments of borrowings(1,114.6)(435.1)
Dividends paid(87.4)(75.3)
Net cash used in financing activities(193.7)(11.8)
Net decrease in cash and cash equivalents(104.1)(352.1)
Cash and cash equivalents at the beginning of the period606.2 844.6
Effect of exchange rate changes3.2 (2.1)
Cash and cash equivalents at the end of the period505.3 490.4
The condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes on
pages 25 to 50.
24

Notes to the condensed consolidated financial report
for the half-year ended 31 December 2018
About this report
Statement of compliance and basis of preparation
Rounding of amounts
Accounting estimates and judgements
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 2018 Annual Report except for
the new significant judgements and key sources of estimation uncertainty related to the adoption of the new revenue
standard AASB 15 Revenue from Contracts with Customers during the six months to 31 December 2018, which are
described in Note E1.
The Half Year Financial Report does not include full note disclosures of the type required in an Annual Report.
A
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.
The Financial Report does not include all the information required for an annual financial report and should be read in
conjunction with the 2018 Annual Report.
The Financial Report was authorised for issue by the Directors on 7 February 2019.
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.
The Group has initially adopted these new accounting standards and their impact is disclosed in Note E1. In accordance
with elections available under the relevant accounting standards, new accounting policies are only effective from 1 July
2018 and comparative information is not restated and continues to be prepared under policies disclosed in the 30 June
2018 Financial Report.
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.
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 reporting period except for the adoption of the new revenue standard
AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments during the six months to 31
December 2018.
25

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
Business performance
B1.Segment informationB3.Earnings per share
B2.Profit from ordinary activitiesB4.Subsequent events
B1. Segment information
Dec 2018
$'mTransportUtilities
Facilities
EC&MMining Total
Revenue and other income
1,792.6 1,212.5 1,663.0 945.1 688.1 25.3 6,326.6
Inter-segment sales
- - - - - (2.1)(2.1)
1,792.6 1,212.5 1,663.0 945.1 688.1 23.2 6,324.5
268.4 - 4.0 - 26.1 - 298.5
2,061.0 1,212.5 1,667.0 945.1 714.2 23.2 6,623.0
87.9 64.7 81.3 22.4 36.9 (25.2)268.0
(0.4)(1.6)(5.9) - - (23.5)(31.4)
87.5 63.1 75.4 22.4 36.9
(48.7)236.6
Dec 2017
$'m
TransportUtilities
Facilities
EC&MMining Total
Revenue and other income1,786.3 950.9 1,711.6 690.5668.4
22.9
5,830.6
Inter-segment sales - - - - - (27.5)(27.5)
1,786.3 950.9 1,711.6
690.5
668.4 (4.6)5,803.1
258.5 - 3.5 14.3 21.1 - 297.4
2,044.8 950.9 1,715.1 704.8 689.5 (4.6)6,100.5
80.1 54.1 77.0 23.5 20.9 (172.6)83.0
(0.1)(1.0)(5.5) - - (24.1)(30.7)
80.0 53.1 71.5 23.5 20.9 (196.7)52.3
(i)
This is a non-statutory disclosure as it relates to Downer's share of revenue from equity accounted joint ventures and associates.
Total reported segment results
(EBIT)
Amortisation of acquired
intangibles
Amortisation of acquired
intangibles
Share of sales revenue from joint
ventures and associates
(i)
Total reported segment results
(EBIT)
EBIT before amortisation of
acquired intangibles (EBITA)
B
Total revenue including joint
ventures and other income
(i)
Total segment revenue and
other income
During the period, the composition of business units within operating segments was realigned to better reflect how the
Group’s chief operating decision maker assesses performance and allocates Group resources. As a result, the
Infrastructure Projects NZ, Building Projects NZ and Defence business units (previously reported as part of the EC&M
segment), were reallocated to the Transport, Facilities and Utilities segments respectively; the UASG business unit
(previously reported as part of the Facilities segment) has been reallocated to the Utilities segment; and the Rail
Services business unit (previously the Rail segment) has been included as part of the Transport segment. The new
structure better aligns the segment reporting with Downer’s end-markets and management reporting structure.
Accordingly, the Group has restated the previously reported segment information for the half year ended 31 December
2017. The reportable segments identified within the Group are outlined below:
An operating segment is a component of an entity that engages in business activities from which it may earn revenue
and incur expenses. The operating segments have been identified based on the nature of the service provided and the
internal reports that are reviewed regularly by the Group CEO in assessing performance and in determining the
allocation of resources.
Un-
allocated
Un-
allocated
Share of sales revenue from joint
ventures and associates
(i)
Total revenue including joint
ventures and other income
(i)
Total segment revenue and
other income
EBIT before amortisation of
acquired intangibles (EBITA)
26

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
B1. Segment information - continued
Reconciliation of segment net operating profit to net profit / (loss) after tax:
Dec
Dec
2018
2017
Note $'m
$'m
Segment net operating profit285.3 249.0
Unallocated:
Mining goodwill impairment - (76.4)
Divestment of Freight Rail - (49.3)
Spotless management redundancies and integration costs - (3.1)
Spotless residual strategy reset costs - (7.1)
Spotless integration costs - (3.4)
Amortisation of Spotless and Tenix acquired intangible assets(23.5)(24.1)
Fair value gain on revaluation of existing interest in Downer Mouchel Joint VentureD717.0 -
Corporate costs(42.2)(33.3)
Total unallocated (48.7)(196.7)
Earnings before interest and tax236.6 52.3
Net finance costs(42.1)(41.0)
Profit before income tax194.5 11.3
Income tax expense(53.1)(27.2)
Profit / (loss) after income tax141.4 (15.9)
B2. Profit from ordinary activities
a) Revenue and other income
Dec 2018
$'mTransportUtilities
Facilities
EC&MMining Total
Service revenue1,251.9 683.4 1,150.4 457.0 684.5 (2.2)4,225.0
Construction contracts435.9 528.5 416.5 475.8 - - 1,856.7
Sale of goods100.6 0.5 96.1 7.2 2.2 - 206.6
1,788.4 1,212.4 1,663.0 940.0 686.7 (2.2)6,288.3
Other revenue3.8 - - 4.7 0.2 7.6 16.3
1,792.2 1,212.4 1,663.0 944.7 686.9 5.4 6,304.6
Other income0.4 0.1 - 0.4 1.2 17.8 19.9
Total revenue and other income1,792.6 1,212.5 1,663.0 945.1 688.1 23.2 6,324.5
268.4 - 4.0 - 26.1 - 298.5
2,061.0 1,212.5 1,667.0 945.1 714.2 23.2 6,623.0
Dec 2017
$'m
TransportUtilities
Facilities
EC&MMining Total
Service revenue1,119.7 613.6 1,289.5 312.6 663.5 (27.1)3,971.8
Construction contracts553.6 335.9 379.6 368.6 - - 1,637.7
Sale of goods105.0 0.5 42.5 8.5 1.3 - 157.8
1,778.3 950.0 1,711.6 689.7 664.8 (27.1)5,767.3
Other revenue6.9 0.9 - 0.7 0.4 22.3 31.2
1,785.2 950.9 1,711.6 690.4 665.2 (4.8)5,798.5
Other income1.1 - - 0.1 3.2 0.2 4.6
Total revenue and other income1,786.3 950.9 1,711.6 690.5 668.4 (4.6)5,803.1
258.5 - 3.5 14.3 21.1 - 297.4
2,044.8 950.9 1,715.1 704.8 689.5 (4.6)6,100.5
(i)
This is a non-statutory disclosure as it relates to Downer's share of revenue from equity accounted joint ventures and associates.
Segment results
Un-
allocated
Total revenue from ordinary
activities
Share of sales revenue from joint
ventures and associates
(i)
Total revenue including joint
ventures and other income
(i)
Total revenue from ordinary
activities
Share of sales revenue from joint
ventures and associates
(i)
Total revenue from contracts
with customers
Total revenue from contracts
with customers
Total revenue including joint
ventures and other income
(i)
Un-
allocated
27

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
B2. Profit from ordinary activities - continued
Revenue by geographical locations:
Dec 2018
$'mTransportUtilities
Facilities
EC&MMining Total
Australia1,292.9 982.6 1,185.8 933.6 662.0 23.0 5,079.9
Pacific and New Zealand499.7 229.9 477.2 - - - 1,206.8
Rest of world - - - 11.5 26.1 0.2 37.8
Total revenue and other income1,792.6 1,212.5 1,663.0 945.1 688.1 23.2 6,324.5
Dec 2017
$'m
TransportUtilities
Facilities
EC&MMining Total
Australia1,239.5 739.0 1,263.8 679.4 643.8 (5.3)4,560.2
Pacific and New Zealand546.8 211.9 447.8 2.1 - 0.7 1,209.3
Rest of world - - - 9.0 24.6 - 33.6
Total revenue and other income1,786.3 950.9 1,711.6 690.5 668.4 (4.6)5,803.1
b) Operating expenses
Dec
Dec
2018
2017
$'m
$'m
Employee benefits expense:
- Defined contribution plans
115.0 109.8
- Share-based employee benefits expense
1.6 2.0
- Employee benefits2,137.9 1,870.6
Total employee benefits expense
2,254.5 1,982.4
Operating lease expenses relating to land and building39.1 44.1
Operating lease expenses relating to plant and equipment58.9 62.4
Total operating lease expense98.0 106.5
Un-
allocated
Un-
allocated
28

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
B3. Earnings per share
Basic earnings per share
DecDec
20182017
Profit / (Loss) attributable to members of the parent entity ($'m)134.2 (11.1)
Adjustment to reflect ROADS dividends paid ($'m)(4.1)(4.0)
Profit / (Loss) attributable to members of the parent entity used in calculating EPS ($'m)130.1 (15.1)
Weighted average number of ordinary shares (WANOS) on issue (m's)
(i)
591.1 590.5
Basic earnings / (loss) per share (cents per share)22.0 (2.6)
Diluted earnings per share
DecDec
20182017
Profit / (Loss) attributable to members of the parent entity ($'m)134.2 (11.1)
Weighted average number of ordinary shares
- Weighted average number of ordinary shares (WANOS) on issue (m's)
(i)(ii)
591.9 590.5
- WANOS adjustment to reflect potential dilution for ROADS (m's)
(iii)
27.2 27.6
WANOS used in the calculation of diluted EPS (m's)619.1 618.1
Diluted earnings / (loss) per share (cents per share)
(iv)
21.7 (2.6)
(i)
(ii)
(iii)
(iv)
B4. Subsequent events
a)
The Group's operations in future financial years;
b)The results of those operations in future financial years; or
c)The Group's state of affairs in future financial years.
The WANOS on issue has been adjusted by the weighted average effect of the unvested executive incentive shares.
For diluted EPS, the WANOS has been further adjusted by the potential vesting of executive incentive shares.
The calculation of basic earnings per share (EPS) is based on the profit / (loss) attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding.
At the date of this report there is no matter or circumstance that has arisen since the end of the period, that has
significantly affected, or may significantly affect:
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 $190.3 million (December 2017: $182.0 million), divided by the average market price of the
Company's ordinary shares for the period 1 July 2018 to 31 December 2018 discounted by 2.5% according to the ROADS
contract terms, which was $6.99 (December 2017: $6.59).
At 31 December 2017, the ROADS were deemed anti-dilutive and consequently, diluted EPS remained at (2.6) cents per share.
The calculation of diluted EPS is based on the 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.
29

