Dow

Annual Report
2022

02

|     Downer EDI Limited03

Contents

Directors’ Report 

Auditor’s Signed Reports 
Auditor’s Independence Declaration 
Independent Auditor’s Report 

Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income 
 Consolidated Statement of Financial Position 
 Consolidated Statement of Changes in Equity 
 Consolidated Statement of Cash Flows 

Notes to the consolidated financial statements

6

52
53

61
62
63
64

A

B

C

D

E

F

About this  
report

Business 
performance

Operating assets 
and liabilities

Employee 
benefits 

Capital structure  
and financing

Group 
structure

G

Other 

Page 65-66

Page 67-80

Page 81-95

Page 96-97

Page 98-105

Page 106-116

Page 117-124

B1
Segment 
information

B2
Revenue

C1
Reconciliation 
of cash and cash 
equivalents

D1
Employee benefits

E1
Borrowings

F1
Joint arrangements 
and associate 
entities

G1
New accounting 
standards

C2
Trade receivables 
and contract assets

D2
Defined 
benefit plan

E2
Financing facilities

F2
Controlled entities

G2
Capital and financial 
risk management

G3
Other financial 
assets and 
liabilities

F3
Related party 
information

F4
Parent entity 
disclosures

F5
Acquisition 
of businesses

F6
Disposal of 
businesses

B3
Individually 
significant items

C3
Inventories

D3
Key management 
personnel 
compensation

E3
Lease liabilities

B4
Earnings per share

C4
Trade payables and 
contract liabilities

D4
Employee discount 
share plan

E4
Commitments

B5
Taxation

B6
Remuneration 
of auditor

C5
Property, plant and 
equipment

C6
Right-of-use assets

B7
Subsequent events

C7
Intangible assets

C8
Other provisions

C9
Contingent liabilities

Directors’ Declaration 

Other information
Sustainability Performance Summary 2022 
Corporate Governance 

Information for Investors 

E5
Issued capital

E6
Reserves

E7
Dividends

125

126
132

144

Annual Report 2022     |04

Highlights

1.  The underlying cash conversion is calculated 
after adjusting for cash outflows related to 
FY20 items outside underlying earnings of 
$22.3 million and bid costs for the Queensland 
Train Manufacturing Program of $12.7 million.
2.  Total revenue is a non-statutory disclosure  
and includes revenue from joint ventures,  
other alliances and other income. 

3.  Underlying EBITA and NPATA are non-IFRS 
measures that are used by Management to  
assess the performance of the business. 
They have been calculated from the statutory 
measures and underlying EBITA is reconciled to 
statutory NPAT in the Directors’ Report Group 
Financial Performance section on pages 12 and 13.

Downer’s Urban Services businesses performed 
well in FY22. Despite positive underlying core 
markets, earnings were weighed down by the 
disruptive impacts of COVID-19 and severe wet 
weather on operations. 
Downer reported a statutory net profit after 
tax (NPAT) of $152.0 million, and an underlying 
NPATA of $225.3 million.
Cash performance remains strong, with cash 
conversion of 83.9% (underlying cash conversion 
of 88.9%1). 
Downer’s performance, and the continued strength 
of the balance sheet, has resulted in the Board 
declaring a final dividend of 12 cents per share, 
taking total dividends for the year to 24 cents per 
share (up 3 cents per share on prior year), unfranked.

Total Revenue2

$11,987.1m

Statutory EBITA

Underlying3 EBITA

$358.0m

$399.2m

Statutory NPAT

Underlying3 NPATA

$152.0m

$225.3m

Operating Cash Flow

$495.4m

|     Downer EDI Limited05

After successfully exiting the remaining non-core 
businesses (Mining and Hospitality), Downer’s 
strategy is to continue to focus on its core Urban 
Services businesses. These businesses have:
–  demonstrated strength and resilience
–  leading market positions and attractive 

medium and long-term growth opportunities

–  a high proportion of government and  

government-related contracts

–  a capital light, services-based business model 

generating lower risk, more predictable revenues 
and cash flows.

The Downer Portfolio

Transport

Utilities

Facilities

Road Services

Telecommunications

Government

Rail and Transit Systems

Water

Health and Education

Projects

Power and Gas

Defence

Building

Power and Energy

Industrial and Marine

Mineral Technologies

Annual Report 2022     |06

Directors’ Report

for the year ended 30 June 2022

The Directors of Downer EDI Limited submit the Annual Financial Report of the Company for the financial year ended 
30 June 2022. In compliance with the provisions of the Corporations Act 2001 (Cth), the Directors’ Report is set out below.

Board of Directors

MARK PETER CHELLEW (66)
Chairman since October 2021
Independent Non-executive Director since September 2021
Mr Chellew has over 40 years of experience in the building materials and related industries, including roles 
such as Managing Director and Chief Executive Officer of Adelaide Brighton Limited, Managing Director 
of Blue Circle Cement in the United Kingdom and senior management positions within the CSR group 
of companies in Australia and the United Kingdom.
He is currently the Non-executive Chairman of Cleanaway Waste Management Limited and a 
Non-executive Director of Ampol Limited. He is a former Non-executive Director of Virgin Australia 
Holdings Limited and Infigen Energy Limited.
Mr Chellew holds a Bachelor of Science (Ceramic Engineering), Masters of Engineering 
(Mechanical Engineering) and a Graduate Diploma in Management.
Mr Chellew lives in the Southern Highlands of New South Wales.

GRANT ANTHONY FENN (57)
Managing Director and Chief Executive Officer since July 2010
Mr Fenn has over 30 years’ experience in operational management, strategic development and financial 
management. He joined Downer in October 2009 as Chief Financial Officer and was appointed Chief 
Executive Officer in July 2010.
He was previously a member of the Qantas Executive Committee, holding a number of senior roles over 
14 years, as well as Chairman of Star Track Express and a Director of Australian Air Express. He worked 
at KPMG for eight years before he joined Qantas.
Mr Fenn is currently a Director of Spotless Group Holdings Limited and a former Director of Sydney 
Airport Limited.
Mr Fenn holds a Bachelor of Economics from Macquarie University and is a member of the Australian 
Institute of Chartered Accountants.
Mr Fenn lives in Sydney.

|     Downer EDI Limited07

MARK JAMES BINNS (66)
Independent Non-executive Director since March 2022
Mr Binns is an experienced senior executive and non-executive director with extensive experience 
in New Zealand in the energy, construction and building materials sectors where he has been closely 
involved in many of New Zealand’s largest infrastructure projects, including the Wiri Prison public-private 
partnership, Waterview Connection, SKYCITY, Museum of New Zealand Te Papa Tongarewa and the 
second Manapōuri tunnel.
Mr Binns was Chief Executive Officer of Meridian Energy from 2012 to 2017 and prior to that held several 
senior roles with Fletcher Building, including as Chief Executive Officer of the Infrastructure Division where 
he was responsible for the construction and heavy building materials operations in Australia, South East 
Asia, India, South America, the United States and the South Pacific, as well as in New Zealand.
Mr Binns is currently Chairman of Crown Infrastructure Partners and Hynds Limited and a Non-executive 
Director of Auckland International Airport and several private companies.
Mr Binns holds a Bachelor of Laws from the University of Auckland.
Mr Binns lives in Auckland.

TERESA GAYLE HANDICOTT (59)
Independent Non-executive Director since September 2016
Ms Handicott is a former corporate lawyer with over 30 years’ experience in mergers and acquisitions, 
capital markets and corporate governance. She was a partner of national law firm Corrs Chambers 
Westgarth for 22 years, serving as a member of its National Board for seven years including four 
years as National Chairman. She also has extensive experience in governance of local and state 
government organisations.
Ms Handicott is currently the Chairman of listed company PWR Holdings Limited and of Peak Services 
Holdings Pty Ltd, which is the subsidiary of the Local Government Association of Queensland that is 
responsible for its commercial operations. Ms Handicott is also State President of the Queensland Division 
of the Australian Institute of Company Directors.
Ms Handicott is a former Director of CS Energy Limited, a former member of the Queensland University 
of Technology (QUT) Council, the Takeovers Panel and Corporations and Markets Advisory Committee 
and a former Associate Member of the Australian Competition and Consumer Commission.
A Senior Fellow of FINSIA, Fellow of the Australian Institute of Company Directors and Member of Chief 
Executive Women, Ms Handicott holds a Bachelor of Laws (Hons) degree from the Queensland University 
of Technology.
Ms Handicott lives in Brisbane.

Directors’ Report     |08

NICOLE MAREE HOLLOWS (51)
Independent Non-executive Director since June 2018
Ms Hollows has 25 years’ experience in the resources sector in a number of senior managerial roles 
across both the public and private sectors, including in mining, utilities and rail. Her experience spans 
operational management, accounting and finance, mergers and acquisitions, capital management and 
corporate governance.
Ms Hollows is the Non-executive Chair of Jameson Resources Limited, and a Non-executive Director 
of Qube Holdings Limited and Chief Executive Women.
She was formerly the Chief Executive Officer of SunWater Limited, a Queensland Government owned 
corporation, the Chief Financial Officer and subsequently Chief Executive Officer of Macarthur Coal 
Limited and Managing Director of AMCI Australia and South East Asia.
A Fellow of the Australian Institute of Company Directors and a Member of Chief Executive Women and the 
Institute of Chartered Accountants, Ms Hollows holds a Bachelor of Business – Accounting and a Graduate 
Diploma in Advanced Accounting (Distinction) from the Queensland University of Technology and is a 
Graduate of Harvard Business School’s Program for Management Development.
Ms Hollows lives in Brisbane.

DR ADELLE MAREE HOWSE (51)
Independent Non-executive Director since April 2022
Dr Howse has extensive senior executive and non-executive experience in the infrastructure, energy 
and resources, construction, data centres, telecommunication and property sectors.
Dr Howse held several senior roles with CIMIC, including Chief Strategy Officer.
Dr Howse is currently a Non-executive Director of Macquarie Telecom Group, Sydney Desalination 
Plant and is Chairman of the Australian Mathematical Sciences Institute. She has previously served 
on the boards of Devine Group, Design Studio Group, Ventia, Nextgen Holdings and Manila North 
Tollroads Corporation.
Dr Howse holds a Bachelor of Science and Doctor of Philosophy (Mathematics) from the University 
of Queensland, an executive MBA from IMD, Switzerland and a Graduate Diploma of Applied Finance 
and Investment. She is a member of the Australian Institute of Company Directors.
Dr Howse lives in Sydney.

|     Downer EDI Limited09

MARK JOHN MENHINNITT (57)
Independent Non-executive Director since March 2022
Mr Menhinnitt is an experienced senior executive with extensive domestic and international experience 
in large infrastructure development and urban regeneration, investment management, construction, asset 
services, operations and maintenance.
Mr Menhinnitt held several senior roles over a 30-year career with Lendlease, including as Chief Executive 
Officer of Lendlease Australia.
Mr Menhinnitt is currently a Non-executive Director of The GPT Group, a Non-executive Director of 
Sunshine Coast Airport Pty Ltd, a member of the Australian War Memorial Development Committee and 
Chairman of Fluent Property Pty Ltd.
Mr Menhinnitt holds a Bachelor of Engineering (Mechanical) and Master of Business (Applied Finance), 
both from the Queensland University of Technology. He is a member of the Australian Institute of Company 
Directors and a Fellow of the Governance Institute of Australia.
Mr Menhinnitt lives on the Sunshine Coast.

PETER LAWRENCE WATSON (65)
Independent Non-executive Director since May 2019
Mr Watson has extensive experience in the construction and engineering sectors in senior executive 
and governance roles, including in the industrial, transport, defence, health, justice and utilities sectors. 
He was Chief Executive Officer and Managing Director of Transfield Services Limited (now known as 
Broadspectrum which is owned by Ventia) for ten years. During this period, he led the business through 
a successful transition, cultivating a sustainable and successful public company. He also has considerable 
experience in various Non-executive Director roles.
Mr Watson is currently the Non-executive Chairman of BG&E Group Limited and a Consultant of 
Stephenson Mansell Group where he provides coaching and mentoring to senior executives.
Mr Watson is a former Chairman of LogiCamms Limited (now known as Verbrec), Watpac Limited, Regional 
Rail Link Authority in Victoria and AssetCo Management which managed PPP assets, a former Director 
of the Major Transport Infrastructure Board in Victoria, Yarra Trams and Save the Children Australia 
and was a Board member of Infrastructure Australia and independent Chair of Ross River Solar Farm.
A Fellow of the Australian Academy of Technological Sciences and Engineering and member of the 
Institute of Engineers Australia and Australian Institute of Company Directors, Mr Watson holds a Diploma 
of Civil Engineering from the Caulfield Institute of Technology and is a Graduate of the Wharton Advanced 
Management Program of the University of Pennsylvania.
Mr Watson lives on the Sunshine Coast.

RETIRED DIRECTORS
Richard Michael Harding
Independent Non-executive Director from 1 July 2008 to 30 September 2021,  
Chairman from November 2010.

Philip Stuart Garling
Independent Non-executive Director from 24 November 2011 to 30 June 2022.

Directors’ Report     |10

Directors’ shareholdings
The following table sets out each Director’s relevant interest (direct and indirect) in shares, debentures, and rights or options in 
shares or debentures (if any) of the Company at the date of this report. No Director has any relevant interest in shares, debentures 
and rights or options in shares or debentures, of a related body corporate as at the date of this report.

Director

M P Chellew
G A Fenn1
M J Binns
T G Handicott
N M Hollows
A M Howse
M J Menhinnitt
P L Watson

Number of Fully
Paid Ordinary Shares

Number of Fully Paid
Performance Rights

Number of Fully Paid
 Performance Options

18,000
2,049,772
–
21,100
25,538
5,000
21,748
17,933

–
584,317
–
–
–
–
–
–

–
–
–
–
–
–
–
–

1. 

Performance rights granted to Mr Fenn are subject to performance and/or service period conditions over the period 2019 to 2024. Further details regarding the 
conditions relating to these restricted shares and performance rights are outlined in sections 6.4 and 9.2 of the Remuneration Report.

Company Secretary
The Company Secretarial function is responsible for ensuring 
that the Company complies with its statutory duties and 
maintains proper documentation, registers and records. It 
also provides advice to Directors and officers about corporate 
governance and gives practical effect to any decisions made 
by the Board.

Mr Robert Regan was appointed Group General Counsel and 
Company Secretary in January 2019. He has qualifications in 
law from the University of Sydney and is an admitted solicitor 
in New South Wales. Mr Regan was formerly a partner of 
Corrs Chambers Westgarth and has over 30 years of experience 
in legal practice.

Mr Peter Lyons was appointed joint Company Secretary in 
July 2011. A member of CPA Australia and the Governance 
Institute of Australia, he has qualifications in commerce from the 
University of Western Sydney and corporate governance from 
the Governance Institute of Australia. Mr Lyons was previously 
Deputy Company Secretary and has been in financial and 
secretarial roles at Downer for over 20 years.

Review of Operations

Principal Activities
Downer EDI Limited (Downer) is a leading provider of 
integrated services in Australia and New Zealand. Downer 
employs approximately 33,000 people, mostly in Australia 
and New Zealand.

Downer operates in sectors that are closely connected to 
the investment that is being driven by population growth and 
urbanisation. These sectors include roads, rail, light rail, other 
public transport, power, gas, water, telecommunications, health, 
education, defence and other government sectors.

These sectors are served by Downer’s Urban Services 
businesses – Transport, Utilities and Facilities.

These Urban Services businesses have:
 § Demonstrated strength and resilience
 § Leading market positions and attractive medium-term 

and long-term growth opportunities
 § A high proportion of government and 

government-related contracts

 § A capital light, services-based business model generating 
lower risk, more predictable revenues and cash flows.

In the 12 months ended 30 June 2022, Downer completed the 
divestment of its Mining portfolio of businesses, with the sale 
of Open Cut Mining East and Otraco. During the year, Downer 
also exited the majority of its Hospitality contracts.

|     Downer EDI Limited11

Gearing has decreased by 1.3 percentage points (pp) to 17.7% 
since June 2021 reflecting the strong operating cash flows and 
proceeds from the divestment program partially offset by the 
impact of the share buy-back program.

Cash conversion for the year was 83.9% and 88.9% after 
adjusting for $22.3 million2 cash outflows related to items 
recognised in FY20 and funded from the July 2020 capital 
raising, and $12.7 million bid costs for the Queensland Train 
Manufacturing Program.

Corporate costs decreased by $2.7 million or, 2.6%, to 
$100.5 million as a result of portfolio restructure and cost 
management, partially offset by higher information technology 
security and insurance related costs.

Net finance costs decreased by $19.5 million or, 18.6%, to 
$85.4 million driven by lower average debt drawn and lower 
lease interest expense.

The underlying effective tax rate of 28.0% is lower than the 
statutory corporate tax rate of 30.0% due to the impact of items 
including non-taxable distributions from joint ventures and 
lower tax rates in overseas jurisdictions (e.g. New Zealand).

Individually Significant Items (ISIs) totalled $41.2 million loss 
before interest and tax for the year, ($48.9 million loss after-tax). 
These ISIs relate to: 
 § The fair value movement of the Downer Contingent Share 
Options (DCSO) issued in FY21 as part of the acquisition of 
the remaining 12.2% interest in Spotless

 § Divestments and exit costs
 § Portfolio restructure costs
 § Bid costs
 § Probuild credit loss
 § Gain on sale of PP&E.

Refer to Note B3 to the Financial Report for further details.

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.

2.  Downer undertook a Non-renounceable Pro-rata Entitlement Offer, for 

which the uses included the funding of payroll remediation costs and legal 
settlements of New Zealand building works.

Sustainability
At Downer, sustainability means sustainable and profitable 
growth, providing value to customers, delivering services in a 
safe and environmentally responsible manner, helping its people 
to be better and advancing the communities in which the 
Group operates.

Downer’s commitments to sustainability are outlined 
in its policies, which are accessible from the Downer 
website (www.downergroup.com). The Group’s 2022 
Sustainability Report details Downer’s sustainability- 
related performance for the financial year ended 
30 June 2022 can be found on the Company website  
(www.downergroup.com/2022sustainabilityreport).

A core element of Downer’s sustainability approach is to 
focus on its customers’ success. The Group’s core operating 
philosophy, ‘Relationships creating success’, encapsulates this 
theme. With Downer’s services impacting millions of lives every 
day, the sustainability of the Group’s operations is paramount 
– for its people, partners, shareholders, customers and their 
customers. Downer delivers these services while managing 
the impacts of its activities on people, the environment 
and communities in which the Group operates and working 
collaboratively with its supply chain. Downer’s extensive 
capability is well-placed for the decarbonisation effort that 
is required to meet Australia and New Zealand’s Net Zero 
emissions target. The Group understands that its ability 
to do this is fundamental to Downer’s long-term success.

Group Financial Performance
For the 12 months ended 30 June 2022, Downer reported a 
decrease in total revenue and earnings before interest, tax and 
amortisation of acquired intangibles (EBITA) driven by the loss 
of contribution from the Mining and Laundries divestments 
made in the current and prior periods. In addition, the Group’s 
financial performance has been impacted by COVID-19 as well 
as severe wet weather conditions as a result of La Niña. 

The main features of the result for the 12 months ended 
30 June 2022 were:
 § Total revenue1 of $12.0 billion, down 2.0%
 § Statutory EBITA of $358.0 million, down 10.7%; 

from $401.0 million

 § EBITA margin of 3.0% down from 3.3% at 30 June 2021
 § Statutory earnings before interest and tax (EBIT) 
of $323.2 million, down 3.5%; from $334.8 million

 § Statutory net profit after tax and before amortisation 

of acquired intangible assets (NPATA) of $176.4 million, 
down 23.3%; from $230.0 million

 § Statutory net profit after tax (NPAT) of $152.0 million, 

down 17.3%; from $183.7 million.

Directors’ Report     |12

The table below provides a comparison of the underlying1 earnings for FY22 versus the results for FY21 and a reconciliation to 
statutory NPAT.

Segment

Transport

Utilities

Facilities

All other segments

All other segments

Facilities

Facilities

Unallocated

Underlying1 EBITA (A$m)

Transport

Utilities2

Facilities2

Core Urban Services Businesses
Engineering & Construction

Mining

Laundries

Hospitality

Non-core businesses
Corporate

Group Underlying EBITA2
Amortisation of acquired intangibles (pre-tax)

Underlying EBIT
Net interest expense

Tax expense

Underlying NPAT
Amortisation of acquired intangibles (post-tax)

Underlying NPATA3
Items outside of underlying NPATA

Tax (expense)/benefit on items outside NPATA

Statutory NPATA
Amortisation of acquired intangibles (post-tax)

Statutory NPAT

FY22

254.6

73.7

179.8

508.1
–

8.1

–

(16.5)

(8.4)
(100.5)

399.2
(34.8)

364.4
(85.4)

(78.1)

200.9
24.4

225.3
(41.2)

(7.7)

176.4
(24.4)

152.0

FY21

250.2

94.8

178.6

523.6
(5.1)

46.6

5.0

0.4

46.9
(103.2)

467.3
(66.2)

401.1
(100.6)

(85.6)

214.9
46.3

261.2
(70.6)

39.4

230.0
(46.3)

183.7

Variance 
(%)

1.8%

(22.3%)

0.7%

(3.0%)
100.0%

(82.6%)

(100.0%)

<(100%)

<(100%)
2.6%

(14.6%)
47.4%

(9.1%)
15.1%

8.8%

(6.5%)
(47.3%)

(13.7%)
41.6%

<(100%)

(23.3%)
47.3%

(17.3%)

1. 

The underlying result is a non-IFRS measure that is used by Management to assess the performance of the business. Non-IFRS measures have not been subject to 
audit or review.

2.  The Group has restated the previously reported segment information for the year ended 30 June 2021 to align it with the current segment presentation.
3.  Downer calculates EBITA and NPATA by adjusting EBIT and NPAT to add back acquired intangible assets amortisation expense. 

Group FY22: $34.8 million, $24.4 million after-tax. (FY21: $66.2 million, $46.3 million after-tax).

|     Downer EDI Limited13

Statutory earnings
Statutory earnings before interest and tax (EBIT) of $323.2 million, down 3.5%; from $334.8 million.
Statutory EBITA of $358.0 million, down 10.7%, from $401.0 million.
Underlying EBITA of $399.2 million, down 14.6%; from $467.3 million.

A reconciliation of the FY22 underlying result to the statutory result is provided in the table below:

A$m

Underlying result
Fair value on Downer Contingent 
Share Options (DCSO)1
Divestments and exit costs
Portfolio restructure costs
Bid costs2
Probuild credit loss
Gain on sale of PP&E
Total items outside underlying result
Statutory result – Profit/(loss)

EBITA

399.2

3.7
(75.8)
(7.6)
(12.7)
(34.6)
85.8
(41.2)
358.0

Net Interest 
expense

Tax 
expense

NPATA

Amortisation
of acquired
intangibles
(post-tax)

NPAT

(85.4)

(88.5)

225.3

(24.4)

200.9

–
–
–
–
–
–
–
(85.4)

–
5.0
2.3
3.8
6.9
(25.7)
(7.7)
(96.2)

3.7
(70.8)
(5.3)
(8.9)
(27.7)
60.1
(48.9)
176.4

–
–
–
–
–
–
–
(24.4)

3.7
(70.8)
(5.3)
(8.9)
(27.7)
60.1
(48.9)
152.0

1. 

The Downer Contingent Share Options (DCSO) issued as part of the acquisition of the minority interest in Spotless in August 2020 are required to be recorded 
at fair value with changes in fair value recorded through profit or loss. Since 30 June 2021, the fair value of the DCSO has decreased by $3.7 million, which has been 
recognised in ‘Other income’ in the Consolidated Statement of Profit or Loss and Other Comprehensive Income during the year. This income is primarily driven by 
the decrease in Downer’s share price from $5.59 at 30 June 2021 to $5.05 at 30 June 2022.

2.  Downer is in the process of tendering for the State of Queensland Train Manufacturing Program, for which a net $12.7 million in bid costs were expensed during the year.

Refer to Note B3 to the Financial Report for further details.

Expenses
Total expenses decreased by 3.6%, or $410.5 million 
compared to the prior corresponding period (pcp) and 
includes $153.7 million of items outside the underlying result, 
while the pcp included $77.0 million of ISIs.

Excluding these items, total expenses in FY22 decreased by 
4.4%, or $487.2 million.

Downer’s cost base (including ISIs) by type of expense 
compared to the pcp is as follows:

FY22 (%)
5.7

7.8

12.7

FY21 (%)
5.1

9.8

33.0

14.2

34.2

40.8

36.7

  Employee benefits

  Subcontractor
  Raw materials and 
consumables used

  Plant and equipment, 

depreciation and amortisation, 
impairment of assets

  Other expenses

Employee benefits expense decreased by 7.2%, or $278.3 million, 
to $3.6 billion and represents 33.0% of Downer’s cost base. 
The decrease is mainly driven by divestments (Mining and 
Laundries) and exiting of contracts in Hospitality together with 
a shift in the mix of labour from direct labour to subcontractors.
Accordingly, subcontractor costs increased by 7.2%, or $297.8 
million, to $4.4 billion and represents 40.8% of Downer’s cost 
base (36.7% in pcp).

Raw materials and consumables used decreased by 13.4%, or 
$213.3 million, to $1.4 billion and represents 12.7% of Downer’s 
cost base. The decrease is mainly driven by lower raw materials 
costs following the divestment of Mining and Laundries and 
completion of the Sydney Growth Trains (SGT) construction 
phase within Transport.

Plant and equipment costs decreased by 20.6%, or $121.7 million, 
to $0.5 billion and represents 4.3% of Downer’s cost base. 
The decrease in plant and equipment costs is attributed to 
a less capital-intensive business following the divestment of 
Mining and Laundries as well as from initiatives to drive efficient 
plant and equipment utilisation and maintenance practices. 
Total depreciation and amortisation decreased by 30.8%, or 
$152.2 million, to $0.3 billion and represents 3.2% of Downer’s 
cost base. The decrease is driven by assets disposed as part of 
the Laundries and Mining divestments.

Directors’ Report     |14

Other expenses from ordinary activities which include 
communication, travel, professional fees and occupancy 
costs, increased by 6.1%, or $35.4 million, to $615.3 million and 
represents 5.7% of Downer’s cost base.

Other expenses include $84.0 million of pre-tax ISIs (pcp 
included $60.4 million), mainly related to divestment results 
(including transaction and divestment costs) and the credit 
loss incurred as a result of the customer Probuild entering 
administration as described in Note B3 to the Financial Report. 
Excluding the impact of ISIs, other expenses increased 2.3% 
or $11.8 million mainly due to higher information technology 
security and insurance costs.

Cash flow
Operating Cash Flow
Operating cash flow of $495.4 million represents a cash 
conversion of 83.9% of adjusted earnings before interest, tax, 
depreciation and amortisation (EBITDA).

The decrease in cash was predominantly driven by lower 
contributions from Mining and Laundries as a result of 
divestment activities as well as from the impact of severe 
wet weather as a result of La Niña and from COVID-19 across 
the Group.

Included within the operating cash flows is $22.3 million1 of cash 
outflows related to items recognised in FY20 and funded from 
the July 2020 capital raising, and a net $12.7 million in relation to 
bid costs. Excluding these cash outflows, cash conversion would 
be 88.9%.

Investing Cash Flow
Total investing cash inflow of $38.4 million was $2.5 million 
higher than the pcp and includes $245.4 million proceeds from 
the disposal of Mining during the year. Proceeds from disposal 
activities include: $75.1 million net proceeds from Otraco, 
$131.0 million net proceeds from Open Cut Mining East and 
$39.3 million deferred proceeds received in relation to Open 
Cut Mining West and Blasting (divested in FY21).

Excluding payments for the acquisition of businesses and 
proceeds from the disposal of businesses, investing cash 
outflow would have decreased by 21.0% or $48.5 million to 
$182.9 million largely due to lower capex requirements following 
the divestment of the Laundries and Mining businesses.

Debt and bonding
The Group’s performance bonding facilities totalled 
$1,964.7 million at 30 June 2022 with $591.8 million undrawn. 
There is sufficient available capacity to support the ongoing 
operations of the Group.

As at 30 June 2022, the Group had liquidity of $1.9 billion 
comprising cash balances of $738.5 million and undrawn 
committed debt facilities of $1.2 billion.

1.  Downer undertook a Non-renounceable Pro-rata Entitlement Offer, 
for which the uses included the funding of payroll remediation costs 
and legal settlements of New Zealand building works.

A buyback of Downer’s shares was announced to the market 
on 27 April 2021 and the buyback commenced on 8 June 2021. 
During the year ended 30 June 2022, a total of 24,002,597 
shares were purchased for total consideration of $142.6 million. 
Since announcement, $167.4 million has been spent on the 
buyback program with 28,365,995 shares bought back.

The Group continues to be rated BBB (Stable) by Fitch Ratings.

Balance sheet
Since 30 June 2021, the net assets of the Group decreased by 
$123.4 million or, 4.2%, to $2.8 billion driven by the impact of 
Mining divestments (now concluded) as shown below:

Movement in Net Assets

3.2 

3.0 

2.8 

b
$

’

2.6 

2.4 

2.2 

2.0 

2,957.4 

47.0 

103.8 

30.9 

2,834.0 

(236.5)

(68.6)

Jun-21

Reduction 
in net 
debt 

Mining
disposal 

PPE

ROUA Working 
capital
and other

Jun-22

Increase

Decrease

Total

Net debt is calculated as borrowings (excluding lease liabilities) 
less cash and cash equivalents. Net debt has decreased by 
$47.0 million or, 7.0%, mainly driven by $119.9 million lower 
borrowings following debt repayments made, partially offset by 
the lower cash position since 30 June 2021. 

The Mining divestment program reduced net assets of 
the Group by $236.5 million as described in Note F6 to the 
Financial Report.

Excluding the impact from the disposal of Mining; Property, 
plant and equipment increased by $103.8 million or, 12.6%. 
This was driven by capital expenditure in the Transport segment 
including assets from the acquisition of Fowlers Asphalting as 
well as the Rosehill Asphalt plant and Somerton land. Right-of-
use assets decreased by $68.6 million, or 13.6%, representing a 
lower leased asset portfolio following divestments.

Total Equity decreased by $123.4 million mainly driven by the 
$142.6 million in shares bought back and $171.4 million dividends 
paid during the year. This was partially offset by $152.0 million 
net profit after tax and mark to market gain on cross currency 
interest rates swaps recognised in hedge reserves.

|     Downer EDI Limited15

Segment financial performance

Transport
Transport comprises Downer’s Road Services, Rail and Transit 
Systems and Projects businesses.

Total revenue1 (FY22)

EBITA2 (FY22)

48.1%

51.0%

Transport

1. 

2 

Total revenue is a non-statutory disclosure and includes revenue, other 
income and notional revenue from joint ventures and other alliances not 
proportionately consolidated.
Downer calculates EBITA by adjusting EBIT to add back acquired intangibles 
amortisation expense. Due to rounding, divisional percentages do not add up 
precisely to 100%.

Transport revenue increased by 8.1%, or $426.5 million, to 
$5.7 billion due to higher contributions from the Projects 
business in Australia resulting from the commencement of new 
projects as well as an improved contribution from the Keolis 
Downer JV due to patronage increase following the easing of 
COVID-19 restrictions and the commencement of the Adelaide 
Metro contract. These increases were partially offset by lower 
revenue in Rail and Transit Systems following completion of the 
Sydney Growth Trains (SGT) construction phase.

Transport EBITA increased by 1.8% to $254.6 million due to 
new contracts within the Project business and an increased 
contribution from the Keolis Downer JV. This was partially offset 
by a decrease in contribution from Road Services in Australia 
mainly from wet weather impact from La Niña and from the 
completion of the SGT delivery project in Rail and Transit 
Systems business.

Road Services
Downer manages and maintains road networks across Australia 
and New Zealand and manufactures and supplies products 
and services to create safe, efficient and reliable journeys. 
Downer offers one of the largest non-government owned road 
infrastructure services businesses in Australia and New Zealand, 
maintaining more than 28,000 kilometres of road in Australia 
and more than 25,000 kilometres in New Zealand.

Downer creates and delivers solutions to its customers’ 
challenges through strategic asset management and a 
leading portfolio of products and services. Downer is a leading 
manufacturer and supplier of bitumen-based products and 
an innovator in the sustainable asphalt industry and circular 
economy, using recycled products and environmentally 
sustainable methods to produce asphalt.

Rail and Transit Systems
Downer has over 100 years’ rail experience providing end-
to-end, innovative transport solutions. Downer is a leading 
provider of rollingstock asset management services in Australia, 
with expertise in delivering whole-of-life asset management 
support to its customers. Downer’s capability spans all sectors, 
from rollingstock to infrastructure, and every project phase, 
from design and manufacture to through-life-support, fleet 
maintenance, operations and comprehensive overhaul of assets.

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, Adelaide Metro and 
an 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.

Projects
Downer delivers multi-disciplined infrastructure solutions to 
customers within the transport and power sector. The services 
provided by Downer include the design and construction of 
light rail, heavy rail, signalling, track and station works, rail 
safety technology, bridges and roads as well as design and 
construction of steel lattice transmission towers and design 
and build of substations.

Downer has a long history of delivering infrastructure projects 
under a variety of contracting models. Downer’s integrated 
capabilities enable intelligent transport solutions, road network 
management and maintenance, facility maintenance, utilities 
services and renewable energy technologies.

Utilities
Downer offers a range of services to customers across 
the power and gas, water, telecommunications and 
renewables sectors.

Total revenue1 (FY22)

EBITA2 (FY22)

14.9%

14.7%

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.

2.  Downer calculates EBITA by adjusting EBIT to add back acquired intangibles 
amortisation expense. Due to rounding, divisional percentages do not add up 
precisely to 100%.

Utilities revenue decreased by 6.0%, or $112.0 million, to 
$1.8 billion largely due to a decrease in volumes relating 
to COVID-19 related disruptions; partially offset by increased 
activities in Telecommunications in Australia.

Directors’ Report     |16

Utilities EBITA decreased by 22.3% to $73.7 million largely due 
to COVID-19 lockdowns impacts particularly in Water Services 
and Metering Services in Australia and in Telecommunications 
and Energy in New Zealand; partially offset by an increase in 
contribution from Telecommunications in Australia.

Power and Gas
Downer’s services include planning, designing, constructing, 
operating, maintaining, managing and decommissioning power 
and gas network assets. A collaborative approach has made 
Downer a benchmark end-to-end service provider to owners of 
utility assets.

Downer constructs and maintains electricity and gas networks, 
provides asset inspection and monitoring services, connects 
tens of thousands of new power and gas customers each year 
and provides meter, energy and water efficiency services for 
governments, utilities and corporations.

Water
Downer is dedicated to delivering complete water lifecycle 
solutions for municipal and industrial water users.

Downer’s expertise includes water treatment, wastewater 
treatment, water and wastewater network construction and 
rehabilitation, desalination and biosolids treatment.

As a leading provider of asset management services, Downer 
supports its customers across the full asset lifecycle from 
conceptual development through to design, construction, 
commissioning and into operations and maintenance.

Telecommunications
Downer is a leading provider of end-to-end technology and 
communications service solutions, offering integrated civil 
construction, electrical, fibre, copper and radio network 
deployment capability throughout Australia and New Zealand. 
Key capabilities include designing, engineering, maintenance, 
operations and smart metering.

Facilities
The Facilities service line operates in Australia and New Zealand 
across a range of industry sectors including defence, education, 
health, government, power & energy, industrial & marine 
and hospitality.

Total revenue1 (FY22)

EBITA2 (FY22)

35.0%

32.7%

Facilities revenue increased by 16.5%, or $588.9 million, to 
$4.2 billion largely driven by increased activities in Building 
Projects in New Zealand and higher activities in Australia in 
Health & Education. This was partially offset by loss of revenue 
contribution from Laundries (disposed in FY21, $186.1 million 
contribution in pcp) while COVID-19 lockdowns and exiting of 
contracts impacted Hospitality activities.

Facilities EBITA decreased by 11.3%, or $20.7 million to 
$163.3 million mainly driven by the impact of COVID-19 
lockdowns during the year on several sectors (particularly in 
Hospitality), loss of contribution from the Laundries business 
following disposal in FY21, partially offset by higher contribution 
from Building Projects in New Zealand and from Health & 
Education in Australia.

Facilities
Downer is the largest integrated facilities management services 
provider in Australia and New Zealand, delivering property and 
facilities management services to government departments, 
agencies and authorities at the Federal, State and municipal 
level. With 21 Public Private Partnership projects across the 
defence, education, health and leisure sectors, Downer provides 
innovative management of its customers’ assets across 
their lifecycle.

Downer has a 40-year history of supporting the daily operations 
of hospitals across Australia and New Zealand, delivering a 
range of services that create a safe environment for hospital 
staff, patients and their guests. At leading schools and tertiary 
institutions, Downer helps to create world-class learning 
environments through integrated services such as catering, 
building and grounds maintenance, conserving energy 
with air-conditioning and lighting solutions and ensuring 
a secure environment.

Power & Energy and Industrial & Marine
Downer is a leading provider of asset maintenance and 
specialist services to Australia’s critical economic infrastructure 
including the oil and gas, power generation and industrial 
sectors. As a trusted partner with a leading safety record, 
Downer optimises the reliability, efficiency and whole-
of-life costs of its customers’ assets through long-term 
relationship-based contracts.

Mineral Technologies
Downer’s Mineral Technologies business is the world leader 
in fine physical mineral separation solutions, including spiral 
gravity concentrators and magnetic and electrostatic separation 
technology. Mineral Technologies delivers innovative process 
solutions for iron ore, mineral sands, silica sands, coal, chromite, 
gold, tin, tungsten, tantalum and several other fine materials.

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.

2.  Downer calculates EBITA by adjusting EBIT to add back acquired intangibles 
amortisation expense. Due to rounding, divisional percentages do not add up 
precisely to 100%.

|     Downer EDI Limited17

All other segments
All other segments comprise the Group’s Mining activities prior 
to divestment and in the comparative period also includes 
the Engineering and Construction business unit which was 
previously reported as ‘businesses in wind down’.

Total revenue1 (FY22)

EBITA2 (FY22)

Engineering and Construction
Downer announced in February 2020 that it would focus 
its construction efforts on areas where it has a competitive 
differentiation. As a result, Downer no longer tenders for ‘hard 
dollar’ construction contracts in the coal, iron ore and industrial 
Electrical & Instrumentation and Structural, Mechanical and 
Piping sectors.

2.1%

1.6%

All other segments

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.

2.  Downer calculates EBITA by adjusting EBIT to add back acquired intangibles 
amortisation expense. Due to rounding, divisional percentages do not add up 
precisely to 100%.

All other segments revenue decreased by 83.0%, or $1.2 billion, 
to $0.2 billion and EBITA decreased by 80.5% to $8.1 million 
due to cessation of revenue and EBITA contribution from the 
remaining Mining businesses disposed during the year as part 
of the Group’s Urban Services strategy.

Mining
Downer has completed the divestment of Mining operations. 
The results for the year ended 30 June 2022 include 
contribution from the Mining business units to the point 
of disposal.

Dividends
The Downer Board resolved to pay a final dividend of 12.0 
cents per share, unfranked, payable on 28 September 2022 to 
shareholders on the register at 31 August 2022. The portion of 
the unfranked dividend amount that will be paid out of Conduit 
Foreign Income (CFI) is 14%.1

The Board also determined to continue to pay a fully imputed 
dividend on the ROADS security, which having been reset on 
15 June 2022 has a yield of 8.14% per annum payable quarterly 
in arrears, with the next payment due on 15 September 2022. 
As this dividend is fully imputed (the New Zealand equivalent of 
being fully franked), the actual cash yield paid by Downer will be 
5.86% per annum until the next reset date.

Consistent with the prior year, the Company’s Dividend 
Reinvestment Plan remains suspended.

Zero harm
Downer’s Lost Time Injury Frequency Rate (LTIFR) decreased to 
0.82 from 0.99 and its Total Recordable Injury Frequency Rate 
(TRIFR) decreased to 2.35 from 2.60 per million hours worked2.

Sadly, a long-term Downer employee in New Zealand died in 
May 2022 following a fall at work. Although the cause of death 
is not yet known, Downer has treated this as a workplace 
fatality. This incident is a reminder of the challenges of ensuring 
we remain vigilant and relentlessly manage the Critical Risks 
associated with the work we do every day.

Downer Group Safety Performance (12-month rolling frequency rates)

3.00

2.50

2.60

I

R
F
R
T

0.99

2.00

1.50

2.00

1.50

2.35

1.00

0.82

R
F
T
L

I

0.50

1
2
-
n
u
J

1
2
-
l
u
J

1
2
-
g
u
A

1
2
-
p
e
S

1
2
-
t
c
O

1
2
-
v
o
N

1
2
-
c
e
D

2
2
-
n
a
J

2
2
-
b
e
F

2
2
-
r
a
M

2
2
-
r
p
A

2
2
-
y
a
M

2
2
-
n
u
J

LTIFR

TRIFR

1. 

This is relevant only for non-resident shareholders. The effect is that the portion of the unfranked dividend paid out of CFI is not subject to Australian dividend 
withholding tax.

2 .  Lost time injuries (LTIs) are defined as injuries that cause the injured person (employee or contractor) to be unfit to perform any work duties for one whole day or shift, 

or more, after the shift on which the injury occurred, and any injury that results, directly or indirectly, in the death of the person. The Lost Time Injury Frequency Rate 
(LTIFR) is the number of LTIs per million hours worked. Total Recordable Injuries (TRIs) are the number of LTIs plus medically treated injuries (MTIs) for employees and 
contractors. Total Recordable Injury Frequency Rate (TRIFR) is the number of TRIs per million hours worked.

Directors’ Report     |18

Group Business Strategies and Prospects for Future Financial Years
Downer’s Purpose is to create and sustain the modern environment by building trusted relationships with our customers.

Our Promise is to work closely with our customers to help them succeed, using world-leading insights and solutions.

Our business is founded on four Pillars:
 § Safety: Zero Harm is embedded in Downer’s culture and is fundamental to the company’s future success
 § Delivery: we build trust by delivering on our promises with excellence while focusing on safety, value for money and efficiency
 § Relationships: we collaborate to build and sustain enduring relationships based on trust and integrity
 § Thought leadership: we remain at the forefront of our industry by employing the best people and having the courage to 

challenge the status quo.

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

Downer believes that a sustainable 
and embedded Zero Harm culture 
is fundamental to the Company’s 
ongoing success, and to building 
trusted relationships with customers 
and business partners. Downer’s 
approach to Zero Harm enables it 
to work safely and environmentally 
responsibly in industry sectors with 
inherently hazardous environments. 
Zero Harm at Downer means a work 
environment that supports the health, 
including mental health and wellbeing,  
and safety of its people and allows it 
to deliver its business activities in an 
environmentally sustainable manner 
and advance the communities in which 
it operates. This includes continuing to 
monitor all COVID-19 risks and controls, 
and supporting the Government’s 
vaccination rollout strategy.

Embed asset 
management and 
standardisation as a 
cornerstone of the 
Delivery pillar

Downer has developed extensive asset 
management knowledge and expertise 
and also adopts and implements world-
leading insights and solutions. Downer 
strives for standardisation in its risk 
management and project delivery to 
ensure consistent quality outcomes for 
its customers.

Downer has a robust Critical Risk program. Risks that could 
cause serious injury to people or harm to the environment, 
and the controls needed to eliminate or manage those risks, 
are understood. This knowledge forms the core of Downer’s 
risk management processes, and the monitoring of its critical 
controls. There is a strong commitment to Downer’s Zero Harm 
objectives across all levels of the business. A core objective 
of The Downer Standard program is to unify the way Downer 
manages Zero Harm and performs its work. In an important 
step, Downer achieved centralised third-party accreditation 
to the International Standards ISO 45001 (Safety), ISO 9001 
(Quality) and ISO 14001 (Environment). This gives Downer a 
single system of work for safety, quality and environment, and 
a framework to develop, implement and monitor The Downer 
Standard. Establishing this consistent single platform means 
Downer can deliver consistent best practice information and 
work processes to its frontline employees, helping them to 
better manage risk and change in their dynamic workplaces. 
Downer continues to be vigilant around the management of 
COVID-19 and maintaining the highest levels of controls in 
line with expert advice and Government guidance. Downer 
supported the Government’s vaccination initiative and strongly 
encouraged its employees to have the vaccination when 
it was available to them, once they had consulted a health 
professional on the associated risks and benefits.
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 through standard 
processes, data analytics and lifecycle performance analytics. 
A number of these investments have Group-wide application in 
addition to their bespoke customer benefits. 

