Annual Report 2018 HOSPITAL HOTEL GAS CO LAUNDRY CLEANO SCHOOL This Annual Report includes the Downer EDI Limited Directors’ Report, the Annual Financial Report and Independent Audit Report for the financial year ended 30 June 2018. The Annual Report is available on the Downer website www.downergroup.com. Contents Directors’ Report Page 2 Auditor’s signed reports Page 52 Auditor’s Independence Declaration Page 53 Independent Auditor’s Report Financial Statements Page 62 Consolidated Statement of Profit or Loss and Other Comprehensive Income Page 63 Consolidated Statement of Financial Position Page 64 Consolidated Statement of Changes in Equity Page 65 Consolidated Statement of Cash Flows Notes to the consolidated financial statements A B C D E F G About this Business Operating assets Employee Capital structure Group Other report performance and liabilities benefits and financing structure Page 66-67 Page 68-77 Page 78-87 Page 88 Page 89-95 Page 96-106 Page 107-120 B1 C1 D1 E1 F1 G1 Segment Reconciliation Employee benefits Borrowings Joint arrangements New accounting information of cash and and associate standards cash equivalents entities B2 C2 D2 E2 F2 G2 Profit from Trade and other Key management Financing facilities Acquisition of Capital and financial ordinary activities receivables personnel businesses risk management compensation B3 C3 D3 E3 F3 G3 Earnings per share Rendering of Employee discount Commitments Disposal of Other financial services and share plan business assets and liabilities construction contracts B4 C4 E4 F4 Taxation Inventories Issued capital Controlled entities B5 C5 E5 F5 Remuneration Trade and other Reserves Related party of auditors payables information B6 C6 E6 F6 Subsequent events Property, plant Dividends Parent entity and equipment disclosures C7 Intangible assets C8 Provisions C9 Contingent liabilities Page 121 Directors’ Declaration Other information Page 122 Sustainability Performance Summary 2018 Page 127 Corporate Governance Page 136 Information for Investors Annual Report 2018 1 Directors’ Report for the year ended 30 June 2018 The Directors of Downer EDI Limited submit the Annual S A CHAPLAIN (60) Financial Report of the Company for the financial year Independent Non-executive Director since July 2008 ended 30 June 2018. In compliance with the provisions Ms Chaplain is a former investment banker with extensive of the Corporations Act 2001 (Cth), the Directors’ Report experience in public and private sector debt financing. She also is set out below. has considerable experience as a Director of local and state Board of Directors government-owned corporations involved in road, water and port infrastructure. R M HARDING (69) Ms Chaplain is Chairman of Queensland Airports Limited and a Chairman since November 2010, Independent Director of Seven Group Holdings Limited. Ms Chaplain is also Non-executive Director since July 2008 Chairman of Canstar Pty Ltd, a financial services research and Mr Harding has held management positions around the world ratings company and a Director of Credible Labs Inc and The with British Petroleum (BP), including President and General Australian Ballet. Her former board roles include being a member Manager of BP Exploration Australia. of the Board of Taxation, a Director of EFIC, Australia’s export credit agency and a Director of PanAust . Mr Harding is currently the Chairman of Lynas Limited and a Director of Cleanaway Waste Management Limited, a former A Fellow of the Australian Institute of Company Directors, Chairman of Roc Oil Company Limited and Clough Limited Ms Chaplain holds a Bachelor of Arts degree majoring in and a former Director of Santos Limited. Economics and Mandarin from Griffith University in addition to a Masters of Business Administration (MBA) from the University Mr Harding holds a Masters in Science, majoring in of Melbourne. She holds an honorary doctorate from Griffith Mechanical Engineering. University for her service to banking and finance, and to the Mr Harding lives in Sydney. Gold Coast community. G A FENN (53) Ms Chaplain lives on the Gold Coast. Managing Director and Chief Executive Officer since P S GARLING (64) July 2010 Independent Non-executive Director since November 2011 Mr Fenn has over 30 years’ experience in operational Mr Garling has over 35 years’ experience in the infrastructure, management, strategic development and financial management. construction, development and investment sectors. He was He joined Downer in October 2009 as Chief Financial Officer and the Global Head of Infrastructure at AMP Capital Investors, was appointed Chief Executive Officer in July 2010. a role he held for nine years. Prior to this, Mr Garling was CEO He was previously a member of the Qantas Executive of Tenix Infrastructure and a long-term senior executive at the Committee, holding a number of senior roles over 14 years, Lend Lease Group, including five years as CEO of Lend Lease as well as Chairman of Star Track Express and a Director of Capital Services. Australian Air Express. He worked at KPMG for eight years Mr Garling is currently the Chairman of Tellus Holdings