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
Capital structure and financing
C1. BorrowingsC4. Reserves
C2. Financing facilitiesC5. Dividends
C3. Issued capital
C1. Borrowings
Dec
Jun
2018
2018
$'m
$'m
Current
Secured:
-Finance lease liabilities 3.9 5.1
-Hire purchase liabilities - 0.2
3.9 5.3
Unsecured:
-Bank loans - 2.1
-USD private placement notes9.9 -
-Medium term notes - 150.0
-Deferred finance charges(3.9)(3.7)
6.0 148.4
Total current borrowings9.9 153.7
Non-current
Secured:
-Finance lease liabilities 10.2 11.2
10.2 11.2
Unsecured:
-Bank loans 872.7 817.7
-USD private placement notes141.8 144.7
-AUD private placement notes30.0 30.0
-Medium term notes250.0 250.0
-JPY medium term notes128.3 122.2
-Deferred finance charges(6.9)(8.3)
1,415.9 1,356.3
Total non-current borrowings1,426.1 1,367.5
Total borrowings1,436.0 1,521.2
Fair value of total borrowings
(i)
1,484.2 1,561.8
(i)
Excludes finance lease, hire purchase and supplier finance liabilities.
C
30

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
C2. Financing facilities
Dec
Jun
2018
2018
$'m
$'m
Syndicated bank loan facilities710.0 780.0
Bilateral bank loan facilities145.0 145.0
Total unutilised bank loan facilities855.0 925.0
Syndicated and bilateral bank and bilateral insurance bonding facilities752.8 574.3
Total unutilised bonding facilities752.8 574.3
Summary of borrowing arrangements
Bank loan facilities
-
Bilateral bank loan facilities:
-
Syndicated loan facilities:
USD private placement notes
AUD private placement notes
Medium Term Notes (MTNs)
The Group has the following unsecured MTNs on issue:
- $250.0 million maturing March 2022; and
- JPY10.0 billion maturing May 2033.
USD unsecured private placement notes are on issue for a total amount of US$107.0 million. US$7.0 million notes
mature in September 2019 and US$100.0 million in July 2025. The USD denominated principal and interest amounts
have been fully hedged against the Australian dollar through cross-currency interest rate swaps.
AUD unsecured private placement notes are on issue for a total amount of $30.0 million with a maturity date of July
2025.
The JPY denominated principal and interest amounts have been fully hedged against the Australian dollar through
cross-currency interest rate swaps.
A total of $225.0 million in bilateral bank loan facilities are committed and unsecured facilities with maturities in
calendar years 2019, 2020 and 2021.
- $200 million revolving tranche maturing May 2022; and
- $200 million revolving tranche maturing May 2023.
- NZD75 million revolving tranche maturing May 2021;
- $280 million revolving tranche maturing May 2022;
- $200 million term tranche maturing May 2022;
- NZD75 million term tranche maturing May 2021;
The syndicated bank loan facilities are unsecured, committed facilities and comprised of Australian Dollar and New
Zealand Dollar tranches as follows:
- $200 million revolving tranche maturing April 2021;
- $280 million revolving tranche maturing May 2021;
At reporting date, the Group had the following facilities that were unutilised:
31

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
C2. Financing facilities - continued
Finance lease / Hire purchase facilities
Covenants on financing facilities
Bonding
Refinancing requirements
Credit ratings
The Group has certain secured facilities of these types which are for an aggregate amount of $14.1 million and which
amortise over different periods of up to three years.
Downer Group’s financing facilities contain undertakings to comply with financial covenants and ensure that Group
guarantors of these facilities collectively meet the minimum threshold amounts of Group EBIT and Group Total Tangible
Assets.
Where existing facilities approach maturity, the Group will negotiate with existing and, where required, with new financiers
to extend the maturity date or refinance these facilities. 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.
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 debt and bonding facilities, to reflect the weaker credit risk profile.
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 has the flexibility in respect of certain committed facility amounts (shown as part of the unutilised bilateral bank
loan facilities) which can at the election of the Group be utilised to provide additional bonding capacity.
The main financial covenants which the Group is subject to are Net Worth, Interest Service Coverage (rolling 12-month
EBIT to Net Interest Expense) and Leverage (Net Debt to Total Capitalisation).
Financial covenants testing is undertaken and reported to the Downer Board on a monthly basis. Reporting of financial
covenants to financiers occurs semi-annually for the rolling 12-month periods to 30 June and 31 December. The Downer
Group was in compliance with all its financial covenants as at 31 December 2018.
Spotless’ financing facilities contain undertakings to comply with financial covenants. The main financial covenants that
Spotless is subject to are Net Leverage (Net Debt to EBITDA) and Interest Service Coverage (rolling 12-month EBITDA to
Net Total Cash Interest) as well as ensuring that the guarantors under various facilities collectively meet the minimum
threshold amounts of Group EBITDA and Group Total Assets.
Financial covenants testing is undertaken and reported to the Spotless Board on a monthly basis. Reporting of financial
covenants to financiers occurs on a semi-annual basis. Spotless was in compliance with all its financial covenants as at
31 December 2018.
The Group has $2,269.7 million of bank guarantee and insurance bond facilities to support its contracting activities.
$1,337.5 million of these facilities are provided to the Group on a committed basis and $932.2 million on an uncommitted
basis. Included in these facilities is a syndicated $210.0 million committed revolving bank guarantee facility for the specific
purpose of a passenger rail manufacturing contract and of which $153.1 million is utilised and $56.9 million is unutilised.
The Group’s bonding facilities are provided by a number of banks and insurance companies on an unsecured and
revolving basis. These facilities are supported by Group guarantees representing certain minimum threshold amounts of
Group EBIT and Group Total Tangible Assets (for Downer) and Group EBITDA and Group Total Assets (for Spotless).
$1,516.9 million (refer to Note D6) of these facilities were utilised as at 31 December 2018 with $752.8 million unutilised.
These facilities have varying maturity dates between calendar years 2019 and 2021.
32

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
C3. Issued capital
Dec
Jun

2018
2018
$'m
$'m
Ordinary shares
594,702,512 ordinary shares (Jun 2018: 594,702,512) 2,263.1 2,263.1
Unvested executive incentive shares
3,385,446 ordinary shares (Jun 2018: 4,207,358)(16.6)(19.8)
200,000,000 Redeemable Optionally Adjustable
Distributing Securities (ROADS) (Jun 2018: 200,000,000) 178.6 178.6
2,425.1 2,421.9
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
Fully paid ordinary share capital
Balance at the beginning of the financial period / year594.7 2,263.1 594.7 2,263.2
Capital raising costs net of tax - - - (0.1)
Balance at the end of the financial period / year 594.7 2,263.1 594.7 2,263.1
b) Unvested executive incentive shares
Balance at the end of the financial period / year 4.2 (19.8)4.3 (20.0)
Vested executive incentive share transactions
(i)
(0.8)3.2 (0.1)0.2
Balance at the end of the financial period / year 3.4 (16.6)4.2 (19.8)
(i)
c) Redeemable Optionally Adjustable Distributing
Securities (ROADS)
m's $'m
m's $'m
200.0 178.6 200.0 178.6
2018
Dec
Dec
Jun
2018
2018
2018
Jun
Balance at the beginning and at the end of the financial period /
year
December 2018 figures referable to the 2015 LTI plan, second deferred component of the 2016 STI award and first deferred
component of the 2017 STI award totalling 821,912 vested shares for a value of $3,166,042.
June 2018 figures referable to the second deferred component of the 2015 STI award and the first deferred component of the 2016
STI award totalling 50,015 vested shares for a value of $192,660.
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.
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 2018 is 6.15% per annum (2017: 6.05% per
annum) which is equivalent to the one year swap rate on 15 June 2018 plus the Step-up Margin of 4.05% per annum.
33

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
C4. Reserves
Hedge
reserve
Foreign
currency
translation
reserve
Employee
benefits
reserve
Fair value
through
OCI
reserve
(i)
Total
attributable
to members
of the
parent
Balance at 1 July 2018(13.0)(26.8)15.5 (2.6)(26.9)
Foreign currency translation difference - 8.3 - - 8.3
Change in fair value of cash flow hedges (net of tax)
3.9 - - - 3.9
Total comprehensive income for the period3.9 8.3 - - 12.2
Vested executive incentive share transactions - - (3.2) - (3.2)
Share-based employee benefits expense - - 1.6 - 1.6
- 1.0 - 1.0
Balance at 31 December 2018(9.1)(18.5)14.9 (2.6)(15.3)
(i)
Hedge
reserve
Foreign
currency
translation
reserve
Employee
benefits
reserve
Available-
for-sale
revaluation
reserve
Total
attributable
to members
of the
parent
Balance at 1 July 2017(6.2)(18.0)14.1 (0.8)(10.9)
Foreign currency translation difference - (8.7) - - (8.7)
Change in fair value of cash flow hedges (net of tax)
(2.4) - - - (2.4)
Change in fair value of available-for-sale assets - - - (0.6)(0.6)
Total comprehensive income for the period(2.4)(8.7) - (0.6)(11.7)
Vested executive incentive share transactions - - (0.2) - (0.2)
Share-based employee benefits expense - - 2.0 - 2.0
- - 0.5 - 0.5
Balance at 31 December 2017(8.6)(26.7)16.4 (1.4)(20.3)
Hedge reserve
Foreign currency translation reserve
Employee benefit reserve
Fair value through OCI reserve
Available-for-sale revaluation reserve
The hedge reserve comprises the effective portion of the cumulative net change in the fair value cash flow hedging
instruments relating to future transactions.
The fair value reserve includes the cumulative net movement above cost of the fair value of available-for-sale investment
until the asset is realised or impaired or control of an acquiree is obtained at which time the cumulative gain or loss
previously recognised in the available-for-sale revaluation reserve is included in the profit or loss.
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.
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.
The fair value reserve comprises the cumulative net change in the fair value of equity securities designated at FVOCI
(2017: available-for-sale financial assets) and the cumulative net change in fair value of debt securities at FVOCI (2017:
available-for-sale financial assets) until the assets are derecognised or reclassified. This amount is reduced by the
amount of loss allowance.
Income tax relating to share-based transactions
during the period
-
Dec 2018
$'m
Income tax relating to share-based transactions
during the period
Dec 2017
$'m
Before 1 July 2018, these reserves were classified in the available-for-sale revaluation reserve in accordance with AASB 139. From
1 July 2018, these are classified at Fair Value through Other Comprehensive Income (FVOCI) in accordance with AASB 9.
34