Risks to be managed include: delivering services with limited 
value to customers; scope reduction by customers who elect to 
insource services and directly source blue-collar contractors; an 
inability to deliver obligations in performance frameworks and 
service outcome contracts; exposure to modern slavery risks 
in the Group’s labour force and supply chain; and adjustment 
mechanisms and allowances for price movements (for example, 
CPI movements, material costs and labour cost).    

|     Downer EDI Limited19

Strategic Objective Prospects

Risks and risk management

Focus on 
engagement with 
customers and 
suppliers as a 
cornerstone of the 
Relationships pillar

Utilise technology 
in core service 
offerings as a 
cornerstone of 
Downer’s Thought 
Leadership 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.
Technology is an inherent feature of 
today’s world and there is therefore 
greater demand for provision of 
cyber secure technology in the 
services Downer provides. Customer 
operations are growing in complexity 
in an ever-changing threat landscape, 
and this creates opportunities for 
Downer to connect securely, manage, 
monitor and report on core services 
and infrastructure.

Strengthen 
Downer’s position 
as an employer of 
choice by fostering 
an inclusive 
workplace culture

For Downer to deliver the best possible 
outcomes for its customers, it needs 
a workforce that is diverse, inclusive, 
capable and engaged. Downer’s 
actions are guided by its Inclusion 
and Belonging (I&B) Strategy, which 
promotes a culture where employees 
feel a sense of belonging.

Relationships creating success continues to be Downer’s 
core operating philosophy that drives delivery of projects 
and services. It helps to ensure investment as initiatives and 
activities are focused on helping Downer’s customers to 
succeed. 

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.

Downer invests in a range of technology platforms and 
partnerships to meet customer needs. Downer focuses on 
selecting the right investments, for example those that can be 
leveraged across a number of service lines to maximise value 
for the greatest number of customers. Downer remains firmly 
focused on continuously protecting against evolving cyber 
risks and threats, demonstrating credibility and trust through 
secure cyber stewardship and custody. 

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.
Downer operates in sectors that are subject to highly 
competitive labour markets, which makes employee retention 
and attraction an important strategic objective.

Downer has the ability to leverage its large workforce, broad 
geographic footprint and diverse technical skill base to mitigate 
labour supply challenges by redeploying skilled employees to 
high-priority contracts/projects to ensure the right people are 
in place to deliver high-quality services for its customers.

Downer’s talent attraction and retention strategy focuses on 
providing opportunities for employees to grow their careers, 
offering benefits that are competitive with the market, and 
creating channels for engagement and feedback.

Downer is focused on maintaining the work-life balance of its 
people and supports flexible working arrangements, where 
possible, to meet the growing expectations of its current and 
future workforce.

Downer also understands that mental health is a growing 
societal issue, and has developed and implemented its 
accredited Mental Health First Aid program to arm its people 
with the knowledge and skills to support their own mental 
health as well as the mental health of their friends and family.

Risks to manage include: effective retention of high-performing 
people; potential for high employee turnover; increased 
competition for talent due to tight labour market; workforce 
resilience; and low unemployment and high job mobility rates.

Directors’ Report     |20

Strategic Objective Prospects

Risks and risk management

Mitigate climate-
related risks and 
capture growth 
opportunities 
presented 
by decarbonisation

As society shifts towards a net zero 
emissions future, Downer is seeing 
increasing interest in decarbonisation 
across its customer base.

Downer is uniquely positioned with 
its skills, experience and technical 
capabilities to play a pivotal role in the 
energy transition.

Downer believes its own pathway to net 
zero is essential in adding credibility to 
the services it delivers to help customers 
decarbonise their own operations.

Downer has committed to an absolute 
near-term target of 50% reduction of its 
Scope 1 and 2 GHG emissions by 2032 
and an absolute near-term target of 
30% reduction of its Scope 3 emissions 
by 2032. Downer has set a long-term 
target to be net zero in Scope 1, 2 and 
3 GHG emissions by 2050, subject to 
future available technologies. Both the 
near-term and the long-term targets 
have a base year of 2020.

Downer’s key climate-related challenge is to decouple its GHG 
emissions from revenue growth.

In FY22, Downer completed a detailed review of its most 
material climate-related risks and opportunities in line with the 
Taskforce for Climate-related Financial Disclosures (TCFD). 
This work built on Downer’s previous TCFD analysis in 2019, 
and reaffirmed that climate change presents considerable 
opportunities for Downer – and that these opportunities will 
increase as efforts to decarbonise accelerate.

The analysis determined that Downer’s greatest exposure 
to transition risk are its asphalt plants as well as its light and 
heavy vehicle fleet and plant and equipment. Downer has 
decarbonisation strategies and plans to minimise exposure 
to transition risks.

In addition, Downer has undertaken a review of its capital 
allocation process to integrate climate thinking and 
considerations. This led to the creation of a centralised 
decarbonisation fund to support initiatives that will help 
achieve Downer’s net zero commitments.

Risks to manage include: the physical risks to Downer’s fixed 
assets, key sites and locations (such as extreme heat, bushfires 
and severe weather events); transition risks associated with 
decarbonising Downer’s asphalt manufacturing process and 
its fleet; regulatory risk and cost increase due to Government 
policy (i.e. carbon price); reputational risk such as customer 
and shareholder expectations; and reducing Downer’s Scope 
3 emissions, in particular emissions derived from purchased 
goods and services.

|     Downer EDI Limited21

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

Transport

Utilities

Facilities

Prospects

Downer’s response

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. Downer maintains 
strong strategic partnerships with leading global transport solutions 
providers and, through this model, is pursuing opportunities in 
rollingstock manufacture and maintenance, and transport network 
operations and maintenance. The Keolis Downer joint venture is a 
leading Australian multi-modal transport operator. Downer is also 
seeing increased demand for its circular economy products like 
ReconophaltTM, a sustainable asphalt product made from up to 100% 
recycled materials.
Downer has market leading positions in the power, gas, water 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. Downer is also one of the largest and most 
experienced providers in the renewable energy market and power 
systems sectors, with more than 3GW of renewable energy generated 
by wind and solar farms, either built or currently being delivered.
Through the acquisition of Spotless, Downer is a major force in both 
Australia and New Zealand with market-leading positions across 
key sectors including defence, health, education and government. 
Downer also has strong market positions across the power & energy, 
industrial & marine, and future energy areas. Downer is investing in 
expertise and capability that will position Australia as a world leader 
in clean Hydrogen and has also supported customers in delivering 
carbon capture underground storage systems.

In FY22, Downer exited the majority of its Hospitality contracts. 

The multi-billion dollar market 
for transport services continues 
to grow 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.

Growth across utility markets 
is multi-faceted with a good 
pipeline of prospects in both 
Australia and New Zealand. 

Downer’s customers 
are actively investing in 
decarbonisation projects.

Large-scale and long-term 
outsourcing contracts continue 
to come to market, however the 
long-term nature of contracts in 
this sector means that a lot of 
work is already under contract. 
There is a strong pipeline of 
opportunities on the short-to-
medium-term horizon in both 
Australia and New Zealand. 
In addition, all Downer’s 
customers are actively investing 
in decarbonisation projects 
and many are investigating 
Hydrogen opportunities.

Directors’ Report     |22

Downer’s ability to manage the impacts of its activities on the 
natural and built environment is fundamental to its long-term 
success. Downer is committed to helping its customers succeed 
by developing and delivering environmentally responsible and 
sustainable solutions so communities remain resilient and thrive 
in the future.

Downer is conscious of its social licence to operate – and 
responds to this by improving the sustainability of its operations, 
aiming to achieve Zero Harm to its people, minimising harm 
to the environment, and always striving to enhance Downer’s 
reputation, business value and ultimately shareholder wealth.

Suitably qualified environment and sustainability professionals 
support each of the Business Units. Each Business Unit has 
developed Sustainability Improvement Plans aligned to specific 
United Nations Sustainable Development Goals with year-on-
year actions and deliverables. In addition, each Business Unit 
has a customised Decarbonisation Plan. These plans assign 
responsibilities for implementing the actions and deliverables. 
Progress is monitored and reported throughout the year and 
assessed as part of the Business Unit’s annual performance, 
which is linked to the short-term incentive program.

Employee Discount Share Plan (ESP)
An ESP was instituted in June 2005. In accordance with the 
provisions of the plan, as approved by shareholders at the 
1998 Annual General Meeting, permanent full-time and part-
time employees of Downer EDI Limited and its subsidiary 
companies who have completed six months service may be 
invited to participate.

No shares were issued under the ESP during the years ended 
30 June 2022 or 30 June 2021.

There are no performance rights or performance options, 
in relation to unissued shares, that are outstanding.

Outlook
For FY23, Downer expects 10-20% underlying NPATA 
growth, assuming no material COVID-19, weather, labour or 
other disruptions.

Subsequent Events
At the date of this report there is no matter or circumstance 
that has arisen since the end of the financial year that has 
significantly affected, or may significantly affect:
(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. 

Changes in state of affairs
During the financial year there was no significant change in the 
state of affairs of the Group other than that referred to in the 
financial statements or notes thereto.

Environmental management
Environmental management is an important component of 
Downer’s Zero Harm philosophy. Downer’s environmental 
commitments are outlined in its Environmental Sustainability 
Policy which can be found on the Downer website 
at www.downergroup.com/board-policies.

Effectively managing its environmental aspects and impacts 
is fundamental to Downer’s approach to delivering its 
services. Downer puts significant emphasis on its critical risk 
program ensuring effective controls are implemented and 
continuous improvement through lessons learned. Downer’s 10 
Environmental Principles are critical to ensuring its employees 
and broader stakeholder groups are engaged and aware of its 
environmental commitments, including meeting and exceeding 
its environmental compliance obligations.

Downer’s environmental management system is accredited 
to AS/NZ ISO14001:2015 and is integrated into its Group-wide 
management system, known as The Downer Standard. The 
Downer Standard ensures a consistent approach to identifying 
and controlling environmental hazards and risks, and managing 
the Company’s environmental performance across the 
organisation. The environmental management system is audited, 
both internally and externally, by independent third parties.

|     Downer EDI Limited23

Directors’ meetings
The following table sets out the number of Directors’ meetings (including meetings of Board Committees) held during the 
2022 financial year and the number of meetings attended by each Director (while they were a Director or Board Committee 
member). During the year, nine Board meetings, six Audit and Risk Committee meetings, three Remuneration Committee meetings, 
four Zero Harm Committee meetings and two Nominations and Corporate Governance Committee meetings were held. In addition, 
17 ad hoc meetings (attended by various Directors) were held in relation to various matters including tender reviews, major projects 
and due diligence for the on-market share buy-back program.

Director
M P Chellew2
R M Harding3
G A Fenn
M J Binns4
P S Garling6
T G Handicott
N M Hollows
A M Howse5
M J Menhinnitt4
P L Watson

Director
M P Chellew2
R M Harding3
G A Fenn
M J Binns4
P S Garling6
T G Handicott
N M Hollows
A M Howse5
M J Menhinnitt4
P L Watson

Board

Audit and Risk  
Committee

Remuneration  
Committee

Held1
8
2
9
4
9
9
9
3
3
9

Attended
8
2
9
4
9
9
9
3
3
9

Held1
–
–
–
–
–
6
6
–
–
6

Attended
–
–
–
–
–
6
6
–
–
6

Held1
2
1
–
–
3
3
3
–
–
–

Attended
2
1
–
–
3
3
3
–
–
–

Zero Harm
Committee

Nominations and Corporate 
Governance Committee

Held1
3
2
4
–
4
–
–
–
–
4

Attended
3
2
4
–
4
–
–
–
–
4

Held1
2
–
–
–
–
2
2
–
–
–

Attended
2
–
–
–
–
2
2
–
–
–

These columns indicate the number of meetings held during the period each person listed was a Director or member of the relevant Board Committee.

1. 
2.  Mr Chellew joined the Board on 1 September 2021.
3.  Mr Harding retired on 30 September 2021.
4.  Mr Binns and Mr Menhinnitt joined the Board on 1 March 2022.
5.  Dr Howse joined the Board on 1 April 2022.
6.  Mr Garling retired on 30 June 2022.

Directors’ Report     |24

The Directors are of the opinion that the services as disclosed 
below do not compromise the external auditor’s independence, 
based on advice received from the Audit and Risk Committee, 
for the following reasons:
 § All non-audit services have been reviewed and approved to 
ensure that they do not impact the integrity and objectivity 
of the auditor

 § None of the services undermine the general principles 

relating to auditor independence as set out in the Institute 
of Chartered Accountants in Australia and CPA Australia’s 
Code of Conduct APES 110 Code of Ethics for Professional 
Accountants issued by the Accounting Professional and 
Ethical Standards Board, including reviewing or auditing 
the auditor’s own work, acting in a management or decision-
making capacity for the Company, acting as advocate for 
the Company or jointly sharing economic risks and rewards.

A copy of the auditor’s independence declaration is set out 
on page 52 of this Annual Report.

During the year, details of the fees paid or payable for non-audit 
services provided by the auditor of the parent entity, its related 
practices and related audit firms were as follows:

Non-audit services

Tax services
Advisory services

2022
$

248,596
96,679
345,275

2021
$

205,795
506,977
712,772

Rounding of amounts
The Company is of a 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 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.

Indemnification of officers and auditors
During the financial year, the Company paid a premium in 
respect of a contract insuring the Directors of the Company, 
the Company Secretary, all officers of the Company and of any 
related body corporate against a liability incurred as a Director, 
secretary or executive officer to the extent permitted by the 
Corporations Act 2001 (Cth).

The contract of insurance prohibits disclosure of the nature of 
the liability and the amount of the premium.

Downer’s Constitution includes indemnities, to the extent 
permitted by law, for each Director and Company Secretary 
of Downer and its subsidiaries against liability incurred in the 
performance of their roles as officers. The Directors and the 
Company Secretaries listed on pages 6 to 10, individuals who 
act as a Director or Company Secretary of Downer’s subsidiaries 
and certain individuals who formerly held any of these roles also 
have the benefit of the indemnity in the Constitution.

The Company has not otherwise, during or since the financial 
year, indemnified or agreed to indemnify an officer or auditor of 
the Company or of any related body corporate against a liability 
incurred as such an officer or auditor.

Corporate Governance
In recognising the need for the highest standards of corporate 
behaviour and accountability, the Board endorses the ASX 
Corporate Governance Council’s Corporate Governance 
Principles and Recommendations (ASX Principles). The Group’s 
corporate governance statement is set out at pages 132 to 143 
of this Annual Report.

Non-audit services
Downer is committed to audit independence. The Audit and 
Risk Committee reviews the independence of the external 
auditors on an annual basis. This process includes confirmation 
from the auditors that, in their professional judgement, they are 
independent of the Group. To ensure that there is no potential 
conflict of interest in work undertaken by Downer’s external 
auditors, KPMG, they may only provide services that are 
consistent with the role of the Company’s auditor.

The Board has considered the position and, in accordance with 
the advice from the Audit and Risk Committee, is satisfied that 
the provision of non-audit services during the year is compatible 
with the general standard of independence for auditors imposed 
by the Corporations Act 2001 (Cth).

|     Downer EDI Limited25

Many of the activities that Downer’s people perform every 
day have potential risks and ensuring they remain safe is of 
paramount importance. Downer’s Lost Time Injury Frequency 
Rate for the year was 0.82 and the Total Recordable Injury 
Frequency Rate was 2.35. Sadly, a long-term Downer employee 
in New Zealand died in May 2022 following a fall at work. 
Although the cause of death is not yet known, Downer has 
treated this as a workplace fatality. Downer operates in sectors 
that are exposed to high-risk activities and, while we have a 
history of strong safety performance, we are determined to learn 
from this loss. The health and safety of our people is Downer’s 
number one priority.

The impact of divestments or acquisitions on executive 
remuneration can be significant. The Board’s overarching 
concern is to ensure executives:
 § Are accountable for delivery of the annual budget 

and business plan

 § Consider potential acquisition or divestment 

opportunities without the influence of their impact 
on remuneration outcomes.

The Board’s policy is that:
 § Where a transaction is both material and unbudgeted, 
the impact of the transaction when calculating the key 
performance indicators on which executive performance is 
measured should be removed. This ensures that executives 
are ‘no better or worse off’ due to the transaction

 § For individually significant items, whether to adjust for their 
impact (positive or negative) is considered having regard to 
the circumstances relevant to each.

In 2022 the impact of the acquisition of Fowlers Asphalting, the 
exit of the remaining Hospitality contracts, the divestments of 
the Mining businesses of Otraco and Open Cut Mining East, 
and the gain on the sale of the Rosehill Asphalt Plant have been 
removed, in line with policy.

Remuneration Report
Chairman’s Letter

Dear Shareholders,

Downer’s 2022 Remuneration Report provides information 
about the remuneration of its most senior executives and 
explains how performance has been linked to reward outcomes 
at Downer for the 2022 financial year.

At the last Annual General Meeting in November 2021, 
97.2% of all votes cast by shareholders were in favour of 
the 2021 Remuneration Report.

A challenging but productive year
The 2022 financial year has been extremely challenging for 
Downer and indeed most companies across the globe. The 
impact of widespread COVID-19 infections within the community 
and the restrictions placed on businesses and employees by 
government were not anticipated at the time we set our targets 
and forecasts for 2022. Additionally, the prolonged and severe 
wet weather patterns experienced throughout Australia’s 
eastern States have been debilitating and unprecedented. 
The impact of COVID-19 and severe wet weather patterns 
have materially impacted the Company’s financial performance 
in 2022.

Notwithstanding the difficulties presented during the period 
our staff and management responded outstandingly in 
highly challenging circumstances, maximising outcomes for 
shareholders, protecting not only the performance of your 
Company but also the communities in which Downer operates, 
all while delivering quality service outcomes for our customers. 
If not for this ‘above and beyond’ effort, our Company would not 
be in the strong position it is in today.

We remain leaders in the markets in which we operate, 
strengthening our position over the past 12 months with 
$36.1 billion work in hand. Our Net Debt to EBITDA is just 
1.6x with available liquidity of $1.9 billion. We have won over 
$3.5 billion in new work over the last quarter of 2022 setting 
the Company up for a strong 2023 and beyond.

During the period our executive team have continued to 
improve the portfolio by:
 § Completing the exit of the Open Cut Mining East and Otraco 
businesses, delivering on the strategy to exit capital-intensive 
businesses and significantly decreasing the Group’s carbon 
emissions profile

 § Completing the exit of the Hospitality businesses, 

improving the Group’s resilience and reducing volatility

 § Acquiring Fowlers Asphalting in Victoria’s Gippsland
 § Completing the sale of our Rosehill Asphalt Plant and the 
construction of our new world leading replacement plant.

Directors’ Report     |26

There were other unbudgeted individually significant items 
in 2022 which also affected statutory results, being:
 § The fair value adjustment on the Downer Contingent Share 
Options issued as part of the consideration for acquisition of 
the remaining interests in Spotless

 § Bid costs for the Queensland Train Manufacturing Program.

Link between Downer performance and reward outcomes
Downer’s remuneration framework for key senior employees 
has been very successful in aligning Downer’s strategy and 
the creation of alignment between senior executives and 
shareholders. As set out in this Remuneration Report, Downer’s 
remuneration strategy continues to provide:

The impact of these items on executive performance KPIs have 
also been removed as they were either not contemplated at the 
time KPI targets were set or were unable to be calculated at that 
time. This is consistent with policy and past practice. More detail 
can be found on these items at section 7.4.2 of this report.

Most importantly, the Board has assessed the impact of 
COVID-19 and severe wet weather on executive performance 
KPIs and formed the view that the executive was likely to 
achieve at least target earnings performance in 2022, in the 
absence of those impacts.

After extensive deliberation of these issues and the Company’s 
financial and non-financial performance, the Board determined 
it important and appropriate to exercise discretion and award 
an STI outcome of 65% for the Executives, which is between 
threshold and target. In keeping with policy, 50% of these 
awards are deferred.

In assessing the appropriate level of award the Board has 
balanced the challenging environment for shareholders and the 
strong competition for talent and retention across Australia and 
New Zealand, which is unparalleled in recent years.

 § A significant proportion of remuneration being ‘at risk’ linked 

to clear, objective measures

 § A profitability gateway as a precondition to any short-term 

incentive entitlement

 § For deferral of 50% of short-term incentive payments over 

a further two-year period

 § The delivery of a significant proportion of pay in equity.

We trust that this overview and the accompanying detailed 
analysis are helpful when forming your own views on Downer’s 
remuneration arrangements.

M P Chellew 
Chairman 

T G Handicott 
 Remuneration 
Committee Chairman

|     Downer EDI Limited 
 
 
27

Remuneration Report – AUDITED

The Remuneration Report provides information about the 
remuneration arrangements for key management personnel 
(KMP), which means Non-executive Directors and the Group’s 
most senior executives, for the year to 30 June 2022. The 
term ‘executive’ in this Report means KMPs who are not 
Non-executive Directors.

The Report covers the following matters:
1.  Year in Review
2.  Details of Key Management Personnel
3.  Remuneration Policy, Principles and Practices
4.  Relationship between Remuneration Policy 

and Company Performance

5.  The Board’s Role in Remuneration
6.  Description of Executive Remuneration
7.  Details of Executive Remuneration
8.  Executive Equity Ownership
9.  Key Terms of Employment Contracts
10.  Related Party Information
11.  Description of Non-executive Director Remuneration

Directors’ Report     |28

1.  Year in Review
1.1  Summary of changes to remuneration policy
Downer has continued to refine its remuneration policy during the period. The Board considered Company strategy and reward 
plans based on performance measurement, competitive position and stakeholder feedback. Changes to policy are noted in the 
relevant sections of this Report and are summarised in the table below.

Policy

Enhancements since 2021

Short-term incentive (STI) plan

The environmental sustainability and critical risk measures for the Zero Harm element have 
been further refined, building upon previous improvements to move with and support growth 
in organisational maturity and ensure continual stretch and ongoing Zero Harm improvement 
through, in addition to existing requirements:
 § Introducing a requirement to undertake a climate-related risk and opportunity assessment, 
and address one climate risk, progress one climate opportunity, and incorporate these into 
the decarbonisation plan

 § Reviewing the Sustainable Development Goal Improvement Plans developed in 2021 and 

achievement of the Year 2 goals from those plans

 § Undertaking a detailed analysis to understand the top three controls requiring improvement 

within an area of responsibility and completion of projects to improve them

 § Achievement of the stretch targets for the Group’s Sustainability Linked Loan Key Performance 

Indicators, which include greenhouse gas emissions reductions and social sustainability 
measures of Indigenous Cultural Awareness and Mental Health First Aid training targets.

Further detail on the measures for the STI plan are set out at section 6.3.4.

2.  Details of Key Management Personnel
The following persons acted as Directors of the Company during or since the end of the most recent financial year:

Director

Role

M P Chellew
R M Harding
G A Fenn
M J Binns
P S Garling
T G Handicott
N M Hollows
A M Howse
M J Menhinnitt
P L Watson

Chairman, Independent Non-executive Director (commenced 1 September 2021)
Chairman, Independent Non-executive Director (retired 30 September 2021)
Managing Director and Chief Executive Officer
Independent Non-executive Director (commenced 1 March 2022)
Independent Non-executive Director (retired 30 June 2022)
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director (commenced 1 April 2022)
Independent Non-executive Director (commenced 1 March 2022)
Independent Non-executive Director

Downer undertook an organisational restructure which was implemented effective 1 July 2021. The restructure saw the 
rationalisation of the management structure and the appointment of a Group Chief Operating Officer. Accordingly, the Executive 
Key Management Personnel who have the authority and responsibility for planning, directing and controlling the activities of the 
Group were reassessed.

The named persons held their current executive position for the whole of the most recent financial year.

Executive

Role

M J Ferguson
P J Tompkins

Chief Financial Officer
Chief Operating Officer

|     Downer EDI Limited29

3.  Remuneration Policy, Principles and Practices
3.1  Executive remuneration policy
Downer’s executive remuneration policy and practices are summarised in the table below.

Policy

Practices aligned with policy

Retain experienced, 
proven performers, 
and those considered 
to have high potential 
for succession
Focus performance

Provide a Zero 
Harm environment
Manage risk

 § Provide remuneration that is internally fair
 § Ensure remuneration is competitive with the external market
 § Defer a substantial part of pay contingent on continuing service and sustained performance.

 § Provide a substantial component of pay contingent on performance against targets
 § Focus attention on the most important drivers of value by linking pay to their achievement
 § Require profitability to reach a challenging level before any bonus payments can be made
 § Provide a LTI plan component that rewards consistent Scorecard performance over multiple years 

and over which executives have a clear line of sight.

 § Incorporate measures that embody Zero Harm for Downer’s employees, contractors, communities 

and the environment as a significant component of reward.

 § Encourage sustainability by balancing incentives for achieving both short-term and longer-term 
results, and deferring equity-based reward vesting after performance has been initially tested
 § Set stretch targets that finely balance returns with reasonable but not excessive risk taking and 

cap maximum incentive payments

 § Do not provide excessive ‘cliff’ reward vesting that may encourage excessive risk taking as a 

performance threshold is approached

 § Diversify risk and limit the prospects of unintended consequences from focusing on just one 

measure in both short-term and long-term incentive plans

 § Stagger vesting of deferred short-term incentive payments to encourage retention and allow 

forfeiture of rewards that are the result of misconduct or material adjustments

 § Retain full Board discretion to vary incentive payments, including in the event of excessive 

risk taking

 § Restrict trading of vested equity rewards to ensure compliance with the Company’s Securities 

Trading Policy.

Align executive interests 
with those of shareholders

 § Provide that a significant proportion of pay is delivered as equity so part of executive reward is 

linked to shareholder value performance

 § Provide a long-term incentive that is based on consistent Scorecard performance against 

challenging targets set each year that reflect sector volatility and prevailing economic conditions 
as well as relative TSR and earnings per share measures directly related to shareholder value

 § Maintain a guideline minimum shareholding requirement for the Managing Director
 § Exclude the short-term impact of unbudgeted and opportunistic acquisitions and divestments 

from performance assessment to encourage agility and responsiveness

 § Encourage holding of shares after vesting via a trading restriction for all executives and payment 

of LTI components in shares

 § Prohibit hedging of unvested equity and equity subject to a trading lock to ensure alignment 

with shareholder outcomes.

Attract experienced, 
proven performers

 § Provide a total remuneration opportunity sufficient to attract proven and experienced executives 

from secure positions in other companies and retain existing executives.

Directors’ Report     |30

4. 

 Relationship between Remuneration Policy 
and Company Performance
4.1  Company strategy and remuneration
Downer’s business strategy includes:
 § Maintaining focus on Zero Harm by continually improving 
health, safety and environmental performance to achieve 
Downer’s goal of zero work-related injuries and significant 
environmental incidents

 § Driving growth in core markets through focusing on serving 
existing customers better across multiple products and 
service offerings, growing capabilities and investing in 
innovation, research and development and community 
and Indigenous partnerships

 § Creating new strategic positions through enhanced value- 
add services that improve propositions for customers and 
exporting established core competencies into new overseas 
markets with current customers of the Company

 § Reducing risk and enhancing the Company’s capability 

to withstand threats, take advantage of opportunities and 
reduce cyclical volatility

 § Obtaining better utilisation of assets and improved margins 

through simplifying and driving efficiency

 § Identifying opportunities to manage the Downer portfolio 

through partnering, acquisition and divestment that deliver 
long-term shareholder value

 § Maintaining flexibility to be able to adapt to the changing 
economic and competitive environment to ensure Downer 
delivers shareholder value.

The Company’s remuneration policy complements this 
strategy by:
 § Emphasis on Zero Harm measures across safety 

performance, critical risk and environmental and social 
sustainability and setting safety and environmental gateways 
in the STI to maintain the Company’s position as a Zero Harm 
leader, and employer and service provider of choice, thereby 
delivering a competitive advantage

 § Incorporating Company-wide performance requirements for 
both STI and LTI reward vesting for earnings (NPATA), Free 
Cash Flow (FFO) and People measures to encourage cross- 
divisional collaboration

 § Incorporating performance metrics that focus on cash flow 

to reduce working capital and debt exposure

 § Setting NPATA, EBITA and FFO STI performance and 

gateway requirements based on effective application of funds 
employed to run the business for better capital efficiency

 § Employing FFO as the cash measure for the STI to provide 

more emphasis on control of capital expenditure

 § Excluding the short-term impacts of opportunistic and 
unbudgeted acquisitions and divestments on incentive 
outcomes to encourage flexibility, responsiveness and 
growth consistent with strategy

 § Deferring 50% of STI awards to encourage sustainable 

performance and a longer-term focus

 § Incorporating consistent financial performance in the LTIP 

Scorecard measure

 § Encouraging engagement with, and the development and 

retention of, its people to help maintain a sustainable supply 
of talent.

4.2  Remuneration linked to performance
The link to performance is provided by:
 § Requiring a significant portion of executive remuneration 

to vary with short-term and long-term performance
 § Applying a profitability gateway to be achieved before  

an STI calculation for executives is made

 § Applying further Zero Harm gateways to be achieved 

before calculating any reward for safety or environmental 
performance

 § Applying challenging financial and non-financial measures 

to assess performance

 § Ensuring that these measures focus management on 

strategic business objectives that create shareholder value

 § Delivering a significant proportion of payment in equity 

for alignment with shareholder interests.

Downer measures performance on the following key 
corporate measures:
 § Earnings per share (EPS) growth
 § Total shareholder return (TSR) relative to other ASX 100 
companies (excluding ASX ‘Financials’ sector companies)

 § Group NPATA
 § Divisional EBITA
 § FFO
 § Engagement with Downer’s people
 § Zero Harm measures of safety and 

environmental sustainability.

Remuneration for all executives varies with performance 
on these key measures.

|     Downer EDI Limited31

The following graph shows the Company’s performance compared to the median performance of the ASX 100 over the five-year 
period to 30 June 2022.

Downer EDI TSR compared to S&P/ASX 100 median*

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0
0
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150

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Jun
2017

Dec
2017

Jun
2018

Dec
2018

Jun
2019

Dec
2019

Jun
2020

Dec
2020

Jun
2021

Dec
2021

Jun
2022

Downer EDI TSR

S&P/ASX 100 median TSR

* S&P/ASX 100 companies as at 30/06/2017

The graphs below illustrate Downer’s performance against key financial and non-financial performance indicators over the last five years.

Net profit after tax

Free cash flow

m
$

’

300

200

100

0

-100

-200

247.81

258.32

235.51

178.11

(155.7)

431.53

429.34

m
$

’

500

400

300

200

100

0

-100

-200

-300

178.33

185.74

(219.1)

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

1. 

2. 

Adjusted for material unbudgeted transactions and individually significant 
items. 2018: $176.7 million net increase, 2021: $51.8 million net increase and 
2022: $26.1 million net increase.
 Adjusted for material unbudgeted transactions by $18.0 million 
net decrease.

3.  Adjusted for material unbudgeted transactions, including payment for 

Spotless shares. 2018: $324.6 million net decrease and 2021: $313.1 million 
net decrease.

4.  Adjusted for material unbudgeted transactions. 2019: $65.2 million net 

increase and 2022: $104.5 million net decrease.

Basic earnings per share 5

Safety 6

e
r
a
h
s

r
e
p
s
t
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C

50

40

30

20

10

0

-10

-20

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42.1

10.5

25.4

21.3

2018

2019

(26.1)
2020

2021

2022

5.  Basic earnings per share for 2018 and 2019 were restated as a result 

of 106.6 million shares issued from the capital raising as part of the 
acquisition of the remaining shares in Spotless. The weighted average 
number of shares (WANOS) to calculate EPS was adjusted by an 
adjustment factor of 0.9817.

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2018

2019

2020

2021

2022

LTIFR

TRIFR

6. 

Safety data for 2021 and 2022 includes Hawkins and Spotless.  
Safety data for 2018 to 2020 excludes Hawkins and Spotless.

1200

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Directors’ Report     | 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32

5.  The Board’s Role in Remuneration
The Board engages with shareholders, management and other stakeholders as required, to continuously refine and improve 
executive and Director remuneration policies and practices.

Two Board Committees deal with remuneration matters. They are the Remuneration Committee and the Nominations and Corporate 
Governance Committee.

The role of the Remuneration Committee is to review and make recommendations to the Board in relation to executives in 
respect of:
 § Executive remuneration and incentive policy
 § Remuneration of senior executives of the Company
 § Executive reward and its impact on risk management
 § Executive incentive plans
 § Equity-based incentive plans
 § Superannuation arrangements
 § Recruitment, retention, performance measurement and termination policies and procedures for all Key Management Personnel 

and senior executives reporting directly to the Managing Director

 § Disclosure of remuneration in the Company’s public materials including ASX filings and the Annual Report
 § Retirement payments for all Key Management Personnel and senior executives reporting directly to the Managing Director.

The Nominations and Corporate Governance Committee is responsible for recommending and reviewing remuneration 
arrangements for the Executive Director and Non-executive Directors of the Company.

Each Committee has the authority to engage external professional advisors without seeking approval of the Board or management. 
During the reporting period, the Remuneration Committee retained Guerdon Associates Pty Ltd as its advisor. Guerdon Associates 
Pty Ltd does not provide services to management and is considered to be independent.

6.  Description of Executive Remuneration
6.1  Executive remuneration structure
Executive remuneration has a fixed component and a component that varies with performance.

The variable component ensures that a proportion of pay varies with performance. Performance is assessed annually for 
performance periods covering one year and three years. Payment for performance assessed over one year is an STI. Payment for 
performance over a three-year period is an LTI.

In order for maximum STIs to be awarded, performance must achieve a stretch goal that is a clear margin above the planned budget 
for the period. This enables the Company to attract and retain better performing executives, and ensures pay outcomes are aligned 
with shareholder returns.

Target STIs are less than the maximum STI. Target STI is payable on achievement of planned objectives. For executives, the target 
STI is 75% of the maximum STI. The maximum total remuneration that can be earned by an executive is capped. The maximums are 
determined as a percentage of fixed remuneration.

Executive position

Managing Director
KMP

Target STI
% of fixed 
remuneration

Maximum STI
% of fixed
 remuneration

Maximum LTI
% of fixed
 remuneration

75
56.25

100
75

100
50

Maximum total
 performance
 based pay as a
 % of fixed
remuneration

200
125

The proportions of STI to LTI take into account:
 § Market practice
 § The service period before executives can receive equity rewards
 § The behaviours that the Board seeks to encourage through direct key performance indicators
 § The guideline for the Managing Director to maintain a shareholding as a multiple of pay after long-term incentive rewards 

have vested.

|     Downer EDI Limited 
 
 
33

6.2  Fixed remuneration
Fixed remuneration is the sum of salary and the direct cost of providing employee benefits, including superannuation, motor 
vehicles, car parking, living away from home expenses and fringe benefits tax.

The level of remuneration is set to be able to retain proven performers and when necessary to attract the most suitable external 
candidates from secure employment elsewhere.

Remuneration is benchmarked against a peer group of direct competitors and a sector peer group. While market levels of 
remuneration are monitored on a regular basis, there is no contractual requirement or expectation that any adjustments will 
be made.

No adjustment has been made to remuneration for the Managing Director since July 2012, other than a voluntary reduction in 
his fixed remuneration by 50% for the period 1 April 2020 to 30 June 2020 in recognition of the likely impact of the coronavirus 
pandemic on Downer and its people. The funds from this voluntary remuneration reduction, along with contributions from Directors 
and other executives, were used to establish a fund to provide financial assistance to employees experiencing severe hardship.

6.3  Short-term Incentive
6.3.1  STI tabular summary
The following table outlines the major features of the 2022 STI plan.

Purpose of STI plan

Minimum performance ‘gateway’ 
before any payments can 
be made
Maximum STI that can be earned

Percentage of STI that can 
be earned on achieving 
target expectations
Individual Performance 
Modifier (IPM)

Discretion to vary payments

Performance period
Performance assessed
Additional service period after 
performance period for payment 
to be made
Payment timing

Form of payment

Performance requirements

 § Focus performance on drivers of shareholder value over a 12-month period
 § Improve Zero Harm and people related results
 § Ensure a part of remuneration varies with the Company’s 12-month performance.
Achievement of a gateway based on budgeted Group NPATA for corporate executives and 
Division EBITA for divisional heads.

 § Managing Director: up to 100% of fixed remuneration
 § KMP: up to 75% of fixed remuneration.
75% of the maximum. For an executive to receive more, performance in excess of target 
expectations will be required.

 § An IPM may be applied based on an executive’s individual key performance indicators and 

relative performance

 § Moderate individual performance may result in an IPM of less than 1 or outstanding 
performance may result in an IPM greater than 1. The IPM must average 1 across 
all participants

 § Application of an IPM cannot result in an award greater than the maximum STI% level set 

out in section 6.1.

The Board, in its discretion, may vary STI payments by up to + or – 100% from the payment 
applicable to the level of performance achieved, up to the maximum for that executive.
1 July 2021 to 30 June 2022.
August 2022, following audit of accounts.
50% of the award is deferred with the first tranche of 25% vesting one year following award 
and the second tranche of 25% vesting two years following award.

September 2022 for the first cash payment of 50% of the award. The deferred components 
of the STI payments will be paid one and two years following the award, in equal tranches of 
25% of the award.
Cash for initial payment.
The value of deferred components will be settled in cash or shares, net of personal tax. An 
eligible leaver’s deferred components will be settled in shares or in cash in the sole and 
absolute discretion of the Board.
Group NPATA and divisional EBITA, FFO, Zero Harm and people measures.

Directors’ Report     |34

Board discretion

New recruits

Terminating executives

The Board may exercise discretion to:
 § Reduce partly or fully the value of the deferred components that are due to vest in certain 
circumstances, including where an executive has acted inappropriately or where the Board 
considers that the financial results against which the STI performance measures were tested 
were incorrect in a material respect or have been reversed or restated

 § Settle deferred components in shares or cash.
New executives (either new starts or promoted employees) are eligible to participate in the 
STI in the year in which they commence in their position with a pro-rata entitlement.
There is no STI entitlement where an executive’s employment terminates prior to the end of 
the financial year. Where an executive’s employment terminates prior to the vesting date, the 
unvested deferred components will be forfeited. However, the Board has retained discretion 
to vest deferred awards, in the form of shares or cash, in their ordinary course where the 
executive is judged to be an eligible leaver.

6.3.2  STI overview
The STI plan provides for an annual payment that varies with annual performance. This has been applied to performance measured 
over the Company’s financial year to 30 June 2022.

The basis of the plan is designed to align STI outcomes with financial results. No STI is paid unless a minimum profit gateway is 
met. For corporate executives, the gateway is based on the Group budgeted profit target. For Divisional executives, the gateway 
is based on the Division budgeted profit target. Profit for this purpose is defined as NPATA for Corporate executives and EBITA 
for Divisional executives. This minimum must be at a challenging level to justify the payment of STI to an executive and deliver an 
acceptable return for the funds employed in running the business. Positive and negative impacts from material but unbudgeted and 
opportunistic transactions are excluded from gateway assessment. Whether to exclude the impact of significant items (positive or 
negative) is considered on a case by case basis.

As noted in section 6.1, the maximum STI that can be earned is capped to minimise excessive risk taking.

Deferral is a key feature as part of the STI structure. Payment of 50% of the award is made at the time of award in cash and the 
remaining 50% of the award earned is deferred over two years.

The first payment of 50% of the award will be in cash after finalisation of the annual audited results. The payment of the deferred 
component of the award will be in the form of two tranches, each to the value of 25% of the award.

The deferred components represent an entitlement to cash or shares, subject to the satisfaction of a continued employment 
condition. The first tranche will vest one year following award and the second tranche will vest two years following award, provided 
an executive remains employed by the Group at the time of vesting.

The value of deferred components will generally be settled in shares, net of applicable personal tax. This is designed to encourage 
executive share ownership, and not adversely impact executives who have to meet their taxation obligations arising from the 
vesting of the deferred components. However, the Board retains the discretion to vest deferred awards, in the form of shares or 
cash, and will generally have regard to an executive’s individual circumstances and existing level of equity ownership.

No dividend entitlements are attached to the deferred components during the vesting period.

Where an executive ceases employment with the Group prior to the vesting date, the deferred components will be forfeited. 
However, the Board has retained the discretion to vest deferred awards, in the form of shares or cash, in their ordinary course 
where the executive is judged to be an eligible leaver.

6.3.3  How STI payments are assessed

Target STI plan percentage  
of pay
Organisational or divisional 
scorecard result
Individual Performance 
Modifier (IPM)

STI plan incentive calculation

An individual’s target incentive under the STI plan is expressed as a percentage of fixed 
remuneration. The STI plan percentage is set according to policy set out in section 6.1.
As a principle, ‘target’ achievement would be represented at budget. Thresholds and maximums 
are also set.
At the end of the plan year, eligible employees are provided with an IPM against their key 
performance indicators and relative performance. Individual key performance indicators are set 
between the individual and the Managing Director (if reporting to the Managing Director) or the 
Board (if the Managing Director) at the start of the performance period. IPMs must average to 1.
Fixed remuneration x maximum STI plan percentage x scorecard result x IPM.

|     Downer EDI Limited35

6.3.4  STI performance requirements
Overall performance is assessed on Group NPATA, Divisional EBITA, FFO, Zero Harm and a measure of employee engagement.

NPATA and EBITA include joint ventures and associates and include, inter alia, changes in accounting policy. NPATA and EBITA 
provide transparency on operational business performance, align with how Downer presents its results to the market and allow for 
easier understanding of alignment between performance and remuneration outcomes. The Board considers this approach to be 
appropriate as:
 § The Board is the ultimate decision maker for transactions that give rise to acquired intangibles that result in the 

amortisation expense

 § The impact of amortisation of acquired intangibles, which in nature relate to long-term strategic decisions, remains reflected in 

incentive outcomes through the EPS measure in the LTI plan.

FFO is defined as net cash from operating activities (i.e. EBIT plus non-cash items in operating profit plus distributions received 
from JVs or associates plus movements in working capital plus movements in operating assets less net interest less tax paid), less 
investing cash flow.

Zero Harm reflects Downer’s commitment to safety, environment, social and governance matters. The Zero Harm element includes 
key safety performance indicators, safety and environmental risk and environmental sustainability measures, underscoring Downer’s 
commitment to customers, employees, regulators and the communities in which it operates.

The measures for the Zero Harm element of the scorecard are as follows:

Measure

Target

Safety
Total Recordable Injury 
Frequency Rate (TRIFR)

Lost Time Injury 
Frequency Rate (LTIFR)
Critical Risk

Sustainability

Achieve TRIFR below 3.5 and LTIFR below 0.9 for area of responsibility.
TRIFR is calculated as the number of recordable injuries per million hours calculated over 
12 months.
LTIFR is calculated as the number of lost time injuries per million hours calculated over 
12 months.

Completion of all actions arising from high potential incidents within a defined timeframe.
Lead and finalise a Group-wide Community of Practice (CoP) focusing on better control of one 
critical risk. The CoP must deliver a set of minimum deliverables identified in the STI Guide. 
The CoP must conduct a Downer Standard gap analysis, identify practice guidance and control 
standard requirements, define master risks and controls and produce a training package.
Undertake detailed analysis to understand the top three controls requiring improvement within 
an area of responsibility and completion of projects to improve them.
Review of the Sustainable Development Goal Improvement Plans developed in 2021 and 
achievement of the Year 2 goals from those plans.
Undertake a climate related risk and opportunity assessment. Address one climate risk and 
progress one opportunity and incorporate these into the decarbonisation plan.
Evidence that the relevant business unit is on track to achieve its science-based 
decarbonisation target.
Achievement of the stretch targets for the Group’s Sustainability Linked Loan Key Performance 
Indicators, which include greenhouse gas emissions reductions and social sustainability 
measures of Indigenous Cultural Awareness and Mental Health First Aid training.

Directors’ Report     |36

The Zero Harm measures have matured over time, with the Critical Risk and Sustainability measures now incorporating targets 
across safety, environmental sustainability and social sustainability. Accordingly, the independent gateways have also been matured 
to address this blend. Should a workplace fatality or serious environmental incident occur, 50% of the Zero Harm element is 
foregone, with 100% foregone should both occur.

Weightings applied to the 2022 STI scorecard measures for all executives, including the Managing Director, are set out in the 
table below.

Executive

Corporate
Business Unit

Group NPATA Divisional EBITA

Free cash flow

Zero Harm

People

30%
7.5%

–
22.5%

30%
30%
(7.5% Group,
22.5% Division)

30%
30%

10%
10%
(3% Group,
7% Division)

The Board has discretion to vary STI payments by up to + or – 100% from the payment applicable to the level of performance 
achieved, up to the maximum for that executive.

The Board retains the right to vary from policy in exceptional circumstances. However, any variation from policy and the reasons for 
it will be disclosed.

6.4  Long-term Incentive
6.4.1  LTI tabular summary
The following table outlines the major features of the 2022 LTI plan.

Purpose of LTI plan

 § Focus performance on drivers of shareholder value over a three-year period
 § Manage risk by countering any tendency to over-emphasise short-term performance to the 

Maximum value of equity 
that can be granted

Performance period
Performance assessed
Additional service period 
after performance period 
for shares to vest
Performance rights vest
Form of award and payment
Performance conditions

detriment of longer-term growth and sustainability

 § Ensure a part of remuneration varies with the Company’s longer-term performance.
 § Managing Director: 100% of fixed remuneration
 § KMP: 50% of fixed remuneration.

