CEO presentation to the Macquarie Conference

Macquarie Conference
5 May 2021

Understanding Downer
2
Our Purpose
To create and sustain the modern
environment by building trusted
relationships with our customers
Our Promise
To work closely with our customers to
help them succeed, using world
leading insights and solutions
Our Pillars

Urban Services journey
3
Transport
Utilities
Facilities
EC&M
Asset Services
2010
41%
32%
17%
$6.1bn
2015
38%
15%
26%
21%
$7.4bn
Post-divestments
49%
18%
6%
27%
Mining
Work-in -hand$20.4bn
$18.5bn
$36.2bn
as at 31/12/20
Revenue

44
201020122015
Sa le of CPG Asia
(Consulting)
October 2014
Acquisition of Tenix
(foundation of Utilities)
Relationships creating success
Downer concludes
mining services at
Christmas Creek
Acquisition
of RPQ
(Road Services)
2017
Acquisition
of Hawkins
20192018
Sale of
freight rail
business
Acquisition
of ITS
PipeTech
(Utilities)
Acquisition
of UrbanGrid
(Utilities)
Acquisition
of En vi sta
(Defence)
Acquisition of
The Roading
Company (NZ)
2016
Acquisition
of AGIS
(Defence)
Sales of :
Snow den
Laundries (70%)
Dow ner Blasting Services
Open Cut Mining West
2020
Acquisition
of Spotless
Exit Underground
Sale of Otrac o
Urban Services journey

90%
10%
Govt / Govt-backedNon Govt
Urban Services work-in-hand $36.2 billion
5
WIH by Service Line
Customers
Transport
$16.8bn (47%)
Facilities
$12.7bn (35%)
Utilities
$5.2bn (14%)
Asset Services
$1.5bn (4%)

WIH reflects long term contract profile
6
WIH profile ($bn)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2H21FY22FY23FY24FY25FY26+
TransportUtilitiesFacilitiesAsset Services

7
Strategy shaped by four major trends –
Are they still relevant?
Growing population
Increasing urbanisation
Government outsourcing
Tech nology

Population
8
Australia’s population is expected to
be 667,000 smaller by FY25 than the
pre-COVID trajectory
Net overseas migration (NOM) has
been the largest contributor to
population growth over the past 10
years, and has also been the hardest
hit by COVID-19
NOM is expected to bounce back by
2022/23
Federal Government committed to
high levels of NOM for continued GDP
growth and skills shortages
High levels of population growth in the
major cities will continue to drive
Government infrastructure and
services expenditure
© 2021DeloitteAccessEconomics.Deloitte ToucheTohmatsu
Sourc e:Aust ralian Bureauof St at istics; Deloit teAccessEc onomics
ComponentsofAustralian population growth

Market outlook
9
Source:Australian Bureauof Statistics; DeloitteAccessEconomics
© 2021Deloit t eAccessEconomics.Deloit t e T oucheT ohmat su
Australianeconomicgrowth
Transportsectoroutput
Utilitiessectoroutput
Constructionsectoroutput

Market outlook
10
© 2021DeloitteAccessEco nomics.Deloitte T oucheT ohmatsu
Kilometresof majornewroadbycompletiondate
Squaremetresofmajornewofficefacilitiesbycompletiondate
Sourc e:Deloit t eAccessEc onomic sInvestmentM o nit or
Governmentspendingontransportandcommunicationinfrastructure
Sourc e:2020-21 C o mmo n w e a lt hBudget

New macro trends
Bigger Government at all levels
̶Unprecedented levels of fiscal stimulus
̶Infrastructure and services key delivery methods
Decarbonisation of the economy (accelerating)
̶Driven by capital providers (banks and equity)
̶Business way ahead of Government
̶Significant opportunity for Downer
Geopolitical tension
̶Defence spending
̶Sovereign supply capability
̶Localisation
11

Climate resilience and decarbonisation
Downer’s Urban Services strategy delivers environmental and social benefits including a move to
lower capital intensive and lower carbon activities, supporting Downer’s decarbonisation pathway
There are considerable opportunities for Downer that outweigh identified risks, assisting in lower
cost of capital and increased margins
The sale of Mining and Laundries supports our decarbonisation pathway reducing our Scope 1
and 2 emissions by 35% or 206,000 tonnes of carbon dioxide equivalent
12
Identified risks:
̶Impacts of increasing energy costs
̶Exposure to extreme weather events
̶Exposure to thermal coal contracts
̶Changing design and construction requirements
(also an opportunity)
Identified opportunities:
̶Existing capabilities to service new and adjacent
markets e.g. hydrogen
̶Existing renewable energy capability and presence
̶Circular economy to diversify product offering
̶Response services to extreme weather events
̶Increased investment in upgrading infrastructure to
be more resilient to extreme weather events
̶Infrastructure for ElectricVehicles

Climate resilience and decarbonisation (cont’d)
Downer has committed to reduce our Scope 1 and 2 GHG emissions by 45-50% by 2035 and
be net zero by 2050. This commitment was registered with the SBTion 21/3/2021
Downer is well positioned to contribute to Australia and New Zealand’s energy transition
Downer’s clear pathway to net zero is aligned to its Urban Service strategy:
̶Divesting high capital, carbon intensive industries
̶Continued focus on energy efficiency and GHG emission reductions
̶Decarbonisation through new technology and fuel switching
̶Decarbonising Downer’s fleet through EVs and alternate fuel vehicles
̶Increasing uptake of renewables
̶Reducing Scope 3 emissions
13

Capital management
Maintenance of BBB Fitch rating
Net Debt managed within 2-2.5x EBITDA
Dividends increasing to 60-70 % of NPATA over time
On-market buy-back ~$400 million
̶the most EPS accretive option for shareholders
No major refinancing required in the next 24 months
Capital and covenant headroom available for growth, including strategic M&A
14

Cash generation
Diversified and resilient earnings from critical service revenues; unable to be turned off
Agile and robust risk systems and business model
Expectation of 90-100% normalised EBITDA cash conversion
No net reduction through the cycle in Free Cash Flow due to exit of Mining and Laundries
15

Immediate priorities
16
FY21 Earnings and Cash performance
̶Strong performance year to date
Sale of remaining non-core assets (Mining Open Cut East and Hospitality)
FY22 – FY24 Business Planning (underway)
Implementation of The Downer Standard
Growth
̶Organic
oIncreased Government spend in Urban Services
oMargin improvement
oInvestment in technology
oBrand development / increased Government focus
̶Acquisition (“bolt on”)
oDefence (Sovereign capability)
oStrengthen value chain in existing markets

Macquarie Conference
5 May 2021