Limited, before he joined Qantas. Energy Queensland Limited and Newcastle Coal Infrastructure Mr Fenn is currently a Director of Sydney Airport Limited Group and a Director of Charter Hall Limited and the NSW and Spotless Group Holdings Limited and a Member of the electricity distributor, Essential Energy. He is a former Director of UTS Engineering and IT Industry Advisory Board. Spotless Group Holdings Limited and a past President of Water Polo Australia Limited. Mr Fenn holds a Bachelor of Economics from Macquarie University and is a member of the Australian Institute of Mr Garling holds a Bachelor of Building from the University of Chartered Accountants. New South Wales and the Advanced Diploma from the Australian Institute of Company Directors. He is a Fellow of the Australian Mr Fenn lives in Sydney. Institute of Building, Australian Institute of Company Directors and Institution of Engineers Australia. Mr Garling lives in Sydney. 2 Downer EDI Limited T G HANDICOTT (55) A Fellow of the Australian Institute of Company Directors Independent Non-executive Director since September 2016 and a Member of Chief Executive Women and the Institute of Chartered Accountants, Ms Hollows holds a Bachelor of Ms Handicott is a former corporate lawyer with over 30 years’ Business – Accounting and a Graduate Diploma in Advanced experience in mergers and acquisitions, capital markets and Accounting (Distinction) from the Queensland University of corporate governance. She was a partner of national law firm Technology and is a Graduate of Harvard Business School’s Corrs Chambers Westgarth for 22 years, serving as a member Program for Management Development. of its National Board for seven years including four years as National Chairman. She also has extensive experience in Ms Hollows lives in Brisbane. governance of local and state government organisations. C G THORNE (68) Ms Handicott is currently the Chairman of listed company Independent Non-executive Director since July 2010 PWR Holdings Limited and a Director of LGE Holding Company Pty Ltd trading as Peak Services, which is the subsidiary of the Dr Thorne has over 36 years’ experience in the mining and Local Government Association of Queensland that is responsible extraction industry, specifically in senior operational and for its commercial operations. Ms Handicott is also a Director executive roles with Rio Tinto. His experience spanned a range of Bangarra Dance Theatre Limited and a Divisional Councillor of product groups and functional activities in Australia and of the Queensland Division of the Australian Institute of overseas. After serving in London as Group Mining Executive Company Directors. from 1996 to 1998, Dr Thorne moved to Indonesia as President Director of Kaltim Prima Coal and then returned to Australia Ms Handicott is a former Director of CS Energy Limited, a former to manage Rio Tinto’s Australian coal business as Managing member of the Queensland University of Technology (QUT) Director of Rio Tinto Coal Australia and the publicly listed Coal Council, the Takeovers Panel and Corporations and Markets and Allied Industries. He was President of the Queensland Advisory Committee and a former Associate Member of the Resources Council in 2001-2003. Australian Competition and Consumer Commission. In 2006, Dr Thorne was appointed global head of Rio Tinto’s A Senior Fellow of Finsia and Member of the Australian Institute technology, innovation and project engineering functions, of Company Directors and Chief Executive Women, Ms Handicott reporting to the Chief Executive. He was a member of Rio Tinto’s holds a Bachelor of Laws (Hons) degree from the Queensland Executive Committee and Investment Committee. He retired University of Technology. from Rio Tinto in 2011. Ms Handicott lives in Brisbane. Dr Thorne is a Director of Spotless Group Holdings Limited and a former Director of Wesley Research Institute, JK Tech and N M HOLLOWS (47) Queensland Energy Resources Limited. He is a Fellow of the Independent Non-executive Director since June 2018 Australasian Institute of Mining and Metallurgy. Ms Hollows has over 20 years’ experience in the resources Dr Thorne also holds directorships with a number of sector in a number of senior managerial roles across both the private companies. public and private sectors, including in mining, utilities and rail. Her experience spans operational management, accounting He holds Bachelor and Doctoral degrees in Metallurgy from the and finance, mergers and acquisitions, capital management University of Queensland and is a Graduate of the Australian and corporate governance. Institute of Company Directors. Ms Hollows is currently the Chief Executive Officer of SunWater Dr Thorne lives on the Sunshine Coast. Limited, a Queensland Government owned corporation. She is the Chair of The Salvation Army Brisbane Red Shield Appeal Committee and an advisory committee member of the Salvation Army Queensland Advisory Council and also a board member of the Water Services Association of Australia and a member of the CEO Advisory Committee for Dean of Queensland University of Technology Business School.