1 July 2021 to 30 June 2024.
August 2024.
Performance rights for which the relevant performance vesting condition is satisfied will not vest 
unless executives remain employed with the Group on 30 June 2025.

July 2025.
Performance rights.
There are three performance conditions. Each applies to one-third of the performance rights 
granted to each executive.

Relative TSR
The relative TSR performance condition is based on the Company’s TSR performance relative to 
the TSR of companies comprising the ASX 100 index, excluding financial services companies, at 
the start of the performance period, measured over the three years to 30 June 2024.
The performance vesting scale that will apply to the performance rights subject to the relative 
TSR test is shown in the table below:

Downer EDI Limited’s 
TSR Ranking

Percentage of performance rights subject to TSR condition  
that qualify for vesting

< 50th percentile
50th percentile
Above 50th and below 
75th percentile

0%
30%
Pro-rata so that 2.8% of the performance rights in the tranche will 
vest for every 1 percentile increase between the 50th percentile and 
75th percentile

75th percentile and above 100%

|     Downer EDI Limited37

Performance conditions

EPS growth
The EPS growth performance condition is based on the Company’s compound annual EPS growth 
over the three years to 30 June 2024.
The performance vesting scale that will apply to the performance rights subject to the EPS growth 
test is shown in the table below:

Downer EDI Limited’s EPS 
compound annual growth

Percentage of performance rights subject  
to EPS condition that qualify for vesting

< 5%
5%
Above 5% to < 10%

10% or more

0%
30%
Pro-rata so that 14% of the performance rights in the tranche will 
vest for every 1% increase in EPS growth between 5% and 10%
100%

Scorecard
The Scorecard performance condition is based on the Group’s NPATA and FFO for each of the 
three years to 30 June 2024. These measures are considered to be key drivers of shareholder value. 
Accordingly, they have been included in the LTI plan to reward sustainable financial performance.
The performance vesting scale that will apply to the performance rights subject to the Scorecard 
test is shown in the table below:

How performance rights 
and shares are acquired

Treatment of dividends 
and voting rights on 
performance rights
Restriction on hedging
Restriction on trading

New participants

Ceasing executives

Change of control

Scorecard result

< 90%
90%
Above 90% to < 110%

Percentage of performance rights subject to  
Scorecard condition that qualify for vesting

0%
30%
Pro-rata so that 3.5% of the performance rights in the tranche will vest 
for every 1% increase in the Scorecard result between 90% and 110%
100%

110% or more
The rights are issued by the Company and held by the participant subject to the satisfaction of 
the vesting conditions. The number of rights held may be adjusted pro-rata, consistent with ASX 
adjustment factors, for any capital restructures.
If the rights vest, executives can exercise them to receive shares that are normally acquired 
on-market. The Board retains the discretion to vest awards in the form of cash.
Performance rights do not have voting rights or accrue dividends.

Hedging of entitlements under the plan by executives is not permitted.
Vested shares arising from the rights may only be traded with the approval of the Remuneration 
Committee. Approval requires that trading complies with the Company’s Securities Trading Policy.
New executives (either new starters or promoted employees) are eligible to participate in the LTI on 
the first grant date applicable to all executives after they commence in their position. An additional 
pro-rata entitlement if their employment commenced after the grant date in the prior calendar year 
may be made on a discretionary basis.
Where an executive ceases employment with the Group prior to the vesting date, the rights will 
be forfeited. However, the Board will retain the discretion to retain executives in the plan in certain 
circumstances including the death, total and permanent disability or retirement of an executive. In 
these circumstances, the Board will also retain the discretion to vest awards in the form of cash.
On the occurrence of a change of control event and providing at least 12 months of the grants’ 
performance period have elapsed, unvested performance rights pro-rated with the elapsed service 
period are tested for vesting with performance against the relevant relative TSR, EPS growth or 
Scorecard requirements for that relevant period. Vesting will occur to the extent the performance 
conditions are met. Performance rights that have already been tested, have met performance 
requirements and are subject to the completion of the service condition, fully vest.

Directors’ Report     |38

6.4.2  LTI overview
Executives participate in a LTI plan. This is an equity-based 
plan that provides for a reward that varies with Company 
performance over three-year measures of performance.

Three-year measures of performance are considered to be the 
maximum reasonable time period for setting incentive targets 
for earnings per share and are generally consistent with market 
practice in the Company’s sector.

The payment is in the form of performance rights. The 
performance rights do not have any dividend entitlements or 
voting rights. If all the vesting requirements are satisfied, the 
performance rights will vest and the executives will receive 
shares in the Company or cash at the discretion of the Board.

The 2022 LTI represents an entitlement to performance rights 
to ordinary shares exercisable subject to satisfaction of both a 
performance condition and a continued employment condition. 
Grants will be in three equal tranches, with each tranche subject 
to an independent performance requirement. The performance 
requirements for each tranche will share two common features:
 § Once minimum performance conditions are met, the 

proportion of performance rights that qualify for vesting 
commences at 30% and gradually increases pro-rata with 
performance. This approach provides a strong motivation for 
meeting minimum performance, but avoids a large ‘cliff’ which 
may encourage excessive risk taking

 § The maximum reward is capped at a ‘stretch’ performance 

level that is considered attainable without excessive 
risk taking.

Performance for the 2022 LTI grants will be measured over 
the three-year period to 30 June 2024.

The proportion of performance rights that can vest will be 
calculated in August 2024, but executives will be required to 
remain in service until 30 June 2025 to be eligible to receive 
any shares.

Where an executive ceases employment with the Group prior 
to the vesting date, the rights will be forfeited. However, the 
Board will retain the discretion to retain executives in the plan in 
certain circumstances such as the death, total and permanent 
disability or retirement of an executive. In these circumstances, 
the Board will also retain the discretion to vest awards in the 
form of cash.

After vesting, any shares will remain subject to a trading 
restriction that is governed by the Company’s Securities 
Trading Policy.

All unvested performance rights will be forfeited if the Board 
determines that an executive has committed an act of fraud, 
defalcation or gross misconduct or in other circumstances at 
the discretion of the Board.

6.4.3  Performance requirements
One tranche of performance rights in the 2022 LTI grant will 
qualify for vesting subject to performance relative to other 
companies, while the other two tranches of performance rights 
will qualify for vesting subject to separate, independent absolute 
performance requirements.

The relative performance requirement applicable to the first 
tranche of performance rights is based on total shareholder 
return (TSR). TSR is calculated as the difference in share 
price over the performance period, plus the value of shares 
earned from reinvesting dividends received over this period, 
expressed as a percentage of the share price at the beginning 
of the performance period. If the TSR for each company in the 
comparator group is ranked from highest to lowest, the median 
TSR is the percentage return to shareholders that exceeds the 
TSR for half of the comparison companies. The 75th percentile 
TSR is the percentage return required to exceed the TSR for 
75% of the comparison companies.

Performance rights in the tranche to which the relative TSR 
performance requirement applies will vest pro-rata between the 
median and 75th percentile. That is, 30% of the tranche vest at 
the 50th percentile, 32.8% at the 51st percentile, 35.6% at the 
52nd percentile and so on until 100% vest at the 75th percentile.

The comparator group for the 2022 LTI grants will be the 
companies, excluding financial services companies, in the ASX 
100 index as at the start of the performance period on 1 July 
2021. Consideration has been given to using a smaller group of 
direct competitors for comparison, however:
 § Limiting the comparator group to a small number of direct 
competitors could result in very volatile outcomes from 
period to period

 § Management’s strong focus on improving the Company’s 

ranking among ASX 100 companies has become embedded 
in Company culture, so reinforcing this rather than trying to 
dislodge it with another focus was considered desirable.

The absolute performance requirement applicable to the 
second tranche of performance rights is based on Earnings per 
Share (EPS) growth over the three-year performance period to 
30 June 2024. The EPS measure is based on AASB 133 Earnings 
per Share.

The tranche of performance rights dependent on the EPS 
performance condition will vest pro-rata between 5% compound 
annual EPS growth and 10% compound annual EPS growth.

Vesting applies on a pro-rata basis from 30% upon meeting 
the minimum compound annual EPS growth performance level 
of 5% to 100% at 10% compound annual EPS growth. Capping 
reduces the tendency for excessive risk taking and volatility that 
may be encouraged if the annual compound EPS growth bar is 
set above 10%.

|     Downer EDI Limited39

The absolute performance requirement applicable to the 
third tranche of performance rights is based on the Scorecard 
condition over the three-year performance period to 
30 June 2024.

The Scorecard condition is designed to:
 § Strengthen retention through the setting of challenging 
targets on an annual basis that reflect prevailing market 
conditions, for a portion of LTI awards

 § Align with the STI plan to encourage a long-term approach 

to achieving annual financial performance targets

 § Improve the line of sight for executives so as to increase 

motivation and focus on consistent performance

 § Focus on performance sustainability through reward of 

consistent achievement of absolute performance targets 
over the long term.

The Scorecard condition is comprised of two independent 
absolute components of equal weighting. These components 
are based on Group NPATA and Group FFO.

The performance of each component will be measured over 
the three-year period to 30 June 2024.

NPATA and FFO targets are set at the beginning of each of the 
three financial years. The performance of each component will 
be assessed each year relative to the targets. Performance 
of each component will be determined as the average of the 
annual performance assessments for the three years. The 
performance rights will vest on a pro-rata basis from 30% 
upon meeting the minimum three-year average component 
performance level of 90% of target to 100% at the capped 
maximum three-year average component performance level 
of 110% of target.

The processes and timing applicable for the Scorecard measure 
are outlined below:

Timing

Actions

At the beginning 
of the plan
At the beginning 
of each 
financial year
At the end of each 
financial year

At the end of 
three years

Weighting of components is determined. In 
2022 the components are equally weighted.
NPATA and FFO target performance levels 
are set.

 § Calculate actual performance
 § Assess actual performance compared 
to target to determine performance 
percentage for the year.

 § Calculate average annual performance 

for each component

 § Calculate award based on performance 

against the vesting range.

At the end of 
four years

Consider the continued service condition 
and determine vesting.

6.4.4  Post-vesting shareholding guideline
The Managing Director is required to continue to hold shares 
after they have vested until the shareholding guideline has been 
attained. This guideline requires that the Managing Director 
holds vested long-term incentive shares equal in value to 100% 
of his fixed remuneration. The Managing Director’s shareholding 
is currently well in excess of the guideline.

The guideline requirement has been developed to reinforce 
alignment with shareholder interests. The Remuneration 
Committee has discretion to allow variations from this 
guideline requirement.

The Board retains the right to vary from policy in exceptional 
circumstances. However, any variation from policy and the 
reasons for it will be disclosed.

6.5  Treatment of major transactions
Downer has delivered significant shareholder value through a 
long history of strategic mergers, acquisitions and divestments. 
On each occasion, the Board considers the impact of these 
transactions. Where a transaction is both material and 
unbudgeted, the Board considers whether it is appropriate 
to adjust for its impact on the key performance indicators on 
which executive performance is measured. The objective of 
any adjustment is to ensure that opportunities to add value 
through an opportunistic divestment or acquisition should 
not be fettered by consideration of the impact on incentive 
payments. That is, executives should be ‘no better or worse 
off’ as a result of the transaction. No adjustments are made for 
market reactions to a transaction as the Board believes that 
management is accountable for those outcomes.

The Board considers this approach to be appropriate as it:
 § Ensures that executives and the Board consider these 

transactions solely based on the best interests of Downer

 § Means executives remain accountable for transaction 
execution and post-transaction performance from the 
next budget cycle

 § Ensures that executives complete opportunistic transactions 

that are in the long-term interests of shareholders

 § Is consistent with the Board’s long-term view when 
considering the value of major transactions to 
Downer’s shareholders

 § Ensures Downer remains agile and responsive in managing its 
portfolio by pursuing opportunities as and when they emerge 
rather than being constrained by the annual budget process.

Directors’ Report     |40

In assessing Zero Harm performance of executives, the results of acquired businesses are excluded for a period of 12 months 
post acquisition to ensure that management is accountable for the objectives set in the annual business planning process and 
in recognition that an integration period during which Downer’s Zero Harm framework (including systems, processes, definitions 
and measurement and reporting methods) is implemented through the acquired business is appropriate. Where this transition to 
Downer’s framework takes place over a longer period due to the complexity of the implementation or the maturity profile of the 
acquired business, the Board will consider an extension to a more appropriate period.

6.6  Treatment of significant items
From time to time, Downer’s performance is impacted by significant items. Where these occur, the Board considers whether to 
adjust for their impact (positive or negative) on a case by case basis, having regard to the circumstances relevant to each item.

The Board considers this approach to be appropriate as it ensures that executives and the Board make decisions solely based on 
the best interests of Downer.

7.  Details of Executive Remuneration
7.1  Remuneration received in relation to the 2022 financial year
Executives receive a mix of remuneration during the year, comprising fixed remuneration, an STI paid in cash, and a LTI in the form 
of performance rights that vest four years later, subject to meeting performance and continued employment conditions.

The table below lists the remuneration actually received in relation to the 2022 financial year, comprising fixed remuneration, cash 
STIs relating to 2022, deferred STIs payable in 2022 in respect of prior years and the value of LTI grants that vested during the 
2022 financial year. This information differs to that provided in the statutory remuneration table at section 7.2 which shows the 
accounting expense of LTIs and deferred STIs for 2022 determined in accordance with accounting standards rather than the value 
of LTI grants that vested during the year.

Cash Bonus
paid or 
payable in
 respect of
current year2
$

Deferred Bonus
 paid or payable
 in respect of
prior years4
$

650,000
243,750
243,750
1,137,500

430,750
161,531
160,613
752,894

Fixed 
Remuneration1
$

2,091,147
1,000,000
1,000,000
4,091,147

Total 
payments
$

3,171,897
1,405,281
1,404,363
5,981,541

Equity that 
vested during
20223
$

Total
 remuneration
received
$

–
–
–
–

3,171,897
1,405,281
1,404,363
5,981,541

G A Fenn
M J Ferguson
P J Tompkins

Fixed remuneration comprises salary and fees, payment of leave entitlements, non-monetary benefits and superannuation payments.

1. 
2.  Cash Bonus paid or payable in respect of current year represents cash payments in relation to the 2022 financial year. These comprise the 50% cash component 

of the award. The remaining 50% of the total award is deferred as described in Section 6.3.

3.  Represents the value of performance rights granted in previous years that vested during the year, calculated as the number of performance rights that vested 

multiplied by the closing market prices of Downer shares on the vesting date.

4.  Deferred Bonus represents the deferred cash bonus amount to be paid in September 2022, being the first deferred component of the 2021 award, being 25% 

of the award.

|     Downer EDI Limited41

7.2  Remuneration of executive key management personnel required under the Corporations Act 2001 (Cth)

2022

Short-term employee benefits

Post-employment benefits

Cash 
Bonus 
paid or 
payable 
in respect 
of current
year1
$

Deferred
Bonus 
paid or
 payable3
$

Non- 
monetary
$

Super- 
annuation
$

Other
 benefits
$

Term- 
ination
Benefits
$

Subtotal
$

Share- 
based 
payment 
transac-
tions2
$

Total
$

650,000
243,750
243,750

376,147
629,792
12,042
236,172
20,295
235,406
1,137,500 1,101,370 408,484

23,568
23,568
27,496
74,632

–
–
–
–

3,766,827
– 3,370,939 395,888
1,590,075
110,153
– 1,479,922
– 1,479,156
1,578,130
98,974
– 6,330,017 605,015 6,935,032

G A Fenn
M J Ferguson
P J Tompkins

Salary 
and fees
$

1,691,432
964,390
952,209
3,608,031

1. 

Cash Bonus paid or payable in respect of current year represents cash payments in relation to the 2022 financial year. These comprise the 50% cash component  
of the award.

2.  Represents the value of vested and unvested equity expensed during the period including reversal for forfeited equity incentives and the probability of the incentives 
vesting, in accordance with AASB 2 Share-based Payment, related to grants made to the executive, as outlined in section 8.3. Vesting of the majority of securities 
remains subject to significant performance and service conditions as outlined in section 6.4.

3.  Deferred Bonus represents the value of deferred components attributable to the 2022 financial year based on amortisation of deferred components over the period 

from the commencement of the relevant performance year to the end of financial year to which payment of the relevant deferred component relates.

2021

Short-term employee benefits

Post-employment benefits

Cash 
Bonus
 paid or
 payable in
 respect of
 current
year1
$

Deferred
Bonus 
paid or
 payable3
$

Salary 
and fees
$

G A Fenn
S Cinerari
M J Ferguson
S L Killeen
P J Tompkins

1,723,306
1,078,306
965,904
905,749
959,525

483,425
277,691
181,284
177,841
167,103
5,632,790 2,285,973 1,287,344

861,500
473,825
323,063
306,360
321,225

Non- 
monetary
$

Super- 
annuation
$

Other 
benefits
$

Term- 
ination 
Benefits
$

Subtotal
$

Share- 
based 
payment 
transac-
tions2
$

Total
$

339,302
15,566
12,402
72
18,781
386,123

21,694
26,051
21,694
32,478
21,694
123,611

–
–
–
–
–
–

3,313,168
– 3,429,227 (116,059)
1,810,274
(61,165)
– 1,871,439
4,098 1,508,445
– 1,504,347
1,424,233
1,733
– 1,422,500
– 1,488,328
1,509,367
21,039
– 9,715,841 (150,354) 9,565,487

1. 

Cash Bonus paid or payable in respect of current year represents cash payments in relation to the 2021 financial year. These comprise the 50% cash component 
of the award.

2.  Represents the value of vested and unvested equity expensed during the period including reversal for forfeited equity incentives and the probability of the incentives 
vesting, in accordance with AASB 2 Share-based Payment, related to grants made to the executive, as outlined in section 8.3. Vesting of the majority of securities 
remains subject to significant performance and service conditions as outlined in section 6.4.

3.  Deferred Bonus represents the value of deferred components attributable to the 2021 financial year based on amortisation of deferred components over the period 

from the commencement of the relevant performance year to the end of financial year to which payment of the relevant deferred component relates.

7.3  Performance related remuneration
7.3.1  Performance outcomes required under the Corporations Act 2001 (Cth)
The table below lists the proportions of remuneration paid during the year ended 30 June 2022 that are performance  
and non-performance related and the proportion of STIs that were earned during the year ended 30 June 2022 due  
to the achievement of the relevant performance targets.

G A Fenn
M J Ferguson
P J Tompkins

Proportion of 2022 
remuneration

2022 Short-term incentive

Performance
Related1
%

Non-
performance
Related
%

44
37
37

56
63
63

Paid
%

65
65
65

Forfeited
%

35
35
35

1. 

Performance related portion includes the reversal of expense for forfeited equity incentives described in section 6.4.

Directors’ Report     |42

7.3.2  STI performance outcomes
In order for an STI to be paid, a minimum of 90% of the budgeted profit target must be met. For KMP, the hurdle is 90% of the Group 
budgeted profit target. Profit for this purpose is defined as NPATA.

Further information on the financial element and assessment of STI outcomes is set out at section 7.4.

For the Zero Harm element, performance between target and stretch of the individual safety and sustainability measures was 
achieved. Sadly, a long-term Downer employee in New Zealand died in May 2022 following a fall at work. Although the cause of 
death is not yet known, Downer has treated this as a workplace fatality. Accordingly, it was determined that the safety gate was not 
met and 50% of the total Zero Harm achievement is forgone.

For the People element, threshold performance was achieved. 

Specific STI financial and commercial targets remain commercially sensitive and so have not been reported..

7.3.3  LTI performance outcomes
The table below summarises LTI performance measures tested and the outcomes for each executive.

Relevant executives1 Relevant LTI measure

Performance outcome

% LTI tranche that vested

G A Fenn,
M J Ferguson, 
P J Tompkins

G A Fenn,
M J Ferguson,
P J Tompkins

Actual performance ranked 
at the 30th percentile based 
on a TSR result of –8.4%.

Actual performance 
was –4.3%.

2019 plan – performance period 1 July 2018 to 30 June 2021
TSR tranche – percentile ranking 
of Downer’s TSR relative to the 
constituents of the ASX 100 over 
a three-year period.
EPS tranche – compound annual 
earnings per share growth 
against absolute targets over 
a three-year period.
Scorecard tranche – sustained NPAT 
and FFO performance against budget 
over a three-year period.
2020 plan – performance period 1 July 2019 to 30 June 20222
TSR tranche – percentile ranking 
of Downer’s TSR relative to the 
constituents of the ASX 100 over 
a three-year period.
EPS tranche – compound annual 
earnings per share growth 
against absolute targets over 
a three-year period.
Scorecard tranche – sustained NPATA 
and FFO performance against budget 
over a three-year period.

Actual performance ranked at 
the 26th percentile based on a 
TSR result of –18.3%.

Actual performance was 57.6% 
for NPATA and 62.9% for FFO.

Actual performance was 54.3% 
for NPAT and 63.6% for FFO.

0% became provisionally 
qualified. 100% were forfeited.

0% became provisionally 
qualified. 100% were forfeited.

0% became provisionally 
qualified. 100% were forfeited.

0% became provisionally 
qualified. 100% were forfeited.

qualified. 100% were forfeited.

0% became provisionally 
qualified. 100% were forfeited.

Actual performance was –4.1%. 0% became provisionally 

Relevant executives refers to members of the KMP who are participants in the plan tested.

1. 
2.  Test outcomes for the 2020 plan are provisional and will be confirmed following release of the Company’s audited 2022 results. Accordingly, the outcomes are not 

reflected in the disclosures in section 8.

|     Downer EDI Limited43

7.4  Major transactions and significant items
In 2022 there were five major unbudgeted transactions and three unbudgeted significant items. Each of these items is described 
below at sections 7.4.1 and 7.4.2 of this report, along with the impact of the item and effect on remuneration outcomes at 
section 7.4.3.

7.4.1  Major transactions
In 2022 Downer continued to optimise its portfolio in keeping with its Urban Services strategy through restructuring, partnering, 
acquisition and divestment. 

Downer undertook five major unbudgeted transactions during 2022. These transactions were the acquisition of Fowlers Asphalting, 
the exit of the Hospitality businesses, the divestments of the Mining businesses of Otraco and Open Cut Mining East, and the sale 
of the Rosehill Asphalt Plant. 

In accordance with its policy, the Board considered the impact of each major transaction on incentive outcomes and 
determined that:
 § The Fowlers Asphalting acquisition was a material, unbudgeted transaction for which it was appropriate to adjust 

incentive outcomes

 § The exit of Hospitality businesses was a material, unbudgeted transaction for which it was appropriate to adjust 

incentive outcomes

 § The divestment of the Otraco business was a material, unbudgeted transaction for which it was appropriate to adjust 

incentive outcomes

 § The divestment of the Open Cut Mining East business was a material, unbudgeted transaction for which it was appropriate 

to adjust incentive outcomes

 § The gain on sale of the Rosehill site was a material, unbudgeted transaction for which it was appropriate to adjust 

incentive outcomes.

7.4.2  Significant items
During the year, three unbudgeted items had a significant impact. The Board considers such items at the end of each performance 
period and whether it is appropriate to adjust for their impact on incentive outcomes.

The Board considered it was appropriate to adjust incentive outcomes for the following items:

Item

Description

Fair value adjustment on 
the Downer Contingent 
Share Options

Bid costs

Credit risk loss 
– Probuild

In September 2020, Downer issued contingent share options as part of the consideration for its 
acquisition of the remaining interests in Spotless.
The options are required to be remeasured to fair value at each reporting date. For 2022, the options 
were revalued downwards by $3.7 million post-tax, resulting in an unbudgeted gain.
Issuing the securities in order to acquire the remaining interests in Spotless was considered to be  
in the best interests of Downer.
It was determined that it was appropriate to adjust incentive outcomes for this item.
Downer is in the process of tendering for the Queensland Train Manufacturing Program. 
This opportunity was identified in the business planning process, however crystallised earlier 
than expected. In order to secure this opportunity, it was necessary to incur bid costs of $12.7 million 
(post-tax $8.9 million) which was unbudgeted in 2022. 

Securing this opportunity is considered to be in the best interest of Downer. Accordingly, it was 
determined that it was appropriate to adjust incentive outcomes for this item.
In November 2018, Downer entered contracts with Probuild Constructions (Australia) Pty Ltd 
(Probuild) for the provision of mechanical and electrical services for the new Victoria Police building 
in Melbourne. On 23 February 2022 Probuild entered voluntary administration and appointed 
an Administrator.

Downer achieved Practical Completion of its services on 9 July 2020 with the defect liability 
period ending on 9 July 2022. There are outstanding claims which are unpaid by Probuild, of which 
post-tax $27.7 million has been recognised by Downer and recovery is now subject to risk due to 
the administration.

The Board determined that no adjustment be made for this item.

Directors’ Report     |44

7.4.3  Adjustments made to incentive calculations for major transactions and significant items
The Board determined that the following adjustments be made to KPI calculations for the impact of major transactions and 
significant items. The adjustments mean that executives are ‘no better or worse off’ as a result of the transactions and significant 
items so that performance is measured against delivery of the Company’s budget and business plan.

Measure Adjustment

NPATA

Net increase of $26.1 million comprised of:
 § Exclusion of $3.7 million of fair value movement on Downer Contingent Share 

Options (DCSO) liability

Impact on STI

Impact on LTI

No change.

No change.

 § Exclusion of net loss on exit of the Open Cut Mining East, Otraco and 

Hospitality businesses, including the loss of operating earnings since the 
divestment net of interest expense of $83.2 million (post-tax)

 § Exclusion of operating earnings from Fowlers Asphalting net of transaction 

costs and net interest expense of $2.2 million

 § Exclusion of bid costs in relation to tendering for the Queensland Train 

Manufacturing Program of $8.9 million (post-tax)

 § Exclusion of the gain on sale of the Rosehill Asphalt Plant of 

$60.1 million (post-tax).

FFO

Net decrease of $104.5 million comprised of:
 § Exclusion of $105.8 million proceeds from the divestment of the Open Cut 

No change.

No change.

Mining East, Otraco and Hospitality businesses (net of transaction and other 
exit costs) including the loss of operating cash since the divestment

 § Exclusion of the cash flow impact on Fowlers Asphalting (transaction costs, 
net interest expense, operating cash and payment for business acquisition) 
of $18.4 million

 § Exclusion of payment for bid costs in relation to tendering for the 

Queensland Train Manufacturing Program of $8.9 million

 § Exclusion of the net cash inflow impact of the sale of the Rosehill Asphalt 

Plant of $26.0 million.

EPS
TSR

The use of NPAT adjusted as set out above.
No adjustments were made.

Not applicable.
Not applicable.

No change.
Not applicable.

|     Downer EDI Limited45

The Board’s determination to adjust incentive outcomes for major transactions and significant items as set out in sections 7.4.1 
and 7.4.2 did not impact incentive outcomes for executives as the earnings gate was not met. 

The Board considered this outcome and whether it was appropriate.

The impact of widespread COVID-19 infections within the community and the restrictions placed on businesses and employees 
by government was not anticipated at the time targets and forecasts for 2022 were set. Additionally, the prolonged and severe 
wet weather patterns experienced throughout Australia’s eastern States have been debilitating and unprecedented. The impact 
of COVID-19 and severe wet weather patterns materially impacted the Company’s financial performance.

Notwithstanding the difficulties presented during the period our staff and management responded outstandingly in highly 
challenging circumstances, maximising outcomes for shareholders, protecting not only the performance of the Company but also 
the communities in which Downer operates, all while delivering quality service outcomes for customers. If not for this ‘above and 
beyond’ effort, Downer would not be in the strong position it is in today.

During the period the executive team continued to improve the Company by: 
 § Completing the exit of the Open Cut Mining East and Otraco businesses, delivering on the strategy to exit capital-intensive 

businesses and significantly decreasing the Group’s carbon emissions profile

 § Completing the exit of the Hospitality businesses, improving the Group’s resilience and reducing volatility 
 § Acquiring Fowlers Asphalting in Victoria’s Gippsland 
 § Completing the sale of our Rosehill Asphalt Plant and the construction of a world-leading replacement plant. 

The Board assessed the impact of COVID-19 and severe wet weather on executive performance KPIs and formed the view that the 
executive was likely to achieve at least target earnings performance in 2022, in the absence of those impacts.

After extensive deliberation of these issues and the Company’s financial and non-financial performance, the Board determined it 
important and appropriate to exercise discretion to award an STI outcome of 65% for the executives, which is between threshold 
and target. In keeping with policy, 50% of these awards are deferred.

In assessing the appropriate level of award the Board has balanced the challenging environment for shareholders and the strong 
competition for talent and retention across Australia and New Zealand, which is unparalleled in recent years.

7.4.4  Future periods
For major transactions completed in 2022, the impact on operational performance is included in the 2023 budget and accordingly 
no adjustments are expected in respect of FY23 operational performance.

7.5  Variations from policy
There were no variations from policy in 2022.

Directors’ Report     |46

8.  Executive Equity Ownership
8.1  Ordinary shares
KMP equity holdings in fully paid ordinary shares and performance rights issued by Downer EDI Limited are as follows:

Ordinary shares

Performance rights

Balance at 
1 July 2021
No.

Net Change
No.

Balance at 
30 June 2022
No.

Balance at 
1 July 2021
No.

Net Change
No.

Balance at
 30 June 2022
No.

G A Fenn
M J Ferguson
P J Tompkins

2,049,772
92,694
286,004

–
11,279
–

2,049,772
103,973
286,004

625,748
152,591
156,437

276,744
73,031
69,185

902,492
225,622
225,622

8.2  Options and rights
No performance options were granted by Downer EDI Limited or exercised during the 2021 financial year.

As outlined in section 6.4.1, the LTI plan for the 2022 financial year is in the form of performance rights. Relief from certain 
regulatory requirements was applied for and has been received from the Australian Securities and Investments Commission.  
During the year, the LTI plan for the 2022 financial year was approved as outlined in section 6.4 of this report, however grants of 
performance rights have not yet been made to KMP, however they are expected to be made early in the 2023 financial year. This 
means that grants in relation to 2022 and 2023 are expected to be made during the 2023 financial year.

Consistent with the ASX Listing Rules for the adjustment of the quantity of rights and options on issue at the time of new share 
issues, the quantity of unlapsed rights granted to executives under the 2019 plan was adjusted by the ASX Adjustment Factor 
of 0.9812 in respect of the bonus element of the accelerated non-renounceable entitlement offer made during the 2021 year.

The following table shows the number of performance rights granted by Downer EDI Limited and percentage of performance rights 
that vested or were forfeited during the year for each grant that affects compensation in this or future reporting periods.

2019 Plan

2020 Plan

Number of 
performance
rights1

Vested
%

Forfeited
%

Number of 
performance
rights2

Vested
%

Forfeited
%

307,573
73,048
76,894

–
–
–

100
100
100

318,175
79,543
79,543

–
–
–

–
–
–

G A Fenn
M J Ferguson
P J Tompkins

1.  Grant date 3 June 2019. Expiry date is 1 July 2022. The fair value of shares granted was $5.93 per share for the EPS and Scorecard tranches and $2.22 per share  

for the TSR tranche.

2.  Grant date 21 October 2020. Expiry date is 1 July 2023. The fair value of shares granted was $4.36 per share for the EPS and Scorecard tranches and $1.14 per share 

for the TSR tranche.

|     Downer EDI Limited47

Number of 
performance
rights1

584,317
146,079
146,079

2021 Plan

Vested
%

Forfeited
%

–
–
–

–
–
–

G A Fenn
M J Ferguson
P J Tompkins

1.  Grant date 30 September 2021. Expiry date is 1 July 2024. The fair value of shares granted was $5.73 per share for the EPS and Scorecard tranches and $3.86 per share 

for the TSR tranche.

The maximum number of performance options and rights that may vest in future years that will be recognised as share-based 
payments in future years is set out in the table below:

Maximum number of shares for the vesting year

G A Fenn
M J Ferguson
P J Tompkins

2023

–
–
–

2024

318,175
79,543
79,543

2025

584,137
146,079
146,079

The maximum expense for performance options and rights that may vest in future years that will be recognised as share-based 
payments in future years is set out in the table below. The amount reported is the value of share-based payments calculated in 
accordance with AASB 2 Share-based Payment over the vesting period. In respect of the 2022 plan an estimated expense has 
been recognised that will be trued up following formal valuation after the grants have been made.

G A Fenn
M J Ferguson
P J Tompkins

2023

1,507,412
376,852
376,852

2024

1,245,978
311,494
311,494

2025

500,000
125,000
125,000

8.3  Remuneration consultants
Guerdon Associates Pty Ltd was engaged by the Board Remuneration Committee to provide remuneration advice in relation to 
KMP, but did not provide the Board Remuneration Committee with remuneration recommendations as defined under Division 1, 
Part 1.2, 9B (1) of the Corporations Act 2001 (Cth).

The Board was satisfied that advice received was free from any undue influence by KMP to whom the advice may relate, because 
strict protocols were observed and complied with regarding any interaction between Guerdon Associates Pty Ltd and management, 
and because all remuneration advice was provided to the Board Remuneration Committee chair.

Directors’ Report     |48

9.  Key Terms of Employment Contracts
9.1  Notice and termination payments
Executives are on contracts with no fixed end date.

The following table captures the notice periods applicable to termination of the employment of executives.

Managing Director
Other Executives

Termination notice 
period by Downer

Termination notice 
period by employee

Termination payments 
payable under contract

12 months
12 months

6 months
6 months

12 months
12 months

Termination payments are calculated based upon total fixed remuneration at the date of termination. No payment is made for 
termination due to gross misconduct.

9.2  Managing Director and Chief Executive Officer of Downer’s employment agreement
Mr Fenn was appointed as the Managing Director of Downer commencing on 30 July 2010. The following table sets out the key 
terms of the Managing Director’s employment agreement.

Term
Fixed  
remuneration

STI opportunity

LTI opportunity

Until terminated by either party.
$2.0 million per annum. This has remained unchanged since July 2012.
Fixed remuneration includes superannuation and non-cash benefits but excludes entitlements to 
reimbursement for Mr Fenn’s home telephone rental and call costs, home internet costs and medical, life and 
salary continuance insurance. Mr Fenn may also be accompanied by his wife when travelling on business, at 
the Chairman’s discretion. There was no such travel during the year.
Mr Fenn is eligible to receive an annual STI and the maximum STI opportunity is 100% of fixed remuneration.
Any entitlement to an STI is at the discretion of the Board, having regard to performance measures and 
targets developed in consultation with Mr Fenn including Downer’s financial performance, safety, people, 
environmental and sustainability targets and adherence to risk management policies and practices. The Board 
also retains the right to vary the STI by + or – 100% (up to the 100% maximum) based on its assessment of 
performance. The STI deferral arrangements in place for KMP apply to Mr Fenn.
There is no STI entitlement where the Managing Director’s employment terminates prior to the end of the 
financial year, other than in the event of a change in control or by mutual agreement.
Mr Fenn is eligible to participate in the annual LTI plan and the value of the award is 100% of fixed 
remuneration calculated using the volume weighted average price after each year’s half-yearly 
results announcement.
Mr Fenn’s performance requirements have been described in section 6.4.
In the event of a change of control, providing at least 12 months of a grant’s performance period have elapsed, 
unvested shares and performance rights pro-rated with the elapsed service period are tested for vesting with 
performance against the relevant hurdles for that period and vest, as appropriate. Shares that have already 
been tested, have met performance requirements, and are subject to the completion of the service condition, 
fully vest.

|     Downer EDI Limited49

Termination

Other

Mr Fenn can resign:
(a)  By providing six months’ written notice; or
(b)  Immediately in circumstances where there is a fundamental change in his role or responsibilities.  

In these circumstances, Mr Fenn is entitled to a payment in lieu of 12 months’ notice.

Immediately for misconduct or other circumstances justifying summary dismissal; or

Downer can terminate Mr Fenn’s employment:
(a) 
(b)  By providing 12 months’ written notice.
When notice is required, Downer can make a payment in lieu of notice of all or part of any notice period 
(calculated based on Mr Fenn’s fixed annual remuneration).
If Mr Fenn resigns because ill health prevents him from continuing his duties, he will receive a payment in 
recognition of his past services equivalent to 12 months’ fixed remuneration. At the discretion of the Board, 
his shares under the LTI plan may also vest.
If Downer terminates Mr Fenn’s employment on account of redundancy, in addition to the notice (or payment 
in lieu of notice) required to be given by Downer, Mr Fenn will receive a payment in recognition of his past 
services equivalent to 12 months’ fixed remuneration.
If Mr Fenn resigns he will be subject to a six-month post-employment restraint in certain areas where the 
Downer Group operates, where he is restricted from working for competitive businesses.
The agreement contains provisions regarding leave entitlements, duties, confidentiality, intellectual property, 
moral rights and other facilitative and ancillary clauses. It also contains provisions regarding corporate 
governance and a provision dealing with the Corporations Act 2001 (Cth) limits on termination benefits  
to be made to Mr Fenn.

10. Related Party Information
10.1  Transactions with other related parties
Transactions entered into during the year with Directors of Downer EDI Limited and the Group are within normal employee, 
customer or supplier relationships on terms and conditions no more favourable than dealings in the same circumstances  
on an arm’s length basis and included:

 § The receipt of dividends from Downer EDI Limited

 § Participation in the Long-Term Incentive Plan

 § Terms and conditions of employment

 § Reimbursement of expenses.

A number of Directors of the Company hold directorships in other entities. Several of these entities transacted with the Group 
on terms and conditions no more favourable than those available on an arm’s length basis.

Directors’ Report     |50

11.  Description of Non-executive Director Remuneration
11.1  Non-executive Director remuneration policy
Downer’s Non-executive Director remuneration policy is to provide fair remuneration that is sufficient to attract and retain Directors 
with the experience, knowledge, skills and judgement to steward the Company.

Fees for Non-executive Directors are fixed and are not linked to the financial performance of the Company. The Board believes this 
is necessary for Non-executive Directors to maintain their independence.

Non-executive Directors are not entitled to retirement benefits. Shareholders approved an annual aggregate cap of $2.0 million 
for Non-executive Director fees at the 2008 AGM. The allocation of fees to Non-executive Directors within this cap has been 
determined after consideration of a number of factors, including the time commitment of Directors, the size and scale of the 
Company’s operations, the skill sets of Board members, the quantum of fees paid to Non-executive Directors of comparable 
companies and participation in Board Committee work.

The Chairman receives a fee of $410,625 per annum (inclusive of all Committee fees) and superannuation. The other Non-executive 
Directors each receive a base fee of $164,250 per annum. Additional fees are paid for Committee duties: $35,000 for the chair of the 
Audit and Risk Committee; $27,000 for the chair of each of the Zero Harm Committee and Remuneration Committee, and $17,000 
for the chair of the Tender Risk Evaluation Committee.

The basis of fees and the fee pool are reviewed when new Directors are appointed to the Board, when the structure of the Board 
changes, or at least every three years. Reference is made to individual Non-executive Director fee levels and workload (i.e. number 
of meetings and the number of Directors) at comparably sized companies from all industries other than the financial services sector, 
and the fee pools at these companies. In addition, an assessment is made on the extent of flexibility provided by the fee pool to 
recruit any additional Directors for planned succession after allocation of fees to existing Directors.

A review of fees was conducted in 2021. The review found that base fees paid to the Chairman and Non-executive Directors 
remained appropriate however fees paid for chairing or serving as a member of a committee were below market levels. Accordingly, 
as foreshadowed in the 2021 Remuneration Report, the following changes in fees were applied from 1 July 2021:

 § Fees set at a fixed value inclusive of superannuation, rather than a fee plus superannuation at the superannuation guarantee rate

 § Increase in the Chairman fees for the Remuneration Committee to $27,000 from $16,425

 § Increase in the Chairman fees for the Zero Harm Committee to $27,000 from $16,425

 § Increase in the Chairman fees for the Tender Risk Evaluation Committee to $17,000 from $16,425

 § Introduction of fees for committee members at the rate of 50% of the respective committee Chairman fee.

|     Downer EDI Limited51

11.2  Non-executive Directors’ remuneration
The table below sets out the remuneration paid to Non-executive Directors for the 2022 and 2021 financial years.

Short-term benefits

Post-employment benefits

M P Chellew1

R M Harding1

M J Binns1

P S Garling1

T G Handicott

N M Hollows

A M Howse1

M J Menhinnitt1

C G Thorne1

P L Watson

Board 
fee
$

Committee 
fee
$

Total 
fees
$

Super-
 annuation
$

Termination
benefits
$

302,736
–
93,324
375,000
53,640
–
149,318
150,000
149,318
150,000
149,318
150,000
37,330
–
49,773
–
–
5,766
149,318
150,000

–
–
–
–
2,348
–
22,500
13,750
41,966
15,000
54,841
35,000
3,617
–
4,017
–
–
–
57,421
28,347

302,736
–
93,324
375,000
55,988
–
171,818
163,750
191,284
165,000
204,159
185,000
40,947
–
53,790
–
–
5,766
206,739
178,347

18,920
–
9,332
35,625
1,345
–
17,182
15,556
19,128
15,675
20,416
17,575
4,095
–
5,379
–
–
548
20,674
16,943

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Year

2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021

Total
$

321,656
–
102,656
410,625
57,333
–
189,000
179,306
210,412
180,675
224,575
202,575
45,042
–
59,169
–
–
6,314
227,413
195,290

1. 

Amounts represent the payments relating to the period during which the individual was a Non-executive Director.

11.3  Equity held by Non-executive Directors
The table below sets out the equity in Downer held by Non-executive Directors for the 2022 and 2021 financial years.

M P Chellew
R M Harding
M J Binns
P S Garling
T G Handicott
N M Hollows
A M Howse
M J Menhinnitt
P L Watson

2022

2021

Balance at
 1 July 2021

Net change

Balance at 
30 June 20221

Balance at 
1 July 2020

Net change

Balance at 
30 June 2021

–
34,028
–
23,540
20,047
15,538
–
–
17,933

18,000
–
–
–
1,053
10,000
5,000
21,748
–

18,000
34,028
–
23,540
21,100
25,538
5,000
21,748
17,933

–
28,856
–
19,962
17,000
3,000
–
–
6,329

–
5,172
–
3,578
3,047
12,538
–
–
11,604

–
34,028
–
23,540
20,047
15,538
–
–
17,933

1. 

Balance at 30 June 2022 for R M Harding and P S Garling represents the number of shares held as at their retirement date.

Signed in accordance with a resolution of the Directors made pursuant to section 298(2) of the Corporations Act 2001 (Cth). 
On behalf of the Directors.