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
C5. Dividends
a) Ordinary shares
Dividend per share (in Australian cents)14.0 14.0 13.0 12.0
Franking percentage50%50%50%100%
Cost (in $'m)83.3 83.3 77.3 71.4
Dividend record date21/2/1930/8/187/3/1812/9/17
Payment date21/3/1927/9/184/4/1810/10/17
b) Redeemable Optionally Adjustable Distributing Securities (ROADS)
2019Quarter 1Quarter 2Total
Dividend per ROADS (in Australian cents)1.01 1.05 2.06
100%100%100%
Cost (in A$'m)2.0 2.1 4.1
Payment date17/9/1817/12/18
2018Quarter 1Quarter 2Quarter 3Quarter 4Total
Dividend per ROADS (in Australian cents)1.00 0.99 1.02 1.00 4.01
100%100%100%100%100%
Cost (in A$'m)2.0 2.0 2.0 2.0 8.0
Payment date15/9/1715/12/1715/3/1815/6/18
New Zealand imputation credit percentage
New Zealand imputation credit percentage
2019
Interim
2018
Final
2018
Interim
2017
Final
The interim 2019 dividend has not been declared as at reporting date and therefore is not reflected in the condensed
consolidated financial report.
35

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
Other disclosures
D1. Trade and other receivablesD4. Intangible assetsD6. Contingent liabilities
D2. Trade and other payables
D3. Property, plant and equipment
D1. Trade and other receivables
Dec
Jun
2018
2018
Current $'m
$'m
Trade receivables
726.3
842.0
Allowance for doubtful debts
(20.4)
(15.3)
705.9
826.7
Contract assetsD1(a)
1,178.1
1,219.9
Other receivables
102.2
75.3
1,986.2
2,121.9
a) Contract asset / liability balances
Dec
Jun
2018
2018
Current $'m
$'m
Contract assets and capitalised costs to fulfill contracts
1,159.3
1,203.4
Retentions
18.8
16.5
Total contract assets1,178.1
1,219.9
Total contract assets
1,178.1 1,219.9
Total contract liabilitiesD2
(387.0)
(410.2)
Net amount791.1
809.7
D2. Trade and other payables
Dec
Jun
2018
2018
$'m
$'m
Current
Trade payables837.2
674.2
Contract liabilitiesD1(a)
387.0
410.2
Accruals1,017.2
1,084.4
Other
118.4
112.8
2,359.8
2,281.6
D
D5. Joint arrangements and associate
entities
D7. Acquisition and disposal of
businesses
36

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
D3. Property, plant and equipment
$'mTotal
Carrying amount as at 1 July 2018
118.8 1,106.3 14.1 41.2 1,280.4
Additions
0.3 168.8 1.8 15.7 186.6
Disposals at net book value
(5.4)(0.5) - - (5.9)
Acquisition of businesses
(i)
0.1 6.4 - - 6.5
Depreciation expense
(1.7)(109.0)(3.0)(16.3)(130.0)
0.4 0.4 0.1 0.1 1.0
112.5 1,172.4 13.0 40.7 1,338.6
Cost
150.6 2,623.2 36.0 87.5 2,897.3
Accumulated depreciation
(38.1)(1,450.8)(23.0)(46.8)(1,558.7)
Jun 2018
Carrying amount as at 1 July 2017 (restated)
(iii)
129.4 1,061.2 52.3 37.5 1,280.4
Additions0.5 322.9 7.9 36.2 367.5
Disposals at net book value(5.6)(14.9)(14.4) - (34.9)
Acquisition of businesses - 3.2 7.6 1.5 12.3
Disposal of business at net book value - (60.0) - - (60.0)
Depreciation expense(5.1)(229.5)(10.3)(33.4)(278.3)
Reclassifications at net book value - 26.5 (29.1)2.6 -
Reclassified as intangible assets
(ii)
- (0.3) - - (0.3)
(0.4)(2.8)0.1 (3.2)(6.3)
Closing net book value as at 30 June 2018118.8 1,106.3 14.1 41.2 1,280.4
Cost155.1 2,488.7 34.1 74.0 2,751.9
Accumulated depreciation(36.3)(1,382.4)(20.0)(32.8)(1,471.5)
(i)
(ii)
Refers to the reclassification of software from Capital work in progress to Intangible assets.
(iii)
Closing net book value as at 31 December 2018
Plant,
equipment
and
leasehold
improve-
ments
Net foreign currency exchange
differences at net book value
Laundries
rental
stock
Equipment
under
finance
lease
Freehold
land and
buildings
Dec 2018
Net foreign currency exchange
differences at net book value
The values recognised are based on the fair value of assets acquired from the business acquisitions made during the period ended
31 December 2018, for which the accounting on certain transactions remains provisional. Refer to Note D7.
June 2017 balances were restated to reflect the impact of acquisition accounting adjustments made on opening balances.
37

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
D4. Intangible assets
Dec 2018
$'m
Goodwill
Total
2,351.5 381.1 74.7 2.2 241.2 3,050.7
Additions
- - - - 14.5 14.5
Disposal at net book value
- - - - (0.4)(0.4)
Acquisition of businesses
(i)
66.5 30.2 - - 0.5 97.2
Amortisation expense
- (29.4)(1.9)(0.1)(15.0)(46.4)
4.3 - 0.4 - 0.5 5.2
2,422.3 381.9 73.2 2.1 241.3 3,120.8
Cost
2,574.7 494.1 79.3 2.4 402.5 3,553.0
(152.4)(112.2)(6.1)(0.3)(161.2)(432.2)
Jun 2018
2,341.1 409.1 56.9 3.5 220.6 3,031.2
Additions - - - - 46.4 46.4
Disposal at net book value - - - - (0.2)(0.2)
Acquisition of businesses105.0 34.5 21.7 (1.1) - 160.1
Disposal of business at net book value
(14.2) - - - - (14.2)
Reclassifications at net book value
(ii)
- - - - 0.3 0.3
Amortisation expense - (62.6)(3.9)(0.2)(25.2)(91.9)
Impairment of goodwill(76.4) - - - - (76.4)
(4.0)0.1 - - (0.7)(4.6)
2,351.5 381.1 74.7 2.2 241.2 3,050.7
Cost2,503.9 463.8 78.7 2.4 394.9 3,443.7
(152.4)(82.7)(4.0)(0.2)(153.7)(393.0)
(i)
(ii)
(iii)
Net foreign currency exchange
differences at net book value
Closing net book value as at
31 December 2018
Carrying amount as at 1 July 2018
Customer
contracts
and
relationships
Accumulated amortisation and
impairment
Closing net book value as at
30 June 2018
Carrying amount as at 1 July 2017
(restated)
(iii)
Net foreign currency exchange
differences at net book value
Software
and system
develop-
ment
Brand
names on
acquisition
Intellectual
property on
acquisition
Refers to the reclassification of software from Capital work in progress to Intangible assets.
June 2017 balances were restated to reflect the impact of acquisition accounting adjustments made on opening balances.
Accumulated amortisation and
impairment
The values recognised are based on the fair value of assets acquired from the business acquisitions made during the period ended
31 December 2018, for which the accounting on certain transactions remains provisional. Refer to Note D7.
38

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
D5. Joint arrangements and associate entities
Dec
Dec
2018
2017
$'m
$'m
Interest in joint ventures at the beginning of the period
21.2
19.0
Share of net profit
7.3
7.2
Share of distributions
(10.1)
(7.3)
Foreign currency exchange differences
0.2
(0.2)
Interest in joint ventures at the end of the period18.6
18.7
Interest in associates at the beginning of the period
74.8
69.0
Share of net profit
6.2
2.7
Ownership acquired
(4.0)
-
Interest in associates at the end of the period77.0
71.7
Interest in joint ventures and associates95.6
90.4
Dec
Dec
2018
2017
Principal activity%
%
Joint ventures
Allied Asphalt LimitedAsphalt plantNew Zealand
50 50
Australia50 50
Bitumen Importers Australia Pty LtdBitumen importerAustralia
50 50
Eden Park Catering LimitedNew Zealand
50 50
Australia
50 50
Emulco LimitedEmulsion plantNew Zealand
50 50
Isaac Asphalt Limited New Zealand
50 50
RTL Mining and Earthworks Pty Ltd Australia
44 44
VEC Shaw Joint VentureAustralia
50 50
Waanyi Downer JV Pty Ltd Australia
50 -
ZFS Functions (Pty) LtdAustralia
50 50
Associates
MHPS Plant Services Pty LtdAustralia
(i)
27
Keolis Downer Pty LtdAustralia
49 49
(i)
D6. Contingent liabilities
Dec
Jun
2018
2018
$'m
$'m
Bonding
1,516.9
1,341.6
Refurbishment, construction and
maintenance of boilers
Downer acquired the remaining 73.33% of MHPS Plant Services Pty Ltd on 30 August 2018. Refer to Note D7. The entity name has
been subsequently changed to DMH Plant Services Pty Ltd during the half-year ended 31 December 2018.
Operation and maintenance of Gold
Coast light rail, Melbourne tram network
and bus operation
There are no material commitments held by joint ventures or associates. All joint ventures and associates have a statutory
reporting date of 30 June.
Contract mining; civil works and plant hire
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.
Contract mining services
EDI Rail-Bombardier
Transportation Pty Ltd
Manufacture and supply of asphalt
The Group has interests in the following joint ventures and associates which are equity accounted:
Name of arrangement
Ownership interest
Sale and maintenance of railway rolling
stock
Country of
operation
Catering for functions at Eden Park
Construction of bitumen storage facilityBitumen Importers Australia Joint
Venture
Road construction
The Group has bid bonds and performance bonds issued in respect of contract
performance in the normal course of business for controlled entities
Catering for functions at Federation
Square
39