M P Chellew
Chairman
Sydney, 17 August 2022

Directors’ Report     |52

Auditor’s Independence Declaration
for the year ended 30 June 2022

|     Downer EDI LimitedKPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Downer EDI Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Downer EDI Limited for the financial year ended 30 June 2022 there have been: i.no contraventions of the auditor independence requirements as set out in theCorporations Act 2001 in relation to the audit; andii.no contraventions of any applicable code of professional conduct in relation to the audit.KPMG Nigel Virgo Partner Sydney 17 August 2022 53

Independent Auditor’s Report
for the year ended 30 June 2022

Auditor’s Signed Reports     |    KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.  Independent Auditor’s Report   To the shareholders of Downer EDI Limited Report on the audit of the Financial Report  Opinion We have audited the Financial Report of Downer EDI Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001.  The Financial Report comprises:  • Consolidated statement of financial position as at 30 June 2022 • Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended • Notes including a summary of significant accounting policies  • Directors' Declaration. The Group consists of Downer EDI Limited (the Company) and the entities it controlled at the year end or from time to time during the financial year.  Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements.  54

Independent Auditor’s Report – continued
for the year ended 30 June 2022

|     Downer EDI Limited     Key Audit Matters The Key Audit Matters we identified are: • Recognition of revenue • Value of goodwill  Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recognition of revenue Refer to Note B2 ‘Revenue’ ($10,989.0m) The key audit matter How the matter was addressed in our audit Recognition of revenue is a key audit matter due to the: • Significance of revenue to the financial statements • Large number of contracts with numerous estimation events potentially occurring over the course of the contract’s life. This results in complex and judgemental revenue recognition from rendering of services and construction contracts and therefore significant audit effort is required to gather sufficient audit evidence for revenue recognition. We focused on the Group’s assessment of the following elements of revenue recognition for rendering of services and construction contracts, as applicable: • Revisions to total expected costs for certain events or conditions occurring during the performance of the contract, or are expected to occur to complete the contract, which is difficult to estimate; • The Group’s assessment of when a modification to the contract scope and/or price for variations and claims is approved and enforceable. The Group’s consideration of the enforceability or approval may include evidence that is written, oral or implied by customary business practice and therefore requires a degree of judgement. The Group’s Our procedures included: • We obtained an understanding of the Group’s process of accounting for rendering of services and construction contract revenues. We considered the appropriateness of the Group’s accounting policy for rendering of services and construction contract revenues, including variations and claims and variable consideration, against the requirements of the accounting standards. We tested key controls such as: - Management’s review and approval of information for key bids including estimated project milestones, projected Earnings Before Interest and Tax (EBIT), Net Present Value (NPV), Return On Funds Employed (ROFE), and potential legal risks; - Management’s review of key contracts where events or conditions have occurred that require changes to revenue recognition;  - The Group’s requirement to obtain customer acceptance prior to billing an invoice. • We selected a statistical sample of revenue recognised and checked to evidence of the service being performed such as customer approval.   • We used data analytic routines to select a sample of contracts for testing based on a number of quantitative and qualitative factors. These factors included contracts with significant deterioration in margin, significant variations and claims or variable consideration. We also included factors which 55

Auditor’s Signed Reports     |     assessment of the enforceability of variations and claims can drive different accounting treatments, increasing the risk of inappropriately recognising revenue; and • The Group’s policy for the determination of the amount of revenue recognised from variable consideration which is highly probable of not reversing. Variable consideration is contingent on the Group’s performance and includes key performance payments, abatements offsetting revenue under the contract and liquidated damages. The Group's determination that variable consideration is highly probable requires a degree of estimation and judgement. This increased the audit effort we applied to gather sufficient audit evidence.  indicated to us a greater level of judgement was required by the Group when assessing the revenue recognition based on the estimates developed for current and forecast contract performance. For the samples selected, where relevant: - we read the selected contract terms and conditions to evaluate the individual characteristics of each contract reflected in the Group’s estimate of revenue; - we assessed the estimation of total expected costs, including cost contingencies for contracting risks, by challenging the Group’s project and finance managers on their estimations. We also checked key forecast cost assumptions to independent sources and underlying documentation such as inflation, Enterprise Bargaining Agreements for wage rates, salary costs and agreements with subcontractors;  - we evaluated the Group’s assessment of when a modification to the contract scope and/or price for variations and claims is approved and enforceable. This included assessing the underlying records, legal documents, customer correspondence and contracts. We recalculated the amount of revenue using the modified features of the contract. We compared the recalculated amounts against the amounts recorded by the Group; - we assessed the Group’s estimation of the highly probable amount of revenue for variations and claims. This included comparing underlying evidence such as correspondence with customers, and reports from objective time and cost claim experts (where applicable) for consistency with contract terms; - we evaluated the Group’s legal and external experts’ reports received on contentious matters to identify conditions indicating inappropriate recognition of variations and claims. We checked the consistency of this to the inclusion or not of an amount in the estimates used for revenue recognition;  56

Independent Auditor’s Report – continued
for the year ended 30 June 2022

|     Downer EDI Limited     - we assessed the scope, competency and objectivity of the legal and external experts engaged by the Group; and • We evaluated the method applied by the Group to estimate the highly probable amount of the key performance payments, liquidated damages and abatements against the specific contract terms. This included gathering underlying evidence in relation to the Group’s performance against the terms of the contract. We then recalculated the amount of variable consideration. We compared the recalculated amounts to the amounts recorded by the Group as offsets to revenue.   Value of goodwill Refer to Note C7 ‘Intangible assets’ ($2,285.0m) The key audit matter How the matter was addressed in our audit The value of goodwill is a key audit matter due to the size of the balance (being 30.6% of total assets) and the significant audit effort arising from: • The Group having 5 groups of Cash Generating Units (CGUs) for which the impairment of goodwill is assessed; • The risk that a reasonably possible unfavourable change in certain key assumptions for the Facilities CGU in the absence of mitigating factors, may result in nil headroom for that CGU; and • The Group reorganising its internal reporting structure during the year, necessitating our consideration of the changes to the Group’s segments and composition of the Group’s CGUs and the level at which goodwill was assessed. We focused on the following key forward looking assumptions in the Group’s value in use models: • Forecast cash flows including revenue growth rate and EBIT margin improvement in the forecast years, with greater focus on the Facilities CGU and Our procedures included: • We obtained an understanding of the Group’s goodwill impairment assessment process and tested key controls such as the review and approval of the budget by management and the Board. • We considered the appropriateness of the value in use method applied by the Group to perform the annual test of goodwill for impairment against the requirements of the accounting standards. • We considered the Group’s determination of their CGUs based on our understanding of the operations of the Group and how independent cash inflows were generated, against the requirements of the accounting standards. • We analysed the Group’s reorganised segments and the Group’s internal reporting to assess the Group’s monitoring and management of activities, and the allocation of goodwill to Groups of CGUs. • We assessed the integrity of the value in use model used, including the accuracy of the underlying calculation formulas.  • We obtained the Group’s value in use model and checked amounts to the Board approved FY23 budget and the FY24-FY25 business plan. We 57

Auditor’s Signed Reports     |     the expected outcome of tenders and contract renewals.  • Discount rates – these are complicated in nature and vary according to the conditions and environment the specific CGU is subject to from time to time; and • Long-term growth rates – certain valuations for CGUs of the Group are highly sensitive to changes in this assumption. Using forward-looking assumptions tends to be prone to greater risk for potential bias, error and inconsistent application. These conditions necessitate additional scrutiny by us, in particular to address the objectivity of sources used for assumptions, and their consistent application. The significant judgement involved in key assumptions required the involvement of valuation specialists to supplement our senior audit team members in assessing this key audit matter. challenged the Group’s projected cash flows by comparing the budget and business plan to our understanding of the business. We compared actual performance in FY22 to the budget for FY23. We also considered the revenue growth rate and EBIT margin between FY22 and the terminal year in the models through our sensitivity analysis. • We considered the sensitivity of the models by varying key assumptions including revenue growth rate and EBIT margin, long-term growth rates and discount rates, within a reasonably possible range. We considered the interdependencies of key assumptions when performing the sensitivity analysis. We did this to identify those CGUs at higher risk of impairment and those assumptions at higher risk of bias or inconsistency in application to focus our further procedures.    • We obtained independent economic views on the expected revenue growth rates for the CGUs in the forecast years to challenge the forecast cashflows.  • For the Facilities CGU with a higher risk of impairment we performed a range of sensitivity analyses to identify those assumptions at higher risk of bias or inconsistency in application. This included the discount rate, long-term growth rate, revenue growth rate and EBIT margin. We assessed the inclusion of expected tender wins and contract renewals by comparing to historical win and renewal rates to inform this testing. We considered the sensitivity of the models by varying key assumptions within a reasonably possible range. • Working with our valuation specialists we: o independently developed a discount rate range using publicly available market data for comparable entities, adjusted by risk factors specific to the Group and the industry it operates in; and  o independently assessed the long-term growth rate for each of the CGUs against publicly available data and compared this to the Group’s assumption.  • We assessed the Group’s disclosures of the quantitative and qualitative considerations in relation to the valuation of goodwill, by comparing these disclosures to our understanding and the requirements of the accounting standards. 58

Independent Auditor’s Report – continued
for the year ended 30 June 2022

|     Downer EDI Limited       Other Information Other Information is financial and non-financial information in Downer EDI Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error • assessing the Group and Company's ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is:  • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and  • to issue an Auditor’s Report that includes our opinion.  Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report. 59

Auditor’s Signed Reports     |Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Downer EDI Limited for the year ended 30 June 2022, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 27 to 51 of the Directors’ report for the year ended 30 June 2022.  Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.KPMG Nigel Virgo Stephen Isaac Partner Partner Sydney 17 August 2022 60

Financial Statements

for the year ended 30 June 2022

Consolidated Statement of Profit or Loss and Other Comprehensive Income 
 Consolidated Statement of Financial Position 
 Consolidated Statement of Changes in Equity 
 Consolidated Statement of Cash Flows 

61
62
63
64

Notes to the consolidated financial statements

A

B

C

D

E

F

About this  
report

Business 
performance

Operating assets 
and liabilities

Employee 
benefits 

Capital structure  
and financing

Group 
structure

G

Other 

Page 65-66

Page 67-80

Page 81-95

Page 96-97

Page 98-105

Page 106-116

Page 117-124

B1
Segment 
information

B2
Revenue

C1
Reconciliation 
of cash and cash 
equivalents

D1
Employee benefits

E1
Borrowings

F1
Joint arrangements 
and associate 
entities

G1
New accounting 
standards

C2
Trade receivables 
and contract assets

D2
Defined 
benefit plan

E2
Financing facilities

F2
Controlled entities

G2
Capital and financial 
risk management

G3
Other financial 
assets and 
liabilities

B3
Individually 
significant items

C3
Inventories

D3
Key management 
personnel 
compensation

E3
Lease liabilities

B4
Earnings per share

C4
Trade payables and 
contract liabilities

D4
Employee discount 
share plan

E4
Commitments

B5
Taxation

B6
Remuneration 
of auditor

C5
Property, plant and 
equipment

C6
Right-of-use assets

B7
Subsequent events

C7
Intangible assets

C8
Other provisions

C9
Contingent liabilities

E5
Issued capital

E6
Reserves

E7
Dividends

F3
Related party 
information

F4
Parent entity 
disclosures

F5
Acquisition 
of businesses

F6
Disposal of 
businesses

Directors’ Declaration 

125

|     Downer EDI Limited61

Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2022

Revenue
Other income
Total revenue and other income

Employee benefits expense
Subcontractor costs
Raw materials and consumables used
Plant and equipment costs
Depreciation on leased assets
Other depreciation and amortisation
Impairment of non-current assets
Other expenses from ordinary activities
Total expenses

Share of net profit of joint ventures and associates
Earnings before interest and tax

Finance income
Lease finance costs
Other finance costs
Net finance costs

Profit before income tax
Income tax expense
Profit after income tax

Profit for the year is attributable to:
– Non-controlling interest
– Members of the parent entity
Profit for the year

Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
– Actuarial movement on net defined benefit plan obligations
– Income tax effect of actuarial movement on defined benefit plan obligations
Items that may be reclassified subsequently to profit or loss:
– Exchange differences arising on translation of foreign operations
– Net gain on foreign currency forward contracts taken to equity
– Net gain on cross currency and interest rate swaps taken to equity
– Change in fair value of unquoted equity investments
– Income tax effect of items above
Other comprehensive income for the year (net of tax)
Other comprehensive income for the year is attributable to:
– Non-controlling interest
– Members of the parent entity
Other comprehensive income for the year
Total comprehensive income for the year

Earnings per share (cents)
Basic earnings per share
Diluted earnings per share

Note

B2
B2

D1

C6
C5,C7
C5,C6,C7

F1(a)

B5(a)

D2

B4
B4

2022
$’m

10,989.0
165.5
11,154.5

(3,581.2)
(4,430.5)
(1,381.3)
(468.5)
(160.3)
(181.9)
(42.0)
(615.3)
(10,861.0)

29.7
323.2

2.4
(22.0)
(65.8)
(85.4)

237.8
(85.8)
152.0

0.4
151.6
152.0

6.8
(2.1)

(16.9)
2.4
41.1
0.2
(13.0)
18.5

(0.3)
18.8
18.5
170.5

21.3
21.2

2021
 $’m

11,530.2
53.9
11,584.1

(3,859.5)
(4,132.7)
(1,594.6)
(590.2)
(180.6)
(313.8)
(20.2)
(579.9)
(11,271.5)

22.2
334.8

4.2
(27.7)
(81.4)
(104.9)

229.9
(46.2)
183.7

2.1
181.6
183.7

5.0
(1.5)

1.1
1.4
8.4
–
(2.9)
11.5

0.5
11.0
11.5
195.2

25.4
24.8

The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the 
accompanying notes on pages 65 to 124.

Financial Statements     |62

Consolidated Statement of Financial Position
as at 30 June 2022

ASSETS
Current assets
Cash and cash equivalents
Trade receivables and contract assets
Other financial assets
Inventories
Lease receivables
Current tax assets
Prepayments and other assets
Assets held for sale
Total current assets
Non-current assets
Trade receivables and contract assets
Equity accounted investments
Property, plant and equipment
Right-of-use assets
Intangible assets
Other financial assets
Deferred tax assets
Prepayments and other assets
Total non-current assets
Total assets

LIABILITIES
Current liabilities
Trade payables and contract liabilities
Borrowings
Lease liabilities
Other financial liabilities
Employee benefits provision
Other provisions
Current tax liabilities
Liabilities held for sale
Total current liabilities

Non-current liabilities
Trade payables and contract liabilities
Borrowings
Lease liabilities
Other financial liabilities
Employee benefits provision
Other provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Retained earnings
Parent interests
Non-controlling interest
Total equity

Note

C1(c)
C2
G3
C3

C2
F1(a)
C5
C6
C7
G3
B5(b)

C4
E1
E3
G3
D1
C8

C4
E1
E3
G3
D1
C8
B5(b)

E5
E6

2022
$’m

2021
 $’m

738.5
1,953.0
28.2
208.9
–
40.1
59.3
–
3,028.0

121.6
162.8
924.4
436.2
2,741.4
32.7
3.8
10.1
4,433.0
7,461.0

2,208.1
–
132.4
26.4
303.5
54.5
5.2
–
2,730.1

46.5
1,361.7
411.5
5.0
18.7
18.8
34.7
1,896.9
4,627.0
2,834.0

2,660.2
12.1
161.7
2,834.0
–
2,834.0

811.4
2,121.0
62.7
254.2
0.1
48.6
63.7
41.5
3,403.2

109.2
155.1
994.7
546.5
2,782.9
7.8
65.3
7.4
4,668.9
8,072.1

2,363.0
296.2
157.7
49.0
353.6
64.4
7.9
17.2
3,309.0

34.2
1,185.4
505.1
18.3
35.3
21.6
5.8
1,805.7
5,114.7
2,957.4

2,802.6
(31.2)
181.5
2,952.9
4.5
2,957.4

The consolidated statement of financial position should be read in conjunction with the accompanying notes on pages 65 to 124.

|     Downer EDI Limited63

Consolidated Statement of Changes in Equity
for the year ended 30 June 2022

2022
$’m

Balance at 1 July 2021
Profit after income tax
Other comprehensive income for the year (net of tax)
Total comprehensive income for the year
Vested executive incentive share transactions
Vested Downer Contingent Share Options(i)
Share-based employee benefits expense
Income tax relating to share-based transactions 
during the year
Group on-market share buy-back
Disposal of business
Payment of dividends(ii)
Balance at 30 June 2022

Retained
 earnings

 attributable 
to owners of
 the parent

Non-
 controlling 
interest

Reserves

Total

(31.2)
– 
18.8 
18.8 
(0.2)
16.0 
4.2 

(2.7)
– 
7.2 
– 
12.1 

181.5 
151.6 
– 
151.6 
– 
– 
– 

– 
– 
– 
(171.4)
161.7 

2,952.9 
151.6 
18.8 
170.4 
– 
16.0 
4.2 

(2.7)
(142.6)
7.2 
(171.4)
2,834.0 

4.5 
0.4 
(0.3)
0.1 
– 
– 
– 

– 
– 
(4.6)
– 
– 

Issued 
capital

2,802.6 
– 
– 
– 
0.2 
– 
– 

– 
(142.6)
– 
– 
2,660.2 

Total

2,957.4 
152.0 
18.5 
170.5 
– 
16.0 
4.2 

(2.7)
(142.6)
2.6 
(171.4)
2,834.0 

(i)  On 24 August 2021, the Target Price Condition of Tranche 1 of the Downer Contingent Share Options (DCSO) was satisfied resulting in 2,499,264 shares exercised 

at $6.382 per share.

(ii)  Relates to the 2021 final dividend, 2022 interim dividend and $5.9 million ROADS dividends paid during the financial year.

2021
$’m

Balance at 1 July 2020
Profit after income tax
Other comprehensive income for the year (net of tax)
Total comprehensive income for the year
Capital raising (net of transaction costs and tax)
Vested executive incentive share transactions
Share-based employee benefits expense
Income tax relating to share-based transactions 
during the year
Group on-market share buy-back
Acquisition of non-controlling interest (net of tax)
Payment of dividends(i)
Balance at 30 June 2021

Reserves

Retained
 earnings

Total
 attributable
to owners of
 the parent

Non-
 controlling 
interest

(47.7)
– 
11.0 
11.0 
– 
(4.5)
(0.4)

1.2 
– 
9.2 
– 
(31.2)

68.8 
181.6 
– 
181.6 
– 
– 
– 

– 
– 
– 
(68.9)
181.5 

2,450.8 
181.6 
11.0 
192.6 
393.2 
– 
(0.4)

1.2 
(24.8)
9.2 
(68.9)
2,952.9 

144.2 
2.1 
0.5 
2.6 
– 
– 
– 

– 
– 
(140.9)
(1.4)
4.5 

Issued 
capital

2,429.7 
– 
– 
– 
393.2 
4.5 
– 

– 
(24.8)
– 
– 
2,802.6 

Total

2,595.0 
183.7 
11.5 
195.2 
393.2 
– 
(0.4)

1.2 
(24.8)
(131.7)
(70.3)
2,957.4 

(i)  Relates to the 2021 interim dividend and $5.8 million ROADS dividends paid during the financial year.

The consolidated statement of changes in equity should be read in conjunction with the accompanying notes on pages 65 to 124.

Financial Statements     |64

Consolidated Statement of Cash Flows
for the year ended 30 June 2022

Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Distributions from equity accounted investees
Net cash generated by operating cash flow before interest and tax
Interest received
Interest paid on lease liabilities
Interest and other costs of finance paid
Income tax paid
Net cash generated by operating activities

Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Payments for property, plant and equipment
Payments for intangible assets
Payment to acquire remaining shares in NCI(i)
Payments of deferred consideration on acquisition of businesses
Payments for acquisition of businesses (net of cash acquired)
Proceeds from sale of business (net of cash disposed)
Proceeds from sale of equity accounted investments
Investment in equity accounted and other investments
Advances from/(to) equity accounted investments
Purchases of assets as a lessor
Net cash generated by investing activities

Cash flows from financing activities
Group on-market share buy-back
Proceeds from issue of shares (net of costs)
Proceeds from borrowings
Repayments of borrowings
Payment of principal of lease liabilities
Dividends paid
Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes
Cash and cash equivalents at the end of the year

Note

2022
$’m

2021
 $’m

12,416.3
(11,845.2)
21.9 
593.0
2.2 
(22.0)
(61.9)
(15.9)
495.4 

99.6 
(243.3)
(36.5)
– 
(0.1)
(24.0)
245.4 
– 
(7.5)
4.8 
– 
38.4 

(142.6)
– 
11,413.0 
(11,535.6)
(163.6)
(171.4)
(600.2)

(66.4)
811.4 
(6.5)
738.5 

F1(a) 

C1(a)

F5 
F5 
F6 

E5 

C1(b) 

C1(c) 

12,988.8 
(12,173.2)
11.6 
827.2 
2.9 
(27.7)
(73.8)
(19.9)
708.7 

69.6 
(250.2)
(28.4)
(134.5)
(14.3)
– 
395.9 
20.2 
(9.8)
(5.9)
(6.7)
35.9 

(24.8)
390.4 
6,653.0 
(7,193.7)
(194.5)
(153.6)
(523.2)

221.4 
588.5 
1.5 
811.4 

(i)   Represents the amount paid on 7 October 2020 when the Group completed the acquisition of the remaining 12.198% interest in Spotless.

The consolidated statement of cash flows should be read in conjunction with the accompanying notes on pages 65 to 124.

|     Downer EDI Limited65

Notes to the consolidated  
financial statements

for the year ended 30 June 2022

A

About this report

Statement of compliance
These financial statements represent the consolidated results 
of Downer EDI Limited (ABN 97 003 872 848).

The consolidated Financial Report (Financial Report) is a 
general purpose financial report which has been prepared in 
accordance with Australian Accounting Standards adopted by 
the Australian Accounting Standards Board (AASB) and the 
Corporations Act 2001 (Cth). The Financial Report complies with 
International Financial Reporting Standards (IFRS) adopted by 
the International Accounting Standards Board (IASB).

The Financial Report was authorised for issue by the Board 
of Directors on 17 August 2022.

Rounding of amounts
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.

Basis of preparation
The Financial Report has been prepared on a historical cost 
basis, except for the revaluation of certain financial instruments. 
Cost is based on the fair values of the consideration given in 
exchange for assets. All amounts are presented in Australian 
dollars, unless otherwise noted.

Certain comparative balances have been reclassified to 
ensure consistency with the classification in the 30 June 2021 
Financial Report.

The accounting policies used in the preparation of the 
Financial Report are consistent with those adopted and 
disclosed in Downer’s Annual Report for the financial year 
ended 30 June 2021, except in relation to the relevant new and 
amended accounting standards adopted by the Group and their 
effects on the current period or prior periods as described in 
Note G1.

Accounting estimates and judgements
Preparation of the Financial Report requires management to 
make judgements, estimates and assumptions about future 
events. Information on material estimates and judgements 
considered when applying the accounting policies can be found 
in the following notes:

Accounting estimates 
and judgements

Revenue recognition
Recovery of deferred tax assets
Income taxes
Credit risk
Useful lives and residual values
Impairment of assets
Other provisions
Employee benefits obligations
Valuation of the defined benefit 
plan assets and obligations
Lease liabilities
Acquisition of businesses

Note 

Page

B2
B5
B5
C2
C5 to C7
C7
C8
D1

D2
E3
F5

73
78
78
84
86, 87, 90
90
94
96

97
101
113

Notes to the consolidated financial statements     |66

A. About this report – continued 

Significant accounting policies
Accounting policies are selected and applied in a manner that 
ensures that 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. Other significant accounting policies are contained 
in the notes to the Financial Report to which they relate.

(i) Principles of consolidation
The Financial Report incorporates the financial statements 
of the Company and entities controlled by the Group and its 
subsidiaries. The Group controls an entity when it is exposed 
to, or has rights to, variable returns from its involvement with 
the entity and has the ability to affect those returns from its 
involvement with the entity and has the ability to affect those 
returns through its power over the entity.

The Financial Report includes the information and results of 
each subsidiary from the date on which the Company obtains 
control and until such time as the Company ceases to control 
such entity.

In preparing the Financial Report, all intercompany balances 
and transactions, and unrealised profits arising within the 
consolidated entity, are eliminated in full.

(ii) Foreign currency
Transactions, assets and liabilities denominated in foreign 
currencies are translated into Australian dollars at reporting 
date using the following applicable exchange rates:

Foreign currency amount

Applicable exchange rate

Transactions
Monetary assets and liabilities
Non-monetary assets and  
liabilities carried at fair value

Date of transaction
Reporting date
Date fair value 
is determined

Foreign exchange gains and losses resulting from translation are 
recognised in the Consolidated Statement of Profit or Loss and 
Other Comprehensive Income, except for qualifying cash flow 
hedges which are deferred to equity.

On consolidation the assets, liabilities, income and expenses of 
foreign operations are translated into Australian dollars using 
the following applicable exchange rates:

Foreign currency amount

Applicable exchange rate

Income and expenses
Assets and liabilities
Equity

Average exchange rate
Reporting date
Historical date

Foreign exchange differences resulting from translation are 
initially recognised in the foreign currency translation reserve 
and subsequently transferred to the profit or loss on disposal 
of the foreign operation.

(iii) Finance and borrowing costs
Finance costs comprise interest expense on borrowings, unwind 
of discounts on provisions, cost to establish financing facilities 
(which are expensed over the term of the facility), losses on 
ineffective hedging instruments that are recognised in profit 
or loss and finance lease charges.

|     Downer EDI Limited67

B

Business performance

This section provides the information that is most relevant to understanding the financial performance of the Group during 
the financial year and, where relevant, the accounting policies applied and the critical judgements and estimates made.

B1.  Segment information
B2.  Revenue
B3. 
B4.  Earnings per share

Individually significant items

B5.  Taxation
B6.  Remuneration of auditor
B7.  Subsequent events

B1. Segment information
Identification of reportable segments
An operating segment is a component of an entity that engages 
in business activities from which it may earn revenue and incur 
expenses, whose operating results are regularly reviewed by the 
Group’s chief operating decision maker in order to effectively 
allocate Group resources and assess performance.

The Group has identified its operating segments based on the 
internal reports that are reviewed and used by the Group CEO 
in assessing performance and in determining the allocation 
of resources. The operating segments are identified by the 
Group based on the nature of the services provided. Discrete 
financial information about each of these operating businesses 
is reported to the Group CEO on a recurring basis.

The reportable segments are based on a combination of 
operating segments determined by the similarity of the services 
provided, the sources of the Group’s major risks that could 
therefore have the greatest effect on the rates of return and 
their quantitative contribution to the Group’s results.

During the year, the composition of business units within 
operating segments were realigned to better reflect how the 
Group’s chief operating decision maker assesses performance 
and allocates Group resources. As a result, the Asset Services 
business unit (previously reported as part of the Engineering, 
Construction and Maintenance (EC&M) segment) was 
reallocated to the Facilities segment. The Mining business unit 
(previously a separate reportable segment) and the Engineering 
and Construction business unit (previously reported as part 
of the EC&M segment), have been included within All other 
segments following the reduction in their contribution to the 
Group’s performance following divestments and wind-down of 
contracts. The new structure aligns the segment reporting with 
Downer’s end markets and management reporting structure.

The Group has restated the previously reported segment 
information for the year ended 30 June 2021.

Notes to the consolidated financial statements     |68

B1. Segment information – continued 
The reportable segments identified within the Group are outlined as follows:

Segment

Transport

Utilities

Facilities

All other 
segments

Segment description

Comprises the Group’s road services, transport infrastructure and rail businesses. Downer’s road and transport 
infrastructure services include: road network management; routine road maintenance; asset management 
systems; spray sealing; asphalt laying; manufacture and supply of bitumen-based products and asphalt products; 
the use of recycled products and environmentally sustainable methods to produce asphalt; landfill diversion 
solutions; intelligent transport systems; design and construction of light rail and heavy rail networks; signalling; 
track and station works; rail safety technology; and bridges. The Rail business spans all light rail and heavy rail 
sectors, from rollingstock to infrastructure; from design and manufacture to through-life-support including fleet 
maintenance, operations and comprehensive overhaul of assets.
Comprises the Group’s power, gas, water and telecommunications businesses. This includes: planning, designing, 
constructing, operating, maintaining, managing and decommissioning power and gas network assets; providing 
complete water lifecycle solutions for municipal and industrial water users including water and wastewater 
treatment, network construction and rehabilitation; and end-to-end technology and communications solutions 
including design, civil construction, network construction, operations and maintenance across fibre, copper and 
radio networks.
Facilities operates in Australia and New Zealand and provides outsourced facility services to customers across 
a diverse range of industry sectors including: defence; education; government; healthcare; resources; leisure; 
assets services and hospitality. Facilities provides technical and engineering services; maintenance and 
asset management services including shutdowns, turnaround and outage delivery; operations maintenance, 
refrigeration solutions and ongoing management of strategic assets across a range of sectors. It also provides 
feasibility studies; engineering design; procurement and construction; commissioning and decommissioning 
services; and design and manufacture of mineral process equipment as well as building and construction 
solutions across a variety of sectors in New Zealand. 70% of the laundries business was disposed of on 
31 March 2021.
Include the Group’s Mining and Engineering and Construction operating segments. The Mining divestment 
is complete with Otraco and Open Cut Mining East disposed of during the financial year ended 30 June 
2022 while Snowden, RTL JV, Open Cut Mining West, Underground and Downer Blasting Services have been 
disposed of during the year ended 30 June 2021. There is no contribution from Engineering and Construction 
in FY22 as Downer no longer tenders for construction contracts in the coal, iron ore and industrial Electrical & 
Instrumentation and Structural, Mechanical and Piping sectors.

|     Downer EDI Limited69

2022
$’m

Transport

Utilities

Facilities

All other 
segments Unallocated

Total

Segment revenue and other income
Share of sales revenue from joint ventures 
and associates(i)
Total revenue including joint ventures 
and other income(i)
Share of net profit from joint ventures 
and associates
Depreciation and amortisation

EBIT before amortisation of acquired 
intangibles (EBITA) 
Amortisation of acquired intangibles
Total reported segment results (EBIT)
Net finance costs
Total profit before income tax

4,959.6

1,769.7 

4,159.6 

248.2 

17.4

11,154.5

762.1 

– 

1.6 

– 

68.9 

832.6

5,721.7

1,769.7 

4,161.2 

248.2 

86.3

11,987.1

34.6 
185.0 

254.6 
(4.4)
250.2 

– 
28.8 

73.7 
(0.3)
73.4 

0.1 
56.2 

163.3 
(5.7)
157.6 

– 
19.7 

8.1 
– 
8.1 

7.6 
5.5 
12.8 
– 

(5.0)
52.5 

29.7
342.2

(141.7)
(24.4)
(166.1)

32.5 
587.7 
1,740.2 
28.4 

358.0
(34.8)
323.2
(85.4)
237.8

310.4
7,461.0
4,627.0
162.8

Acquisition of segment assets
Segment assets
Segment liabilities
Carrying value of equity accounted investees

247.8 
3,236.3 
1,348.9 
134.4 

8.4 
873.2 
460.5 
– 

14.1 
2,758.3 
1,064.6 
– 

2021 (restated) 
$’m

Transport

Utilities

Facilities

 segments Unallocated

Total

All other

Segment revenue and other income
Share of sales revenue from joint ventures 
and associates(i)
Total revenue including joint ventures and 
other income(i)
Share of net profit from joint ventures 
and associates
Depreciation and amortisation

EBIT before amortisation of acquired 
intangibles (EBITA) 
Amortisation of acquired intangibles
Total reported segment results (EBIT)
Net finance costs
Total profit before income tax

Acquisition of segment assets
Segment assets
Segment liabilities
Carrying value of equity accounted investees

4,658.2 

1,881.7 

3,566.7

1,455.9

21.6 

11,584.1

637.0 

– 

5.6 

7.5 

– 

650.1

5,295.2 

1,881.7 

3,572.3

1,463.4

21.6 

12,234.2

22.0 
168.5 

250.2 
(7.3)
242.9 

199.9 
3,178.4 
1,628.0 
121.7 

– 
34.8 

94.8 
(0.7)
94.1 

16.2 
971.9 
415.5 
– 

(0.1)
99.3 

184.0 
(8.6)
175.4 

47.0 
2,380.5 
842.6 
– 

0.3 
111.0 

41.5 
– 
41.5 

44.8 
767.3 
291.4 
– 

– 
80.8 

22.2
494.4

(169.5)
(49.6)
(219.1)

30.2 
774.0 
1,937.2 
33.4 

401.0
(66.2)
334.8
(104.9)
229.9

338.1
8,072.1
5,114.7
155.1

(i) This is a non-statutory disclosure as it relates to Downer’s share of revenue from equity accounted joint ventures and associates.

Notes to the consolidated financial statements     |70

B1. Segment information – continued 
Reconciliation of segment EBIT to net profit after tax:

Segment EBIT
Unallocated:
Fair value movement on DCSO liability
Divestments and exit costs
Portfolio restructure costs
Probuild credit loss
Bid costs
Gain on sale of property, plant and equipment
SaaS arrangements
Laundries divestment
Mining divestment 
Amortisation of Spotless and Tenix acquired intangible assets
Corporate costs
Total unallocated
Earnings before interest and tax
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax

Segment assets by geographical location

Geographical location(i)
Australia
New Zealand and Pacific
Rest of the world
Total

Segment results

Note 

B3 
B3 
B3 
B3 
B3 
B3 
B3 
B3 
B3 

B5(a) 

2022
$’m 

489.3 

3.7 
(75.8)
(7.6)
(34.6)
(12.7)
85.8 
– 
– 
– 
(24.4)
(100.5)
(166.1)
323.2 
(85.4)
237.8 
(85.8)
152.0 

2021
$’m

553.9

(16.6)
–
–
–
–
–
(14.0)
(16.2)
(19.5)
(49.6)
(103.2)
(219.1)
334.8
(104.9)
229.9
(46.2)
183.7

 Segment assets 
Non-current(ii)

2022
$’m 

2021
$’m 

3,747.2
521.8 
0.5 
4,269.5

3,925.5 
554.3 
6.8 
4,486.6 

Acquisition of
 segment assets
Non-current

2022
$’m 

255.6 
54.3 
0.5 
310.4 

2021
$’m

271.9
65.7
0.5
338.1

(i)  Assets are allocated based on the geographical location of the legal entity.
(ii)  Total of non-current assets other than deferred tax assets, financial instruments, post-employment benefit assets and trade and other receivables.

|     Downer EDI Limited71

B2. Revenue

Revenue and other income

2022
$’m

Rendering of services
Construction contracts(i)
Sale of goods
Total revenue from contracts 
with customers
Other revenue
Total revenue
Government grants(ii)
Insurance recoveries
Gain/(loss) on sale of property, 
plant and equipment
Other
Other income
Total revenue and other income
Share of sales revenue from joint 
ventures and associates(iii)
Total revenue including joint 
ventures and other income(iii)

2021 (restated)(iv) 
$’m

Rendering of services
Construction contracts
Sale of goods
Total revenue from contracts 
with customers
Other revenue
Total revenue
Government grants(ii)
Gain on divestments of equity 
accounted investee
Insurance recoveries
Other
Other income
Total revenue and other income
Share of sales revenue from joint 
ventures and associates(iii)
Total revenue including joint 
ventures and other income(iii)

Transport

Utilities

Facilities

All other 
segments Unallocated

2,758.5 
1,842.7 
213.6 

4,814.8 
6.9 
4,821.7 
8.2 
4.0 

120.6 
5.1 
137.9 
4,959.6 

1,758.3 
– 
4.0 

1,762.3 
0.5 
1,762.8 
6.0 
– 

0.5 
0.4 
6.9 
1,769.7 

3,382.8 
720.1 
43.1 

4,146.0 
0.7 
4,146.7 
4.0 
5.6 

0.3 
3.0 
12.9 
4,159.6 

241.9 
– 
0.7 

242.6 
6.2 
248.8 
– 
– 

(0.5)
(0.1)
(0.6)
248.2 

– 
– 
– 

– 
9.0 
9.0 
– 
3.3 

1.2 
3.9 
8.4 
17.4 

Total

8,141.5
2,562.8
261.4

10,965.7
23.3
10,989.0
18.2
12.9

122.1
12.3
165.5
11,154.5

762.1 

– 

1.6 

– 

68.9 

832.6

5,721.7 

1,769.7 

4,161.2 

248.2 

86.3 

11,987.1

Transport

Utilities

Facilities

 segments Unallocated

All other

2,908.8 
1,540.6 
188.8 

4,638.2 
4.8 
4,643.0 
0.3 

– 
10.2 
4.7 
15.2 
4,658.2 

1,687.2 
188.3 
5.0 

1,880.5 
0.2 
1,880.7 
0.3 

– 
– 
0.7 
1.0 
1,881.7 

2,805.0 
695.5 
57.7 

3,558.2 
0.1 
3,558.3 
4.4 

0.9 
– 
3.1 
8.4 
3,566.7 

1,156.6 
251.7 
27.5 

1,435.8 
7.4 
1,443.2 
– 

10.7 
– 
2.0 
12.7 
1,455.9 

0.1 
– 
– 

0.1 
4.9 
5.0 
– 

– 
13.6 
3.0 
16.6 
21.6 

Total

8,557.7
2,676.1
279.0

11,512.8
17.4
11,530.2
5.0

11.6
23.8
13.5
53.9
11,584.1

637.0 

– 

5.6 

7.5 

– 

650.1

5,295.2 

1,881.7 

3,572.3 

1,463.4 

21.6 

12,234.2

(i)  Downer has updated the definition of ‘construction’ for the purposes of this disclosure to be consistent with published external information relating to services and 

construction work-in-hand.

(ii)  Government grants represents incentives received under the New Zealand Government’s wage subsidy scheme, COVID leave support scheme available to eligible 

businesses impacted by the COVID-19 pandemic as well as in relation to the New Zealand Government’s Apprentice Boost Scheme.

(iii)  This is a non-statutory disclosure as it relates to Downer’s share of revenue from equity accounted joint ventures and associates.
(iv)  Revenue disclosures have been restated for the change in Operating Segments detailed in Note B1.

Notes to the consolidated financial statements     |72

B2. Revenue – continued 

Revenue from contracts with customers by geographical location

2022
$’m

Transport

Utilities

Facilities

All other 
segments Unallocated

Total

Geographical location(i)
Australia
New Zealand and Pacific
Rest of the world
Total revenue from contracts 
with customers

2021 (restated)(ii) 
$’m

Geographical location(i)
Australia
New Zealand and Pacific
Rest of the world
Total revenue from contracts 
with customers

3,568.0
1,246.8 
– 

1,265.0 
497.3 
– 

3,070.9 
1,048.8 
26.3 

229.0 
– 
13.6 

4,814.8

1,762.3 

4,146.0 

242.6 

– 
– 
– 

– 

8,132.9
2,792.9
39.9

10,965.7

Transport

Utilities

Facilities

 segments Unallocated

Total

All other

3,353.8 
1,284.4 
– 

1,318.0 
562.5 
– 

2,884.4
673.8 
– 

1,384.9
– 
50.9 

4,638.2 

1,880.5 

3,558.2

1,435.8

0.1 
– 
– 

0.1 

8,941.2
2,520.7
50.9

11,512.8

(i)   Revenue is allocated based on the geographical location of the legal entity.
(ii)   Revenue disclosures have been restated for the change in Operating Segments detailed in Note B1.

Recognition and measurement
Revenue
The Group recognises revenue when a customer obtains control 
of the goods or services, in accordance with AASB 15 Revenue 
from Contracts with Customers (AASB 15). Revenue is measured 
at the fair value of the consideration received or receivable. 
Determining the timing of the transfer of control – at a point in 
time or over time – requires judgement. Revenue is recognised 
if it meets the criteria below.

(i) Rendering of services
The Group primarily generates service revenue from the 
following activities:
 § Maintenance and management of transport infrastructure
 § Utilities infrastructure maintenance services (gas, power 

and water)

 § Maintenance and installation of infrastructure in the 

telecommunications sector
 § Industrial plant maintenance
 § Rollingstock maintenance and rail asset 

management services

 § Engineering and consultancy services
 § Facilities management
 § Contract mining services, mining assets maintenance 

services, tyre management and blasting.

Typically, under the performance obligations of service 
contracts, the customer consumes and receives the benefit 
of the service as it is provided. As such, service revenue is 
recognised over time as the services are provided.

(ii) Construction contracts
The contractual terms and the way in which the Group operates 
its construction contracts are predominantly derived from 
projects containing one performance obligation. Under these 
performance obligations, customers either simultaneously 
receive and consume the benefits as the Group performs them 
or performance creates or enhances an asset that the customer 
controls as the asset is created or enhanced. Therefore, 
contracted revenue is recognised over time based on stage 
of completion of the contract.

(iii) Sale of goods
Revenue is recognised at a point in time when the customer 
obtains control of goods.

(iv) Other revenue
Other revenue primarily includes rental income.

(v) Other income
Other income primarily includes insurance recoveries, 
government grants and gains on sale of property, plant 
and equipment.

Insurance recoveries relate to insurance refunds received 
for claims lodged that met the recoverability criteria of being 
‘virtually certain’ following confirmation of indemnity received 
from insurers.

Government grants relate to income received under the 
New Zealand Government’s Wage Subsidy Scheme, COVID 
leave support scheme available to eligible businesses that were 
adversely impacted by the COVID-19 pandemic as well as in 
relation to the New Zealand Government’s apprentice boost 
scheme. The Group elects to present these subsidies in ‘Other 
income’ as allowed under AASB 120 Accounting for Government 
grants and disclosure of Government assistance.

|     Downer EDI Limited73

Gain on sale of property, plant and equipment primarily relates 
to the compulsory acquisition of Downer’s land at Rosehill. 
For more details, see Note B3.

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.

Contract modifications
For services and construction contracts, revenue from variations 
and claims is 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.

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.

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 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 or the 
modification is enforceable and the amount becomes highly 
probable. Modifications may also be recognised when client 
instruction has been received in line with customary business 
practice for the customer.

Contract costs (tender costs)
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.

Performance obligations and contract duration
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.

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 be recognised, on certain contracts over time, as a single 

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.

Measure of progress
The Group recognises 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.

Variable consideration
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 (e.g. 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.

Loss-making contracts
Loss-making contracts are recognised under AASB 137 
Provisions, Contingent Liabilities and Contingent Assets 
as onerous contracts.

Key estimate and judgement: Revenue recognition
Stage of completion
Determining the stage of completion requires an estimate of expenses incurred to date as a percentage of total estimated costs.

Modifications
When a contract modification exists and the Group has an approved enforceable right to payment, revenue in relation to claims 
and variations is only included in the transaction price when the amount claimable becomes highly probable. Management uses 
judgement in determining whether an approved enforceable right exists.

Variable consideration
Determining the amount of variable consideration requires an estimate based on either the ‘expected value’ or the ‘most likely 
amount’. The estimate of variable consideration can only be recognised to the extent it is highly probable that a significant 
revenue reversal will not occur in future.
Changes in these estimates or judgements could have a material impact on the financial statements of the Group.

Notes to the consolidated financial statements     |74

B3. Individually significant items
The following material items of expense, forming part of the unallocated segment are relevant to an understanding of the Group’s 
financial performance:

Fair value
 movement 
on DCSO
 liability

Divestments
and exit
costs

Portfolio
 restructure
 costs

Probuild 
credit 
loss

Bid costs

2022
$’m

Revenue and other income
Loss on disposal of businesses
Impairment of non-current assets
Employee benefits expense
Subcontractors costs
Other expenses from 
ordinary activities
Loss/(profit) before interest 
and tax
Income tax (benefit)/expense
Loss/(profit) after income tax

(3.7) 
– 
– 
– 
– 

–

(3.7)
– 
(3.7)

– 
17.3 
38.8 
6.8 
– 

12.9 

75.8 
(5.0)
70.8 

– 
– 
– 
7.6 
– 

– 

7.6 
(2.3)
5.3 

– 
– 
– 
– 
– 

34.6 

34.6 
(6.9)
27.7 

Gain 
on sale 
of PP&E

(104.8)
– 
– 
– 
– 

Total

(112.5)
17.3
38.8
18.7
12.2

(4.0) 
– 
– 
4.3 
12.2 

0.2 

19.0 

66.7

12.7 
(3.8)
8.9 

(85.8)
25.7 
(60.1)

41.2
7.7
48.9

Fair value movement on Downer Contingent 
Share Options (DCSO) liability
As part of the consideration to acquire the shares in Spotless 
that it did not already own, the Group granted three tranches 
of 2.5 million share options to the previous minority interest 
shareholders which are exercisable within four years of issue 
on achievement of three prescribed share price targets (the 
Downer Contingent Share Options or DCSO). The fair value at 
issue date of these options was recognised as a liability arising 
on the acquisition of the shares. The DCSO are classified as a 
liability, with subsequent changes in the fair value recognised 
in the Consolidated Statement of Profit or Loss and Other 
Comprehensive Income. Since 30 June 2021, the fair value 
of the DCSO has decreased by $3.7 million, which has been 
recognised in ‘Other income’ in the Consolidated Statement 
of Profit or Loss and Other Comprehensive Income during 
the year. This income is primarily driven by the decrease in 
Downer’s share price from $5.59 at 30 June 2021 to $5.05 
at 30 June 2022.

Divestments and exit costs
The divestment program has been completed following the 
disposal of Otraco on 1 December 2021, the sale of Open Cut 
Mining East (OCE) on 17 December 2021, and the exit from a 
number of Hospitality contracts. Assets previously utilised by 
those businesses which will no longer be utilised by the Group 
have been written off. The material elements of divestment and 
exit costs include:
 § $17.3 million net pre-tax loss (including disposal costs) from 

the disposal of Otraco and OCE. Refer to Note F6.

 § $58.5 million pre-tax exit costs, relating to impairments of IT 
infrastructure and applications ($25.5 million), impairment of 
right-of-use assets and leasehold improvements for leased 
properties ($13.3 million); and inventory write-offs and other 
exit costs totalling $19.7 million.

 § A net income tax benefit of $5.0 million arising on divestment 
and exit costs. This is comprised of an income tax benefit 
of $22.6 million on divestment costs offset in part by 
income tax expense of $17.6 million on derecognition of 
deferred tax balances in the AE Smith Construction tax-
consolidated group due to a change in strategic direction 
of these companies.

Portfolio restructure costs
As a result of the divestment program, Downer has reduced 
management overhead with restructuring costs of $7.6 million 
expensed during the year.

Probuild credit loss
In November 2018, the Group entered into contracts with 
Probuild Constructions (Australia) Pty Ltd (Probuild) as a 
subcontractor for the provision of mechanical and electrical 
services for the new Victoria Police building in Melbourne. On 
23 February 2022 Probuild entered into voluntary administration 
and appointed an Administrator. The Practical Completion of 
services was achieved on 9 July 2020.

There are outstanding claims which are unpaid by Probuild, 
of which approximately $29.4 million had previously been 
recognised as a contract asset by the Group. Recovery is now 
subject to risk due to the administration. The total expense 
recognised in the year of $34.6 million includes the impairment 
of this contract asset, trade receivables balances as well as legal 
costs incurred.

The net income tax benefit arising on the Probuild credit loss 
is $6.9 million. No income tax benefit has been recognised on 
unrecoverable Probuild costs in the AE Smith Construction tax-
consolidated group as a consequence of the change in strategic 
direction of these companies.

|     Downer EDI Limited75

Bid costs
Downer is in the process of tendering for the State of 
Queensland Train Manufacturing Program, for which a net 
$12.7 million in bid costs were expensed during the year.

Gain on sale of property, plant and equipment
Downer received notice from Sydney Metro of its intention 
to compulsorily acquire Downer’s land at 1A Unwin Street, 
Rosehill for the purposes of the Sydney Metro West project.

The site was used to operate Downer’s primary Asphalt and 
recycling operations in Sydney.

Sydney Metro and Downer reached agreement under the 
Land Acquisition (Just Terms Compensation) Act on the 
compensation payable to Downer for the acquisition.

The transaction has resulted in Sydney Metro reimbursing 
Downer, on a like-for-like basis, for the actual costs incurred on 
the construction and commissioning of a replacement facility.

Downer has completed the construction of replacement facility, 
also in Rosehill, without any disruptions to its operations.

The difference between the historical written-down book 
value of the existing facility, the reimbursement of costs 
for the replacement facility and relocation costs has been 
recognised as a $60.1 million after-tax gain for the year ended 
30 June 2022.

2021
The Group recognised the following items as individually significant items as at 30 June 2021:

2021 
$’m

Loss on disposal of businesses(i)
Gain on divestment of equity 
accounted investee
Depreciation and amortisation
Impairment of non-current assets
Other expenses from ordinary activities
Loss before interest and tax
Other finance costs
Income tax benefit
Loss/(profit) after income tax

Fair value 
movement on 
DCSO liability

Termination of
 Spotless 
financing
 arrangements

Software-
as-a-Service 
(SaaS) 

arrangements

– 

– 
– 
– 
16.6 
16.6 
– 
– 
16.6 

– 

– 
– 
– 
– 
– 
4.3 
(1.3)
3.0 

– 

– 
(3.6)
– 
17.6 
14.0 
– 
(4.1)
9.9 

Mining 
divestments

Laundries 
divestment

Total

7.1 

16.2 

23.3

(10.7)
– 
20.2 
2.9 
19.5 
– 
(17.5)
2.0 

– 
– 
– 
– 
16.2 
– 
(16.5)
(0.3)

(10.7)
(3.6)
20.2
37.1
66.3
4.3
(39.4)
31.2

(i)  Refer to Note F6 for additional information on disposal of businesses.

Fair value movement on Downer Contingent Share 
Options (DCSO) liability
Since grant date, and primarily driven by the movement 
in Downer’s share price from $4.30 at grant date to $5.59 
at 30 June 2021, the fair value of the DCSO increased by 
$16.6 million, which has been expensed through ‘Other 
expenses’ in the Consolidated Statement of Profit or Loss 
and Other Comprehensive Income.

Termination of Spotless financing arrangements
Following the purchase of the Non-Controlling Interest (NCI) 
in Spotless, the Group extinguished the Spotless financing 
arrangements. As a result, the unamortised deferred financing 
costs related to the extinguished facilities were immediately 
written-off to the ‘Other finance costs’ line in the Consolidated 
Statement of Profit or Loss and Other Comprehensive Income, 
with the tax effect of $1.3 million being credited to the income 
tax expense line.

Mining divestments
The divestment program for the Mining division has resulted 
in a number of material transactions netting to a pre-tax 
$19.5 million expense. These include:
 § $7.1 million representing the net loss made from the disposal 

of Open Cut Mining West, Downer Blasting Services, 
Underground and Snowden businesses. This individually 
significant item is disclosed as part of ‘Other expenses from 
ordinary activities’ in the Consolidated Statement of Profit or 
Loss and Other Comprehensive Income

 § $10.7 million gain on the divestment of the equity accounted 
investment in RTL JV. This individually significant item is 
disclosed as part of ‘Other income’ in the Consolidated 
Statement of Profit or Loss and Other Comprehensive Income
 § $20.2 million impairment charge to adjust the carrying value 
of the property, plant and equipment and other assets of the 
Open Cut Mining West business to its expected recoverable 
value on the earlier classification of this business as a 
Disposal group held for sale

 § $2.9 million representing transaction, redundancies and other 

costs incurred as part of the divestment program.

Notes to the consolidated financial statements     |76

B3. Individually significant items – continued 
The net income tax benefit arising on the Mining divestments 
is $17.5 million. This is comprised of a tax benefit of $5.4 million 
attributable to net non-taxable accounting gains on divestments 
and a net tax benefit of $5.9 million arising on associated 
divestment costs. A tax benefit of $6.2 million has also been 
recognised in respect of previously unbooked capital losses 
used to offset capital gains arising on the Mining divestments.

Laundries divestment
On 31 March 2021, the Group completed the share sale of 
70% of Spotless’ Laundries business to Adamantem Capital 
(Adamantem) and recognised a 30% interest in the remaining 
Laundries business as an equity accounted investment (refer 
to Note F1(a)). The transaction resulted in a pre-tax loss of 
$16.2 million net of transaction costs and stamp duty costs 
incurred. This individually significant item is disclosed as part 
of ‘Other expenses from ordinary activities’ in the Consolidated 
Statement of Profit or Loss and Other Comprehensive Income.

The net income tax benefit arising on the Laundries divestment 
is $16.5 million. This is primarily comprised of a tax benefit 
of $12.8 million in respect of capital losses arising on the 
divestment and a net tax benefit of $3.7 million arising on 
associated divestment costs.

Software-as-a-Service (SaaS) arrangements
The IFRS Interpretations Committee (IFRIC) issued an agenda 
decision in April 2021 which impacts whether a customer 
can recognise an intangible asset in relation to configuration 
or customisation of cloud computing arrangements (CCA), 
specifically for Software-as-a-Service (SaaS). The Group’s 
accounting policy had historically been to capitalise costs 
related to the configuration and customisation of SaaS 
arrangements as intangible assets in the Statement of 
Financial Position.

Downer used SaaS across a range of businesses and functions. 
Following the adoption of the above IFRIC agenda decision, 
current SaaS arrangements were identified and assessed 
to determine if the Group has control of the software. For 
those arrangements where control does not exist, the Group 
derecognised the intangible previously capitalised. The 
adoption of the above agenda decisions has resulted in 
recognition of costs to configure SaaS arrangements as a pre-
tax expense of $14.0 million in the Consolidated Statement of 
Profit or Loss and Other Comprehensive Income in the year.

Following the implementation of the IFRIC interpretation around 
SaaS arrangements in FY21, the interpretation now forms part 
of the Group’s recurring accounting treatment for these costs 
(refer to Note C7).

B4. Earnings per share

Basic earnings per share
The calculation of basic earnings per share (EPS) is based on the profit attributable to ordinary shareholders and the weighted-
average number of ordinary shares outstanding.

Profit attributable to members of the parent entity ($’m)
Adjustment to reflect ROADS dividends paid ($’m)
Profit attributable to members of the parent entity used in calculating basic EPS ($’m)
Weighted average number of ordinary shares (WANOS) on issue (m’s)(i)
Basic earnings per share (cents)

2022 

151.6 
(5.9)
145.7 
684.2 
21.3 

2021

181.6
(5.8)
175.8
692.9
25.4

Diluted earnings per share
The calculation of diluted earnings per share is based on the following 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.

Profit attributable to members of the parent entity used in calculating basic EPS ($’m)
Weighted average number of ordinary shares
– Weighted average number of ordinary shares (WANOS) on issue (m’s)(i)
– WANOS adjustment to reflect potential dilution for ROADS (m’s)(ii)
WANOS used in the calculation of diluted EPS (m’s)
Diluted earnings per share (cents)

2022 

151.6 

684.2 
32.2 
716.4 
21.2 

2021

181.6

692.9
38.0
730.9
24.8

(i)  The WANOS on issue has been adjusted by the weighted average effect of on-market share buy-back and the unvested executive incentive shares.
(ii)  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 $180.4 million (2021: $186.2 million), divided 
by the average market price of the Company’s ordinary shares for the period 1 July 2021 to 30 June 2022 discounted by 2.5% according to the ROADS contract terms, 
which was $5.60 (2021: $4.90).

|     Downer EDI Limited77

B5. Taxation

(a) Reconciliation of income tax expense
The prima facie income tax expense on the pre-tax result for the year reconciles to the income tax expense in the financial 
statements as follows:

Profit before income tax
Tax using the Company’s statutory tax rate
Effect of tax rates in foreign jurisdictions
Non-deductible expenses
Profits and franked distributions from joint ventures and associates
Non-assessable income
Tax effect of divestments
Tax effect of previously unrecognised capital losses
Derecognition of temporary differences
Other items
Under provision of income tax in previous year
Total income tax expense
Current tax expense
Deferred tax expense

2022
$’m 

237.8 
71.3 
(1.8)
4.1 
(6.8)
(3.9)
–
(2.6)
17.6 
3.7 
4.2 
85.8 
23.9 
61.9 

2021
$’m

229.9
69.0
(2.6)
5.6
(5.2)
–
(17.1)
(6.2)
–
0.9
1.8
46.2
36.7
9.5

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable 
profits under Australian tax law. There has been no change in the corporate tax rate when compared with the previous year.

Recognition and measurement
Current tax
Current tax assets and liabilities are measured at the amount of income taxes payable or recoverable in respect of the taxable profit 
or tax loss for the period; this is calculated using tax rates and tax laws that have been enacted or substantively enacted by the 
reporting date.

Deferred tax
Deferred tax is accounted for in respect of temporary differences arising from differences between the carrying amount of assets 
and liabilities and the corresponding tax base.

Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible 
temporary differences, unused tax and capital losses and tax offsets, to the extent that it is probable that sufficient taxable profits 
will be available to utilise them.

However, deferred tax assets and liabilities are not recognised for:
 § Temporary differences that arise from the initial recognition of assets or liabilities in a transaction that is not a business 

combination which affects neither taxable income nor accounting profit

 § Temporary differences relating to investments in subsidiaries, associates and joint ventures to the extent that the Group 
is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the 
foreseeable future

 § Temporary differences arising from goodwill.

Deferred tax assets for temporary differences, including tax losses, of $17.6 million in relation to the AE Smith Construction tax-
consolidated group have been derecognised in the year following an assessment that it is no longer probable that sufficient taxable 
profits will be available against which these will be utilised due to a change in strategic direction of these companies. 

Deferred tax assets and liabilities are measured at the tax rates and tax laws that are expected to apply in the year when the asset is 
utilised or liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

Notes to the consolidated financial statements     |78

B5. Taxation – continued 

(a) Reconciliation of income tax expense – continued

Recognition and measurement – continued 
Offsetting deferred tax balances
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the 
Company/consolidated entity intends to settle its current tax assets and liabilities on a net basis.

Tax consolidation
Downer EDI Limited and its wholly owned Australian entities are part of a tax-consolidated group under Australian taxation law. 
Downer EDI Limited is the head entity in the tax-consolidated group. Entities within the tax-consolidated group have entered into 
a tax funding agreement and a tax sharing agreement with the head entity. Under the terms of the tax funding agreement, Downer 
EDI Limited and each of the entities in the tax-consolidated group have agreed to pay (or receive) a tax equivalent payment to (or 
from) the head entity, based on the current tax liability or current tax asset of the entity.

Key estimates and judgements:
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences, unused tax and capital losses and tax offsets, to the 
extent it is probable that sufficient future taxable profits will be available to utilise them. Judgement is required to determine 
the amount of deferred tax assets that can be recognised, based upon the likely timing, nature and level of future taxable profits.

Income taxes
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Judgement is required 
to determine the worldwide provision for income taxes and to assess whether deferred tax balances are recognised on the 
statement of financial position. Changes in circumstances will alter expectations, which may impact the amount of provision 
for income taxes and deferred tax balances recognised.

|     Downer EDI Limited 
79

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Notes to the consolidated financial statements     | 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
80

B6. Remuneration of auditor

Audit and review of financial statements
Assurance services:
Regulatory assurance services
Other assurance services
Total assurance services
Other services:
Tax services
Advisory services
Total other services

The auditor of the Group is KPMG.

2022
$ 

2021
$

4,938,095 

5,355,264

20,000 
445,278 
465,278 

248,596 
96,679 
345,275 

20,000
325,566
345,566

205,795
506,977
712,772

B7. Subsequent events
At the date of this report, there is no matter or circumstance that has arisen since the end of the financial year, that has significantly 
affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group 
in subsequent financial years.

|     Downer EDI Limited81

C

Operating assets and liabilities

This section provides information relating to the operating assets and liabilities of the Group. Downer has a strong focus 
on maintaining a strong balance sheet through continued focus on cash conversion. The Group’s strategy also considers 
expenditure, growth and acquisition requirements.

C1. 

 Reconciliation of cash and 
cash equivalents

C2.  Trade receivables and contract assets
C3. 

Inventories

 Trade payables and contract liabilities

C4. 
C5.  Property, plant and equipment
C6.  Right-of-use assets

C7. 
Intangible assets
C8.  Other provisions
C9.  Contingent liabilities

C1. Reconciliation of cash and cash equivalents

(a) Reconciliation of cash flows from operating activities

Profit after tax for the year
Adjustments for:

Share of joint ventures and associates’ profits net of distributions
Depreciation on leased assets
Depreciation and amortisation of other non-current assets
Impairment of other non-current assets
Amortisation of deferred borrowing costs
Net loss on disposal of businesses
Movement in current tax balances
Movement in deferred tax balances
Movements on net defined benefit plan obligation
Share-based employee benefits expense
Other

Changes in net assets and liabilities, net of effects from acquisition and disposal 
of businesses:
(Increase)/decrease in assets:

Note

F1(a) 
C6 
C5,C7 

F6 

D2 
D1 

Current trade receivables and contract assets
Current inventories
Other current assets
Non-current trade receivables and contract assets
Other non-current assets
Increase/(decrease) in liabilities:

Current trade payables and contract liabilities
Current financial liabilities
Shareholder class action payable
Current provisions
Non-current trade payables and contract liabilities
Non-current financial liabilities
Non-current provisions

Net cash generated by operating activities

2022
$’m 

152.0

(7.8)
160.3
181.9
42.0
4.4 
17.3 
6.1 
61.9
1.6
4.2 
4.1
476.0

61.9
2.8 
3.5 
(13.7)
(3.6)

(172.7)
34.9 
– 
(27.5)
11.8 
(13.4)
(16.6)
(132.6)
495.4 

2021
$’m

183.7

(10.6)
180.6
313.8
20.2
8.4
–
14.3
1.0
1.7
(0.4)
(7.0)
522.0

115.7
–
(9.5)
(14.0)
4.7

(15.6)
(16.4)
(34.0)
0.7
4.2
3.8
(36.6)
3.0
708.7

Notes to the consolidated financial statements     | 
82

C1. Reconciliation of cash and cash equivalents – continued 
(b) Reconciliation of liabilities arising from financing activities

$’m

Interest bearing loans
Lease liabilities
Total liabilities from 
financing activities

(c) Cash and cash equivalents

1 July
2021

1,481.6 
662.8 

Net cash
 flows

Lease net
additions and
remeasure

Other 
non-cash
 changes

Disposal of
businesses

30 June
2022

(122.6)
(163.6)

–
107.2 

2.7 
(21.7)

–
(40.8)

1,361.7 
543.9 

2,144.4 

(286.2)

107.2 

(19.0)

(40.8)

1,905.6 

For the purpose of the statement of cash flows, cash and cash equivalents comprises:
Cash
Short-term deposits
Total cash and cash equivalents

C2. Trade receivables and contract assets

Trade receivables
Contract assets(i)

Other receivables
Loss allowance on trade receivables and contract assets arising from contracts with customers
Total trade receivables and contract assets

Included in the financial statements as:
Current(i)
Non-current

(i)  Current contract assets: $1,263.0 million (2021: $1,386.5 million).

2022
$’m 

716.2
22.3
738.5 

2022
$’m 

682.9 
1,383.6 
2,066.5 

40.5 
(32.4)
2,074.6 

2021
$’m

563.8
247.6
811.4

2021
$’m

685.4
1,493.8
2,179.2

71.6
(20.6)
2,230.2

1,953.0 
121.6 

2,121.0
109.2

Allowance for credit losses:
The Group’s trade receivables and contract assets are disaggregated based on their expected credit risks between Government 
and Private (non-government) customers. An analysis of the balances is presented below:

Government – not due
Government – less than 90 days past due
Government – more than 90 days past due
Private – not due
Private – less than 90 days past due
Private – more than 90 days past due
Total Gross Carrying Amount
Credit impaired – specific allowance
Not credit impaired – lifetime expected credit loss
Loss allowance on trade receivables and contract assets arising from contracts with customers

2022
$’m 

831.2 
29.8 
23.8 
1,096.6 
62.4 
22.7 
2,066.5 
29.8 
2.6 
32.4 

2021
$’m

938.7
29.5
35.0
1,078.6
63.0
34.4
2,179.2
13.2
7.4
20.6

|     Downer EDI Limited83

The remaining performance obligations balances for both 
30 June 2022 and 30 June 2021 presented above relate to the 
revenue expected to be recognised from ongoing contracts with 
an expected duration of more than 12 months.

During the current financial year revenue of $2,696.3 million has 
been recognised in relation to performance obligations satisfied 
or partially satisfied in previous periods.

Recognition and measurement
Trade receivables
Trade receivables and other receivables are initially recognised 
at fair value and subsequently at amortised cost using the 
effective interest rate method, less an allowance for impairment.

Contract assets
Contract assets primarily relate to the Group’s rights to 
consideration for work performed but not billed at the reporting 
date. The contract assets are transferred to trade receivables 
when the rights have become unconditional. This usually 
occurs when the Group issues an invoice in accordance with 
contractual terms to the customer.

Payments from customers are received based on a billing 
schedule/milestone basis, as established in our contracts.

Costs to obtain or fulfil contracts
Costs incremental to obtaining a contract and that are expected 
to be recovered or are explicitly chargeable to the customer 
regardless of whether the contract is obtained are capitalised.

Financial assets and liabilities
AASB 9 Financial Instruments (AASB 9) contains a 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).

Fair value
Due to the short-term nature of these financial rights, the 
carrying amounts of the trade receivables and contract assets 
are estimated to represent their fair values.

The Group has policies to manage its overall exposure to credit 
risk as set out in Note G2(e).

In assessing lifetime expected credit losses (ECL) as at 30 June 
2022, the Group has considered the risk arising from the 
economic impacts of COVID-19 and potential defaults occurring 
within the smaller construction environment in which Downer 
operates. The Group has assessed ECLs by segmenting the 
portfolio of trade receivables and contract assets by customer 
(i.e. Government and Private) as well as by geography to better 
assess inherent credit risk. The Company defines counterparties 
as ‘Government’ if the contract is with a Federal, State or Local 
Government body. Any counterparties other than those defined 
as ‘Government’ are classified as ‘Private’, and includes sectors 
heavily regulated by Government organisations (such as Gas 
and Electricity), Blue-Chip listed companies, contracts run 
under the Public-Private-Partnership model ((PPPs) for which 
Government organisations are often the end customer), large 
multinational companies, network infrastructure companies, as 
well as other private sector businesses.

The credit risk associated with Government balances is 
considered to be negligible (2021: negligible) due to the high 
creditworthiness of the counterparties. No ‘Government’ related 
balances are currently in default.

For ‘Private’ balances, the Group has assessed the potential 
credit risk of default on key customers utilising credit ratings 
provided by financial institutions. For those ‘Private’ receivables/ 
contract assets that are ultimately backed by the Government 
or a Government body, the credit risk is considered to be low or 
negligible. For those counterparties that are currently in default 
or a risk of default is determined, the Group has recognised 
specific impairment/credit allowances. As at 30 June 2022, 
the $32.4 million loss allowance includes a specific provision of 
$29.4 million in relation to Probuild Pty Ltd as this customer is 
currently under administration.

The ECLs have decreased from $7.4 million at 30 June 2021 
to $2.6 million at 30 June 2022 reflecting a lower credit risk in 
the current portfolio of trade receivables and contract assets, 
determined based on the above methodology and in reference 
to past default experience.

Credit losses on ‘Private’ counterparty balances have historically 
averaged less than 1%. The allowance for credit losses, 
excluding specific provisions, is 0.3% (2021: 0.6%) of the trade 
receivables and contract assets.

Remaining performance obligations
As of 30 June 2022, the aggregate amount of the transaction 
price allocated to the remaining performance obligations 
is $15,973.1 million (2021: $13,572.6 million). The Group will 
recognise this revenue when the performance obligations 
are satisfied. Approximately ~40% of remaining performance 
obligations are expected to occur within the next five years; 
with the remaining ~60% related to long-term service/
maintenance contracts ranging up to 40 years.

Notes to the consolidated financial statements     |84

C2. Trade receivables and contract assets – continued 

Recognition and measurement – continued 
Impairment
The Group has applied the simplified approach to recognise lifetime expected credit losses for trade receivables, contract assets 
and finance lease receivables as permitted by AASB 9.

The Group considers the relevant credit risk associated with disaggregated portions of the financial assets and after considering 
specific provisions against counterparties and defaults, applies an expected credit loss (ECL) percentage derived from recorded 
historic credit losses associated with specific population. The key disaggregation of the balances is between those that are backed 
by Government funding and those that are not and between those that are current or are overdue less than 90 days or become 
more than 90 days overdue. The Group exercises considerable judgement about how economic factors (such as the economic 
impact triggered by the COVID-19 pandemic) affect the ECL of each of the disaggregated balances independently, and applies a 
premium as deemed appropriate to adjust the historically determined default rates to present the total expected credit losses on 
the current balances.

This impairment model applies to financial assets measured at amortised cost or FVOCI (except for investments in equity instruments).

Key estimate and judgement: Credit risk
Credit risk represents the risk that a counterparty will fail to perform an obligation causing a financial loss to the Group. The 
Group minimises credit risk by undertaking transactions with a large number of customers in various industries and geographical 
areas. A credit risk management policy is in place and exposure to credit risk is monitored on an ongoing basis.

The Group uses historical information as a basis for the estimation of expected credit losses and then adjusts its assessment 
of credit risk based on current macro/micro-economic conditions; however, judgement is applied in doing this assessment.

C3. Inventories

Current
Raw materials
Work in progress
Finished goods
Components and spare parts
Total inventories

2022
$’m 

39.2 
3.9 
55.6 
110.2 
208.9 

2021
$’m

74.4
4.3
54.4
121.1
254.2

Recognition and measurement
Inventories are valued at the lower of cost and net realisable value. Net realisable value represents the estimated selling price less 
all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

C4. Trade payables and contract liabilities

Trade payables
Contract liabilities
Accruals
Other payables
Total trade payables and contract liabilities

Included in the financial statements as:
Current
Non-current

2022
$’m 

785.0 
364.6 
949.1 
155.9 
2,254.6 

2021
$’m

670.5
444.3
1,091.5
190.9
2,397.2

2,208.1 
46.5 

2,363.0
34.2

|     Downer EDI Limited85

Recognition and measurement
Trade payables, accruals and other payables
Trade payables, accruals and other payables are recognised when the Group becomes obliged to make future payments resulting 
from the purchase of goods and services.

Contract liabilities
Contract liabilities primarily relate to the Group’s obligation to transfer goods or services to a customer for which the Group has 
received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue 
when work is performed under the contract.

If the net amount of the Company’s rights to consideration for work performed after deduction of progress payments received 
is negative, the difference is recognised as a liability and included as part of Contract liabilities.

Of the Contract liabilities balance of $444.3 million at 30 June 2021, substantially all of this revenue has been recognised in the 
current year.

Fair value
Due to the short-term nature of these financial obligations, their carrying amounts are estimated to represent their fair values.

C5. Property, plant and equipment

2022
$’m

Balance as at 1 July 2021
Additions
Acquisition of businesses
Disposals at net book value
Disposal of businesses(i)
Depreciation expense
Impairment charge(ii)
Net foreign currency exchange differences at net book value
Net book value as at 30 June 2022

Cost
Accumulated depreciation and impairment

2021
$’m

Balance as at 1 July 2020
Additions
Disposals at net book value
Disposal of businesses
Depreciation expense
Impairment charge(iii)
Transferred to disposal group assets held for sale
Reclassification at net book value(iv)
Net foreign currency exchange differences at net book value
Net book value as at 30 June 2021
Cost
Accumulated depreciation and impairment

Freehold 
land and
 buildings

Plant,
equipment
and leasehold
improvements

Note 

F6

67.1 
29.0 
6.3 
(12.3)
– 
(2.2)
– 
(0.4)
87.5 

118.6 
(31.1)

Total

994.7
250.5
15.6
(30.7)
(164.7)
(124.7)
(10.4)
(5.9)
924.4

927.6 
221.5 
9.3 
(18.4)
(164.7)
(122.5)
(10.4)
(5.5)
836.9 

1,748.0 
(911.1)

1,866.6
(942.2)

Freehold 
land and
buildings

Plant,
equipment
and leasehold
improvements

Note 

Laundries
rental stock

F6

B3 

123.1 
0.7 
(1.8)
(52.2)
(2.6)
– 
– 
– 
(0.1)
67.1 
96.5 
(29.4)

1,187.9 
281.4 
(59.6)
(247.7)
(196.2)
(20.2)
(9.4)
(8.2)
(0.4)
927.6 
2,005.4 
(1,077.8)

39.2 
27.6 
– 
(40.9)
(25.8)
– 
– 
– 
(0.1)
– 
– 
– 

Total

1,350.2
309.7
(61.4)
(340.8)
(224.6)
(20.2)
(9.4)
(8.2)
(0.6)
994.7
2,101.9
(1,107.2)

(i)  A further $9.4 million of Otraco assets classified as Assets Held for Sale at 30 June 2021 were also disposed. Refer to Note F6.
(ii) 

Impairment includes $7.2 million in relation to leasehold improvements write-off as a result of divestments (Note B3) and to assets damaged following the flooding/wet 
weather events in Queensland.

(iii)  Impairment relates to the divestment of Open Cut Mining West.
(iv)  Reclassifications of software from Capital work in progress to Intangible assets.

Notes to the consolidated financial statements     | 
86

C5. Property, plant and equipment – continued 

Recognition and measurement
The value of property, plant and equipment is measured as the cost of the asset less accumulated depreciation and impairment.
The expected useful life and depreciation methods used are listed below:

Item

Useful life

Depreciation method

Freehold land 
Buildings
Leasehold improvements
Plant and equipment – power and gas
Plant and equipment – other

n/a
20 to 50 years
Life of lease
Working hours
3 to 25 years 

No depreciation
Straight-line
Straight-line
Based on hours of use
Straight-line

Key estimate and judgement: Useful lives and residual values
The estimation of the useful lives and residual values of assets has been based on historical experience as well as manufacturers’ 
warranties (for plant and equipment), lease terms (for leasehold improvements) and turnover policies. In addition, the condition 
of the assets is assessed at least annually and considered against the remaining useful life. Adjustments to useful lives and 
residual values are made when considered necessary.

C6. Right-of-use assets
The Group leases many assets including property, motor vehicles and plant and equipment. Information about leased assets for 
which the Group is a lessee is presented below:

2022
$’m

Note

Leasehold
property

Motor 
vehicles

Plant and
equipment

Balance as at 1 July 2021
Additions
Remeasure
Depreciation expense
Impairment charge(i)
Disposals at net book value
Disposal of businesses(ii)
Net foreign currency exchange differences at net book value
Net book value as at 30 June 2022
Cost
Accumulated depreciation and impairment

B3

F6

281.6 
17.0 
11.2 
(56.0)
(7.0)
(1.9)
– 
(2.6)
242.3 
418.0 
(175.7)

120.3 
47.3 
7.2 
(61.2)
– 
(2.0)
(0.7)
(0.8)
110.1 
258.8 
(148.7)

144.6 
15.9 
8.6 
(43.1)
– 
(1.5)
(38.8)
(1.9)
83.8 
177.2 
(93.4)

2021
$’m

Note

Leasehold
property

Motor 
vehicles

Plant and
equipment

Balance as at 1 July 2020
Additions
Remeasure
Depreciation expense
Transferred to disposal group assets held for sale
Disposals at net book value
Disposal of businesses
Net foreign currency exchange differences at net book value
Net book value as at 30 June 2021
Cost
Accumulated depreciation and impairment

340.9 
35.3 
(1.4)
(61.1)
(0.2)
(5.4)
(25.8)
(0.7)
281.6 
401.6 
(120.0)

109.1 
53.2 
25.7 
(61.4)
(1.1)
(2.6)
(2.5)
(0.1)
120.3 
226.7 
(106.4)

142.6 
77.3 
12.8 
(58.1)
(0.9)
(2.1)
(26.9)
(0.1)
144.6 
224.0 
(79.4)

F6

Impairment relates to Property rationalisation as a result of divestments.

(i) 
(ii)  A further $2.2 million of Otraco assets classified as Assets Held for Sale at 30 June 2021 were also disposed. Refer to Note F6.

Total

546.5
80.2
27.0
(160.3)
(7.0)
(5.4)
(39.5)
(5.3)
436.2
854.0
(417.8)

Total

592.6
165.8
37.1
(180.6)
(2.2)
(10.1)
(55.2)
(0.9)
546.5
852.3
(305.8)

|     Downer EDI Limited87

Recognition and measurement
The right-of-use assets are initially measured at cost, which comprises:
 § The amount of the initial measurement of the lease liability
 § Any lease payments made at or before the commencement date, less any lease incentives and any initial direct costs incurred by 

the lessee

 § An estimate of the costs to dismantle and remove the underlying asset or to restore the underlying asset.

Subsequently the right-of-use asset is measured at cost less any accumulated depreciation and impairment losses and adjusted for 
certain remeasurements of the lease liability.
The right-of-use asset is depreciated over the shorter period of the lease term and the economic useful life of the underlying asset. 
If a lease transfers ownership of the underlying asset or the costs of the right-of-use asset reflect that the Group will exercise a 
purchase option, the asset will be depreciated from the commencement date to the end of the useful life of the underlying asset. 
The depreciation starts at the commencement date of the lease.
Where the initially anticipated lease term is subsequently reassessed, any changes are reflected in a remeasurement of the lease 
liability and a corresponding adjustment to the asset.
If the recoverable amount of a right-of-use asset is less than its carrying value, an impairment charge is recognised in the profit 
or loss, and the carrying value of the asset written-down to its recoverable amount. Should the recoverable amount increase in 
future periods the carrying value may be adjusted to the lower of the recoverable value or the amortised cost of the asset had it not 
been impaired.

Key estimate and judgement: Useful lives/lease term and recoverable value
The estimation of the useful lives has been based on the assets’ lease terms. There are a number of judgements made 
in determining the lease terms as noted in the Key estimates and judgements section of Note E3.
The expected useful life of the asset includes a judgement as to whether available extension changes will be exercised. 
Changes to this assessment are reflected as a remeasurement, with a corresponding adjustment for the liability.
In assessing whether a right-of-use asset is impaired, judgement is required to determine the recoverable value of the asset. 
For corporate right-of-use assets, impairment is assessed against the recoverable amount of cash-generating units to which 
they are allocated.

Notes to the consolidated financial statements     |88

C7. Intangible assets

2022
$'m

Balance as at 1 July 2021
Additions
Acquisition of businesses(i)
Amortisation expense
Impairment charge(ii)
Net foreign currency exchange 
differences at net book value
Net book value as at 30 June 2022
Cost
Accumulated amortisation 
and impairment

2021
$'m

Balance as at 1 July 2020
Additions
Amortisation expense
Transferred to disposal group assets held 
for sale
Reclassification at net book value(iii)
Disposal of businesses
Net foreign currency exchange 
differences at net book value
Net book value as at 30 June 2021
Cost
Accumulated amortisation 
and impairment

Customer
contracts
and
relationships

Brand
names on
acquisition

Intellectual
property on
acquisition

Software
and system
development

203.2 
 – 
 – 
(30.7)
 – 

 – 
172.5 
515.1 

63.0 
 – 
 – 
(4.0)
 – 

(0.3)
58.7 
78.5 

1.6 
 – 
 – 
(0.1)
 – 

 – 
1.5 
2.4 

234.3 
36.5 
 – 
(22.4)
(24.6)

(0.1)
223.7 
504.6 

Goodwill

2,280.8 
 – 
7.8 
 – 
 – 

(3.6)
2,285.0 
2,602.4 

Total

2,782.9 
36.5 
7.8 
(57.2)
(24.6)

(4.0)
2,741.4 
3,703.0 

(317.4)

(342.6)

(19.8)

(0.9)

(280.9)

(961.6)

Customer
contracts
and
relationships

Brand
names on
acquisition

Intellectual
property on
acquisition

Software
and system
development

280.6 
 – 
(62.0)

 – 
 – 
(15.4)

 – 
203.2 
471.2 

67.0 
 – 
(4.0)

 – 
 – 
 – 

 – 
63.0 
79.0 

1.8 
 – 
(0.2)

 – 
 – 
 – 

 – 
1.6 
2.4 

229.3 
28.4 
(23.0)

(0.5)
8.2 
(8.2)

0.1 
234.3 
436.6 

Goodwill

2,281.3 
 – 
 – 

 – 
 – 
 – 

(0.5)
2,280.8 
2,598.2 

Total

2,860.0 
28.4 
(89.2)

(0.5)
8.2 
(23.6)

(0.4)
2,782.9 
3,587.4 

(317.4)

(268.0)

(16.0)

(0.8)

(202.3)

(804.5)

(i)  This relates to goodwill on acquisition of Fowlers. Refer to Note F5.
(ii) 
(iii)  Reclassifications of software from Capital work in progress to Intangible assets.

Impairment relates to ERP systems write-off as a result of divestments. Refer to Note B3.

|     Downer EDI Limited89

Amortisation
Intangible assets with finite useful lives are amortised on a 
straight-line basis over their useful lives. The estimated useful 
lives are generally:

Item

Customer contracts and relationships
Brand names
Intellectual property acquired
Software and system development
Other intangible assets

Useful life

1-20 years
20 years
15-20 years
5-15 years
20 years

The estimated useful life and amortisation method are reviewed 
at the end of each annual reporting period.

Impairment of assets
Goodwill and intangible assets that have an indefinite useful 
life are tested annually for impairment, or more frequently if 
events or changes in circumstances indicate that they might 
be impaired.

Other assets are reviewed for impairment whenever events or 
changes in circumstances indicate that the carrying amount 
may not be recoverable.

An impairment loss is recognised for the amount by which 
the asset’s carrying amount exceeds its recoverable amount. 
For the purpose of assessing impairment, assets are grouped 
at the lowest levels for which there are separately identifiable 
cash inflows that are largely independent of the cash inflows 
from other assets or groups of assets (cash-generating units or 
CGUs). Non-financial assets other than goodwill that suffered 
impairment are reviewed for possible reversal of the impairment 
at each reporting date.

Recognition and measurement
Goodwill
Goodwill acquired in a business combination is measured at 
cost and subsequently measured at cost less any impairment 
losses. The cost represents the excess of the cost of a business 
combination over the fair value of the identifiable assets, 
liabilities and contingent liabilities acquired.

Customer contracts and relationships on acquisition
Customer contracts and relationships acquired as part of 
a business combination are recognised separately from 
goodwill and are carried at fair value at date of acquisition 
less accumulated amortisation and any accumulated 
impairment losses.

Brand names on acquisition
Brand names acquired as part of a business combination are 
recognised separately from goodwill and are carried at fair value 
at date of acquisition less accumulated amortisation and any 
accumulated impairment losses.

Intellectual property on acquisition
Intellectual property acquired as part of a business combination 
is recognised separately from goodwill and is carried at fair 
value at date of acquisition less accumulated amortisation and 
any accumulated impairment losses.

Intellectual property, software and system development
Intangible assets acquired by the Group, including intellectual 
property (purchased patents and trademarks) and software 
are initially recognised at cost, and subsequently measured at 
cost less accumulated amortisation and any impairment losses. 
Internally developed systems are capitalised once the project is 
assessed to be feasible. The costs capitalised include consulting 
and direct labour costs. Costs incurred in determining project 
feasibility are expensed as incurred.

Software-as-a-Service (SaaS) arrangements
SaaS arrangements are service contracts providing the Group 
with the right to access the cloud provider’s application software 
over the contract period. As such the Group does not receive a 
software intangible asset at the contract commencement date.

For SaaS arrangements, the Group assesses if the contract will 
provide a resource that it can ‘control’ to determine whether 
an intangible asset is present. If the Group cannot determine 
control of the software, the arrangement is deemed a service 
contract and any implementation costs including costs to 
configure or customise the cloud provider’s application software 
are recognised as operating expenses when incurred.

Notes to the consolidated financial statements     |90

C7. Intangible assets – continued

Allocation of goodwill to Groups of 
Cash-Generating Units
Goodwill has been allocated for impairment testing purposes 
to Groups of CGUs that represent the lowest level within 
the Group at which goodwill is monitored for internal 
management purposes.

The final stage of the Spotless integration into the Group 
occurred on 1 July 2021 which enabled a number of operational 
changes and business unit structures to be reorganised.

This restructure impacted the Group’s internal reporting 
structure and the level at which performance and goodwill is 
monitored. This has resulted in a change to the manner in which 
impairment testing of goodwill has been performed.

The Group has reassessed its Groups of CGUs with five Groups 
of CGUs (previously eight) identified.

The goodwill allocation to each of the Groups of CGUs 
(hereafter ‘CGUs’) is presented below:

Key estimates and judgements:
Impairment of assets
Determination of potential impairment requires an estimation 
of the recoverable amount of the CGUs to which the goodwill 
and intangible assets with indefinite useful lives are allocated. 
Key assumptions requiring judgement include projected cash 
flows, discount rates, budgeted revenue growth rate and 
EBIT margin, and the long-term growth rate.

Estimation of useful life
The estimation of the economic useful life of software is 
initially determined based on historical experience. The 
useful lives of intangible assets recognised on business 
combinations is independently determined based on detailed 
reviews of similar assets and underlying factors. These useful 
lives are regularly reassessed for indicators of any change 
to the initial assessments. If the economic useful lives are 
determined to have changed, the amortisation of the assets 
is adjusted to reflect the new expected useful life, impacting 
the future amortisation recognised.

Carrying value of 
consolidated goodwill

2022
$’m 

435.8 
55.3 
294.4 
193.1 
1,306.4 
2,285.0 

2021
restated(i)
$’m 

428.0 
55.3 
294.4 
196.7 
1,306.4 
2,280.8 

Transport Australia
Rail and Transit Systems 
Utilities Australia
New Zealand
Facilities

(i)   FY21 goodwill has been reallocated to reflect the changes to the CGUs.

Recoverable amount testing
The recoverable amount of the identified CGUs has been 
assessed using the higher of ‘value in use’ (VIU) and ‘fair value 
less cost of disposal’ (FVLCD). For each CGU, this has resulted 
in a ‘value in use’ methodology being used.

Value in use calculation
In assessing VIU, the estimated future cash flows are discounted 
to their present value using a discount rate that uses current 
market assessments of the time value of money and the risks 
specific to the CGU.

The Group determines the recoverable amount, using three-
year cash flow projections based on the FY23 budget and the 
business plans for the years ending 30 June 2024 and 2025 (as 
approved by the Board). For FY26 onwards, the Group assumes 
a long-term growth rate of 2.5% to reflect the organic growth 
expectations of the industry.

Cash flow projections are determined utilising budgeted 
Earnings Before Interest and Tax (EBIT) less tax, capital 
maintenance spending and working capital changes, adjusted 
to exclude any uncommitted restructuring costs and future 
benefits to provide a ‘free cash flow’ estimate. This calculated 
‘free cash flow’ is then discounted to its present value using a 
post-tax discount rate that reflects current market assessments 
of the time value of money and the risks specific to the 
asset for which the estimates of future cash flows have not 
been adjusted.

|     Downer EDI Limited91

Results of impairment testing
No impairment has been identified for any of the CGUs.

For all CGUs, sensitivities were made around discount rate, long-term growth rate and cash flow assumptions as discussed in the 
Sensitivity section below.

Recoverable amount testing – Key assumptions
The table below summarises the key assumptions utilised in the VIU calculations.

2022

2021

Budgeted

revenue(i)

EBIT 
margin(ii)

Long-term
growth rate

Discount rate
(post-tax)

Budgeted

revenue(iii)

EBIT 
margin(ii)

Long-term
growth rate

Discount rate
(post-tax)

Transport Australia
Rail and 
Transit Systems
Utilities Australia
New Zealand
Facilities

3.9%

8.2%
3.7%
2.1%
6.4%

6.3%

5.4%
4.7%
5.7%
5.9%

2.50%

2.50%
2.50%
2.50%
2.50%

8.5%

8.7%
8.8%
8.9%
8.7%

2.6%

3.3%
5.6%
4.9%
7.2%

6.6%

5.5%
5.3%
4.9%
7.8%

2.25%

2.25%
2.25%
2.25%
2.25%

8.5%

8.7%
8.3%
8.6%
8.4%

(i)  Budgeted revenue for 2022 is expressed as the compound annual growth rates (CAGR) from FY22 to terminal year forecast based on the CGUs business plan.
(ii)  EBIT margin represents the terminal year forecast margin based on the CGUs business plan.
(iii)  Budgeted revenue for 2021 is expressed as the compound annual growth rates (CAGR) from FY21 to terminal year forecast based on the CGUs business plan.

(i) Projected cash flows – including budgeted revenue 
and EBIT margin and the impact of COVID-19
COVID-19 Impact on projected cash flows
The ongoing disruptions related to the COVID-19 pandemic 
throughout FY22 across Australia and New Zealand have 
impacted the Group’s business lines to varying degrees, with 
impacts including supply chain restrictions, labour shortages 
and deferral of contracts.

Downer continues to be vigilant around the management of 
COVID-19 and maintaining the highest levels of controls in line 
with expert advice and Government guidance.

Whilst the near-term consequences of COVID-19 remain 
uncertain, the experience to date of the impacts of COVID-19 
on FY20, FY21 and FY22 financial performance have been taken 
into consideration in the preparation of the projected cash flows 
for the FY23 budget.

The majority of Downer’s businesses were impacted by 
COVID-19 in FY22 to varying degrees. Those with a higher 
proportion of the customer base being Government Agencies 
or Government-owned corporations in the provision of critical 
services were the least impacted and include businesses within 
the Transport Australia and Rail and Transit Systems CGUs, in 
addition to the Facilities Management (Government and Health 
& Education) businesses within the Facilities CGU. The Utilities 
Australia CGU was modestly impacted by COVID-19 in FY22, 
most notably within the Meter Reading and Water Services 
businesses. New Zealand was more materially impacted due to 
the extent of lockdowns across the country, whilst the Facilities 
CGU also experienced meaningful impacts in Hospitality 
and Asset Services due to event cancellations and deferred 
maintenance expenditure.

The business plans for FY24 onwards assume no material 
COVID-19 disruptions.

Inflation and price escalation
The Group’s exposure to inflationary pressures in labour, 
material and other costs in its long-term services contracts is 
mitigated via contractual mechanisms and allowances for price 
movements. These mechanisms typically include one of, or 
multiple of, the following: consumer price index, labour index, 
relevant materials indices (such as bitumen) or contractual price 
rebasing at select intervals. In addition, the Group has a number 
of ‘cost-plus’ reimbursable contracts where inflation does not 
represent a risk. 

Ongoing cash flow forecasts
The cash flow projections through to the terminal year are 
based on the Group’s past experience and assessment of 
economic and regulatory factors affecting the business in which 
the Downer businesses operate. Specifically, for each CGU:
 § Transport Australia is expected to benefit from activity/
volume growth in road infrastructure post the impact of 
severe wet weather in FY22 and from increased Government 
investment in Western Melbourne and Western Sydney as 
well as in regional Australia.

 § Rail and Transit Systems is expected to benefit from new 
opportunities on rail fleet extensions and maintenance 
contracts, increased work opportunities in Queensland and 
from emerging trends on energy consumption and energy 
saving initiatives across rail and transit system sectors.
 § Utilities Australia is expected to benefit from an increase in 

activity from existing customers in the wireless programs and 
in the water sector including increased levels of activity in 
maintenance work contracts.

Notes to the consolidated financial statements     |92

C7. Intangible assets – continued

Recoverable amount testing – Key assumptions 
– continued 
Ongoing cash flow forecasts – continued
 § New Zealand is expected to benefit from increased 

investment in infrastructure, particularly in the transport and 
utilities sectors with an expected recovery of activity to a pre-
COVID-19 level and an increase on maintenance contracts 
in the transport sector.