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
D6. Contingent liabilities - continued
Other contingent liabilities
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
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.
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.
The Group carries the normal contractor’s and consultant’s 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.
Several New Zealand entities in the Group have been named as co-defendants in “leaky building” claims. The leaky
building claims where Group entities are co-defendants generally relate to water damage arising from historical design
and construction methodologies (and certification) for residential and other buildings in New Zealand during the early-
mid 2000s. The Directors are of the opinion that disclosure of any further information relating to the leaky building claims
would be prejudicial to the interests of the Group.
On 16 September 2015, the Group announced that it had terminated a contract with Tecnicas Reunidas S.A. (“TR”)
following TR’s failure to remedy a substantial breach of the contract and that the Group is pursuing a claim against TR in
the order of $65 million. Downer has since demobilised from the site and has commenced a claim that will be
determined via an arbitration process, with a hearing date currently expected to occur in late calendar year 2019 or early
2020. TR has initiated a counter-claim, which is being defended by Downer. The Directors are of the opinion that
disclosure of any further information relating to this matter would be prejudicial to the interests of the Group.
On 25 May 2017, Alison Court, as applicant, filed a representative proceeding in the Federal Court of Australia on behalf
of shareholders who acquired Spotless shares from 25 August 2015 to 1 December 2015. The applicant under this
proceeding alleges that Spotless engaged in misleading or deceptive conduct and/or breached its continuous disclosure
obligations in relation to Spotless financial results for the financial year ended 30 June 2015 and in its conduct following
the release of those financial results until Spotless issued its trading update of 2 December 2015. The applicant seeks
damages, declarations, interest and costs. Spotless is vigorously defending the proceeding.
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.
In September 2017 Spotless commenced a Facilities Management Subcontract (‘Subcontract’) at the new Royal
Adelaide Hospital (‘nRAH’). Spotless’ Subcontract is with Celsus, which has a head contract with the South Australian
Government under a Public Private Partnership model.
Spotless has previously announced that the Subcontract is a cash negative underperforming contract and that Spotless
is working to resolve various commercial and operational issues which include significant preliminary claims and counter
claims (including the application of some abatements, which are disputed by Spotless). The Process Suspension Deed
signed by the parties in June 2018 has expired however discussions between Spotless, Celsus and the South
Australian Government are ongoing. The mediation process that commenced in June 2018 is continuing and the parties
are engaging in discussions to address the various commercial and operational issues affecting the delivery of services
at the nRAH.
In the event that Spotless is not successful in either reaching agreement as part of the discussions or via the dispute
resolution process then Spotless is likely to incur operating losses up until September 2022, being the 5 year
anniversary of the Subcontract term, at which point Spotless has the ability to trigger a re-pricing process. In this
scenario, Management recorded a provision for the present value of the future losses of $67.1 million as at 31
December 2018, excluding abatements that are disputed by Spotless which the company does not consider to be
probable.
40

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
D7. Acquisition and disposal of businesses
Acquisitions
Dec 2018
Cash outflow on acquisitions
Rock N RoadMHPSKHSATotal
$'m$'m$'m$'m
Gross purchase consideration
68.6
Deferred consideration paid during the period
(i)
9.0
Less: Net cash acquired
(29.1)
Less: Contingent consideration
(2.5)
Total cash consideration - - - 46.0
(i)
Asset acquiredValuation technique
Trade and other receivables
Property, plant and equipment
Intangible assets
Trade and other payables
Borrowings
Provisions
Cost technique - considers the expected economic benefits receivable when due.
The total net cash outflow as a result of the acquisitions made during the half-year ended 31 December 2018 is as follows:
Cost technique - considers the expected economic outflow of resources when due.
Cost technique - considers the expected economic outflow of resources when due.
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.
MHPS Plant Services
On 30 August 2018, the Group acquired the remaining 73.33% of MHPS Plant Services Pty Ltd ("MHPS") for consideration
of $5.6 million.
The acquisition accounting for MHPS remains provisionally accounted for as at 31 December 2018.
Rock N Road
On 3 October 2018, the Group acquired 100% of the shares of Rock N Road Bitumen Pty Ltd (“RNR”) fo r total consideration
of $17.9 million. RNR is a road surfacing business based in Mackay and operates in the central and northern regions of
Queensland.
The acquisition accounting for RNR remains provisionally accounted for as at 31 December 2018.
KHSA Limited (KHSA)
On 21 December 2018, the Group executed a Share Sale Deed to acquire 100% of the shares in the Downer-Mouchel
Roads Joint Venture partner KHSA Limited for consideration of $43.7 million, including cash of $19.5 million.
As KHSA Limited has a 50% interest in the Downer Mouchel Roads Joint Venture (alongside Downer's existing 50%
interest), Downer Mouchel Roads Joint Venture is now 100% controlled. On acquisition of the remaining 50% interest, the
initial investment was re-measured to fair value in accordance with Australian Accounting Standards and compared to the
existing carrying value. As a result, $17.0 million fair value gain on re-measurement has been reported in the profit or loss.
The acquisition accounting for KHSA remains provisionally accounted for as at 31 December 2018.
Boleh Consulting (Boleh)
On 7 December 2018, the Group acquired the net assets of Boleh Consulting (“Boleh”) fo r total consideration of $1.4m. The
business provides a range of engineering services to the railway industry that include design of train control and signalling
systems, systems engineering, systems assurance and project management.
The acquisition accounting for Boleh remains provisionally accounted for as at 31 December 2018.
Measurement of fair values
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
Represents purchase and deferred consideration paid during the period for Envista, AGIS and RPQ.
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 probable economic outflow of resources when the
obligation arises.
41

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
D7. Acquisition and disposal of businesses - continued
Goodwill
Goodwill arising from the acquisitions has been recognised as follows:
Total
Note
$'m
Cash 70.1
Deferred consideration and contingent consideration2.5
72.6
Fair value gain on revaluation of existing interest in Downer Mouchel Joint Venture17.0
Less: Net identifiable assets acquired(23.1)
Provisional goodwill arising from acquisitionsD466.5
Dec 2017
UrbanGrid
Envista
Cabrini
Integrated Services
Disposals
Dec 18
The Group did not dispose any business during the period ended 31 December 2018.
Dec 17
Non-controlling interest (NCI)
The following table summarises the NCI in relation to the Group’s subsidiaries:
Jun 2018
SpotlessOtherTotalSpotless
$'m$'m$'m
$'m
Current assets491.3 14.4 505.7
529.1
Non-current assets2,252.9 1.0 2,253.9
2,272.8
Current liabilities(517.8)(5.8)(523.6)
(521.1)
Non-current liabilities(1,025.3)(0.2)(1,025.5)
(1,009.9)
Net assets 1,201.1 9.4 1,210.5
1,270.9
NCI percentage12.198%26.0%12.301%
12.198%
Net assets attributable to NCI
146.5 2.4 148.9
155.0
Dec 2018
On 1 July 2017, Downer acquired the net assets of UrbanGrid
Australia (UrbanGrid). UrbanGrid provides a wide range of specialist
services to develop, operate and maintain Western Australia’s
essential water, energy and communications networks as well as
civil projects.
The Group has concluded the acquisition accounting process for
this acquisition.
On 21 November 2017, Downer entered an agreement to sell its freight rail business to Progress Rail for $109 million
($122.7 million after adjusting for working capital movements). The sale was completed on 2 January 2018 with the final
settlement payment of $6.9 million in relation to working capital adjustments made during the period ended 31 December
2018.
On 1 July 2017, Spotless Facility Services Pty Ltd acquired the
customer contracts and associated assets and liabilities of Cabrini
Linen Service (referred to as “Cabrini”) from Cabrini Health Limited.
The primary purpose of this acquisition is to strengthen Spotless'
linen capabilities, enhance customer service offerings and maintain
Spotless' market-leading position in the Victorian health sector.
The Group has concluded the acquisition accounting process for
this acquisition.
On 2 March 2018, the Group acquired 100% of
Envista Pty Ltd and Smarter Contracting Pty Ltd
(“Envista”). Envista provides strategy, architecture
and delivery services in complex and sensitive
environments. The acquisition enhances Downer’s
services to customers in the Defence and National
Security sectors.
The Group has concluded the acquisition accounting
process for this acquisition.
On 31 January 2018, the Group acquired the net
assets of Integrated Services. The business provides
traffic infrastructure electrics related works and
complements the existing Transport business
capabilities.
The Group has concluded the acquisition accounting
process for this acquisition.
42

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
Other
E1. New accounting standards
E1. New accounting standards
a) New and amended accounting standards adopted by the Group
Changes in significant accounting policies
AASB 9: Financial Instruments
AASB 15: Revenue from Contracts with Customers
Except as described below, the accounting policies applied in the half year financial report are the same as those
applied in the Group’s consolidated Annual Report for the year ended 30 June 2018. The changes in accounting policies
will also be reflected in the Group’s consolidated Annual Report for the year ending 30 June 2019.
E
The Group has adopted AASB 9 Financial Instruments from 1 July 2018. Details of the new requirements of AASB 9 as
well as their impact on the Group’s consolidated financial report are described below.
The Group has designated the unquoted equity investment, previously classified as an available-for-sale investment
carried at fair value under AASB 139, as an investment measured at Fair Value through Other Comprehensive Income
(FVOCI). Consequently, all fair value gains and losses will be reported in the OCI and no impairment losses nor gains or
losses (when the investment is derecognised) will be recognised in the statement of profit or loss. Based on its
assessment, the Group does not believe that the new classification requirements will have a material impact.
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.
It has replaced AASB 118 Revenue, AASB 111 Construction Contracts and related interpretations. The core principle of
AASB 15 is that an entity shall recognise revenue to depict the transfer of promised goods and services to customers in
an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. This means that revenue will be recognised when control of goods or services is transferred rather than on
transfer of risks and rewards.
The Group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018. Details of the new
requirements of AASB 15 as well as their impact on the Group’s consolidated financial report are described below.
43