 § Facilities is expected to benefit from a pipeline of 

opportunities across its diverse operations as well as from a 
rebound in activity as follows:
 – Health & Education has a favourable market outlook 
with increased Government spend to fulfil growing 
structural demand for these services, underpinned by an 
ageing population and higher community expectations 
relating to health following COVID-19 as well as from 
contract renewals/extensions

 – Government sector has significant growth opportunities 
to service an increasing public sector asset base and 
ageing of existing buildings, leveraging its assets and 
management expertise and national footprint

 – Power & Energy sector has opportunities from the 

decarbonisation of energy generators’ owners as well as 
a strong rebound in activity following deferrals of plant 
shutdowns and maintenance stemming from COVID-19 
related disruptions

 – Defence will benefit from increased Government 

investment on new military capability, upgrades to 
base infrastructure and estate management services.

(ii) Long-term growth rates
The long-term annual growth rates, applicable for the periods 
after which detailed forecasts have been prepared, are based 
on the long-term expected GDP rates for the country of 
operation, adjusted as necessary to reflect industry-specific 
considerations. The Group assumes a long-term growth rate of 
2.50% (FY21: 2.25%) to allow for organic growth on the existing 
asset base. The increase in the rate is in line with economic 
conditions and ending of a sustained period of suppressed 
inflation rates.

(iii) Discount rates
Post-tax discount rates of between 8.5% and 8.9% reflect 
the Group’s estimate of the time value of money and risks 
associated with each CGU.

In determining the appropriate discount rate for each CGU, 
consideration has been given to the estimated weighted 
average cost of capital (WACC) for the Group adjusted for 
country and business risks specific to that CGU. The post-tax 
discount rate is applied to post-tax cash flows that include 
an allowance for tax based on the respective jurisdiction’s tax 
rate. This method is used to approximate the requirement of 
the accounting standards to apply a pre-tax discount rate to 
pre-tax cash flows.

(iv) Budgeted capital expenditure
The expected cash flows for capital expenditure are based 
on past experience and the amounts included in the terminal 
year calculation are for maintenance capital used for existing 
plant and replacement of plant as it is retired from service. 
The resulting expenditure has been compared against the 
annual depreciation charge to ensure that it is reasonable. 

(v) Budgeted working capital
Working capital has been maintained at a level required to 
support the business activities of each CGU, taking into account 
changes in the business cycle. It has been assumed to be in line 
with historic trends given the level of operating activity.

Sensitivities
The recoverable amount of the Facilities CGU currently exceeds 
its carrying value by $197.3 million. Based on the modelling 
and analysis performed utilising a ‘value in use’ model, the 
recoverable amount of the Facilities CGU is expected to be 
greater than its carrying value.

Management has identified that a reasonably possible 
unfavourable change in the three-year compound annual 
revenue growth rate, EBIT margin assumption, long-term 
terminal growth rate and discount rate assumptions, in isolation, 
and in the absence of any mitigating factors or unchanged 
circumstances, would result in the carrying value of the Facilities 
CGU becoming equal to the recoverable amount.

The following table shows the approximate individual change in 
key assumptions under a downside sensitivity scenario for the 
estimated recoverable amount of the Facilities CGU to be equal 
to the carrying amount.

Individual changes in key assumptions  
that would result in nil headroom

Decrease in assumed revenue or 
EBIT margin percentage
Decrease in long-term growth rate 
Increase in the post-tax discount rate 

(8.7%)
from 2.5% to 1.6%
from 8.7% to 9.3%

Other than as disclosed above the Group believes that for all 
CGUs, any reasonably possible change in the key assumptions 
would not cause the carrying value of the CGUs to exceed their 
recoverable amounts.

|     Downer EDI Limited93

Impact of climate change
The Group recognises that an integrated approach to managing 
risks and opportunities is essential. The Downer Board, through 
its oversight functions, has ensured Downer appropriately 
considers Environmental, Social and Governance (ESG) risks, 
including those related to climate change. Climate-related 
risks and opportunities are incorporated into Downer’s broader 
corporate strategy, planning and risk management processes. 
This includes through the development of decarbonisation 
strategies, plans to mitigate exposure to physical and transition 
risks, and consideration of embedding emissions reduction 
targets into capital allocation and decision-making process.

Downer is committed to decarbonising its operations, 
recognising the need to develop emissions reduction targets 
that align with the 2015 Paris Agreement goals to pursue efforts 
to limit the temperature increase to 1.5°C by the end of this 
century. To guide its ambition, Downer has set an absolute 
near-term target of 50% reduction of its Scope 1 and 2 GHG 
emissions by 2032 and an absolute near-term target of 30% 
reduction of its Scope 3 emissions by 2032. Downer has set 
a long-term target to be Net Zero1 in Scope 1, 2 and 3 GHG 
emissions by 2050, subject to future available technologies. 
Both the near-term and the long-term targets have a base year 
of 2020.

In FY22, Downer completed a detailed review of its most 
material climate-related risks and opportunities in line with 
the Taskforce for Climate-related Financial Disclosures 
(TCFD), building on the work that Downer completed and 
disclosed through the Downer Sustainability Report in 2019. 
There remains uncertainty regarding the pace of global and 
local efforts to decarbonise, the economic and policy tools 
which may be used by governments and regulators, customer 
requirements, and the technology available to be applied. 
Therefore, Downer undertook scenario analysis to test the 
resilience of its business strategy, leveraging prioritised climate 
related risk and opportunities. In addition, the scenario analysis 
was used to assess and quantify the estimated financial impact 
of different climate scenarios across Downer’s operations and 
value chain, including potential mitigation costs arising from 
physical and transition risks, and the opportunities arising from 
new and existing business lines.

To assess the physical risks, Downer used a moderate emission 
scenario (rise between 2°C and 3°C by 2100) and a high 
emission scenario (rise above 4°C by 2100). To assess the 
transition risk, Downer chose two of the Network for Greening 
the Financial System (NGFS) 1.5°C aligned scenarios consisting 
of the Net Zero 20502 scenario and the Divergent Net Zero3 
scenario. The NGFS climate scenarios have been selected 
to provide insights into the risks and opportunities of the 
transition to a low carbon future. The NGFS dataset contains 

multiple parameters (e.g. emissions trajectory, carbon price 
and fuel mix) at the sub sectoral and country levels for each of 
the geographies being investigated, allowing the comparison 
of difference across geographies within the same plausible 
future scenario.

Not all assumptions used in scenario modelling (for TCFD 
purposes) are appropriate for incorporation in impairment 
models required by accounting standards. The modelled 
scenarios set out below were not included in the Group’s 
impairment model assumptions relating to asset values 
or cashflow. 

The scenario analysis performed considered the following 
impacts to asset values and cashflows:
 § Physical risks to Downer’s non-current assets, including key 
sites and locations, from events such as extreme heat, an 
increased frequency and severity of bushfires, and severe 
weather events. The scenario analysis quantified a physical 
risk which is not material to the Group’s future cashflows. 
The analysis confirmed no change to the expected useful 
economic lives of non-current assets as disclosed in Note C5. 

 § Transition risks are primarily associated with decarbonising 

Downer’s carbon intensive non-current assets, in the 
Transport CGU’s asphalt manufacturing process, and 
transitioning from internal combustion engine to an electric 
one for the light and heavy vehicle fleets. The analysis 
determined that the impact of decarbonising the asphalt 
plants through energy efficiency measures, using alternate 
or emerging fuels, or new technology, is not expected to 
materially impact the Group’s forecast cash flows.

 § Light vehicle fleet replacement from internal combustion 
engines to electric vehicles is anticipated to occur from 
2025 onwards, with heavy vehicle replacements anticipated 
to commence from 2030 onwards. Management continues 
to assess options for fleet replacement in the short term; 
however, any acceleration from these dates is limited by 
technology and global supply constraints.

The modelled impact is not material to the Group’s cashflows, 
with the analysis reaffirming that the anticipated response to 
climate change presents a net opportunity for Downer. This 
net opportunity is likely to increase as efforts to decarbonise 
accelerate, due to the significant opportunities for Downer’s 
business lines to support both new and existing customers’ 
decarbonisation transitions. 

1 

Net Zero is defined as the mitigation of direct emissions to as low a level as possible and offsetting the remainder through carbon removals. Downer has utilised the 
Science Based Target Initiative’s threshold of a 90% reduction in its emissions as being ‘as low a level as possible’.

2  NGFS Net Zero 2050 is an ambitious scenario that limits global warming to 1.5°C through stringent climate policies and innovation, reaching net zero CO2 emissions 

around 2050. This scenario assumes that ambitious climate policies are introduced immediately.

3  NGFS Divergent Net Zero reaches net zero by 2050 but with higher costs due to divergent policies introduced across sectors and a quicker phase out of fossil fuels. 
This scenario differentiates itself from the Net Zero 2050 by assuming that climate policies are more stringent in the transportation and buildings sectors, while 
decarbonisation of energy supply and industry is less stringent.

Notes to the consolidated financial statements     |94

C8. Other provisions

2022
$'m

Balance as at 1 July 2021
Additional provisions recognised
Unused provisions reversed
Utilisation of provisions
Disposal of businesses
Net foreign currency exchange differences
Balance as at 30 June 2022

Included in the financial statements as:
Current
Non-current

Recognition and measurement
Provisions
Provisions are recognised when:
 § The Group has a present obligation as a result of a past event
 § It is probable that resources will be expended to settle 

the obligation

 § The amount of the provision can be measured reliably.

(i) Decommissioning and restoration
Provisions for decommissioning and restoration are made 
for close down, restoration and environmental rehabilitation 
costs, including the cost of dismantling and demolition of 
infrastructure, removal of residual materials and remediation of 
disturbed areas.
Future rectification costs are reviewed annually and any 
changes are reflected in the present value of the rectification 
provision at the end of the reporting period.
The provision is discounted using a pre-tax rate that reflects 
current market assessments of the time value of money and the 
risks specific to the liability.

(ii) Warranties and contract claims
Provisions for warranties and contract claims are made for 
the estimated liability on all products still under warranty at 
balance sheet date and known claims arising under service and 
construction contracts.

(iii) Onerous contracts and other
Provisions primarily include amounts recognised in relation to 
onerous customer contracts.
The onerous contract provision is discounted using a pre-tax 
rate that reflects current market assessments of the time value 
of money and the risks specific to the liability.

Decomm-
issioning
and
restoration

Warranties
and
contract
claims

Onerous
contracts
and other

25.1 
4.0 
(0.6)
(2.3)
 – 
 – 
26.2 

12.8 
13.4 

26.3 
8.7 
(2.7)
(12.8)
 – 
0.2 
19.7 

15.0 
4.7 

34.6 
32.0 
(10.3)
(28.7)
(0.2)
 – 
27.4 

26.7 
0.7 

Total

86.0 
44.7 
(13.6)
(43.8)
(0.2)
0.2 
73.3 

54.5 
18.8 

Key estimates and judgements: Other provisions
(i) Decommissioning and restoration
Judgement is required in determining the expected 
expenditure required to settle rectification obligations at 
the reporting date, based on current legal requirements, 
technology and estimates of inflation.

(ii) Warranties and contract claims
The provision is estimated having regard to previous 
claims experience.

(iii) Onerous contracts and other
These provisions have been calculated based on 
management’s best estimate of discounted net cash outflows 
required to fulfil the contracts. The status of these contracts 
and the adequacy of provisions are assessed at each 
reporting date. Any change in the assessment of provisions 
impacts the results of the business.

|     Downer EDI Limited95

C9. Contingent liabilities

Bonding

Note 

2022
$’m 

2021
$’m

The Group has bid bonds and performance bonds issued in respect of contract 
performance in the normal course of business for controlled entities

E2 

1,372.9 

1,376.3

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.

Other contingent liabilities
(i)  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.

(ii)  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.
(iii) 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.

(iv) The Group carries the normal contractors’ and consultants’ 
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.
(v)  Downer New Zealand, an entity in the Group, has been 
named as co-defendant in a ‘leaky building’ claim. The 
leaky building claim where the Group entity is co-defendant 
relates to water damage arising from historical design 
and construction methodologies (and certification) for 
residential and other buildings in New Zealand during the 
early to mid 2000s. The Directors are of the opinion that 
disclosure of any further information relating to the leaky 
building claim would be prejudicial to the interests of 
the Group.

Notes to the consolidated financial statements     |96

D

Employee benefits

This section provides a breakdown of the various programs Downer uses to reward and recognise employees and key 
executives, including Key Management Personnel (KMP). Downer believes that these programs reinforce the value of 
ownership and incentives and drive performance both individually and collectively to deliver better returns to shareholders.

D1.  Employee benefits
D2.   Defined benefit plan
D3.   Key management personnel compensation
D4.   Employee discount share plan

D1. Employee benefits

Employee benefits expense:
– Defined contribution plans costs
– Share-based employee benefits expense(i)
– Employee benefits
– Defined benefit plan costs
Total employee benefits expense

Employee benefits provision:
– Current
– Non-current(ii)
Total employee benefits provision

2022
$’m 

2021
$’m 

200.3 
4.2 
3,375.1
1.6 
3,581.2

303.5 
18.7 
322.2 

214.6 
(0.4)
3,643.6 
1.7 
3,859.5 

353.6 
35.3 
388.9 

(i)  Share-based payments net benefit for 2021 includes the reversal for the 2018 Long-Term Incentive Plan performance rights due to forfeiture.
(ii)  Non-current employee benefit provision in 2021 included the net obligation of the defined benefit plan.

Recognition and measurement
The employee benefits liability represents accrued wages and salaries, leave entitlements and other incentives recognised in 
respect of employees’ services up to the end of the reporting period. These liabilities are measured at the amounts expected to be 
paid when they are settled and include related on-costs, such as workers compensation insurance, superannuation and payroll tax.

Key estimates and judgements: 
Annual leave and long service leave
Long-term employee benefits are measured at the present value of estimated future payments for the services provided by 
employees up to the end of the reporting period. This calculation requires judgement in determining the following key assumptions:
– Future increase in wages and salary rates
– Future on-cost rates
– Expected settlement dates based on staff turnover history.
The liability is discounted using the Australian corporate bond rates which most closely match the terms to maturity of 
the entitlement.
For New Zealand employees the liability is discounted using long-term government bond rates given there is no deep corporate 
bond market.

|     Downer EDI Limited97

D2. Defined benefit plan
The Group participates in the Equipsuper Defined Benefit Scheme which provides participants (<100 employees) with a lump sum 
benefit on retirement, death, disablement or withdrawal. The scheme operates under the Superannuation Industry legislation, and is 
governed by The Scheme Trustees, in compliance with Australian Prudential Regulation Authority framework. The scheme is closed 
to new employees.

As at 30 June 2022, the fair value of plan assets (comprising Investment Funds) was $58.6 million. The plan obligation balance was 
$53.2 million. The net asset of $5.4 million is included in Non-current prepayments and other assets. These balances were subject 
to an independent actuarial review as at 30 June 2022.

The main movements during the year were $1.6 million of services costs expensed to the profit or loss, $6.8 million of actuarial gains 
on the obligation, and the Group contributions of $1.1 million (all pre-tax amounts).

Key actuarial assumptions used in determining the values were a discount rate of 4.4% and an expected salary increase rate of 
3.0%. Sensitivity analysis shows a 0.5 percentage point reduction in the discount rate would increase the obligation by 4.2% and 
0.5 percentage point increase in the expected salary increase rate would increase the obligation by 3.6%.

Key estimate and judgement: Valuation of the defined benefit plan assets and obligations
There are a number of estimates and assumptions used in determining the defined benefit plan assets, obligations and 
expenses. These include salary increases, future earnings, and the returns on fund investments. Any difference in these 
assumptions or estimates will be recognised in other comprehensive income and not through the income statement. The net of 
the plan assets and obligations recognised in the statement of financial position will be affected by any movement in the returns 
on the investment or the rate of interest.

D3. Key management personnel compensation

Short-term employee benefits
Post-employment benefits
Share-based payments(i)
Total

2022
$ 

2021
$

7,576,170 
191,103 
605,015 
8,372,288 

10,665,093
225,533
(150,354)
10,740,272

(i)  Share-based payments net benefit for 2021 includes the reversal for the 2018 Long-Term Incentive Plan performance rights due to forfeiture.

Recognition and measurement
Equity-settled transactions
Equity-settled share-based transactions are measured at fair value at the date of grant. The cost of these transactions is recognised 
in profit or loss and credited to equity over the vesting period. At each balance sheet date, the Group revises its estimates of the 
number of rights that are expected to vest for service and non-market performance conditions. The expense recognised each year 
takes into account the most recent estimate.

The fair value at grant date is independently determined using an option pricing model and takes into account any market related 
performance conditions. Non-market vesting conditions are not considered when determining value; however they are included in 
assumptions about the number of rights that are expected to vest.

Cash-settled transactions
The amount payable to employees in respect of cash-settled share-based payments is recognised as an expense, with a 
corresponding increase in liabilities, over the period during which the employees become unconditionally entitled to the payment. 
The liability is remeasured at each reporting date and at settlement date based on the fair value, with any changes in the liability 
being recognised in profit or loss.

D4. Employee discount share plan
No shares were issued under the Employee Discount Share Plan during the years ended 30 June 2022 and 30 June 2021.

Notes to the consolidated financial statements     |98

E

Capital structure and financing

This section provides information relating to the Group’s capital structure and its exposure to financial risks, how they 
affect the Group’s financial position and performance and how the risks are managed.

The capital structure of the Group consists of debt and equity. The Directors determine the appropriate capital structure 
of Downer, specifically how much is raised from shareholders (equity) and how much is borrowed from financial institutions 
(debt) in order to finance the current and future activities of the Group. 

The Directors review the Group’s capital structure and dividend policy regularly and do so in the context of the Group’s 
ability to continue as a going concern, to invest in opportunities that grow the business and enhance shareholder value.

E1. Borrowings
E2. Financing facilities
E3. Lease liabilities 
E4. Commitments

E5. Issued capital
E6. Reserves
E7. Dividends

E1. Borrowings

Current
Unsecured:
– Bank loans
– AUD medium term notes
– Deferred finance charges
Total current borrowings

Non-current
Unsecured:
– Bank loans 
– USD private placement notes
– AUD private placement notes
– AUD medium term notes
– JPY medium term notes
– Deferred finance charges
Total non-current borrowings
Total borrowings

Fair value of total borrowings(i)

(i)  Excludes lease liabilities.

2022
$’m 

2021
$’m

–
–
–
–

582.0 
145.2 
30.0 
508.6 
106.4 
(10.5)
1,361.7 
1,361.7 

50.0
250.0
(3.8)
296.2

400.0
133.0
30.0
510.7
120.4
(8.7)
1,185.4
1,481.6

1,384.5 

1,611.5

|     Downer EDI Limited99

Recognition and measurement
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs. They are subsequently measured at amortised cost using 
the effective interest rate method.

Fair value
The cash flows under the Group’s debt instruments are discounted using current market base interest rates and adjusted for 
current market credit default swap spreads for companies with a BBB credit rating.

E2. Financing facilities
At reporting date, the Group had the following facilities that were unutilised:

Syndicated loan facilities
Bilateral loan facilities
Total unutilised loan facilities
Syndicated bank guarantee facilities
Bilateral bank guarantees and insurance bonding facilities
Total unutilised bonding facilities

Summary of borrowing arrangements
The Group’s borrowing arrangements are as follows:

Bank loan facilities
Bilateral loan facilities:

The Group has a total of $387.0 million in bilateral loan facilities 
which are unsecured, committed facilities.

Syndicated loan facilities:
The Group has $1,400.0 million of syndicated bank loan facilities 
which are unsecured, committed facilities.

USD private placement notes
USD unsecured private placement notes are on issue for a total 
amount of US$100.0 million with a maturity date of July 2025. 
The USD denominated principal and interest amounts have 
been fully hedged against the Australian dollar through cross-
currency interest rate swaps.

2022
$’m 

1,010.0 
195.0 
1,205.0 
61.7 
530.1 
591.8 

2021
$’m

1,100.0
327.0
1,427.0
148.1
484.9
633.0

AUD private placement notes
AUD unsecured private placement notes are on issue for a total 
amount of $30.0 million with a maturity date of July 2025.

Medium Term Notes (MTNs)
The Group has the following unsecured MTNs on issue:
 § $500.0 million maturing April 2026
 § JPY 10.0 billion maturing May 2033
 § The carrying value of the AUD MTN maturing April 2026 
includes a premium of $8.6 million over the face value 
owing to the differential between the coupon rate for that 
instrument and the prevailing market interest rate at the date 
of issue.

 § The JPY denominated principal and interest amounts have 
been fully hedged against the Australian dollar through a 
cross-currency interest rate swap.

The above loan facilities and note issuances are supported by 
guarantees from certain Group subsidiaries.

The maturity profile of the Group’s borrowing arrangements by financial year is represented in the below table by facility limit:

Maturing in the period
$’m

1 July 2023 to 30 June 2024
1 July 2024 to 30 June 2025
1 July 2025 to 30 June 2026
1 July 2026 to 30 June 2027
1 July 2027 to 30 June 2028
1 July 2032 to 30 June 2033
Total

Bilateral
Loan
Facilities

Syndicated
Loan
Facilities

USD 
Private
Placement
Notes

AUD 
Private
Placement
Notes

175.0 
212.0 
– 
– 
– 
– 
387.0 

– 
500.0 
– 
600.0 
300.0 
– 
1,400.0 

– 
– 
145.2 
– 
– 
– 
145.2 

– 
– 
30.0 
– 
– 
– 
30.0 

Medium
Term
Notes

– 
– 
500.0 
– 
– 
106.4 
606.4 

Total

175.0 
712.0 
675.2 
600.0 
300.0 
106.4 
2,568.6 

Notes to the consolidated financial statements     |Refinancing requirements
The Group will negotiate with existing and, where required, with 
new financiers to extend the maturity date or refinance facilities 
maturing within the next 12 months. 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. As at 30 June 2022, the Group has no debt 
facilities maturing within the 12 months to 30 June 2023.

Credit ratings
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 all financing facilities, to reflect the 
weaker credit risk profile.

100

E2. Financing facilities – continued 

Covenants on financing facilities
Downer Group’s financing facilities contain undertakings 
to comply with financial covenants and ensure that Group 
guarantors of these facilities collectively meet certain 
minimum threshold amounts of Group EBITA and Group Total 
Tangible Assets.

The main financial covenants which the Group is subject to are 
Net Worth, Interest Service Coverage and Leverage.

Financial covenants testing is undertaken monthly and reported 
at the Downer Board meetings. Reporting of financial covenants 
to financiers occurs semi-annually for the rolling 12-month 
periods to 30 June and 31 December. Downer Group was in 
compliance with all its financial covenants as at 30 June 2022.

Bank guarantees and insurance bonds
The Group has $1,964.7 million of bank guarantee and 
insurance bond facilities to support its contracting activities. 
$1,064.1 million of these facilities are provided to the Group on a 
committed basis and $900.6 million on an uncommitted basis.

The Group’s facilities are provided by a number of banks and 
insurance companies on an unsecured and revolving basis. 
$1,372.9 million (refer to Note C9) of these facilities were utilised 
as at 30 June 2022 with $591.8 million unutilised. These facilities 
have varying maturity dates between financial years 2023, 2024 
and 2025.

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 flexibility in respect of certain committed facility 
amounts (shown as part of the unutilised bilateral loan facilities) 
which can, at the election of the Group, be utilised to provide 
additional bank guarantee capacity.

|     Downer EDI Limited101

2022
$’m 

2021
$’m

The Group remeasures the lease liability (and makes a 
corresponding adjustment to the related right-of-use 
asset) whenever:

E3. Lease liabilities

Contractual undiscounted 
cash flows
– Within one year
– Between one and five years
– Greater than five years
Total undiscounted  
lease liabilities

– Current
– Non-current
Total lease liabilities

148.2 
305.2 
169.5 

622.9 

132.4 
411.5 
543.9 

182.2
382.2
214.0

778.4

157.7
505.1
662.8

Recognition and measurement
Lease liabilities
The lease liability is initially measured at the present value of 
future lease payments that are not paid at the commencement 
date, discounted using the interest rate implicit in the lease or if 
this rate cannot be readily determined the Group’s incremental 
borrowing rate. Generally, the Group uses its incremental 
borrowing rate as the discount rate.

Lease payments included in the measurement of the lease 
liability comprise:

 § Fixed payments (including in-substance fixed payments), 

less any lease incentives receivable

 § Variable lease payments that depend on an index or a rate
 § The exercise price of a purchase option if the lessee is 

reasonably certain to exercise that option

 § The amount expected to be payable under a residual 

value guarantee

 § Payments of penalties for termination of the lease, if the lease 
term reflects the lessee exercising an option to terminate 
the lease.

Variable lease payments not included in the initial measurement 
of the lease liability are recognised directly in profit or loss.

The lease liability is subsequently measured by increasing the 
carrying amount to reflect interest on the lease liability (using 
the effective interest method) and by reducing the carrying 
amount to reflect the lease payments made.

 § The lease term has changed or there is a significant event 
or change in circumstances resulting in a change in the 
assessment of exercise of a purchase option, in which case 
the lease liability is remeasured by discounting the revised 
lease payments using a revised discount rate

 § The lease payments change due to changes in an index or 

rate or a change in the amount expected to be payable under 
a residual value guarantee

 § A lease contract is modified, and the lease modification is 
not accounted for as a separate lease, in which case the 
lease liability is remeasured based on the lease term of the 
modified lease by discounting the revised lease payments 
using a revised discount rate at the effective date of 
the modification.

The expense charged to profit or loss for low value and short-
term leases (excluded from lease liabilities) is analysed as:

Lease expenses
Land and buildings
Plant and equipment
Total lease expenses

2022
$’m 

2.0 
43.4
45.4

2021
$’m

2.1
52.7
54.8

Key estimate and judgement: Lease liabilities
(i) Extension option
In determining the lease term, the Group considers all facts 
and circumstances that create an economic incentive to 
exercise an extension option, or not exercise a termination 
option. Extension options (or periods after termination 
options) are only included in the lease term if the lease is 
reasonably certain to be extended (or not terminated).

(ii) Incremental borrowing rate
In determining the present value of the future lease 
payments, the Group discounts the lease payments using 
an incremental borrowing rate (IBR). The IBR reflects the 
financing characteristics and duration of the underlying 
lease. Once a discount rate has been set for a leased asset 
(or portfolio of assets with similar characteristics), this rate 
will remain unchanged for the term of that lease. When a 
lease modification occurs, and it is not accounted for as a 
separate lease, a new IBR will be assigned to reflect the new 
characteristics of the lease.

Notes to the consolidated financial statements     |102

E4. Commitments

Capital expenditure commitments
Plant and equipment and other
– Within one year
– Between one and five years
– Greater than five years
Total

Catering rights
Catering rights relates to exclusive secured catering rights arrangements with customers.
– Within one year
– Between one and five years
– Greater than five years
Total

E5. Issued capital

Jun 2022

Jun 2021

No.

$’m 

No.

Ordinary shares
Unvested executive incentive shares
Redeemable Optionally Adjustable Distributing 
Securities (ROADS)
Total

675,425,623 
1,193,978 

2,488.9 
(7.3)

696,928,956 
1,249,255 

200,000,000 

200,000,000 

178.6 
2,660.2 

(a) Fully paid ordinary share capital
Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Fully paid ordinary share capital
Balance at the beginning of the financial year
Capital raising(i)
Capital raising costs net of tax
Group on-market share buy-back
Vested Downer Contingent Share Options(ii)
Balance at the end of the financial year

2022

2021

m’s 

$’m 

m’s 

$’m

696.9 
–
–
(24.0)
2.5 
675.4 

2,631.5 
–
–
(142.6)
–
2,488.9 

594.7 
106.6 
–
(4.4)
–
696.9 

2,263.1
399.7
(6.5)
(24.8)
–
2,631.5

(i)  On 30 July 2020, 88,585,611 shares were issued with net proceeds of $332.2 million, and on 20 August 2020, 18,004,231 shares were issued with net proceeds 

of $67.5 million being received.

(ii)   On 24 August 2021, the Target Price Condition of the Tranche 1 Series Downer Contingent Share Options was satisfied resulting in 2,499,264 shares exercised  

at $6.382 per share. Refer to Note E6.

2022
$’m 

2021
$’m

60.3 
2.0 
–
62.3 

2.0 
6.3 
0.8 
9.1 

42.5
16.7
0.7
59.9

16.8
7.0
2.5
26.3

$’m

2,631.5
(7.5)

178.6
2,802.6

|     Downer EDI Limited103

(b) Unvested executive incentive shares

Unvested executive incentive shares
Balance at the beginning of the financial year
Vested executive incentive share transactions(i)
Balance at the end of the financial year

2022

2021

m’s 

$’m 

m’s

$’m

1.25 
(0.06)
1.19 

(7.5)
0.2 
(7.3)

2.23 
(0.98)
1.25 

(12.0)
4.5
(7.5)

(i)   June 2022 figures relate to the second deferred component of the 2019 STI award of 55,277 vested shares for a value of $252,571.

June 2021 figures relate to the 2017 LTI plan, second deferred component of the 2018 STI award and first deferred component of the 2019 STI award totalling 982,377 
vested shares for a value of $4,488,658.

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.

(c) Redeemable Optionally Adjustable Distributing Securities (ROADS)

Balance at the beginning and at the end of the financial year

2022

2021

m’s 

200.0 

$’m 

178.6 

m’s 

200.0 

$’m

178.6

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 2022 is 8.14% per annum (2021: 4.42% per annum) which is equivalent to the 
one year swap rate on 15 June 2022 of 4.09% per annum plus the step-up margin of 4.05% per annum.

(d) Share options and performance rights
The Group has no share option to issue.

During the financial year 2,585,870 performance rights (2021: 1,420,213) in relation to unissued shares were granted to senior 
executives of the Group under the LTI plan. Further details of the Key Management Personnel (KMP) LTI plan are contained  
in the Remuneration Report.

Recognition and measurement
Ordinary shares
Incremental costs directly attributed to the issue of ordinary shares are accounted for as a deduction from equity, net of any 
tax effects.

Executive incentive shares
When executive incentive shares subsequently vest to employees under the Downer employee share plans, the carrying value 
of the vested shares is transferred from the Employee benefits reserve.

Notes to the consolidated financial statements     | 
104

E6. Reserves

2022
$’m

Balance at 1 July 2021
Foreign currency translation difference
Actuarial movement on net defined benefit 
plan obligations
Income tax effect of actuarial movement 
on defined benefit plan obligations
Change in fair value of cash flow hedges 
(net of tax)
Change in fair value of unquoted 
equity investments
Total comprehensive income for the year
Vested executive incentive share transactions
Vested Downer Contingent Share Options
Share-based employee benefits expense
Income tax relating to share-based transactions 
during the year
Disposal of business
Balance at 30 June 2022

2021
$’m

Balance at 1 July 2020
Foreign currency translation difference
Actuarial movement on net defined benefit 
plan obligations
Income tax effect of actuarial movement 
on defined benefit plan obligations
Change in fair value of cash flow hedges 
(net of tax)
Total comprehensive income for the year
Vested executive incentive share transactions
Share-based employee benefits expense
Income tax relating to share-based transactions 
during the year
Acquisition of non-controlling interest (net of tax)
Balance at 30 June 2021

Foreign
currency
translation
reserve

(29.7)
(16.6)

Hedge 
reserve

(23.1)
–

–

–

30.5 

–
30.5 
–
–
–

–
–
7.4 

–

–

–

–
(16.6)
–
–
–

–
7.2 
(39.1)

(29.4)
–

(30.6)
0.7 

–

–

6.8 
6.8 
–
–

–
(0.5)
(23.1)

–

–

–
0.7 
–
–

–
0.2 
(29.7)

Employee
benefits
reserve

Equity 
reserve

Fair value
through OCI
reserve

Total 
attributable
to the
members of
the Parent

14.7 
–

6.8 

(2.1)

–

–
4.7 
(0.2)
–
4.2 

(2.7)
–
20.7 

14.9 
–

5.0 

(1.5)

–
3.5 
(4.5)
(0.4)

1.2 
–
14.7 

9.5 
–

(2.6)
–

(31.2)
(16.6)

–

–

–

–
–
–
16.0 
–

–
–
25.5 

–
–

–

–

–
–
–
–

–

–

–

0.2 
0.2 
–
–
–

–
–
(2.4)

(2.6)
–

–

–

–
–
–
–

–
9.5 
9.5 

–
–
(2.6)

6.8

(2.1)

30.5

0.2
18.8
(0.2)
16.0
4.2

(2.7)
7.2
12.1

(47.7)
0.7

5.0

(1.5)

6.8
11.0
(4.5)
(0.4)

1.2
9.2
(31.2)

|     Downer EDI Limited105

Hedge reserve
The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments 
relating to future transactions.

Foreign currency translation reserve
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.

Employee benefits reserve
The employee benefits 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. This reserve also includes 
the actuarial gain/loss arisen on the defined benefit plan (refer to Note D2).

Equity reserve
The equity reserve accounts for the difference between the fair value of, and the amounts paid or received for, equity transactions 
with non-controlling interests.

Fair value through OCI reserve
The fair value through OCI reserve comprises the cumulative net change in the fair value of equity investments designated 
as FVOCI. Until the assets are derecognised or reclassified, this amount is reduced by the amount of loss allowance.

E7. Dividends

(a) Ordinary shares

Dividend per share (in Australian cents)
Franking percentage
Cost (in $’m)
Dividend record date
Payment date

2022 
Final 

12.0
0%
81.1
31/8/22
28/9/22

2022 
Interim 

12.0 
0%
81.8 
24/2/22 
24/3/22 

2021 
Final 

12.0 
0%
83.7 
26/8/21 
23/9/21 

2021
Interim

9.0
0%
63.1
25/2/21
25/3/21

Recognition and measurement
A liability is recognised for the amount of any dividend declared, being appropriately authorised and no longer at the discretion 
of the entity, before or at the end of the financial year but not distributed at balance sheet date.

The final 2022 dividend has not been declared at the reporting date and therefore is not reflected in the consolidated 
financial statements.

(b) Redeemable Optionally Adjustable Distributing Securities (ROADS)

2022

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Dividend per ROADS (in Australian cents)
New Zealand imputation credit percentage
Cost (in A$’m)
Payment date

0.76 
100% 
1.5 
15/9/21 

0.75 
100% 
1.5 
15/12/21 

0.74 
100% 
1.5 
15/3/22 

0.72 
100% 
1.4 
15/6/22

2021

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Dividend per ROADS (in Australian cents)
New Zealand imputation credit percentage
Cost (in A$’m)
Payment date

0.72 
100% 
1.4 
15/9/20 

0.73 
100% 
1.5 
15/12/20 

0.71 
100% 
1.5 
15/3/21 

0.72 
100% 
1.4 
15/6/21

Total

2.97
100%
5.9

Total

2.88
100%
5.8

(c) Franking credits
The franking account balance as at 30 June 2022 is nil (2021: nil).

Notes to the consolidated financial statements     |106

F

Group structure

This section explains significant aspects of Downer’s Group structure, including joint arrangements where the Group 
has interest in its controlled entities and how changes have affected the Group structure. 

It also provides information on business acquisitions and disposals made during the financial year as well as information 
relating to Downer’s related parties, the extent of related party transactions and the impact they had on the Group’s 
financial performance and position.

F1. 

 Joint arrangements and 
associate entities
F2.  Controlled entities
F3.  Related party information

F4.  Parent entity disclosures
F5.  Acquisition of businesses
F6.  Disposal of businesses

F1. Joint arrangements and associate entities

(a) Interest in joint ventures and associate entities

Interest in joint ventures at the beginning of the financial year
Share of net profit
Share of distributions
Interest in joint venture divested
Foreign currency exchange differences
Interest in joint ventures at the end of the financial year

Interest in associates at the beginning of the financial year
Share of net profit
Share of distributions
Investment in associates
Additional associate interest acquired
Interest in associates at the end of the financial year
Total interest in joint ventures and associates

Note

F6

2022 
$’m 

24.1 
21.5
(13.6)
–
(0.1)
31.9 

131.0 
8.2 
(8.3)
– 
– 
130.9 
162.8 

2021
$’m

32.1
12.9
(11.6)
(9.3)
–
24.1

78.5
9.3
–
9.8
33.4
131.0
155.1

|     Downer EDI Limited107

The Group has interests in the following joint ventures and associates which are equity accounted:

Name of arrangement

Principal activity

Ownership interest

Country of
operation 

2022 
%

2021
%

Asphalt plant 

Joint Ventures
Allied Asphalt Limited
Bitumen Importers Australia Joint Venture Bitumen importer 
Bitumen importer 
Bitumen Importers Australia Pty Ltd
Sale and maintenance of railway rollingstock 
EDI Rail-Bombardier 
Transportation Pty Ltd
Emulco Limited
Isaac Asphalt Limited 
Repurpose It Holdings Pty Ltd
Waanyi Downer JV Pty Ltd(i)
ZFS Functions (Pty) Ltd(i)

Emulsion plant 
Manufacture and supply of asphalt 
Waste recycling 
Contract mining services 
Catering for functions at Federation Square 

New Zealand 
Australia 
Australia 
Australia 

New Zealand 
New Zealand 
Australia 
Australia 
Australia 

Associates
Keolis Downer Pty Ltd

HT HoldCo Pty Ltd

Operation and maintenance of Gold Coast 
light rail, Melbourne tram network, Adelaide 
metro and bus operation 
Laundries services 

Australia 

Australia 

50 
50 
50 
50 

50 
50 
45 
–
–

49 

30 

50
50
50
50

50
50
45
50
50

49

30

(i)  Downer’s interest in this joint venture was disposed of during the year ended 30 June 2022.

There are no material commitments held by joint ventures and associates. All joint ventures and associates have a statutory 
reporting date of 30 June.
The Group’s share of aggregate financial information from joint ventures and associates is presented below.
The Group does not disclose the details of the individual joint ventures and associates on the basis these are individually immaterial.

The Group’s share of the carrying amounts:

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Goodwill
Adjustment to align accounting policies
Carrying amounts

Profit for the year
Total comprehensive income for the year

2022 
$’m 

289.2 
272.2 
(190.2)
(219.9)
151.3 
7.0 
4.5 
162.8 

29.7 
29.7 

2021
$’m

266.1
228.2
(165.8)
(184.6)
143.9
7.0
4.2
155.1

22.2
22.2

Notes to the consolidated financial statements     |108

F1. Joint arrangements and associate entities – continued 

Recognition and measurement
Equity accounting
(i) Investments in joint ventures
Investments in joint ventures are accounted for using the equity method of accounting.

(ii) Investments in associates
Investments in entities over which the Group has the ability to exercise significant influence, but not control, are accounted for using 
the equity method of accounting. The investment in associates is carried at cost plus post-acquisition changes in the Group’s share 
of the associates’ net assets, less any impairment in value.

(b) Interest in joint operations
The Group has interests in the following joint operations which are proportionately consolidated:

Name of joint operation

Principal activity

Ownership interest

Country of
 operation 

2022 
% 

2021
%

Ausenco Downer Joint Venture
Bama Civil Pty Ltd & Downer EDI Works 
Pty Ltd
Cameron Road Joint Venture (i)
China Hawkins Construction JV
City Rail JV
Concrete Pavement Recycling Pty Ltd
Confluence Water JV
CPB Contractors Pty Ltd & Spotless 
Facility Services Pty Ltd (i)
CPB Downer Joint Venture
CRL Construction Joint Venture

Dampier Highway Joint Venture
Downer BMD Joint Venture (i)
Downer-Carey Mining JV (ii)

Downer EDI Works Pty Ltd &  
CPB Contractors Pty Ltd (i)
Downer EDI Works Pty Ltd & McConnell 
Dowell Constructors (Aust) Pty Ltd (i)
Downer Electrical GHD JV (iii)
Downer FKG JV
Downer HEB Joint Venture 
(Memorial Park Alliance)
Downer HEB Joint Venture 
(Mt Messenger Project)
Downer MCD Wynyard Edge JV 
(Americas Cup Project)
Downer Seymour Whyte JV 
Downer York Joint Venture (ii)
Downtown Infrastructure 
Development Project JV
Gumala Downer Joint Venture (ii)
Hatch Downer JV (ii)

HCMT Supplier JV

Enabling works for Carrapateena Project
Civil Infrastructure design and/or 
construction activities 
Cameron Road construction
Building construction
Enabling works for Auckland City Rail Link
Road maintenance
Sydney Water services
Riverina Redevelopment Program

Parramatta Light Rail construction
Construction of the City Rail Link 
Alliance Project 
Highway construction and design
West Camden Water Recycling Plant Upgrade 
Management of run of mine and ore 
rehandling services
Warringah Freeway Upgrade Project

Waurn Ponds Duplication

Australia
Australia

New Zealand
New Zealand
New Zealand
Australia
Australia
Australia

Australia
New Zealand

Australia
Australia
Australia

Australia

Australia

Traffic control infrastructure
Major civil and roadworks
Design and build of the New Zealand 
National War Memorial Park 
Design and build of the Mt Messenger Project New Zealand

Australia
Australia
New Zealand

Design and build on Americas Cup Project

New Zealand

Road construction
Tramline extension
Downtown infrastructure 
development program
Contract mining services
Design and construction of solvent 
extraction plant
Rail build supplier

Australia
Australia
New Zealand

Australia
Australia

Australia

50 
50 

50 
50 
50 
49 
43 
50 

50 
30 

50 
50 
– 

33 

50

90 
50 
50 

50 

50 

50 
– 
33 

– 
– 

50 

50
50

 –
50
50
49
43
 –

50
30

50
 –
46

 –

–

90
50
50

50

50

50
50
33

50
50

50

|     Downer EDI Limited109

Name of joint operation

Principal activity

Ownership interest

Country of
 operation 

2022 
% 

2021
%

John Holland Pty Ltd & Downer 
Utilities Australia Pty Ltd Partnership
Macdow Downer Joint Venture (Connectus)
Macdow Downer Joint Venture (CSM2)
Macdow Downer Joint Venture  
(Russley Road)
NEWest Alliance

North Canterbury Transport Infrastructure 
Economic Recovery Alliance ‘NCTIER’ JV
Safety Focused Performance JV
Thiess VEC Joint Venture
Utilita Water JV
VEC Shaw Joint Venture
Waanyi ReGen JV (ii)
WDJV Unit Trust (ii)
Wiri Train Depot Joint Venture

Operation of water recycling plant at Mackay

Australia

Rail construction
Road construction
Road construction

Construction activities as part 
of Perth’s METRONET program
Kaikoura earthquake works

Water and sewerage capital works
Highway construction
Plant maintenance
Road construction
Rehab contract services
Contract mining services
Construction of the Wiri train depot

New Zealand
New Zealand
New Zealand

Australia

New Zealand

Australia
Australia
Australia
Australia
Australia
Australia
New Zealand

(i)  Joint operation entered into during the year ended 30 June 2022.
(ii)  Joint operation disposed/terminated during the year ended 30 June 2022.
(iii)  Contractual arrangement prevents control despite ownership of more than 50% of this joint operation.

50 

50 
50 
50 

50 

25 

45 
50 
50 
50 
– 
– 
50 

50

50
50
50

50

25

45
50
50
50
50
50
50

Recognition and measurement
Proportionate consolidation
Joint operations
Joint operations give the Group the right to the underlying assets and obligations for liabilities and are accounted for by recognising 
the share of those assets and liabilities.

F2. Controlled entities
The controlled entities of the Group listed below were wholly owned during the current and prior year, unless otherwise stated:

Australia
A E Smith & Son (NQ) Pty Ltd (vii)
A E Smith & Son (SEQ) Pty Ltd (vii)
A.E. Smith & Son Proprietary Limited (vii)
AE Smith Building Technologies Pty Ltd (vii)
A.E. Smith Service (SEQ) Pty Ltd (vii)
A.E. Smith Service Holdings Pty Ltd (vii)
A.E. Smith Service Pty Ltd (vii)
ACN 009 173 040 Pty Ltd
AGIS Group Pty Limited
Airparts Fabrication Pty Ltd (vii)
Airparts Fabrication Unit Trust (vii)
Airparts Holdings Pty Ltd (vii)
Aladdin Group Services Pty Limited
Aladdin Laundry Pty Limited
Aladdin Linen Supply Pty Limited
Aladdins Holdings Pty. Limited
ASPIC Infrastructure Pty Ltd
Asset Services (Aust) Pty Ltd
Berkeley Challenge (Management) Pty Limited
Berkeley Challenge Pty Limited
Berkeley Railcar Services Pty Ltd

Berkeleys Franchise Services Pty Ltd
Bonnyrigg Management Pty. Limited
Cleandomain Proprietary Limited
Cleanevent Australia Pty. Ltd.
Cleanevent Holdings Pty. Limited
Cleanevent International Pty. Limited
Cleanevent Technology Pty Ltd 
DM Road Services Pty Ltd
DMH Electrical Services Pty Ltd
DMH Maintenance and Technology Services Pty Ltd
DMH Plant Services Pty Ltd 
Downer Australia Pty Ltd 
Downer EDI Associated Investments Pty Ltd
Downer EDI Engineering Company Pty Limited
Downer EDI Engineering CWH Pty Limited
Downer EDI Engineering Electrical Pty Ltd
Downer EDI Engineering Group Pty Limited
Downer EDI Engineering Holdings Pty Ltd
Downer EDI Engineering Power Pty Ltd

Notes to the consolidated financial statements     |110

F2. Controlled entities – continued 

Australia – continued 
Downer EDI Engineering Pty Limited
Downer EDI Limited Tax Deferred Employee Share Plan
Downer EDI Mining Pty Ltd
Downer EDI Mining-Minerals Exploration Pty Ltd
Downer EDI Rail Pty Ltd 
Downer EDI Services Pty Ltd
Downer EDI Works Pty Ltd 
Downer Energy Systems Pty Limited
Downer Group Finance Pty Limited 
Downer Holdings Pty Limited
Downer Investments Holdings Pty Ltd
Downer Mining Regional NSW Pty Ltd
Downer PipeTech Pty Limited
Downer PPP Investments Pty Ltd
Downer Utilities Australia Pty Ltd
Downer Utilities Holdings Australia Pty Ltd
Downer Utilities New Zealand Pty Ltd
Downer Utilities SDR Pty Ltd 
Downer Victoria PPP Maintenance Pty Ltd
EDI Rail PPP Maintenance Pty Ltd
EDICO Pty Ltd 
Emerald ESP Pty Ltd (vii)
Emoleum Partnership
Emoleum Road Services Pty Ltd 
Emoleum Roads Group Pty Ltd
Envar Engineers and Contractors Pty Ltd (vii)
Envar Holdings Pty Ltd (vii)
Envar Installation Pty Ltd (vii)
Envar Service Pty Ltd (vii)
Envista Pty Limited
Errolon Pty Ltd
Evans Deakin Industries Pty Ltd 
Fieldforce Services Pty Ltd
Fowlers Asphalting Pty. Limited (vi)
Gippsland Asphalt Pty. Ltd.(vi)
Infrastructure Constructions Pty Ltd
International Linen Service Pty Ltd
LNK Group Pty Ltd
Lowan (Management) Pty. Ltd.
Maclab Services Pty Ltd
Mineral Technologies (Holdings) Pty Ltd
Mineral Technologies Pty Ltd
Monteon Pty Ltd
National Community Enterprises (iv) (vii)
Nationwide Venue Management Pty Limited
New South Wales Spray Seal Pty Ltd
NG-Serv Pty Ltd
Nuvogroup (Australia) Pty Ltd
Otraco International Pty Ltd (v)
Otracom Pty Ltd (v)
Pacific Industrial Services BidCo Pty Ltd
Pacific Industrial Services FinCo Pty Ltd
Primary Producers Improvers Pty. Ltd.
Rail Services Victoria Pty Ltd
Riley Shelley Services Pty Limited

Roche Services Pty Ltd
RPC Roads Pty Ltd
RPQ Asphalt Pty. Ltd.
RPQ Mackay Pty Ltd
RPQ North Coast Pty. Ltd.
RPQ Pty Ltd
RPQ Services Pty. Ltd.
RPQ Spray Seal Pty. Ltd.
Skilltech Consulting Services Pty. Ltd.
Skilltech Metering Solutions Pty Ltd.
Smarter Contracting Pty Ltd
Southern Asphalters Pty Ltd
Sports Venue Services Pty Ltd
Spotless Defence Services Pty Ltd
Spotless Facility Services Pty Ltd
Spotless Financing Pty Limited
Spotless Group Holdings Limited
Spotless Group Limited
Spotless Investment Holdings Pty Ltd
Spotless Management Services Pty Ltd
Spotless Property Cleaning Services Pty Ltd
Spotless Securities Plan Pty Ltd
Spotless Services Australia Limited
Spotless Services International Pty Ltd 
Spotless Services Limited
Spotless Treasury Pty Limited
SSL Asset Services (Management) Pty Ltd
SSL Facilities Management Real Estate Services Pty Ltd
SSL Security Services Pty Ltd
Tarmac Linemarking Pty Ltd (vi)
Taylors Two Two Seven Pty Ltd
Trenchless Group Pty Ltd
Trico Asphalt Pty. Ltd.
UAM Pty Ltd
Utility Services Group Holdings Pty Ltd
Utility Services Group Limited
VEC Civil Engineering Pty Ltd
VEC Plant & Equipment Pty Ltd

New Zealand and Pacific
AF Downer Memorial Scholarship Trust
DGL Investments Limited
Downer Construction (Fiji) Pte Limited 
Downer Construction (New Zealand) Limited
Downer EDI Engineering Power Limited
Downer EDI Engineering PNG Limited
Downer EDI Works Vanuatu Limited
Downer New Zealand Limited
Downer New Zealand Projects 1 Limited
Downer New Zealand Projects 2 Limited
Downer Utilities Alliance New Zealand Limited (viii)
Downer Utilities New Zealand Limited
Downer Utilities PNG Limited (iv)
Green Vision Recycling Limited
Hawkins Limited
Hawkins Project 1 Limited
ITS Pipetech Pacific (Fiji) Pte Limited

|     Downer EDI Limited111

F3. Related party information

(a) Transactions with controlled entities
Aggregate amounts receivable from and payable to controlled 
entities by the parent entity are included within total assets and 
liabilities balances as disclosed in Note F4.
Other transactions which occurred during the financial year 
between the parent entity and controlled entities, as well as 
between entities in the Group, were on normal arm’s length 
commercial terms.

(b) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in controlled 
entities are disclosed in Note F2.

Equity interests in joint arrangements and 
associate entities
Details of interests in joint arrangements and associate 
entities are disclosed in Note F1. The business activities 
of a number of these entities are conducted under joint 
venture arrangements. Associated entities conduct business 
transactions with various controlled entities. Such transactions 
include purchases and sales, dividends and interest. All such 
transactions are conducted on the basis of normal arm’s length 
commercial terms.

(c) Controlling entity
The parent entity of the Group is Downer EDI Limited.

Richter Drilling (PNG) Limited
Spotless Facility Services (NZ) Limited
Spotless Holdings (NZ) Limited
Techtel Training & Development Limited
The Roading Company Limited
Underground Locators Limited (viii)
Waste Solutions Limited 
Works Finance (NZ) Limited

Africa
Downer EDI Mining - Ghana Limited
Downer Mining South Africa Proprietary Limited
MD Mineral Technologies Africa (Pty) Ltd (ix)
MD Mining and Mineral Services (Pty) Ltd (i)
Otraco Botswana (Proprietary) Limited (v)
Otraco Southern Africa (Pty) Ltd (ii)
Otraco Tyre Management Namibia (Proprietary) Limited (v)

Asia
Chang Chun Ao Hua Technical Consulting Co Ltd
Cleanevent Middle East FZ LLC (iii)
Downer EDI Engineering (S) Pte Ltd 
Downer EDI Engineering Holdings (Thailand) Limited 
Downer EDI Engineering Thailand Ltd 
Downer EDI Group Insurance Pte Ltd 
Downer EDI Rail (Hong Kong) Limited
Downer EDI Works (Hong Kong) Limited
Downer Pte Ltd
Downer Singapore Pte Ltd
MD Mineral Technologies Private Limited
PT Duffill Watts Indonesia
PT Otraco Indonesia (iii)

Americas
Mineral Technologies Comercio de Equipamentos para 
Processamento de Minerais LTD
Mineral Technologies, Inc.
Otraco Brasil Gerenciamento de Pneus Ltda
Otraco Chile SA (v)

United Kingdom and Channel Islands
KHSA Limited
Sillars (B. & C.E.) Limited (iii)
Sillars (TMWD) Limited (iii)
Sillars Holdings Limited (iii)
Sillars Road Construction Limited (iii)
Works Infrastructure (Holdings) Limited (iii)
Works Infrastructure Limited (iii)

(i)  70% ownership interest.
(ii)  Entity disposed during the financial year ended 30 June 2022.  
The Group had 74% ownership interest prior to its disposal.

(iii)  Entity is currently undergoing liquidation/dissolution.
(iv)  Entity liquidated/de-registered during the financial year ended 30 June 2022.
(v)  Entity disposed during the financial year ended 30 June 2022.
(vi)  Entity acquired during the financial year ended 30 June 2022.
(vii)  Entity does not form part of the tax-consolidated group of which Downer EDI 

Limited is the head entity.

(viii) Entity amalgamated into Downer New Zealand Limited during the financial 

year ended 30 June 2022.

(ix)  MD Mineral Technologies SA (Pty) Ltd. changed its name to MD Mineral 

Technologies Africa (Pty) Ltd during the financial year ended 30 June 2022.

Notes to the consolidated financial statements     |112

F4. Parent entity disclosures

(a) Financial position

Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Reserves
Total equity

Company

2022 
$’m 

2021
$’m

24.1 
2,774.8
2,798.9

30.1
5.8 
35.9
2,763.0 

2,481.6 
253.5 
27.9 
2,763.0 

19.8
2,883.8
2,903.6

74.6
4.2
78.8
2,824.8

2,624.0
190.1
10.7
2,824.8

The parent entity was in a net current liabilities position largely due to the recognition of the fair value on the Downer Contingent 
Share Options (DCSO) of $13.7 million financial instrument at reporting date which would be settled in equity. The parent entity 
can meet all its financial obligations when they fall due since it has the ability to control the timing of the funding from its 
controlled entities.

(b) Financial performance

Profit for the year
Total comprehensive income

Company

2022 
$’m 

228.7 
228.7 

2021
$’m

244.2
244.2

(c) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has, in the normal course of business, entered into guarantees in relation to the debts of its subsidiaries during 
the financial year.

(d) Contingent liabilities of the parent entity
The parent entity has no contingent liabilities as at 30 June 2022 (2021: nil) other than those disclosed in Note C9 to the 
financial statements.

(e) Commitments for the acquisition of property, plant and equipment by the parent entity
The parent entity does not have any commitments for acquisition of property, plant and equipment as at 30 June 2022 (2021: nil).

|     Downer EDI Limited113

F5. Acquisition of businesses

Current year acquisitions
Fowlers
On 30 November 2021, the Group acquired 100% of Fowlers 
Asphalting Pty. Limited, Gippsland Asphalt Pty. Ltd. and Tarmac 
Linemarking Pty Ltd (‘Fowlers’) for total consideration of 
$25.9 million. Total consideration for this acquisition comprises 
$24.0 million cash paid (net of $0.6 million cash balances 
acquired) and $1.3 million deferred consideration. The fair 
value of the acquired net assets amounts to $18.1 million 
resulting in goodwill of $7.8 million being recognised. Fowlers 
is an asphalting and civil construction business operating in 
the Gippsland area of Victoria. The acquisition accounting for 
Fowlers remains provisionally accounted for as at 30 June 2022.

Goodwill from acquisition
The goodwill resulting from the above acquisition represents 
the future market development, expected revenue growth 
opportunities, technical talent and expertise, and the benefits 
of expected synergies. These benefits are not recognised 
separately from goodwill because they do not meet the 
recognition criteria for identifiable intangible assets.

Other
During the year, deferred consideration payments of $0.1 million 
were made (2021: $14.3 million) in relation to acquisitions 
completed in previous periods.

Prior year acquisitions
Other
The purchase of the remaining Spotless shares not already owned 
in the year ended 30 June 2021 did not represent an acquisition 
of a business as the Group already controlled this entity.

Measurement of fair values
The valuation techniques used for measuring the fair value 
of material assets acquired were as follows:

Asset/liability 
acquired

Trade receivables 
and contract assets
Property, plant 
and equipment

Intangible assets

Trade payables and 
other payables

Valuation technique

Cost technique – considers the expected 
economic benefits receivable when due.
Market comparison technique and cost 
technique – the valuation model considers 
quoted market prices for similar items 
when available and current replacement 
cost when appropriate.
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.
Cost technique – considers the expected 
economic outflow of resources when due.

Asset/liability 
acquired

Borrowings

Provisions

Valuation technique

Cost technique – considers the expected 
economic outflow of resources when due.
Cost technique – considers the probable 
economic outflow of resources when the 
obligation arises.

Recognition and measurement
Business combinations
The Group accounts for business combinations using the 
acquisition method when control is transferred to the Group. 
The consideration transferred in the acquisition is measured at 
fair value. Acquisition-related costs are expensed as incurred in 
profit or loss.

(i) Acquisition achieved in stages
Where a business combination is achieved in stages, the 
Group’s previously held equity interest in the acquiree is 
remeasured to fair value at the acquisition date (i.e. the date 
when the Group attains control) and the resulting gain or loss, 
if any, is recognised in profit or loss. Amounts arising from 
interests in the acquiree prior to the acquisition date that have 
previously been recognised in other comprehensive income 
are reclassified to profit or loss where such treatment would be 
appropriate if that interest were disposed of or control of the 
acquiree obtained.

(ii) Contingent consideration
The subsequent accounting for changes in the fair value of 
contingent consideration that do not qualify as measurement 
period adjustments depends on how the contingent 
consideration is classified. Contingent consideration that is 
classified as equity is not remeasured at subsequent reporting 
dates and its subsequent settlement is accounted for within 
equity. Contingent consideration that is classified as an asset or 
liability is remeasured at subsequent reporting dates with the 
corresponding gain or loss being recognised in profit or loss.

(iii) Non-controlling interest
The Group can elect, on an acquisition by acquisition basis, to 
recognise non-controlling interests in an acquired entity either 
at fair value or at the non-controlling interest’s share of the 
acquired entity’s net identifiable assets/(liabilities).

Key estimate and judgement: Acquisition 
of businesses
Accounting for acquisition of businesses requires judgement 
and estimates in determining the fair value of acquired assets 
and liabilities. The relevant accounting standard allows the 
fair value of assets acquired to be refined in a window of a 
year after the acquisition date and judgement is required to 
ensure that the adjustments made reflect new information 
obtained about facts and circumstances that existed as of 
the acquisition date. The adjustments made to the fair value 
of assets are retrospective in nature and have an impact on 
goodwill recognised on acquisition.

Notes to the consolidated financial statements     |114

F6. Disposal of businesses

Current year divestments
Disposal of Mining businesses
Open Cut Mining East business
On 11 October 2021, Downer entered into an agreement to sell its Open Cut Mining East business to an Australian subsidiary 
of PT Bukit Makmur Mandiri Utama (BUMA), a large Mining services provider in Indonesia, for gross proceeds of $150 million. 
The sale included the transfer of assets (including fleet and inventory) and liabilities; and the novation of the existing contracts 
to BUMA. Downer received an initial deposit of $16 million at that date. On 17 December 2021, the sale of Open Cut Mining East 
was completed and Downer received the remaining purchase price. As at 30 June 2022, net proceeds (after transaction costs) 
of $131.0 million had been received with a $64.7 million pre-tax loss on disposal recognised.

Otraco business
On 26 April 2021, an agreement was reached for the sale of Mining’s tyre management business (Otraco) to Bridgestone 
Corporation (Bridgestone). Otraco was disclosed as a disposal group held for sale in the Group’s 2021 Annual Report. 
On 1 December 2021, the sale of Otraco was completed and Downer received net proceeds (after transaction costs) 
of $75.1 million and recorded a net pre-tax gain on disposal of $47.4 million.

The below table summarises the impact of divestments during the 2022 financial year:

2022
$’m

Proceeds on disposal (net of transaction costs)
Less cash disposed

Proceeds net of disposal costs(i)

Proceeds on disposal (net of transaction costs)
Cash and cash equivalents
Trade receivables and contract assets
Property, plant and equipment(ii)
Right-of-use assets(iii)
Intangible assets(iv)
Inventories
Current tax assets
Deferred tax assets
Prepayments and other assets
Assets disposed
Trade payables and contract liabilities
Lease liabilities(v)
Employee benefits provision
Other provisions
Liabilities disposed
Net assets disposed
Add non-controlling interest disposed
Less FCTR held on businesses disposed
(Loss) on disposal before tax

Mining
Divestments

Note

221.8
(15.7)

206.1

221.8
15.7
40.4
174.1
41.7
0.5
40.3
1.7
9.2
0.7
324.3
5.9
43.2
38.5
0.2
87.8
236.5
4.6
7.2
(17.3)

B3

(i)  A further $39.3 million proceeds in relation to Open Cut Mining West and Blasting businesses disposed during FY21 have been received during the year. 

Total divestment proceeds received as at 30 June 2022 amounts to $245.4 million.

(ii)  A further $9.4 million of Otraco assets classified as Assets Held for Sale at 30 June 2021 were also disposed. Refer to Note C5.
(iii)  A further $2.2 million of Otraco assets classified as Assets Held for Sale at 30 June 2021 were also disposed. Refer to Note C6.
(iv)  $0.5 million of Otraco intangible assets classified as Assets Held for Sale at 30 June 2021 were also disposed. Refer to Note C7.
(v)  A further $2.4 million of Otraco lease liabilities classified as Liabilities Held for Sale at 30 June 2021 were also disposed. Refer to Annual Report 2021.

|     Downer EDI Limited115

Disposal of Snowden
During the year, Downer disposed of its Snowden 
Consulting business.
The sale of Snowden Consulting was completed on 15 July 2020 
to Datamine for a net consideration of $7.5 million with a net 
gain on disposal of $5.6 million recognised.

Disposal of RTL JV
On 28 August 2020, Mining disposed its 44% interest in RTL 
JV to Thiess for a total gross consideration of $18.9 million, 
representing a gain on disposal of $10.7 million.

Divestment of 70% of the Laundries business
On 2 December 2020, Downer entered into an agreement to sell 
70% of its Laundries business to an Australian private equity 
firm, Adamantem Capital (Adamantem) for $139.6 million (net of 
transaction costs). The sale was completed on 31 March 2021.

Upon completion of this transaction, Downer ceased to 
consolidate the Laundries business on 31 March 2021 and 
recognised its remaining interest in the Laundries business of 
30% as an equity accounted investment. Refer to Note F1(a).

As at 30 June 2021, net proceeds of $136.2 million had been 
received with a $16.2 million pre-tax loss on disposal recognised.

Prior year divestments
Disposal of Mining businesses
Disposal of Downer Blasting Services (DBS) business
On 18 November 2020, Downer entered into an agreement to 
sell its blasting services business (Downer Blasting Services 
or DBS) to Enaex S.A. (a subsidiary of Sigdo Koppers Group 
(Chile)) for gross proceeds of $62.0 million. The transaction was 
completed on 1 March 2021 with net proceeds (after transaction 
costs) of $59.1 million and net gain on disposal of $6.5 million.

Disposal of Open Cut Mining West business
On 15 December 2020, Downer entered into an agreement to 
sell its Western Australian open cut mining business (Open 
Cut Mining West) to MACA Limited for gross proceeds of 
$175 million. The sale included the transfer of certain assets 
(including fleet and inventory) and liabilities; and the novation of 
the existing contracts to MACA. On classification as a disposal 
group held for sale, the Group recognised a $20.2 million 
impairment to adjust the carrying value of the assets to its 
expected recoverable value. Refer to Note B3.

On 1 February 2021, the sale of Open Cut Mining West was 
completed. Downer received an initial payment of $109.0 
million, with an additional $66.0 million to be received in 12 
equal monthly instalments of $5.5 million commencing in 
February 2021. As at 30 June 2021, net proceeds of $133.5 
million had been received with a $14.4 million pre-tax loss on 
disposal recognised.

Disposal of Underground
On 4 March 2021, Downer completed the transition of 
underground mining services at OZ Minerals’ Carrapateena 
mine to Byrnecut Australia. The transition included the 
transfer of equipment from Downer to Byrnecut for $56 
million (representing book value). Net proceeds received 
(after transaction costs with the unwinding of working capital) 
amounted to $59.6 million with a net pre-tax loss on disposal of 
$4.8 million recognised.

Notes to the consolidated financial statements     |116

F6. Disposal of businesses – continued 

Prior year divestments – continued
The below table summarises the impact of divestments during the 2021 financial year:

2021
$’m

Note

Laundries

Mining 
Divestments

Proceeds on disposal (net of transaction costs)
Less cash disposed
Proceeds net of disposal costs
Deferred consideration
Additional associate interest acquired
Total proceeds on disposal
Cash and cash equivalents
Trade receivables and contract assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Other assets
Inventories
Lease receivables
Deferred tax assets
Assets disposed
Trade payables and contract liabilities
Lease liabilities
Employee benefits provision
Other provisions
Deferred tax liabilities
Liabilities disposed
Net assets disposed
FCTR held on businesses disposed
(Loss) on disposal before tax

139.6 
(3.4)
136.2 
– 
33.4 
169.6 
3.4 
30.7 
180.1 
26.1 
23.6 
1.4 
3.7 
– 
19.7 
288.7 
11.3 
59.7 
13.9 
– 
14.6 
99.5 
189.2 
– 
(16.2)

260.6 
(0.9)
259.7 
39.2 
– 
298.9 
0.9 
37.6 
160.7 
29.1 
– 
0.5 
74.4 
60.6 
5.1 
368.9 
16.1 
29.5 
16.4 
0.8 
0.7 
63.5 
305.4 
1.5 
(7.1)

F1

C5
C6
C7

B3

Total

400.2
(4.3)
395.9
39.2
33.4
468.5
4.3
68.3
340.8
55.2
23.6
1.9
78.1
60.6
24.8
657.6
27.4
89.2
30.3
0.8
15.3
163.0
494.6
1.5
(23.3)

|     Downer EDI Limited117

G

Other

This section provides details on other required disclosures relating to the Group to comply with the accounting standards and 
other pronouncements including the Group’s capital and financial risk management disclosure. 

This disclosure provides information around the Group’s risk management policies and how Downer uses derivatives to hedge 
the underlying exposure to changes in interest rates and to foreign exchange rate fluctuations.

G1.   New accounting standards
G2.   Capital and financial risk management
G3.   Other financial assets and liabilities

G1. New accounting standards

(a) New and amended accounting standards adopted 
by the Group
During the year, the Group has applied a number of new 
and revised accounting standards issued by the Australian 
Accounting Standards Board (AASB) that are mandatorily 
effective for an accounting period that begins on or after 
1 July 2021, as follows:
 §  AASB 2020-8 Amendments to Australian Accounting 

Standards – Interest Rate Benchmark Reform – Phase 2.

 § AASB 2021-3 Amendments to Australian Accounting 

Standards – Covid-19 Related Rent Concessions Beyond 
30 June 2021.

 § IFRIC agenda decisions on Costs Necessary to Sell 

Inventories.

None of the above new and amended accounting standards 
have had a significant impact on the Group's consolidated 
financial statements.

(b) New accounting standards and interpretations 
not yet adopted
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.

 § AASB 2020-1 and 2020-6 Classification of Liabilities as 

Current or Non-current.

 § AASB 2020-3 Amendments to Australian Accounting 
Standards – Annual Improvements 2018-2020 and 
Other Amendments.

 § AASB 2021-2 Amendments to Australian Accounting 

Standards – Disclosure of Accounting Policies and Definition 
of Accounting Estimates.

 § AASB 2021-5 Amendments to Australian Accounting 

Standards – Deferred Tax related to Assets and Liabilities 
arising from a Single Transaction.

 § AASB 17 Insurance Contracts
 § AASB 2014-10 Amendments to Australian Accounting 
Standards – Sale or Contribution of Assets between an 
Investor and its Associate or Joint Venture.

Management continues to assess the impact of AASB 17 
Insurance Contracts on the Group, and has not yet quantified 
the effect of the new standard. These new or amended 
standards’ impacts are not expected to have a significant 
impact on the Group’s consolidated financial statements 
when they are adopted.

Notes to the consolidated financial statements     |118

G2. Capital and financial risk management

(a) Capital risk management
The capital structure of the Group consists of debt and equity. 
The Group may vary its capital structure by adjusting the 
amount of dividends, returning capital to shareholders, issuing 
new shares or increasing or reducing debt.

The Group’s objectives when managing capital are to 
safeguard its ability to operate as a going concern so that it 
can meet all its financial obligations when they fall due, provide 
adequate returns to shareholders, maintain an appropriate 
capital structure to optimise its cost of capital and maintain 
an investment grade credit rating to ensure ongoing access 
to funding.

A buy-back of Downer’s shares was announced to the 
market on 27 April 2021 and the buy-back commenced on 
8 June 2021. As of 30 June 2022, a total of 28,365,995 shares 
were purchased for total consideration of $167.4 million, 
funded by the Group’s cash reserves.

(b) Financial risk management objectives
The Group’s Treasury function manages the funding, liquidity 
and financial risks of the Group. These risks include foreign 
exchange, interest rate, commodity and financial counterparty 
credit risk.

The Group enters into a variety of derivative financial 
instruments to manage its exposures including:
(i)  Forward foreign exchange contracts to hedge the exchange 
rate risk arising from cross-border trade flows, foreign 
income and debt service obligations

(ii)  Cross-currency interest rate swaps to manage the interest 
rate and currency risk associated with foreign currency 
denominated borrowings

(iii)  Interest rate swaps to manage interest rate risk
(iv)  Commodity forward contracts to manage commodity price 

movements in contracts.

The Group does not enter into or trade derivative financial 
instruments for speculative purposes.

Financial assets and liabilities are offset and the net amount 
reported in the Consolidated Statement of Financial Position, 
when there is a legally enforceable right to offset the recognised 
amounts and there is an intention to settle on a net basis or 
realise the asset and settle the liability simultaneously. No 
material amounts with a right to offset were identified in the 
Consolidated Statement of Financial Position.

(c) Foreign currency risk management
The Group undertakes certain transactions denominated in 
foreign currencies. As a result, exposures to exchange rate 
fluctuations arise. Exchange rate exposures are managed within 
approved policy parameters, utilising forward foreign exchange 
contracts and cross-currency swaps.

The carrying amounts of the Group’s unhedged foreign 
currency denominated financial assets and financial liabilities 
at the reporting date are as follows:

Financial
assets(i)

Financial
liabilities(i)

2022 
$’m 

1.3 
0.6 

2021 
$’m 

2.3 
– 

2022 
$’m 

– 
2.3 

2021 
$’m 

– 
– 

US Dollar (USD)
Euro (EUR)

(i)   The above table shows foreign currency financial assets and liabilities in 

Australian dollar equivalent.

Foreign currency forward contracts
The following table summarises, by currency pairs, the Australian dollar value (unless otherwise stated) of forward exchange 
contracts outstanding as at the reporting date:

Outstanding contracts

Buy USD/Sell AUD
Less than 3 months
3 to 6 months

Later than 6 months

Sell USD/Buy AUD
Less than 3 months
3 to 6 months

Later than 6 months

Weighted average 
exchange rate

2022 

2021  

0.7217 
0.7305 
0.7387 

0.7728 
0.7729 
0.7593 

0.7194 
0.7431 
0.7225 

0.7755 
0.7625 
0.7777 

Foreign currency

Contract value

Fair value

2022 
FC'm 

2021 
FC'm 

2022 
$'m 

2021 
$'m 

2022 
$'m 

2021 
$'m 

7.2 
9.6 
7.5 
24.3 

3.5 
12.4 
8.8 
24.7 

5.1 
12.1 
2.8 
20.0 

5.8 
6.9 
29.9 
42.6 

10.0 
13.1 
10.1 
33.2 

4.9 
16.7 
12.2 
33.8 

6.7 
15.7 
3.7 
26.1 

7.4 
9.1 
38.5 
55.0 

0.5 
0.8 
0.7 
2.0 

(0.2)
(1.2)
(0.5)
(1.9)

0.2 
0.4 
–
0.6 

(0.2)
(0.1)
(1.3)
(1.6)

|     Downer EDI Limited 
119

Outstanding contracts

Buy EUR/Sell AUD
Less than 3 months
3 to 6 months

Later than 6 months

Buy JPY/Sell AUD
Less than 3 months
3 to 6 months

Later than 6 months

Sell JPY/Buy AUD
Less than 3 months
3 to 6 months

Later than 6 months

Buy NZD/Sell AUD
Less than 3 months

Sell NZD/Buy AUD
Less than 3 months

Buy GBP/Sell AUD
Less than 3 months
Later than 6 months

Total

Weighted average 
exchange rate

2022  

2021 

0.6530 
0.6304 
0.6260 

0.6356 
0.6127 
0.6208 

86.14 
89.82 
82.77 

78.50 
77.44 
84.02 

87.97 
– 
80.02 

78.27 
83.01 
83.79 

Foreign currency

Contract value

Fair value

2022
FC’m 

2021
FC’m 

2022
$’m 

2021
$’m 

2022
$’m 

2021
$’m 

3.8 
1.0 
0.8 
5.6 

584.6 
75.6 
342.4 
1,002.6 

515.9 
– 
51.3 
567.2 

4.1 
1.6 
2.1 
7.8 

138.5 
80.5 
463.0 
682.0 

116.7 
12.8 
301.2 
430.7 

5.9 
1.6 
1.2 
8.7 

6.8 
0.8 
4.1 
11.7 

5.9 
– 
0.6 
6.5 

6.4 
2.7 
3.4 
12.5 

1.8 
1.0 
5.5 
8.3 

1.5 
0.2 
3.6 
5.3 

(0.2)
(0.1)
– 
(0.3)

(0.6)
– 
(0.4)
(1.0)

0.4 
– 
0.1 
0.5 

– 
(0.1)
– 
(0.1)

(0.1)
(0.1)
0.1 
(0.1)

0.1 
– 
– 
0.1 

1.0992 

1.0767 

45.0 

190.0 

40.9 

176.5 

(0.3)

0.4 

– 

1.0746 

– 

10.0 

– 

0.5669 
0.5291 

0.5625 
0.5653 

0.4 
0.7 
1.1 

1.9 
1.5 
3.4 

0.6 
1.3 
1.9 

9.3 

3.4 
2.7 
6.1 

– 

– 

– 
(0.1)
(0.1)

(1.1)

0.1 
0.1 
0.2 

(0.5)

Cross-currency interest rate swaps
Under cross-currency interest rate swaps, the Group is committed to exchange certain foreign currency loan principal and interest 
amounts at agreed future dates at fixed foreign exchange and interest rates. Such contracts enable the Group to eliminate the risk 
of adverse movements in foreign exchange and interest rates related to foreign currency denominated borrowings.

The following table details the Australian dollar equivalent of cross-currency interest rate swaps outstanding as at the reporting date:

Weighted average 
AUD equivalent 
interest rate 
(including 
credit margin)

2022  
%

2021  
%

Weighted average 
exchange rate

2022

2021

Contract value

Fair value

2022
$’m 

2021
$’m 

2022
$’m 

2021
$’m 

5.9 

5.9 

0.7739 

0.7739

129.2 

129.2 

14.7 

(2.1)

5.2 

5.2 

83.12 

83.12 

120.3 

120.3 

(7.8)

(20.7)

Outstanding contracts

Buy USD/Sell AUD
1 to 5 years

Buy JPY/Sell AUD
5 years or more

The above cross-currency interest rate swaps are designated as effective cash flow hedges.

Notes to the consolidated financial statements     | 
 
120

G2. Capital and financial risk management – continued 

(c) Foreign currency risk management – continued 
Foreign currency sensitivity analysis
The Group is mainly exposed to the movement in United States dollar (USD) and New Zealand dollar (NZD) arising from 
cross-border trade and intercompany flows.

The following table details the Group’s sensitivity to movements in the Australian dollar against relevant foreign currencies. 
The percentages disclosed below represent the Group’s assessment of the possible changes in spot foreign exchange rates 
(i.e. forward exchange points and discount factors have been kept constant). The sensitivity analysis includes only outstanding 
foreign currency denominated monetary items and adjusts their translation at the period end for a given percentage change in 
foreign exchange rates.

A positive number indicates a before-tax increase in profit and equity and a negative number indicates a before-tax decrease 
in profit and equity.

USD impact
- 15% rate change
+ 15% rate change

NZD impact
- 15% rate change
+ 15% rate change

Profit/(loss)(i)

Equity(ii)

2022
$’m 

0.2 
(0.1)

– 
– 

2021
$’m 

0.4 
(0.3)

– 
– 

2022
$’m 

(0.2)
0.2 

7.2 
(5.3)

2021
$’m 

(4.7)
3.5 

19.7 
(14.6)

(i)  This is mainly as a result of the changes in the value of unhedged foreign currency denominated financial asset and liabilities.
(ii)  This is as a result of the changes in the value of forward foreign exchange contracts designated as cash flow hedges.

(d) Interest rate risk management
The Group is exposed to interest rate risk as entities borrow funds at floating interest rates. Management of this risk is governed 
by a Board approved Treasury Policy and is managed by maintaining an appropriate mix between fixed and floating rate borrowings 
and hedging is undertaken through cross-currency interest rate swaps and interest rate swap contracts and the issue of long-term 
fixed rate debt securities.

The Group’s exposure to interest rates on financial assets and financial liabilities is detailed in the table below:

Floating interest rates – cash flow exposure
Bank loans
Cash and cash equivalents
Total cash flow exposure 

Fixed interest rates – fair value exposure
Bank loans(i)
USD private placement notes(i)
AUD private placement notes
Medium term notes(i)
Total fair value exposure 

Weighted average AUD 
equivalent interest rate 
(including credit margin)

Liability/(asset)

2022
% 

2021
% 

2022
$’m 

2021
$’m 

1.8 
0.3 

2.0 
5.9 
5.8 
3.6 

1.2 
0.3 

3.0 
5.9 
5.8 
3.9 

7.0 
(738.5)
(731.5)

568.0 
130.5 
30.0 
622.9 
1,351.4 

45.0 
(811.4)
(766.4)

407.7 
135.2 
30.0 
901.8 
1,474.7 

(i)   The marked to market values of the interest rate and cross-currency swaps have been included in the debt amounts.

|     Downer EDI Limited121

All interest rates in the above table reflect rates in the currency of the relevant loan other than USD private placement notes 
and JPY medium term notes, where the AUD rates under the relevant cross-currency swaps are used.
The table above relates to amounts that are drawn. The Group has a number of undrawn facilities, which if utilised would be 
on a floating rate basis.

The Group uses cross-currency interest rate swaps and interest rate swap contracts to manage interest rate exposures. Under 
these contracts, the Group commits to exchange the difference between fixed and floating rate interest amounts calculated on 
notional principal amounts. The fair values of interest rate swaps are based on market values of equivalent instruments at the 
reporting date.

The following table details the interest rate swap contracts and related notional principal amounts as at the reporting date:

Weighted average 
interest rate

Notional principal 
amount

Fair value

2022
% 

2021
% 

2022
$’m 

2021
$’m 

2022
$’m 

2021
$’m 

0.7 
3.3 

1.2 
1.3 

575.0 
225.0 
800.0 

270.0 
135.0 
405.0 

5.4 
1.5 
6.9 

(1.0)
(1.7)
(2.7)

a counterparty’s contractual payment obligations. Refer to 
Note C2 for details on credit risk arising from trade receivables 
and contract assets.

Financial counterparty credit limits and the related credit 
acceptability of financial counterparties are set by a Board 
approved Treasury Policy that is subject to annual review to 
ensure it remains relevant to the external environment and 
reflects the Group’s risk appetite at all times. The Treasury 
Policy sets clear parameters for determining acceptable 
financial counterparties and limits the exposure the Group 
may have at any one time to any financial counterparties to 
mitigate financial loss due to a default by a counterparty. 
No material exposure is considered to exist by virtue of the 
non-performance of any financial counterparty.

Credit risk on derivative financial instruments and cash 
balances held with financial counterparties is managed by 
Group Treasury with transactions only made with approved 
counterparties that have a minimum investment grade rating 
from Standard & Poor’s of A- (or equivalent from Moody’s or 
Fitch rating agencies). In limited circumstances, surplus cash 
may be held in foreign jurisdictions with financial counterparties 
that do not meet the minimum rating threshold where there is 
no other alternative.

The carrying amount of financial assets recorded in the financial 
statements, net of any allowances for losses, represents the 
Group’s maximum exposure to credit risk.

Outstanding floating to  
fixed swap contracts

AUD interest rate swaps
Less than 1 year
1 to 2 years

Interest rate sensitivity analysis
The sensitivity analysis has been determined based on the 
exposure to interest rates at the reporting date and assuming 
that the rate change occurs at the beginning of the financial 
year and is then held constant throughout the reporting period.

Sensitivities have been based on a movement in interest rates 
of 100 basis points across the yield curve of the relevant 
currencies. The selected basis point increase or decrease 
represents the Group’s assessment of the possible change 
in interest rates on variable rate instruments, cross-currency 
interest rate swaps and interest rate swaps. An increase in 
interest rates of 100 basis points on the unhedged position 
(mostly cash and cash equivalents) will generate a profit of 
$7.3 million (2021: $7.7 million profit) to the profit or loss; a similar 
decrease in interest rates will generate a loss of $7.3 million 
(2021: $7.7 million loss) to the profit or loss.

For hedged positions designated as cash flow hedges, 
an increase and decrease in interest rates of 100 basis 
points will generate an increase and decrease in equity 
of $5.8 million (2021: $2.0 million) and $5.6 million 
(2021: $3.5 million) respectively.

(e) Credit risk management
Credit risk refers to the risk that a financial counterparty will 
default on its contractual obligations in respect of a financial 
instrument, resulting in a potential loss to the Group.

Trade receivables and contract assets arise from a large 
number of customers, spread across diverse industries and 
geographical areas. A credit risk assessment is performed at 
the onset of material contracts to assess the financial condition 
of the counterparty and reviewed annually to take account 
of any changes in the risk profile of the counterparty. Where 
possible, a bank guarantee or performance bond, or parent 
guarantee from a creditworthy counterparty, is sought to secure 

Notes to the consolidated financial statements     |122

G2. Capital and financial risk management – continued 

(f) Liquidity risk management
Liquidity risk is the risk that the Group is unable to meet its financial obligations as and when they fall due. The Group’s liquidity risk 
is managed under a Board approved Treasury Policy that sets clear parameters governing the Group’s continued access to liquidity.
The Group manages liquidity risk by ensuring a minimum level of liquidity is available to meet the Group’s financial obligations in 
the form of available liquid cash balances and access to committed undrawn debt facilities and other forms of capital, monitoring 
forecast and actual cash flows and matching the maturity profile of financial assets and liabilities.
The Group seeks to mitigate its exposure to liquidity risk by ensuring that debt facilities are provided by strong investment 
grade rated financial counterparties and by the early refinancing of debt facilities to ensure continued access to capital over 
the medium term.
As at 30 June 2022, the Group has no debt facilities maturing within the 12 months to 30 June 2023. The maturity profile and 
quantum of the Group’s debt facilities will continue to be monitored and refinanced in advance subject to credit market conditions 
and the support of its financial counterparties. Included in Note E2 is a summary of committed undrawn bank loan facilities.

Liquidity risk tables
The following tables detail the contractual maturity of the Group’s financial liabilities. The tables are based on the undiscounted 
cash flows of financial liabilities and include both interest and principal cash flows.

2022
$'m

Less than
1 year

Bank loans(i)
USD notes
AUD notes
Medium term notes
Total borrowings including interest
Cross-currency interest rate swaps
Interest rate swaps
Foreign currency forward contracts
Total derivative instruments(ii)
Trade payables
Lease liabilities
Total financial liabilities

2021
$'m

Bank loans(i)
USD notes
AUD notes
Medium term notes
Total borrowings including interest
Cross-currency interest rate swaps
Interest rate swaps
Foreign currency forward contracts
Total derivative instruments(ii)
Trade payables
Lease liabilities
Total financial liabilities

1.5 
6.6 
1.7 
19.7 
29.5 
6.0 
(5.4)
1.8 
2.4 
785.0 
148.2 
965.1

Less than
1 year

51.8 
6.1 
1.7 
281.1 
340.7 
6.5 
3.1 
0.7 
10.3 
670.5 
182.2 
1,203.7

1 to 2
years

100.0 
6.6 
1.7 
19.7 
128.0 
6.0 
(1.5)
0.1 
4.6 
– 
111.8 
244.4

1 to 2
years

100.0 
6.1 
1.7 
19.8 
127.6 
6.4 
0.3 
0.1 
6.8 
– 
138.6 
273.0

2 to 3
years

182.0 
6.6 
1.7 
19.7 
210.0 
6.1 
(0.4)
(0.1)
5.6 
– 
80.4 
296.0

2 to 3
years

– 
6.1 
1.7 
19.8 
27.6 
6.4 
– 
– 
6.4 
– 
107.8 
141.8

3 to 4
years

– 
148.5 
30.9 
519.7 
699.1 
(10.5)
– 
– 
(10.5)
– 
64.1 
752.7

3 to 4
years

– 
6.1 
1.7 
19.8 
27.6 
6.5 
– 
– 
6.5 
– 
80.3 
114.4

4 to 5
years

More than
5 years

– 
– 
– 
1.2 
1.2 
5.1 
– 
– 
5.1 
– 
48.9 
55.2

300.0 
– 
– 
113.5 
413.5 
44.2 
– 
– 
44.2 
– 
169.5 
627.2

4 to 5
years

More than
5 years

– 
136.1 
30.9 
519.8 
686.8 
1.8 
– 
– 
1.8 
– 
55.5 
744.1

300.0 
– 
– 
129.7 
429.7 
34.3 
– 
– 
34.3 
– 
214.0 
678.0

(i)   $582 million (2021: $450 million) of the bank loan liabilities relate to loan principal obligations with the balance relating to interest obligations for the current quarterly or 

monthly drawn profile. Interest obligations beyond the respective loan rollover dates are set by reference to the quarterly or monthly floating interest rate at the time of the 
respective  loan rollover. As these rates have not yet been quantified, the interest obligations for these liabilities beyond the current rollover period have not been disclosed.
Includes assets and liabilities.

(ii) 

|     Downer EDI Limited123

Recognition and measurement
Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are 
subsequently re-measured to their fair value at each reporting date. Any gains or losses arising from changes in fair value of 
derivatives, except those that qualify as effective hedges, are immediately recognised in profit or loss.

Hedge accounting
AASB 9 aligns the accounting for hedging instruments 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 includes requirements on rebalancing hedge relationships and prohibiting 
voluntary discontinuation of hedge accounting.

Fair value hedges
Fair value hedges are used to hedge the exposure to changes in the fair value of a recognised asset, liability or firm commitment. 
For fair value hedges, changes in the fair value of the derivative, together with any changes in the fair value of the hedged asset or 
liability that is attributable to the hedged risk, are immediately recorded in profit or loss. Hedge accounting is discontinued when 
the hedge instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge accounting.

Cash flow hedges
Cash flow hedges are used to hedge risks associated with contracted and highly probable forecast transactions. For cash flow 
hedges, the effective portion of changes in the fair value of the derivative is deferred in equity and the gain or loss relating to the 
ineffective portion is recognised immediately in profit or loss.

Amounts deferred in equity are transferred to profit or loss in the same period the hedged item is recognised in profit or loss. When 
the forecast transaction that is hedged results in the recognition of a non-financial asset or liability, the gains and losses previously 
deferred in equity are transferred to form part of the initial measurement of the cost of the non-financial asset or liability.

If the forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised 
immediately in profit or loss. If the hedge instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge 
accounting, any gain or loss deferred in equity remains in equity until the forecast transaction occurs.

G3. Other financial assets and liabilities

2022
$’m

At amortised cost:

Other financial assets
Advances to/from joint ventures and associates
Deferred consideration

At fair value:
Level 2
Foreign currency forward contracts – Cash flow hedge
Cross-currency and interest rate swaps – Cash flow hedge
Downer Contingent Share Options (DCSO) financial instrument

Level 3
Unquoted equity investments – Fair value through OCI

Total

Financial assets

Financial liabilities

Current  Non-current 

Current  Non-current 

15.7 
0.3 
4.5 
20.5 

2.2 
5.5 
– 
7.7 

– 
– 
28.2 

5.6
– 
– 
5.6

0.4 
17.0 
– 
17.4 

9.7
9.7 
32.7 

– 
3.6 
0.2 
3.8 

3.6 
5.3 
13.7 
22.6 

– 
– 
26.4 

– 
– 
1.3 
1.3 

0.3 
3.4 
– 
3.7 

– 
– 
5.0 

Notes to the consolidated financial statements     |124

G3. Other financial assets and liabilities – continued 

2021
$'m

At amortised cost:

Other financial assets
Advances to/from joint ventures and associates
Deferred consideration

At fair value:
Level 2
Foreign currency forward contracts – Cash flow hedge
Commodity forward contract – Cash flow hedge
Cross-currency and interest rate swaps – Cash flow hedge
Downer Contingent Share Options (DCSO) financial instrument

Level 3
Unquoted equity investments – Fair value through OCI

Total

Financial assets

Financial liabilities

Current  Non-current 

Current  Non-current 

18.8 
3.2 
39.2 
61.2 

1.5 
– 
– 
– 
1.5 

– 
– 
62.7 

5.7 
– 
– 
5.7 

0.1 
– 
– 
– 
0.1 

2.0 
2.0 
7.8 

– 
3.6 
0.1 
3.7 

2.0 
2.4 
7.6 
33.3 
45.3 

– 
– 
49.0 

– 
– 
0.2 
0.2 

0.2 
– 
17.9 
– 
18.1 

– 
– 
18.3 

Reconciliation of Level 3 fair value measurements of financial assets
The fair value of Level 3 investments has increased by $7.7 million from prior year (2021: no change) due to the $7.5 million 
investment in Evolution Rail (HCMT project) and $0.2 million revaluation of an investment.