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
E1. New accounting standards - continued
a) New and amended accounting standards adopted by the Group - continued
AASB 15: Revenue from Contracts with Customers - continued
On adoption, the key impacts on transition were as a result of the following changes:
Contract modifications
Contract costs
Performance obligations and contract duration
Measure of progress
Tax
The Group measures revenue using the measure of progress that best reflects the Group’s performance in satisfying the
performance obligation within the contracts over time. The different methods of measuring progress include an input
method (e.g. costs incurred) or an output method (e.g. milestones reached).
On adoption of AASB 15, it was identified that for Rail maintainance contracts, the input method would better reflect the
measure of progress rather than the billing method previously used. As a result, a $2.5 million after tax impact on
transition was recognised in retained earnings as at 1 July 2018.
Adjustments under the new standards are subject to tax effect accounting and therefore the net deferred tax position
has been impacted.
Under AASB 111 Construction Contracts, costs incurred during the tender process were capitalised within contract
debtors when it was deemed probable the contract will be won. Under the new standard, costs incurred during the
tender / bid process will be expensed, unless they are incremental to obtaining the contract and the Group expects to
recover them or they are explicity chargeable to the customer, regardless of whether the contract is obtained. As a result
a $23.9 million after tax impact on transition was recognised in retained earnings as at 1 July 2018.
AASB 15 requires a more granular approach to identify the different revenue streams (i.e. performance obligations) in a
contract by identifying the different activities that are being undertaken and then aggregating only those where the
different activities are significantly integrated or highly interdependent. As a result of the change, additional performance
obligations were identified for some contracts which resulted in an adjustment of $26.8 million after tax to retained
earnings as at 1 July 2018.
Revenue was previously recognised when it was probable that work performed will result in revenue whereas under
AASB 15, revenue is recognised when contract modifications are enforceable and to the extent that it is "highly
probable" that a significant reversal of revenue will not occur.
In making this assessment, the Group considers a number of factors including nature of the claim, formal or informal
acceptance by the customer of the validity of the claim, stage of negotiations, legal opinion on the enforceability of the
claim under the contract, or the historical outcome of similar claims to determine whether the enforceable and "highly
probable” threshold has been met.
As a result of the change to a higher threshold of approval for claims or variations and the "highly probable" threshold for
the estimation of the amount to be recognised as revenue, a $204.8 million after tax impact on transition was recognised
in retained earnings as at 1 July 2018.
45

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
E1. New accounting standards - continued
b) Accounting policies applied from 1 July 2018
AASB 15: Revenue from Contracts with Customers
Rendering of Services
Construction Revenue
Sale of goods
Other revenue
Contract Modifications
In making this assessment, the Group considers a number of factors including nature of the claim, formal or informal
acceptance by the customer of the validity of the claim, stage of negotiations, or the historical outcome of similar claims
to determine whether the enforceable and "highly probable" threshold has been met.
Revenue in relation to claims and variations, where the Group has an approved enforceable right to payment, is only
included in the transaction price when the amount claimable becomes highly probable.
Revenue in relation to modifications, such as a change in the scope of the contract, will only be included in the
transaction price, when it is approved by the parties to the contract, the modification is enforceable and the amount
becomes highly probable. Modifications will be recognised when client instruction has been received in line with
customary business practice for the customer.
Other revenue primarily includes rental income received by the Group.
Revenue is recognised when the customer obtains control of goods and services.
As with services revenue the new standard provides higher thresholds for recognition of variations, claims and
incentives such that they are only recognised to the extent that they are approved or enforceable under the contract. The
amount of revenue is then recognised to the extent that it is highly probable that a significant reversal of revenue will not
occur.
The contractual terms and the way in which the Group operates its construction contracts is predominantly derived from
projects containing one performance obligation. Under these performance obligations, customers simultaneously receive
and consume the benefits as the Group performs. Therefore contracted revenue is recognised over time based on stage
of completion of contract.
The new standard provides a higher threshold for recognition of variations, claims and incentives which only allows
revenue from variations and claims to be recognised to the extent they are approved or enforceable under the contract.
The amount of revenue is then recognised to the extent it is highly probable that a significant reversal of revenue will not
occur.
Services revenue is primarily generated from maintenance and other services supplied to infrastructure assets and
facilities across different sectors as well as from contract mining services, mining assets maintenance services, tyre
management, blasting, catering and laundry services. Typically, under the performance obligations of service contract,
the customer consume and receive the benefit of the service as it is provided. As such, service revenue is recognised
over time as the services are provided.
Under AASB 15, revenue is recognised when a customer obtains control of the goods or services. Determining the
timing of the transfer of control – at a point in time or over time – requires judgement.
47

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
E1. New accounting standards - continued
b) Accounting policies applied from 1 July 2018 - continued
AASB 15: Revenue from Contracts with Customers - continued
Contract costs (Tender costs)
Performance obligations and contract duration
Measure of progress
Variable consideration
Loss-making contracts
Loss-making contracts are now recognised under AASB 137 Provisions, Contingent Liabilities and Contingent Assets as
onerous contracts.
Variable consideration that is contingent on the Group’s performance, including key performance payments, liquidated
damages and abatements that offset revenue under the contract, is recognised only when it is highly probable, that a
reversal of that revenue will not occur.
In addition, where the identified revenue stream is determined to be a series of distinct goods or services that are
substantially the same and that have the same pattern of transfer to the customer (for example maintenance services);
variable consideration is recognised in the period/(s) in which the series of distinct goods or services subject to the
variable consideration are completed.
The Group measures revenue using the measure of progress that best reflects the Group’s performance in satisfying the
performance obligation within the contracts over time. The different methods of measuring progress include an input
method (e.g. costs incurred) or an output method (e.g. milestones reached). The same method of measuring progress
will be consistently applied to similar performance obligations.
The Group has elected to apply the practical expedient to not adjust the total consideration over the contract term for the
effect of a financing component if the period between the transfer of services to the customer and the customer’s
payment for these services is expected to be one year or less.
AASB 15 provides guidance in respect of the term over which revenue may be recognised and is limited to the period for
which the parties have enforceable rights and obligations. When the customer can terminate a contract for convenience
(without a substantive penalty), the contract term and related revenue is limited to the termination period.
AASB 15 requires a granular approach to identify the different revenue streams (i.e. performance obligations) in a
contract by identifying the different activities that are being undertaken and then aggregating only those where the
different activities are significantly integrated or highly interdependent. Revenue will continue to be recognised, on
certain contracts over time, as a single performance obligation when the services are part of a series of distinct goods
and services that are substantially integrated with the same pattern of transfer.
Revenue is allocated to each performance obligation and recognised as the performance obligation is satisfied which
may be at a point in time or over time.
Costs incurred during the tender / bid process are expensed, unless they are incremental to obtaining the contract and
the Group expects to recover those costs or where they are explicitly chargeable to the customer regardless of whether
the contract is obtained. The Group applies the practical expedient available under AASB 15 and does not capitalise
incremental costs of obtaining contracts if the amortisation period is one year or less.
48

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
E1. New accounting standards - continued
b) Accounting policies applied from 1 July 2018 - continued
AASB 9: Financial instruments
Impairment
Under AASB 9, loss allowances are measured on either of the following bases:
-
-
Hedge accounting
The Group has applied the simplified approach to recognise lifetime expected credit losses for trade receivables, and
finance lease receivables as permitted by AASB 9. The Group notes that the impact on transition from application of the
expected credit loss model of AASB 9 is not material.
AASB 9 contains a new classification and measurement approach for financial assets that reflects the business model in
which assets are managed and their cash flow characteristics.
AASB 9 contains three principal classification categories for financial assets: measured at amortised cost, fair value
through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The standard eliminates the
existing AASB139 categories of held to maturity, loans and receivables and available for sale, whilst the existing
requirements for the classification of financial liabilities in AASB 139 is retained. The adoption of AASB 9 has not had a
significant effect on the Group’s accounting policies related to financial assets.
Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial
instrument.
This standard replaces AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 includes revised
guidance on the classification and measurement of financial instruments, including a new expected credit loss model for
calculation of impairment on financial assets, and new general hedge accounting requirements. It also carries forward
guidance on recognition and derecognition of financial instruments from AASB 139.
Classification and measurement – financial assets and liabilities
AASB 9 replaces the "incurred loss” model in AASB 139 with a forward looking “expected credit loss” (ECL) model. The
Group exercises considerable judgement about how changes in economic factors affect ECL, which is determined on a
probability-weighted basis. There is consideration around the probability of default upon initial recognition and
subsequent assessment as to whether there has been a significant increase in credit risk at each reporting period.
This impairment model applies to financial assets measured at amortised cost or FVOCI (except for investments in
equity instruments).
12-month ECLs: where there are ECLs that result from possible default events within 12 months from the reporting
date; and
AASB 9 aligns the accounting for hedging instruments more closely with the Group’s risk management objectives and
strategy and applies a more qualitative and forward-looking approach to assessing hedge effectiveness. The Group has
elected to adopt the general hedge accounting model in AASB 9. AASB 9 introduces new requirements on rebalancing
hedge relationships and prohibiting voluntary discontinuation of hedge accounting. Under the new model, it is possible
that more risk management strategies, particularly those involving hedging a risk component (other than foreign
currency risk) of a non-financial item, will be likely to qualify for hedge accounting.
Similar to the Group’s prior period hedge accounting policy, management does not intend to exclude the forward
element of foreign currency forward contracts from designated hedging relationships. The Group previously elected to
adjust non-financial hedged items with gains/losses arising from effective cash flow hedges under AASB 139 which is
mandatory under AASB 9.
49

Notes to the condensed consolidated financial report - continued
for the half-year ended 31 December 2018
E1. New accounting standards - continued
c) New accounting standards and interpretations not yet adopted
AASB 16 - Leases
•
•
•
•
•
Other
- AASB 2017-7 Amendments to Australian Accounting Standards – Long term interest in Associates and JVs.
- AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty over Income Tax Treatments; and
As a result, the Group has not yet quantified the impact of the new standard. However, the following impacts are
expected on implementation date:
Total assets and total liabilities will increase, due to the recognition of a “Right of Use Asset” and a “Lease
Liability” grossing up the assets and liabilities in the Statement of Financial position;
Interest expense will increase due to the effective interest rate implicit in the lease, where the interest expense
component is higher in early years on the lease;
Depreciation charge will increase as the depreciation of the right of use assets is recognised;
AASB 16 must be implemented retrospectively either, with the restatement of comparatives or, under the modified
retrospective approach, with the cumulative impact of initial application recognised as an adjustment to opening retained
earnings as at 1 July 2019.
Under the modified retrospective approach, on a lease-by-lease basis, the right of use of an asset may be deemed to be
equivalent to the lease liability at transition or calculated retrospectively as at inception of the lease.
The Group is in the process of assessing available options for transition.
-AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture;
- AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based
Payment Transactions;
Operating cash flows will be favourable as repayment of the principal portion of all lease liabilities will be
classified as financing activities.
Management will no longer recognise provisions for operating leases assessed to be onerous and will instead,
include the payments due under the lease in its lease liability and assess the right of use of assets for
impairment;
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated
financial statements:
AASB 16 Leases will replace the current leasing standard AASB 117, and contains significant changes to the accounting
treatment of leases around how to recognise, measure and disclose leases. The new standard provides a single lessee
accounting model, requiring lessees to recognise assets and liabilities for all leases, with the exception of short term
(less than 12 months) and low value leases. AASB 16 applies to annual reporting periods beginning on or after 1 July
2019.
The Group manages its owned and leased assets to ensure there is an appropriate level of equipment to meet its
current obligations and to tender for new work. The decision as to whether to lease or purchase an asset is dependent
on the finance available at the time and the residual risk of ownership following the anticipated completion of the project.
As at 31 December 2018, Management has reviewed the current lease related business processes, controls,
governance and the future state requirements. Analysis on the existing lease databases (systems or documents) was
performed and, with the lease contract data fields, serving as a basis for the design of the lease system implementation.
Detailed contract reviews across the divisions are ongoing to conclude whether contracts contain or should be
accounted as a lease under AASB 16. Moreover, the lease data enrichment process has commenced while the
quantification of the likely impact of AASB 16 for existing or known lease contracts (currently disclosed as operating
lease commitments) is ongoing.
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.
50

Directors' Declaration
for the half-year ended 31 December 2018
In the opinion of the Directors' of Downer EDI Limited:
(a)
(i)
(ii)
(b)
On behalf of the Directors
R M Harding
Chairman
Sydney, 7 February 2019
Signed in accordance with a resolution of the Directors:
the condensed consolidated half-year Financial Reportandnotes setout on pages 21to50,arein accordance
with the Corporations Act 2001 (Cth), including:
giving a trueandfair viewofthe Group's financial positionas at 31December2018 and ofits performance
for the six month period ended on that date; and
complying with Australian Accounting Standard AASB134Interim Financial ReportingandtheCorporations
Regulations 2001; and
there are reasonable groundstobelieve that the Company willbe abletopayits debtsas andwhen they
become due and payable.
51

Page 1 of 3

Media/ASX and NZX Release
7 February 2019

DOWNER REPORTS 24% GROWTH IN EARNINGS
Downer EDI Limited (Downer) today announced its financial results for the six months to 31 December 2018.
The highlights are set out below.
 Net profit after tax and before amortisation of acquired intangible assets (NPATA) of $163.4 million, up
23.8% from underlying NPATA of $132.0 million in the prior corresponding period.

 Net profit after tax (NPAT) of $141.4 million, compared with a statutory NPAT loss of $15.9 million in the
prior corresponding period.

 FY19 NPATA target guidance increased from $335 million to $352 million, taking into account the fair
value gain of $17 million from acquiring the remaining 50% of the Downer Mouchel joint venture.

 Total revenue of $6.6 billion, up 8.6%.

 Operating cash flow of $355.3 million, representing cash conversion of 91% of adjusted earnings before
interest, tax, depreciation and amortisation (EBITDA).

 Gearing of 23.8%, down from 24.6% in the prior corresponding period, with liquidity of $1.4 billion.

 Work-in-hand of $43.5 billion, up from $42.0 billion at 30 June 2018.

 Interim dividend 14 cents per share (50% franked), up 7.7% from the prior corresponding period.

All the figures above include 100% contribution from Spotless, before minority interests.

The Chief Executive Officer of Downer, Grant Fenn, said Downer achieved good revenue growth in the
period with a strong increase in earnings.

“An increasing proportion of Downer’s earnings are coming from our Urban Services businesses of
Transport, Utilities and Facilities,” Mr Fenn said. “These businesses have market leading positions and are
leveraged to the long-term trends of increasing urbanisation, growing population, government outsourcing
and technology proliferation.

“Our Urban Services businesses are well positioned for growth, require modest capital expenditure and have
a high proportion of long term contracts with a diverse and high-quality customer base. As recently as
yesterday we received an order from the New South Wales Government for an additional 17 Waratah Series
2 trains.”

Mr Fenn said Downer’s strategic focus on services had reduced the contribution from construction related
activities to just 17% of Group EBITA.

Downer EDI Limited
ABN 97 003 872 848
Triniti Business Campus
39 Delhi Road
North Ryde NSW 2113
1800 DOW NER
www.downergroup.com

Page 2 of 3

“Construction is an important part of our service capability but our involvement is now limited to projects that
help drive long term services contracts with our customers.”

Mr Fenn said Downer was continuing to grow its maintenance and asset services business within its
Engineering, Construction & Maintenance (EC&M) service line as LNG and CSG markets transition from
construction to operations.

“Maintenance and asset services is now a larger and more profitable contributor to EC&M than construction,”
Mr Fenn said.

Downer’s Mining business delivered a significantly improved performance, including a 76.6% jump in EBITA.

“We have won new work and contract extensions at both open cut and underground mines and across coal,
iron ore, copper and gold,” Mr Fenn said. “The growth in EBITA was driven by these contract wins as well as
overhead cost reduction and improved operational productivity.”

Downer’s cash performance continued to be strong, predictable and reliable with Group cash flow
conversion of 91% of adjusted EBITDA. Gearing is 23.8%, down from 24.6% in the prior corresponding
period, and the company has liquidity of $1.4 billion.

“Downer has a strong balance sheet to support our strategy of investing in growth, including targeted bolt-on
acquisitions,” Mr Fenn said.

Downer reports its financial results under five service lines and the performance of each service line,
compared with the prior corresponding period, is summarised below.

Urban Services
Transport Utilities
Total revenue of $2.1 billion, up 0.8% Total revenue of $1.2 billion, up 27.5%
EBITA of $87.9 million, up 9.7% EBITA of $64.7 million, up 19.6%
Work-in-hand of $17.9 billion Work-in-hand of $3.3 billion

Facilities
Total revenue of $1.7 billion, down 2.8%
EBITA of $81.3 million, up 5.6%
Work-in-hand of $17.3 billion

Mining, Energy and Industrials
Mining Engineering, Construction & Maintenance
Total revenue of $714.2 million, up 3.6% Total revenue of $945.1 million, up 34.1%
EBITA of $36.9 million, up 76.6% EBITA of $22.4 million, down 4.7%
Work-in-hand of $3.3 billion Work-in-hand of $1.7 billion

Safety
Downer continues to perform well against key health and safety indicators with a Lost Time Injury Frequency
Rate of 0.68 per million hours worked and a Total Recordable Injury Frequency Rate of 3.09 per million
hours worked.

Page 3 of 3

Dividend
The Downer Board resolved to pay interim dividend of 14.0 cents per share, 50% franked, (13.0 cents per
share 50% franked in the prior corresponding period) payable on 21 March, 2019 to shareholders on the
register at 21 February, 2019. The unfranked portion of the dividend (50%) will be paid out of Conduit
Foreign Income. The company’s Dividend Reinvestment Plan (DRP) remains suspended and will not operate
for this dividend.

For further information please contact:
Michael Sharp, Group Head of Corporate Affairs and Investor Relations +61 439 470 145

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 more than 53,000 people across more than
300 sites, primarily in Australia and New Zealand, but also in the Asia-Pacific region, South America and
Southern Africa. It also owns 88 per cent of Spotless Group Holdings Limited. For more information visit
downergroup.com

2
SafetyEarnings growthCash conversionBalance sheet
Our focus areas
Our financial results
23.8% NPATA
1
growth v HY18
3
FY19 guidance increased
to $352 million NPATA
1
Operating cash flow
of $355.3m, cash
conversion of 90.7%
Continue delivering cash
backed earnings with
+90% cash conversion to
adjusted EBITDA
Gearing of 23.8% v
24.6% in HY18and
$1.4bn of liquidity
Balance sheet flexibility
to support growth
strategy
Total revenue
2
$mEBITA
1
$mNPATA
1
$mOperating Cash Flow $m
All figures above and throughout the presentation include 100% contribution from Spotless, before minority interests, unless stated otherwis e.
1
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. Group HY19 $31.4m, $22.0m after-tax (HY18: $30.7m, $21.6m after-tax). FY19 guidance includes the fair value
gain from acquiring the remaining 50% of the Downer Mouchel JV in late 1H19.
2
Total revenue above and throughout the presentation is a non-statutory disclosure and includes revenue from joint ventures and other allianc es and other income.
3
HY18 figures are underlying.
LTIFR of 0.68 and
TRIFR of 3.09,
improving on HY18
Zero Harm embedded in
culture and fundamental
to success
268.0
222.3
-
50
100
150
200
250
300
HY19HY18
163.4
132.0
-
50
100
150
200
HY19HY18
355.3
307.1
-
100
200
300
400
HY19HY18
6,623.0
6,100.5
0
2,000
4,000
6,000
8,000
HY19HY18
+8.6% v HY18+20.6% v HY18
3
+23.8% v HY18
3
+15.7% v HY18
Delivering operationally and financially
HY19 Financial Results

12%
8%
28%
22%
30%
Urban Services
Mining, Energy and Industrial Services
Energy and Resources
—Engineering
—Construction
—Asset management services
Mining
—Open Cut
—Underground
—Blasting and Tyre Management
Mining
—Hospitality and FM
—Health, Education, Defence,
Justice, Resources, Infrastructure
—Mechanical & Electrical (M&E) and
Heating, Ventilation and Air-
conditioning (HVAC)
—Laundries
—Hawkins
Facilities
—Power and gas
—Water
—Renewables
—Communications
Utilities
—Road services
—Bitumen and logistics
—Transport infrastructure projects
—Heavy rail, light rail, buses
Transport
Downer’s earnings are heavily weighted to
the growing Urban Services markets
75%
Revenue
80%
EBITA
1
25%
Revenue
20%
EBITA
1
3.6%
EBITA margin
4.7%
EBITA margin
EC&M
Transport
Mining
EC&M
Facilities
Utilities
1
Chart split based on HY19 EBITA (excludes unallocated corporate costs).
3
HY19 Financial Results

Urban Services
Leveraged to the long-term trends of increasing urbanisation, growing
population, government outsourcing and technology proliferation
TransportUtilitiesFacilities
Work-in-hand
EBITA by service line
$38.5bn
$233.9m
5.1
4.9
2.4
1.7
6.16.1
3.2
2.0
SydneyMelbourneBrisbaneAuckland
20172030
18
24
25
24
24
26
29
2017201820192020202120222023
Transport spend ($bn)
1
Population (m)
2
Strategic focus areas
Leverage leading positions in growing markets
Strategic investment in existing operations and targeted acquisitions
Continued innovation
4
HY19 Financial Results
1
BIS Oxford Economics - Engineering in Australia Study. Public sector road and railways construction spend plus private toll roads.
2
Australian Bureau of Statistics - Australian Demographic Projections, Auckland City Council - Auckland 2050 Plan.
Transport, Utilities, Facilities

5
Mining, Energy & Industrial Services
Leading engineering, construction, operations and contract mining
provider experiencing improved conditions due to favourable global
resources outlook
Mining
Work-in-hand
EBITA by Service Line
$5.0bn
$59.3m
53
50
47
55
61
75
82
2017201820192020202120222023
Mining capital and maintenance spend ($bn)
1
Production volumes
2
873
567
105
974
642
157
Iron OreCoalOil & Gas
20172023
Strategic focus areas
Continue to grow maintenance and asset services as LNG and CSG
markets transition from construction to operations
Diversification of Mining’s service offerings
Drive further capital efficiency
EC&M
HY19 Financial Results
1
BIS Oxford Economics - Mining in Australia Study.
2
BIS Oxford Economics - Mining in Australia Study. Iron Ore (mt), Coal (mt), Oil & Gas (Gm
3
)
Mining and Engineering, Construction & Maintenance (EC&M)

Downer’s strategic focus on services has
reduced construction to just 17% of EBITA
6
EBITA composition
1
Services:
Continued transformation to integrated services business
High proportion of long term services based contracts
Higher margin and more stable and defensive earnings
Diverse and high quality customer base
Construction:
Projects that will help drive long term services contracts
Reduce exposure to high risk markets
Improve project performance
HY19 Financial Results
ConstructionServices
1
Chart split based on HY19 EBITA (excludes unallocated corporate costs).

Downer’s shareholder value proposition
7
Aligned to growing
markets and serving
quality customers
Strategic capital
allocation, cost and
capital efficiency
Consistently growing
EPS and DPS
Increasing EPS and
maintaining a 50% -
60% payout ratio
Business
growth
Efficient use
of capital
Shareholder
value
TSR growth through
continued delivery
Maintaining a strong
balance sheet and
credit rating
Continue strong
operating cash flow
discipline
Increased exposure to
low capital, service
oriented businesses
Strategic acquisitions
23.8% NPATA
growth v HY18
1,2
12.8% ROFE
3
Targeting 19%
EPS growth in
FY19
4
HY19 Financial Results
1
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. Group HY19 $31.4m, $22.0m after-tax (HY18: $30.7m, $21.6m after-tax).
2
HY18 underlying
3
Throughout the presentation, ROFE = 12 month rolling underlying EBITA divided by average funds employed (AFE); AFE = Average Opening and Closing Net Debt + Equity.
4
EPS is calculated using FY18 underlying NPATA and FY19 NPATA market guidance after taking into account minority interest and ROADS dividends.

8
Culture and people
Focus on employee well-being
Employer of choice for high quality people
Scale, innovation and opportunity
Stability, focus and direction
Sustainable decision making
Accountability framework
CEOs accountable for business performance
Systems focused on transparency
Managers accountable to external and internal
stakeholders
Remuneration structures drive consistent
Zero Harm, earnings, cash and people focus
Risk management
Inherent risk aversion
Robust bid approval process
Focused Project Management Office and Internal Audit
Construction risk limited
Centralised Legal and Compliance
Business planning and
performance
Robust planning process for short and long term
Focus on capital allocation, returns and cash conversion
Monthly business performance reviews
Common management systems and processes
1
2
3
4
Managing for success
HY19 Financial Results

Group results
HY19 Financial Results
9

Financial performance
10
$mGroup HY19Group HY18
1
Change (%)
Total revenue
2
6,623.06,100.58.6
EBITDA
413.0376.89.6
EBITA
3
268.0222.320.6
EBIT
236.6191.623.5
Net interest expense
(42.1)(41.0)(2.7)
Tax expense
(53.1)(40.2)(32.1)
NPAT
141.4110.428.1
NPATA
3
163.4132.023.8
EBITA margin
4.0%
3.6%0.4
Effective tax rate
27.3%
26.7%0.6
ROFE
4
12.8%11.3%1.5
Dividend declared (cps)14.013.07.7
Ordinary Dividend payout ratio
5
52.3%60.4%(8.1)
Revenue growth of $523 million
or 8.6%
EBITA margin improvement
from 3.6% to 4.0%
Dividend up 7.7% to 14 cps
1
HY18 figures are underlying.
2
Total revenue is a non-statutory disclosure and includes revenue from joint ventures and
other allianc es and other income.
3
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back
acquired intangible assets amortisation expense. Group HY19 $31.4m, $22.0m after-tax
(HY18: $30.7m, $21.6m after-tax).
4
ROFE = 12 month rolling underlying EBITA divided by average funds employed (AFE);
AFE = Average Opening and Closing Net Debt + Equity
5
Ordinary dividend payout ratio = Dividends divided by (NPATA – ROADS dividend).
HY19 Financial Results

Summary of earnings HY19
11
$mEBIT
Net interest
expense
Tax expenseNPAT
Add back
amortisation
of acquired
intangibles
post-tax
NPATA
1
Statutory result236.6(42.1)(53.1)141.422.0163.4
Less: Fair value
gain on existing
Downer Mouchel JV
(17.0)--(17.0)-(17.0)
Adjusted result219.6(42.1)(53.1)124.422.0146.4
HY19 Financial Results
1
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. Group HY19 $31.4m, $22.0m after-tax (HY18: $30.7m, $21.6m after-tax).

AASB 15 – impact on Downer
12
$m
Group
HY19
NPAT as reported
141.4
Impact of AASB 15 adjustments
2.3
NPAT without adoption of AASB 15143.7
Opening retained earnings impact substantially
as reported at 30 June 2018
Earnings not materially different when
comparing new standard to previous reporting
requirement for HY19
Further details disclosed in Note E1. New
accounting standards
HY19 Financial Results
$m
Disclosure
of estimate
at 30 Jun 18
Adjustment
As
reported
31 Dec 18
Contract modifications (claims and
variations)
198.95.9204.8
Contract costs (tender costs)23.9-23.9
Change in performance obligations
and measure of progress
29.3-29.3
Decrease in opening retained
earnings at 1 Jul 18 (after tax)
252.15.9258.0

Operating cash flow
13
$m
Group
HY19
Group
HY18
Change (%)
EBIT
236.6191.6
1
23.5
Add: depreciation and
amortisation
176.4185.2(4.8)
Less: Non-cash fair value gain
on existing Downer Mouchel JV
(17.0)-100
Adjusted EBITDA
396.0376.8
1
5.1
Operating cash flow
355.3307.115.7
Add: Net interest paid
2
35.334.32.9
Less: Tax received
(31.5)(9.3)>(100)
Adjusted operating cash flow
359.1332.18.1
EBITDA conversion
90.7%
88.1%2.6
Cash flow conversion increased from 88% to
91%
Downer Group cash remains predictable and
reliable
Spotless conversion 76.7% of EBITDA
(91.6% excluding nRAH)
HY19 Financial Results
1
Underlying
2
Interest and other costs of finance paid minus interest received.

Cash flow
14
$mGroup HY19Group HY18Change (%)
Total operating355.3
307.1
15.7
Net capital expenditure(191.7)
(188.4)
(1.8)
Spotless acquisition
1
-
(391.8)
100
Other acquisitions(46.0)
(37.6)
(22.3)
IT Transformation and Other(14.5)
(29.2)
50.3
Loans to JVs and other (13.5)
(0.4)
>(100)
Total investing(265.7)
(647.4)
59.0
Issue of shares (net of costs)-
(0.2)
100
Net (repayments) / proceeds of
borrowings
(106.3)
63.7
>(100)
Dividends paid(87.4)
(75.3)
(16.1)
Total financing(193.7)
(11.8)
>(100)
Net decrease in cash(104.1)
(352.1)
70.4
Cash at 31 December505.3
490.4
3.0
Total liquidity1,360.31,375.4(1.1)
Continued investment in growth and strategic
bolt-on acquisitions
Continued strong liquidity to fund future growth
Growth capital in Mining as new projects
mobilise
Capital management through debt repayment
and increased returns to shareholders
1
Gross consideration paid to achieve 87.8% interest in Spotless.
HY19 Financial Results

Balance sheet and capital management
15
Balance sheet well positioned for
growth
Gearing remains in target range
Increase in net PPE primarily in
Transport and Mining on secured
new contracts
No movement in net debt
Reduction in net assets and
increase in gearing primarily a result
of adoption of AASB15
Credit metrics have improved and
remain well within thresholds
$mDec-18Jun-18
Current assets
2,886.9
3,133.6
Non-current assets
4,775.2
4,654.6
- Goodwill
2,422.3
2,351.5
- Acquired intangible assets
457.2
458.0
-PP&E, Software and other
1,895.7
1,845.1
Total liabilities
(4,646.8)
(4,583.1)
Net Assets
3,015.3
3,205.1
Net Debt
1
(940.0)
(940.0)
Gearing: net debt / net debt plus equity
23.8%
22.7%
Interest cover6.8x6.3x
Net debt / EBITDA1.11.2
Adjusted Net Debt / Adjusted EBITDAR
2
2.17x2.23x
HY19 Financial Results
1
Adjusted for the marked-to-market derivatives and deferred finance charges
2
Adjusted Net Debt includes Net Debt plus 6x operating lease expenses in the year. Adjusted EBITDAR equals underlying earningsbefore interest, tax, depreciation, amortis ation and operating lease expens e (on a rolling 12
month basis).

Debt maturity profile (Downer and Spotless)
16
Weighted average debt duration of
3.8 years
1
(4.0 years at Jun-18)
Diversified funding sources
Improvement in both key credit
metrics since Jun-18
Spotless net debt continues to
reduce
0
100
200
300
400
500
600
700
800
900
1,000
Jun-19Jun-20Jun-21Jun-22Jun-23Jun-24Jun-25Jun-26Jun-27Jun-28Jun-29Jun-30Jun-31Jun-32Jun-33
A$m
Weighted average debt duration (including SPO)
Dec 2018 = 3.72 years (Jun 2018) = 4 years
Syndicated bank facilitiesBilateral bank facilitiesA$ MTNUSPPJPY MTNOther
MetricDec-18Jun-18
Interestcover
6.8x6.3x
AdjustedNet Debt/ Adjusted
EBITDAR
2
2.17x2.23x
1
Based on the weighted average life of debt facilities (by A$mlimit).
2
Adjusted Net Debt includes Net Debt plus 6x operating lease expenses in the year. Adjusted EBITDAR equals underlying earningsbefore interest, tax, depreciation, amortis ation and operating lease expens e (on a rolling 12 month basis).
HY19 Financial Results
Net debt ($m)Dec-18Jun-18
Downer
237.3198.7
Spotless
702.7741.3
Group
940.0940.0

Urban
Services
17
HY19 Financial Results

18
Financial results
Operational factors
Revenue $mEBITA $mEBITA marginROFE
+0.8% v HY18+9.7% v HY18+0.4% v HY18+3.3% v HY18
Revenue growth in 1H19 despite reduction of $83m from Freight Rail divestment in 1H18
Continued strong performance across road services, bituminous products, rail and light rail
Major rolling stock projects (HCMT and SGT) are performing well
A further 17 SGT trains announced by NSW Government on 6 February ($900 million)
Downer JV awarded contract to build Stage 1 of the Parramatta Light Rail project
Acquisition of remaining 50% of Downer Mouchel enhances network management capability
4.3%
3.9%
0%
1%
2%
3%
4%
5%
HY19HY18
21.9%
18.6%
0%
5%
10%
15%
20%
25%
HY19HY18
2,061.0
2,044.8
0
500
1,000
1,500
2,000
2,500
HY19HY18
87.9
80.1
0
20
40
60
80
100
HY19HY18
HY19 Financial Results
Transport

19
Utilities
Financial results
Operational factors
Revenue $mEBITA $mEBITA marginROFE
+27.5% v HY18+19.6% v HY18(0.4)% v HY18+4.1% v HY18
Continued strong performance from Communications
Growth through improvement in Water
Expansion of Power and Gas distribution businesses
Margin negatively impacted by performance in Renewables
Remaining solar projects performing to budget
Significant opportunities from transmission line investment
5.3%
5.7%
0%
1%
2%
3%
4%
5%
6%
HY19HY18
28.8%
24.7%
0%
5%
10%
15%
20%
25%
30%
35%
HY19HY18
1,212.5
950.9
0
200
400
600
800
1,000
1,200
1,400
HY19HY18
64.7
54.1
0
10
20
30
40
50
60
70
HY19HY18
HY19 Financial Results

20
Facilities
1
Financial results
Operational factors
Revenue $mEBITA $mEBITA marginROFE
(2.8)% v HY18+5.6% v HY18+0.4% v HY18+0.2% v HY18
Improved EBITA and EBITA margin led by Hospitality & FM, Defence, Laundries
Significant investment in business development, operational excellence, bid/delivery governance
Integration of Mechanical & Electrical and Heating, Ventilation and Air-conditioning businesses
creating new opportunities
Outsourcing opportunities emerging across Government and Hospitality
Strong pipeline in growth markets - Justice, Critical Infrastructure, Defence
nRAHnegotiations continuing; improved monthly financial position in line with reduced headcount
Facilities includes Spotless and Hawkins
4.9%
4.5%
0%
1%
2%
3%
4%
5%
HY19HY18
15.0%
14.8%
0%
2%
4%
6%
8%
10%
12%
14%
16%
HY19HY18
1,667.0
1,715.1
0
500
1,000
1,500
2,000
HY19HY18
81.3
77.0
0
20
40
60
80
100
HY19HY18
HY19 Financial Results
1
Refer slide 29 for reconciliation from Facilities segment to Spotless statutory results

Mining,
Energy &
Industrial
Services
21
HY19 Financial Results

22
Financial results
Operational factors
Revenue $mEBITA $mEBITA marginROFE
+3.6% v HY18+76.6% v HY18+2.2% v HY18+1.6% v HY18
Underground contract wins in the period include new and renewed contracts at Newcrest and
CSA copper mines, and Cosmo gold mine
Open cut operations secured new wins and contract extensions in Queensland at Commodore
and Goonyella; iron ore renewals at CiticPacific and FMG
EBITA growth driven by overhead cost reduction, contract wins and improved operational
productivity
Increased diversification through long term copper and gold contracts (Gruyere, Cadia,
Carrapateena)
Mining
5.2%
3.0%
0%
1%
2%
3%
4%
5%
6%
HY19HY18
11.1%
9.5%
0%
2%
4%
6%
8%
10%
12%
HY19HY18
714.2
689.5
0
200
400
600
800
HY19HY18
36.9
20.9
0
10
20
30
40
HY19HY18
HY19 Financial Results

23
Financial results
Operational factors
Revenue $mEBITA $mEBITA marginROFE
+34.1% v HY18(4.7)% v HY18(0.9)% v HY18+0.3% v HY18
Continued strong construction performance at Ichthys; successful conversions in WA iron ore
sector with solid pipeline in FY20 and FY21
Growth in engineering services to the global mineral sands, base metals and industrial mineral
processing sectors
Long term asset services contract wins with Chevron (5 yrs) and BHP Iron Ore (3 yrs)
Maintenance and asset services is now a larger and more profitable contributor than construction
EBITA and EBITA margin negatively affected by two loss-making construction projects
EC&M
2.4%
3.3%
0%
1%
2%
3%
4%
HY19HY18
21.4%
21.1%
0%
5%
10%
15%
20%
25%
HY19HY18
945.1
704.8
0
200
400
600
800
1,000
HY19HY18
22.4
23.5
0
5
10
15
20
25
HY19HY18
HY19 Financial Results

Outlook
HY19 Financial Results
24

FY19 outlook and goals
25
FY19 Outlook
Downer has increased its target guidance for FY19 to $352 million consolidated net profit after tax
and before amortisationof acquired intangible assets (NPATA) before minority interests.
The increase takes into account the fair value gain of $17 million from acquiring the remaining 50%
of the Downer Mouchel JVin late 1H19.
FY19 operational and financial goals
Zero Harm: Ensure a safe environment for employees with improving injury rates and well being
Growth: Deliver EPS growth of 19% in FY19
Cash flow: Maintain strong cash flow conversion consistent with recent periods
Returns: Active capital management and maintain dividend payout ratio within 50 –60% of NPATA
Balance sheet: Maintain conservative gearing position, providing balance sheet flexibility to support growth
HY19 Financial Results

Outlook supported by work-in-hand of $43.5bn
26
WIH remains strong
Contracts secured in the period in excess of
revenue
7%
4%
40%
8%
41%
Transport
Mining
EC&M
Facilities
Utilities
43.5
42.0
39.2
Dec-18Jun-18Dec-17
Work-in -hand
HY19 Financial Results

Supplementary
information

Segment reporting
28
HY19 Financial Results
HY19
$m
Transport
Utilities
FacilitiesEC&MMiningUnallocated
1
Total
Revenue and other income
1,792.61,212.51,663.0945.1688.123.26,324.5
Share of sales from JVs and
Associates
268.4-4.0-26.1-298.5
Total revenue
2,061.01,212.51,667.0945.1714.223.26,623.0
EBITDA
112.372.2120.127.298.6(17.4)413.0
EBITA
2
87.964.781.322.436.9(25.2)268.0
EBIT
87.563.175.422.436.9(48.7)236.6
EBITA margin
4.3%5.3%4.9%2.4%5.2%4.0%
Net interest expense
(42.1)
Tax expense
(53.1)
Net profit after tax
141.4
NPATA
2
163.4
1 Unallocated include $17m fair value gain on existing Downer Mouchel JV
2
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. Group HY19 $31.4m, $22.0m after-tax (HY18: $30.7m, $21.6m after-tax).

Reconciliation of Facilities Segment to
Spotless result
29
HY19
$m
Facilities
segment
Less:
Hawkins
Building
Add:
Spotless
Utilities
Spotless
Total Revenue
1
1,667.0(291.7)86.01,461.3
EBITA
2
81.3(3.4)4.382.2
EBIT75.4(2.9)4.376.8
Net Interest Expense(20.3)
Tax Expense(17.5)
NPAT39.0
NPATA
2
42.9
HY19 Financial Results
1
Total revenue is a non-statutory disclosure and includes revenue from joint ventures and other alliances and other income.
2
Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. Spotle ss HY19 $5.4m, $3.9m after-tax.

HY18 – Reconciliation of underlying to statutory result
30
$mEBIT
Net interest
expense
Tax expenseNPAT
Add back
amortisation
of acquired
intangibles
post-tax
NPATA
Underlying result191.6(41.0)(40.2)110.421.6132.0
Loss on divestment of freight rail(49.3)-9.3(40.0)-(40.0)
Mining goodwill impairment(76.4)--(76.4)-(76.4)
Spotless integration costs(3.4)-0.8(2.6)-(2.6)
Spotless Management redundancies and
integration costs
(3.1)-0.9(2.2)-(2.2)
Spotless residual Strategy Reset costs(7.1)-2.0(5.1)-(5.1)
Individually Significant Items(139.3)-13.0(126.3)-(126.3)
Statutory result52.3(41.0)(27.2)(15.9)21.65.7
Note:
•Results represent 100% contribution before minority interests.
•Downer’s statutory results are reported under International Financial Reporting Standards. Earnings before individually signific ant items (ISI) is a non-IFRS measure reported to provide a greater understanding of the underlying business
performanc e of the Group. ISI are detailed in Note B2(c) of the 2018 Half Year Financial Report and relate to amounts of expensethat are associated with business disposal, impairment of goodwill and Spotless related transactions.
HY19 Financial Results

Debt and bonding facilities
31
Debt facilities $mDOWSPOGroup
Total limit1,233.11,067.22,300.3
Drawn(648.1)(797.2)(1,445.3)
Available585.0270.0855.0
Cash410.894.5505.3
Total liquidity995.8364.51,360.3
Net debt237.3702.7940.0
Bonding facilities $mDOWSPOGroup
Total limit2,059.7210.02,269.7
Drawn(1,363.4)(153.5)(1,516.9)
Available696.356.5752.8
HY19 Financial Results
2.9x
2.8x2.8x
HY18FY18HY19
SPOTLESS DEBT COVENANTS
Net Leverage
< 3.5x
7.3x
7.5x
7.4x
HY18FY18HY19
> 3.0x
Interest Cover

Thank you

Downer JV awarded Parramatta Light Rail contract Half-year Investor Presentation – Supplementary Information

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