Recognition and measurement
Fair value measurement
When a derivative is designated as the cash flow hedging instrument, the effective portion of changes in the fair value of the 
derivative is recognised in Other comprehensive income and accumulated in the hedging reserve. Any ineffective portion of 
changes in the fair value of the derivative is recognised immediately in profit or loss.

Valuation of financial instruments
For financial instruments measured and carried at fair value, the Group uses the following to categorise the methods used:

 § Level 1: fair value is calculated using quoted prices in active markets for identical assets or liabilities
 § Level 2: fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the asset 

or liability, either directly (as prices) or indirectly (derived from prices)

 § Level 3: fair value is estimated using inputs for the asset or liability that are not based on observable market data.

During the year there were no transfers between Level 1, Level 2 and Level 3 fair value hierarchies.

The following table shows the valuation technique used in measuring Level 2 and 3 fair values, as well as significant unobservable 
inputs used:

Type

Valuation technique

Significant unobservable input

Cross-currency and 
interest rate swaps
Foreign currency 
forward contracts
Unquoted equity 
investments

Calculated using the present value of the estimated 
future cash flows based on observable yield curves.
Calculated using forward exchange rates prevailing 
at the balance sheet date.
Calculated based on the Group’s interest in the net 
assets of the unquoted entities.

Not applicable.

Not applicable.

Assumptions are made with regard to future expected 
revenues and discount rates. Changing the inputs 
to the valuations to reasonably possible alternative 
assumptions would not significantly change the 
amounts recognised in profit or loss, total assets or 
total liabilities, or total equity.

|     Downer EDI Limited125

Directors’ Declaration
for the year ended 30 June 2022

In the opinion of the Directors of Downer EDI Limited:

(a)  The financial statements and notes set out on pages 61 to 124 are in accordance with the Australian Corporations Act 2001 

(Cth), including:

(i)   Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting 

requirements; and

(ii)  The financial statements and notes thereto give a true and fair view of the financial position and performance of the 

Company and the consolidated entity;

(b)  There are reasonable grounds to believe that Downer EDI Limited will be able to pay its debts as and when they become due 

and payable;

(c)  The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 (Cth); and

(d)  The attached financial statements are in compliance with International Financial Reporting Standards, as noted in Note A to the 

financial statements.

Signed in accordance with a resolution of the Directors made pursuant to Section 295(5) of the Corporations Act 2001 (Cth).

On behalf of the Directors

M P Chellew
Chairman
Sydney, 17 August 2022

Directors’ Declaration     |126

Sustainability Performance Summary 2022

Downer’s Sustainability Approach
At Downer, sustainability means sustainable and profitable 
growth, providing value to our customers, delivering our 
services in a safe and environmentally responsible manner, 
helping our people to be better and advancing the communities 
in which we operate. Downer recognises that sustainability is 
vital for securing long-term environmental, economic and social 
viability and understands its role in contributing to a sustainable 
future for communities to prosper.

Downer’s sustainability strategy is integrated into its 
business strategy which is shaped by its four Pillars: Safety; 
Delivery; Relationships; and Thought Leadership. Downer’s 
commitment to sustainability is outlined on the Downer 
website and within the Sustainability Report located 
at www.downergroup.com/2022sustainabilityreport.

Downer leverages its understanding of Environment, Social 
and Governance mega-trends and key material sustainability 
issues to drive innovation and identify new sources of growth 
and revenue for the business. Downer operates in sectors that 
are closely connected to the investment that is being driven 
by population growth and urbanisation. These sectors include 
roads, rail, light rail, other public transport, power, gas, water, 
telecommunications, health, education, defence and other 
government sectors.

These sectors are served by Downer’s Urban Services 
businesses – Transport, Utilities, and Facilities. These 
businesses have demonstrated strength and resilience, hold 
market-leading positions and attractive medium-term and 
long-term growth opportunities. They have a high proportion 
of government and government-related contracts and a capital 
light, services-based business model, with a lower risk profile 
and are generating more predictable revenues and cash flows.

Downer’s Urban Services strategy delivers many environmental 
and social benefits including a move to lower capital intensive 
and lower carbon activities which supports Downer’s 
decarbonisation pathway. Downer completed the sale of 
its Open Cut Mining East business in December 2021. This 
completed the divestment of Downer’s former Mining Service 
Business Unit.

Downer is proud of the role we play in creating more sustainable 
cities and improving the quality of life in Australia and New 
Zealand. Our customers trust us to deliver these services, which 
will have a direct impact on their customers every day.

With our services impacting millions of lives every day, the 
sustainability of our operations is paramount – for our people, 
our partners, our shareholders, our customers and their 
customers. We deliver these services while managing the 
impacts of our activities on the environment and communities 
in which we operate, and working collaboratively with our supply 
chain. We understand that our ability to do this is fundamental 
to Downer’s long-term success.

Downer’s ESG Reporting Approach
Downer prepares its Sustainability Report with reference to the 
Global Reporting Initiative’s (GRI) Standards to provide investors 
with comparable information relating to environmental, social 
and governance (ESG) performance. Specifically, Downer’s 
approach takes into consideration the GRI’s principles for 
informing report content: materiality, completeness, and 
sustainability context and stakeholder inclusiveness. A key 
focus is to demonstrate how Downer delivers sustainable 
returns while managing risk and being responsible in how 
it operates.

Downer seeks to identify the issues that have the greatest 
potential to impact its future success and returns to 
shareholders. In FY21, Downer revisited its materiality 
assessment in line with the GRI Standards via a rigorous 
independently-led process to formally engage internal and 
external stakeholders to understand what they believe are 
the material sustainability issues for Downer and inform 
the identification of its material issues by economic, social, 
environmental and governance.

The materiality assessment provided key sustainability insights 
for Downer’s strategy and frames the content for this year’s 
Sustainability Report. The results were positive with strong 
alignment between internal and external stakeholder views.

Downer continues to refine its material issues list as a result 
of changes in the organisation, and the market in which it 
operates. Downer typically undertakes a comprehensive 
materiality assessment every two to three years or when there 
have been significant or material changes within the business.
For example, Downer’s last materiality assessment in 2021 took 
into consideration the divestment of the Laundries and Mining 
Services businesses. A desktop review of the results from our 
2021 assessment was undertaken this year, with no significant 
changes to the business.

|     Downer EDI Limited127

The material issues ranked in order of importance 
for Downer and its stakeholders are:
1.  Health, safety and wellbeing
2.  Governance and ethical conduct
3.  Economic performance
4.  Customer relationships
5.  Contractor management
6.  Climate change
7.  Cybersecurity
8.  Business resilience
9.  Employee development and engagement
10.  Diversity and inclusion
11.  Community engagement, impact and development
12.  Human rights (including modern slavery)
13.  Supply chain management

Further information including the Materiality process 
undertaken is available on Downer’s website and 
within the 2022 Sustainability Report located 
at www.downergroup.com/2022sustainabilityreport.

Governance and Risk Management
The Downer Board, through its oversight functions, has verified 
that Downer appropriately considers Environmental, Social 
and Governance (ESG) risks including those related to climate 
change. In fulfilling this function, the Downer Board also receives 
oversight from Downer’s Zero Harm Board Committee, Audit 
and Risk Committee, Tender Risk Evaluation Committee and 
Disclosure Committee. ESG related risks and opportunities are 
incorporated into Downer’s broader corporate strategy, planning 
and risk management processes.

The Downer Board recognises that an integrated approach 
to managing ESG risks and opportunities is essential. This has 
been reflected in the strengthening of Downer’s governance 
and increased focus in both Board and Executive forums 
throughout the 2022 financial year. Managing our business to 
be sustainable over the long term has always been front of mind 
for Downer’s Board.

ESG risks and opportunities are governed as part of Downer’s 
Group Risk and Opportunity Management Framework and 
Project Risk Management Framework. Downer identifies, 
manages and discloses material climate-related risks as part 
of Downer’s standard business practices, and, in accordance 
with the Group and Business Unit strategies, which apply to 
everyone at Downer.

Downer’s Zero Harm Management System Framework sets 
the Company’s Zero Harm and sustainability governance 
requirements. Downer maintained its centralised third-party 
accreditation to the International Standards ISO 45001 
(Safety), ISO 9001 (Quality) and ISO 14001 (Environment). 
This gives Downer a single system of work for safety, quality 
and environment, and a framework to develop, implement and 
monitor The Downer Standard.

The Board’s Zero Harm Committee oversees the strategy and 
monitors the development and implementation of Downer’s Zero 
Harm management systems, improvement and performance 
reporting systems, and monitors Downer’s Zero Harm 
performance. Effective monitoring occurs through extensive 
internal and third-party audit programs, with oversight by both 
the Board Zero Harm and Board Audit and Risk Committees. 
Other aspects of Downer’s approach to sustainability are 
overseen by other relevant corporate governance forums, 
for example the Group Diversity Committee.

The method for measuring the Company’s performance 
is clearly set out in its governance framework. Short-term 
remuneration incentives are offered to senior managers in 
relation to the Company’s performance against Zero Harm and 
Sustainability targets. These targets include the management 
of Downer’s Safety performance (LTIFR and TRIFR), Zero Harm 
critical risks, developing improvement plans aligned to the 
United Nations Sustainable Development Goals and focusing on 
decarbonisation (GHG emissions reductions) in order to achieve 
Downer’s science-based target to be net zero by 2050.

Downer’s Zero Harm performance during 2022 is summarised 
below. More comprehensive information is provided in Downer’s 
2022 Sustainability Report which will be available on the Downer 
website www.downergroup.com/2022sustainabilityreport.

Health, Safety and Wellbeing
Downer’s business is founded on a deeply held value of Zero 
Harm. Health and safety is Downer’s highest priority, its top 
material issue and the first of its strategic pillars. Zero Harm 
is embedded in Downer’s culture and is fundamental to future 
success. Downer’s managers, supervisors and employees 
bring this core principle to fruition and actively live it every day, 
vigilantly protecting the health and safety of themselves and 
others in and around its workplaces.

Downer’s approach to health and safety is built on leading, 
innovating, managing risk, rethinking processes, applying lessons 
learnt, and adopting and adapting practices that aim to achieve 
zero work-related injuries. Downer’s integrated lifecycle approach 
is a market differentiator and enables its people to work safely in 
industry sectors that may be inherently hazardous. In everything 
it does, the health and safety of its people and communities that 
it works within is always its top priority.

Sustainability Performance Summary     |128

Downer’s commitment is enhanced by strong leadership 
from senior leaders within the business, who actively engage, 
enable and empower its people to work safely, and maintain 
safe working environments for themselves and the community. 
Downer has a mature safety culture, and it is proud of its 
people’s support and commitment to its Zero Harm principles 
and practices.

Downer’s Total Recordable Injury Frequency Rate (TRIFR) for 
FY22 was below target at 2.35 which was an improvement on 
2.60 in FY21. Downer’s Lost Time Injury Frequency Rate (LTIFR) 
is below target (<0.90) at 0.82, an improvement on 0.99 in FY21. 
This is below industry benchmarks published by Safe Work 
Australia for all industries which Downer operates in, the lowest 
of which relates to Architectural, Engineering and Technical 
Services with an LTIFR benchmark of 1.

FY22 Safety Performance

LTIFR

TRIFR

s
r
u
o
h
0
0
0
0
0
0
,
1

,

r
e
p
s
e
i
r
u
n

j

i

I
e
m
T
t
s
o
L

2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0

0.78

0.57

0.67

0.99

0.82

2018

2019

2020

2021

2022

5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0

s
r
u
o
h
0
0
0
0
0
0
,
1

,

r
e
p
s
e
i
r
u
n

j

l

I
e
b
a
d
r
o
c
e
R

l

a
t
o
T

* 

Note: In 2021 onwards Downer’s Safety Performance includes Spotless and 
Hawkins. Safety data for 2018 to 2020 excludes Spotless and Hawkins.

Sadly, a long-term Downer employee in New Zealand died in 
May 2022 following a fall at work. Although the cause of death 
is not yet known, Downer has treated this as a workplace 
fatality. This incident is a reminder of the challenges of ensuring 
we remain vigilant and relentlessly manage the Critical Risks 
associated with the work we do every day.

During FY22, Downer incurred two penalty infringement notices 
relating to safety concerns totalling $13,904 (AUD).

 § A penalty infringement for $10,904 (AUD) was issued 

concerning an alleged technical breach of the Public Health 
and Wellbeing Act 2008 (Vic). Downer believed it was in 
compliance, in that the scope of work being conducted at 
that location was permitted in accordance with the list of 
exempted works, and that Downer had received authorisation. 
Downer was unsuccessful in its administrative appeal of 
the notice and opted to pay the fine rather than pursue 
further challenges.

 § Downer’s VEC Civil Engineering business was issued with 

an infringement notice for $3,000 (AUD) relating to work in 
proximity of overhead power lines.

Downer was also charged with a breach of the Heavy Vehicle 
National Law Application Act 2013 (Vic) relating to overload 
of a heavy vehicle moving stockpile, which required a short 
travel on public roads. Downer has entered into an Enforceable 
Undertaking with the National Heavy Vehicle Regulator.

Downer partnered with McConnell Dowell in a joint venture 
to deliver Stage 2 of the Christchurch Southern Motorway 
extension and upgrade (CSM2). On 30 October 2019, a 
cyclist was fatally injured in a collision with a concrete truck 
delivering concrete to the CSM2 project. As a result, Downer 
and McConnell Dowell were charged with one offence under 
sections 36(2), 48(1) and 48(2) of the Health and Safety at 
Work Act 2015 in relation to the incident. On 22 March 2022, 
Work Safe New Zealand accepted an Enforceable Undertaking 
from Downer New Zealand Limited which commits to total 
expenditure of at least $1,000,000 (NZD) to develop a training 
program, support a scoping study, develop a NZQA qualification 
and facilitate a cyclist awareness campaign, in order to improve 
safety for vulnerable road users.

Strategic initiatives as identified for FY22 have been progressed 
and have continued to strive for a more aligned and consistent 
approach across the Group. Downer’s strategic program for 
health and safety has focused on:
 § Continue the consolidation of Critical Risk bow tie analysis 

and verification through the Communities of Practice.
 § Implement the improvements and outcomes identified by 

the Communities of Practice and incorporate them into The 
Downer Standard.

 § Build on the progress made on The Downer Standard and 

extend our consistent approach into deeper layers within the 
Company, improving utilisation by the frontline.

 § Enriching the quality of our data and utilising emerging 
technologies in our strategy and planning activities.
 § Roll out Downer’s Enterprise Data Warehouse (EDW) to 
provide a foundation for advanced data analytics and 
reporting, including the introduction of data science 
techniques such as natural language processing and other 
forms of machine learning.

 § Refine our in-house training programs to reflect The Downer 
Standard, and increase the risk management competency of 
our workforce.

 § Continued delivery of our Foundations of Mental Health 

program, which gives an insight into the basic neuroscience 
behind the most common mental illnesses, and the 
accredited Mental Health First Aid (MHFA) training course 
which arms our people with the knowledge and insights 
to support themselves, their colleagues, and their family 
and friends.

 § Continue to monitor all COVID-19 risks and controls and 
support government vaccination roll-out strategies.

More comprehensive information on Downer’s approach to 
Health, Safety and Wellbeing is provided in Downer’s 2022 
Sustainability Report which will be available on the Downer 
website www.downergroup.com/2022sustainabilityreport.

|     Downer EDI Limited 
 
 
 
 
 
 
 
 
 
129

Environmental Sustainability
Downer is committed to mitigating the impact of its activities 
on the natural and built environment.

Downer’s environmental sustainability performance is 
measured against the key areas of risk management, 
minimising environmental impact, legal compliance, reducing 
its operational (Scope 1 and 2) GHG emissions and maximising 
resource efficiency opportunities in its own and its customers’ 
businesses. Downer’s key focus areas during the year were:
 § Improving Downer’s environmental, social and governance 

performance and disclosure, in turn improving ESG 
analyst rating scores and project/contract related 
sustainability ratings.

 § Take a whole-of-life approach when considering initiatives 

and specifying materials. Apply Lifecycle Assessment to our 
road pavement products.

 § Complete a comprehensive review of its critical 

environmental risks. This resulted in a standardised set of 
critical control verifications that were deployed across the 
Group. The combination of the critical risk program, system 
improvements to The Downer Standard and the continued 
roll-out of environmental awareness training to the workforce 
has resulted in improved environmental performance.

 § Prepare the business as markets transition to a low 

carbon economy.

 § Continue efforts to decarbonise Downer’s Fleet in the short 
to medium term, balancing supply issue and technology 
readiness. Continue to pilot Electric Vehicles (EVs) and 
commit to at least three pilot trials of EVs.

 § Protect high value biodiversity located on sites Downer owns, 

occupies or operates.

 § Improve environmental sustainability workforce capability.

Downer achieved its Group-wide target of zero Level 51 or 
Level 62 environmental incidents. There were no significant 
environmental incidents3 (≥ Level 4) during financial year 2022.

In FY22, unfortunately, Downer incurred two penalty 
infringement notices totalling $13,617 AUD. On 15 July 2021, 
Downer received a Penalty Infringement Notice (PIN) for 
the amount of $13,345 AUD from Moreton Bay Council. The 
PIN was issued for the contravention of a condition of the 
Environmental Authority under the Environmental Protection 
Act 1994 involving the uncontrolled release of a contaminant 
into a stormwater drain.

In December 2021, Downer received a PIN for NZ$300 
($272 AUD) from Christchurch City Council. The PIN was issued 
for an environmental breach of the Resource Management Act 
1991 involving the discharge of sediment latent water into a 
stormwater drain.

In June 2022, Utilita, a joint venture between Downer and Ventia, 
received a Compliance Notice from Brisbane City Council for 
the alleged contravention of the Natural Assets Local Law 2003. 
The Compliance Notice included an amount of $16,199.40 (AUD) 
to offset the canopy loss due to the interference of native trees 
on Council land, where a Brisbane Utilities water asset is being 
managed by Utilita. Utilita has formally requested a review of the 
decision, and at the time of publishing this report, the outcome 
was pending.

Noteworthy achievements for FY22 include:
 § Maintained its ‘AA’ MSCI rating and increased its S&P Global 

CSA score to be ranked in the 93rd percentile, up from 
82nd percentile (fifth position worldwide) in its industry 
sector in 2021. S&P Global once again listed Downer in 
its Sustainability Yearbook 2021, recognising outstanding 
performance. In addition, Downer increased its Carbon 
Disclosure Project (CDP) Climate Change score from a C to 
a B in the Industrial Support Services category and scored a 
B– in the CDP Water Security survey.

 § Completed the sale of its Open Cut Mining East business 
in December 2021 which completed the divestment of 
Downer’s former Mining Services Business Unit. This resulted 
in reduction of Downer’s operational emissions by 35% or 
206,000 tonnes of carbon dioxide equivalent.

 § Reduced Downer’s absolute Scope 1 and 2 GHG emissions by 
26% and lowered Downer’s GHG emissions intensity by 25% 
from 41.4 in FY21 to 31.1 in FY22.

 § Achieved FY22 Sustainability Linked Loan Targets for KPI 1, 

KPI 3 and KPI 4.

 § Performed a full assessment of our Scope 3 emissions 

portfolio in accordance with the Greenhouse Gas Protocol’s 
Corporate Value Chain (Scope 3) Standard.

 § Continued delivering several Infrastructure Sustainability 
rated projects including Warrnambool Line Upgrade 
(Victoria), Transport access Program Tranche 3 (New South 
Wales), Auckland City Rail Link and the South Australia Road 
Maintenance Services contract.

 § Business Units achieved the goals and deliverables set within 
their Sustainable Development Goal aligned Sustainability 
Improvement Plans.

1. 

A Level 5 environmental incident is defined as any incident that causes significant impact or serious harm on the environment, where material harm has occurred  
and if costs in aggregate exceed $50,000.

2.  A Level 6 environmental incident is defined as an incident that results in catastrophic widespread impact on the environment, resulting in irreversible damage.
3.  A significant environmental incident or significant environmental spill (≥ Level 4) is any environmental incident or spill where there is significant impact on or material 
harm to the environment; or a notifiable incident where there is a spill that results in significant impact or material harm; or there is long-term community irritation 
leading to disruptive actions and requiring continual management attention.

Sustainability Performance Summary     |130

Climate Change and TCFD Update
Decarbonisation is now recognised as humanity’s greatest 
challenge and Downer is well placed to have a significant role 
in decarbonising the economy in Australia and New Zealand.

The economics of climate change are rapidly shifting, 
presenting significant opportunities for Downer’s services. 
Downer’s Urban Services strategy delivers many environmental 
and social benefits, including a move to lower capital intensive 
and lower carbon activities, supporting Downer’s climate change 
resilience and decarbonisation pathway. Downer is committed 
to reducing its direct emissions profile and is well positioned to 
service our customers through the energy transition essential 
for the broader economy to achieve Net Zero by 2050.

Downer accepts the Intergovernmental Panel on Climate 
Change’s assessment of the science related to climate change 
and supports the Paris Agreement in transitioning to net zero 
emissions by 2050 to limit the global temperature increase to 
1.5°C by the end of this century. Downer will track its progress 
towards its emissions reduction target and review its emission 
reduction approach in line with Intergovernmental Panel on 
Climate Change (IPCC) updated scientific reports, whilst 
considering other developments in low-emissions technology, 
to ensure a practical and affordable transition towards 
this commitment.

To guide its ambition, Downer has set an absolute near-term 
target of 50% reduction of its Scope 1 and 2 GHG emissions by 
2032 and an absolute near-term target of 30% reduction of its 
Scope 3 emissions by 2032. Downer has set a long-term target 
to be net zero1 in Scope 1, 2 and 3 GHG emissions by 2050, 
subject to future available technologies. Both the near-term and 
the long-term targets have a base year of 2020.

Building on the TCFD disclosures that Downer has made 
annually since 2019 and coupled with the changes in Downer’s 
business and strategy in FY22 a detailed review of Downer’s 
most material climate-related risks and opportunities was 
completed. This work reaffirmed that climate change presents 
considerable opportunities for Downer, and that these 
opportunities increase as efforts to decarbonise accelerate. 
The insights and findings from the work undertaken will 
continue to inform Downer’s decarbonisation plans and 
growth strategies.

Downer also undertook a review of the Taskforce on Climate-
related Financial Disclosures (TCFD) annex, released in October 
2021, which updated their implementation guidance. To which, 
we have undertaken further work to assess and understand the 
decarbonisation financial implications.

In FY22, an assessment was commenced to quantify the 
estimated financial impact of different climate scenarios on 
Downer’s value chain. It also assessed the potential mitigation 
costs against the identified risks. There are three key areas 
of focus for this work: Downer’s fleet, our asphalt plants, and 
the physical climate impacts on Downer’s fixed assets and key 
operational locations.

A review was also commenced to review Downer’s current 
capital asset decision-making process. This review 
has examined opportunities to integrate more formal 
climate considerations into Downer’s capital allocation 
decision-making process.

In FY23 Downer will enhance its position as a thought leader 
in this space by developing and publishing a standalone Climate 
Change Report, which will complement this Annual Report and 
the Sustainability Report. The Climate Change Report will be 
prepared to provide shareholders and potential shareholders 
with information on Downer’s climate-related plans. This 
includes its strategies to thrive through the energy transition 
by summarising our climate-related plans, activities and 
disclosures in accordance with the TCFD.

Downer believes its own pathway to Net Zero is essential in 
adding credibility to the services we deliver to our customers 
to help them decarbonise their own operations. Downer remains 
focused on six key areas to ensure we meet our near-term and 
long-term science-based target commitments. Downer has a 
clear pathway to Net Zero by 2050, which aligns with its Urban 
Service Strategy. The six key focus areas include:
1.  Increase our focus on core urban services which has seen 

a shift from high capital, carbon intensive industries to lower 
carbon activities.

2.  Continue to focus on energy efficiency and GHG 

emission reductions.

3.  Decarbonise our fixed assets with new technology and 

fuel switching.

4.  Decarbonise Downer’s fleet through electric and alternate 

fuel vehicles.

5.  Increase uptake of renewables on- and off-grid.
6.  Reducing Scope 3 emissions i.e. low carbon materials, 

e.g. bituminous products; and working with suppliers to lower 
their emissions.

In February 2022, Downer established a Fleet Decarbonisation 
Committee, with Executive support from the CFO, Head 
of Sustainability, Head of Road Services and Head of 
Utilities. This committee demonstrates the importance of 
fleet decarbonisation to Downer and provides governance 
and oversight on Downer’s fleet decarbonisation plan and 
associated actions.

1.  Net Zero is defined as the mitigation of direct emissions to as low a level as possible and offsetting the remainder through carbon removals. Downer has utilised 

the Science Based Target Initiative’s threshold of a 90% reduction in its emissions as being ‘as low a level as possible’.

|     Downer EDI Limited131

This year, the Board considered information on Downer’s 
climate-related risks and opportunities, as identified through 
the TCFD analysis. Due to the opportunities identified, 
decarbonisation and energy transition have been highlighted 
as a key growth strategy for Downer. As an outcome Downer 
established a centralised decarbonisation fund, which makes 
funds accessible to Business Units for initiatives that result in 
structural decarbonisation. The Board has endorsed a series 
of decarbonisation initiatives in the short term which include 
PV solar, fuel switching of asphalt manufacturing process 
from diesel to natural gas and biogas, and the acceleration of 
alternate fuel vehicles such as hybrid and electric into the fleet.

In FY23 and beyond Downer will:
 § Continue to progress activities under the six decarbonisation 
strategic focus areas mentioned on page 130, with a specific 
focus on Downer’s fleet and fixed assets.

 § Actively seek to progress opportunities to assist our 
customers’ decarbonisation, in line with our Urban 
Services strategy.

 § Consider a framework to integrate climate thinking into 

Downer’s capital allocation decision-making process that 
considers the carbon implications of investment over the 
short and longer terms.

Refer to Downer’s Climate Change Report which will be located 
at www.downergroup.com/2022sustainabilityreport for 
further disclosures on Downer’s response to climate change as 
it specifically addresses the TCFD recommendations.

Sustainability Performance Summary     |132

Corporate Governance

for the year ended 30 June 2022

Overview
Downer’s corporate governance framework provides the 
platform from which:
 § The Board is accountable to shareholders for the operations, 

performance and growth of the Company

 § Downer management is accountable to the Board
 § The risks to Downer’s business are identified and managed
 § Downer effectively communicates with its shareholders and 

the investment community.

Downer continues to enhance its policies and processes 
to promote leading corporate governance practices.

The Board endorses the ASX Corporate Governance Council’s 
Corporate Governance Principles and Recommendations 
(ASX Principles).

Principle 1: Lay solid foundations 
for management and oversight
The Downer Board Charter sets out the functions and 
responsibilities of the Board and is available on the Downer 
website at www.downergroup.com.

The Board Charter states that the role of the Board is to provide 
strategic guidance and to effectively oversee management of 
the Company. Among other things, the Board is responsible for:
 § Overseeing the Company, including its control and 

accountability systems

 § Appointing and removing the Group CEO and 

senior executives

 § Monitoring performance of the Group CEO and 

senior executives

 § Reviewing, ratifying and monitoring systems of risk 
management and internal control, codes of conduct 
and legal compliance.

Before appointing a Director or senior executive, the Board 
undertakes appropriate checks.

The Board provides shareholders with all material information 
which is relevant to the decision to elect or re-elect a Director.

Directors receive formal letters of engagement setting out the 
key terms, conditions and expectations of their engagement.

The Board Charter also describes the functions delegated 
to management, led by the Group CEO.

The primary goal set for management by the Board is to focus 
on enhancing shareholder value, which includes responsibility 
for Downer’s economic, environmental and social performance.

The Group CEO is responsible for the day-to-day management 
of Downer and his authority is delegated and authorised by 
the Board.

|     Downer EDI Limited133

ASX diversity recommendations – diversity statement
This diversity statement outlines Downer’s performance 
throughout 2022 with respect to its broader diversity program, 
but with a particular focus on gender, and specifically includes:
 § Details of Downer’s key gender representation metrics
 § An overview of the gender diversity initiatives undertaken 

by Downer throughout 2022

 § An outline of Downer’s measurable gender diversity 

objectives for 2022.

Gender representation metrics
As at 30 June 2022, Downer’s female gender representation 
metrics were as follows:

Board 
Senior Executive1
Management2 
Workforce

37.5%
23%
17%
31%

Downer has written employment agreements with each of 
its senior executives and the performance of those senior 
executives is regularly reviewed against appropriate measures, 
including performance targets linked to the business plan and 
overall corporate objectives. In 2022, Downer’s senior executives 
participated in periodic performance evaluations where they 
received feedback on progress against these targets.

The Company Secretary is responsible for supporting the 
effectiveness of the Board and is directly accountable to the 
Board, through the Chairman, on all matters to do with the 
proper functioning of the Board.

Details of Downer’s Directors and the Executive 
Leadership Team are available on the Downer website 
at www.downergroup.com.

Diversity at Downer
Downer is committed to ensuring that it has a diverse and 
inclusive workforce, which fulfils the expectations of its 
employees, customers and shareholders while building a 
sustainable future for its business. This is formalised through 
the Downer Diversity and Inclusion (D&I) Policy which outlines 
the Company’s commitment to developing a diverse and 
inclusive workforce.

In May 2022, Downer progressed its Diversity Framework 
through the launch of ‘Own Different’, an enhanced Diversity 
Strategy and Action Plan focused on Inclusion and Belonging 
(I&B). This plan supports the D&I Policy and implementation of 
Divisional I&B strategies.

The D&I Policy is available on the Downer website 
at www.downergroup.com.

1. 

2. 

For present purposes, ‘Senior Executive’ refers to CEO, KMP and Other Executives/General Managers as defined in the Workplace Gender Equality Agency Reference 
Guide to the workplace profile and reporting questionnaire (WGEA Reference Guide).
For present purposes, ‘Management’ refers to CEO, KMP, Other Executives/General Managers, Senior Managers and Other Managers as defined in the WGEA 
Reference Guide.

Corporate Governance     |134

Looking back: 2022 measurable objectives

Focus Area Objective

Targets

Initiatives

Outcomes

Flexibility, 
Diversity 
and Inclusion

Report quarterly 
to the Executive 
Committee and 
Lines of Business 
on progress 
towards targets 
and objectives.

To continue 
developing 
Downer’s 
commitment to 
representing the 
businesses and 
communities in 
which we serve 
through a focus 
on I&B.

 ‚ Embed talent management and 
succession planning framework 
cohort to CEO-3 for females.

 ‚ Executive Committee pilot launched 

June 2022. Top talent being mentored 
by Senior Leadership Team members.

 ‚ Establishing a Group Level 
Community of Practice that 
provides strategic advice and 
governance for the Line of 
Business I&B Steering Committees. 
This will include a strategic focus 
on flexible work arrangements.

 ‚ Embedding and leveraging the 
Diversity and Inclusion Steering 
Committees within each Line of 
Business to focus on programs 
and initiatives that will support 
the achievement of targets.

 ‚ I&B Community of Practice has 

been established and meeting on a 
bi-monthly schedule. 

 ‚ Each Line of Business has developed 
an I&B Tactical Plan consisting of 
initiatives and actions specific to their 
Lines of Business I&B maturity and 
strategic direction. 

 ‚ Continuing to review and 

 ‚ In progress. 

modify Downer’s Mandatory 
Induction program to ensure our 
commitment to a diverse and 
inclusive workforce and working 
environment is embedded in 
Downer’s culture.

 ‚ Delivering a series of D&I 
‘Lunch ’n’ Learn’ sessions 
for all employees across the 
Group, covering a range of 
topics including Indigenous, 
gender, disability, orientation 
and generational diversity.

 ‚ Launch Workplace  
Giving Program. 

 ‚ Continuing to leverage our 

relationships that manage the 
transition of ex-Defence personnel 
into employment 

 ‚ Engage with not-for-profit 

and community organisations 
to provide pathways and 
opportunities for culturally and 
linguistically diverse groups 
and people.

 ‚ Commencing March 2021, the I&B 

Team have been delivering monthly 
Lunch ’n’ Learn sessions across all 
focus areas identified in the strategy. 

 ‚ In December 2021, Downer launched 
the Workplace Giving Program as part 
of our Corporate Philanthropic arm.

 ‚ Downer’s partnerships with Right 
Management and the Australian 
Veterans Employment Coalition (AVEC) 
are core to supporting the transition 
of current and ex-Australian Defence 
Force members and their families into 
employment. 

 ‚ Downer is continuing our partnership 

with Career Seekers and has two 
placement programs that we are 
engaged in.

|     Downer EDI Limited 
 
 
 
 
 
 
 
 
 
 
135

Looking back: 2022 measurable objectives

Targets
40% women in 
the workforce 
by 2023.

25% women in 
management 
positions 
by 2023.

25% women 
in executive 
positions 
by 2023.

30% women 
on the Board.

3% Aboriginal 
and Torres 
Strait Islander 
employees.

Focus Area Objective
Gender  
Diversity

To improve 
opportunities for 
women to reach 
their potential 
through an 
inclusive work 
environment 
while positioning 
Downer Group 
as a preferred 
employer for 
women in 
our industry.

Cultural 
Diversity

To build on 
Downer Group’s 
commitment to 
closing the gap 
by increasing 
Indigenous 
workforce 
participation 
and developing 
strategic 
partnerships 
with Indigenous 
organisations 
and community 
groups.

Generational 
Diversity

Maintain 
or increase 
the number 
of graduate 
employees 
year-on-year.

To establish 
Downer Group 
as a sought-
after employer 
for all age-
groups and as 
an organisation 
that builds a 
talent pipeline of 
thought leaders 
and continues to 
value experience.

Initiatives
 ‚ Analyse the WGEA reporting 

Outcomes
 ‚ In progress. 

data and use the learnings as key 
inputs to develop ongoing strategy, 
programs and initiatives.

 ‚ Deliver Downer’s THRIVE women’s 

personal and professional 
growth program.

 ‚ Develop and release an unconscious 
bias capability program to support 
an inclusive workplace. 

 ‚ Downer’s THRIVE program is now in the 
second cohort series and has seen 218 
participants commence the program.

 ‚ The strategy around unconscious 
bias is multi-faceted, consisting of 
online modules through the Inclusion 
Habits Journey, podcasts, Fact 
Sheets and Lunch ’n’ Learn sessions 
and the Diversity @ Downer external 
learning package.

 ‚ Realign our Leadership programs 
to include further diversity and 
inclusion content and learning.
 ‚ Work with Reconciliation Australia 
to develop and launch a Downer 
Group Innovate Reconciliation Action 
Plan (RAP).

 ‚ Programs have been reviewed to 

include I&B information. Introduction of 
Diversity @ Downer.

 ‚ In late May 2022, we received 

conditional endorsement of our 
Downer Innovate RAP, which launched 
during NAIDOC week.

 ‚ Create an Indigenous 
Champions network. 

 ‚ Ongoing. In the I&B Strategy and 

Action Plan we have determined that 
the creation of ‘Listening Circles’ 
around all focus areas is more 
culturally appropriate.

 ‚ Embed best practice cultural 

heritage monitoring within large- 
scale on-country project deliveries.

 ‚ Ongoing. A Downer-wide best practice 
cultural heritage monitoring guide will 
be delivered in Q3 of FY23.

 ‚ Continue to deliver Downer’s Māori 
Leadership Development program, 
Te Ara Whanake.

 ‚ Continue to deliver the Te Ara 

Whanake program to Non-Māori 
leaders which gives them a deeper 
understanding of Māori history, 
culture and Tikanga.

 ‚ Continue to deliver 

Te Ara Maramatanga.

 ‚ Continue to build a talent pipeline by 
investing in entry level programs that 
align to our generational diversity 
focus and priority areas, including:

 –The Downer Graduate 
Development Program

 –Cadets and further 

Undergraduate programs

 –Apprentices and Trainees.

 ‚ In FY22 three Te Ara Whanake and two 
Te Ara Whanake Wahine Toa programs 
were run with a total of 89 participants 
completing the program. In addition, 
we completed eight additional 
Māori programs. 

 ‚ In FY22, 58 participants completed 
the Te Ara Maramatanga program.
 ‚ Ongoing. In addition to the Graduate 
Program, Cadets and Undergraduate 
programs, Apprentices and Trainees,  
we are also utilising the sponsorship 
arrangements that Downer has made 
to fill these pipelines with Indigenous 
students and Alumni and migrant and 
refugee opportunities.

Corporate Governance     | 
 
 
 
 
 
 
136

Looking ahead: 2023 measurable objectives

Targets
3% Aboriginal and  
Torres Strait Islander  
employees. 

Focus Area
Aboriginal, 
Torres Strait 
Islander and 
Māori Peoples

Objective
Educate and embed best 
practice cultural heritage 
monitoring within 
large-scale on-country 
project deliveries. 
Support engagement 
and partnership with Iwi, 
Local Traditional Owner 
groups and Registered 
Native Title bodies. 

Focus on talent and 
sourcing pipelines, 
Employee Value 
Proposition, retention 
and engagement.

Gender  
Diversity

To improve opportunities 
for women to reach 
their potential through 
an inclusive work 
environment while 
positioning Downer 
Group as a preferred 
employer for women in 
our industry.

40% women in the  
workforce by 2023.

25% women 
in management  
positions by 2023.

25% women  
in executive  
positions by 2023.

30% women 
on the Board.

Cultural and  
Linguistic  
Diversity 

To improve opportunities 
for employees from 
different cultural and 
linguistic backgrounds.

Increase employees  
who identify to  
be from cultural 
and linguistically 
diverse backgrounds.

Initiatives
 ‚ Develop and deliver a series of information sessions, 

awareness packs and other resources to the business about 
Aboriginal, Torres Strait Islander and Māori history and 
cultures, such as Cultural Learning Bites.

 ‚ Develop and endorse inclusive ‘optional’ mentoring programs 
for Aboriginal and Torres Strait Islander employees, to ensure 
supported ongoing ‘Cultural Safety’ in their roles.

 ‚ Develop internal Indigenous pre-employment and internship 
programs in Australia, through the consultation, education, 
engagement, and collaboration with Business Units 
across Downer.

 ‚ Identify and implement pipeline activities for potential 

candidates from Aboriginal, Torres Strait Islander and Māori 
heritage. Develop innovative programs and approaches 
to reach a wider range of recruitment platforms and 
diverse communities.

 ‚ Develop a strategic and inclusive Diversity Attraction, 

Employment, Engagement and Retention Plan.

 ‚ Continue to deliver Downer’s Māori Leadership Development 

program, Te Ara Whanake.

 ‚ Continue to deliver the Te Ara Whanake program 
to Non-Māori leaders which gives them a deeper 
understanding of Māori history, culture and Tikanga.

 ‚ Continue to deliver Te Ara Maramatanga.

 ‚ Create and maintain identified positions for Aboriginal and 

Torres Strait Islander people.

 ‚ Analyse the WGEA reporting data and use the learnings 
as key inputs to develop ongoing strategy, programs 
and initiatives.

 ‚ Develop a strategic and inclusive Diversity Attraction, 

Employment, Engagement and Retention Plan.

 ‚ Conduct self-assessment against criteria and standards 

outlined in the Workplace Equality and Respect Standards 
and Gender Equality Act 2020 (Vic), reporting on areas 
for improvement.

 ‚ Continue to deliver THRIVE, our women’s personal and 

professional growth program and New Zealand’s Women 
In Leadership Downer program (WILD).

 ‚ Develop a strategic and inclusive Diversity Attraction, 

Employment, Engagement and Retention Plan.

 ‚ Develop and deliver information sessions, awareness 

packs and other resources to the business in relation to 
the awareness and understanding of different cultures 
and languages.

 ‚ Identify new partnerships and opportunities for sourcing 

and recruiting employees from under-represented 
cultural groups.

|     Downer EDI Limited137

Looking ahead: 2023 measurable objectives

Targets
Increase the 
number of graduate 
employees year-on-year.

Focus Area
Generational  
Diversity

Objective
To establish Downer 
Group as a sought-
after employer for all 
age-groups and as 
an organisation that 
builds a talent pipeline 
of thought leaders 
and continues to 
value experience.

Initiatives
 ‚ Develop a strategic and inclusive Diversity Attraction, 

Employment, Engagement and Retention Plan.

 ‚ Continue to build a talent pipeline by investing in entry level 
programs that align to our generational diversity focus and 
priority areas, including:
 ‚ The Downer Graduate Development Program
 ‚ Cadetships and further Undergraduate programs
 ‚ Apprenticeships and traineeships (mature-age 

opportunities, recognition of prior learning for experienced 
workers without formal qualifications)

 ‚ Internships
 ‚ CSO pre-employment programs (NZ).

LGBTIQA+

Disability and  
Neurodiversity

Create a welcoming and 
safe environment for all 
employees who identify 
as lesbian, gay, bisexual, 
transgender, intersex, 
queer, asexual and other 
diverse genders, sexes 
and sexualities.
Providing a safe and 
inclusive workplace that 
enables people of all 
abilities to realise their 
full potential and make 
valued contributions.

Increase confidence of 
employees to identify 
as LGBTIQA+.

 ‚ Develop and deliver information sessions, awareness 

packs and other resources to the business in relation to 
LGBTQIA+ communities.

 ‚ Identify new partnerships and opportunities for sourcing and 

recruiting employees from the LGBTQIA+ community.

Increase confidence of 
employees to identify 
as employees with 
a disability.

 ‚ Identify new partnerships and opportunities for sourcing and 

recruiting employees with a disability.

 ‚ Autism recruitment pilot within a specific Business Unit. 

Identify target roles and seek a recruitment exemption from 
the Anti-Discrimination Board (Australia).

 ‚ Develop and deliver information sessions, awareness packs 
and other resources to the business in relation to disability 
workplace accessibility and inclusion.

Corporate Governance     |138

Principle 2: Structure the Board to be effective 
and add value
Throughout the 2022 financial year, the Board was comprised of 
a majority of independent Directors.

The Board is currently comprised of the Chairman (Mark 
Chellew, an independent, Non-executive Director), six other 
independent, Non-executive Directors and an Executive 
Director (the Group CEO, Grant Fenn). Details of the members 
of the Board, including their skills, experience, status and 
their term of office are set out in the Directors’ Report on 
pages 6 to 51 and are also available on the Downer website 
at www.downergroup.com.

The composition of the Board is reviewed and assessed by 
the Nominations and Corporate Governance Committee to 
ensure the Board is of a composition, size and commitment to 
effectively discharge its responsibilities and duties.

Directors are required to bring their independent judgement to 
bear on all Board decisions. To facilitate this, it is Downer’s policy 
to provide Directors with access to independent professional 
advice at the Company’s expense in appropriate circumstances.

Downer’s Non-executive Directors recognise the benefit of 
conferring regularly without management present, and they do 
so at various times throughout the year.

The Board considers that an independent Director is a Non- 
executive Director who is not a member of management and 
who is free of any business or other relationship that could (or 
could reasonably be perceived to) materially interfere with the 
independent exercise of their judgement.

The roles of Chairman and Group CEO are not exercised by 
the same person and the division of responsibilities between 
the Chairman and the Group CEO have been agreed by the 
Board and are set out in the Board Charter and Downer’s 
Delegations Policy.

The Board has established a number of committees to 
assist the Board to effectively and efficiently execute its 
responsibilities. A list of the main Board Committees and their 
current membership is set out in the table below.

Board Committee

Chairman

Members

Audit and Risk

N M Hollows

Zero Harm

P L Watson

Nominations and  
Corporate Governance

M P Chellew

Remuneration

T G Handicott

Disclosure

T G Handicott

Tender Risk Evaluation

P L Watson

T G Handicott
A M Howse
P L Watson
M J Binns
G A Fenn
T G Handicott
N M Hollows
N M Hollows
A M Howse
M J Menhinnitt
M P Chellew
G A Fenn
M J Binns
G A Fenn
N M Hollows
M J Menhinnitt

The Board regularly assesses the independence of each 
Director to ensure that each Director has the capacity to bring 
independent judgement to bear on issues before the Board and 
to act in the best interests of Downer as a whole.

The names of members of each committee, the number of 
meetings and the attendances by each of the members of the 
various committees to which they are appointed is set out in the 
Directors’ Report on page 23.

Downer’s governance framework requires each Director to 
promptly disclose actual and possible conflicts of interest, any 
interests in contracts, other directorships or offices held, related 
party transactions and any dealing in the Company’s securities.

At least one Director must retire from office at each Annual 
General Meeting (AGM). No Non-executive Director can 
serve more than three years without offering themselves 
for re-election.

The Chairman of the Board is an independent, Non-executive 
Director. He is responsible for the leadership of the Board and 
for the efficient organisation and functioning of the Board. 
The Chairman is appointed by the Board to ensure that a high 
standard of values, governance and constructive interaction 
is maintained.

The Chairman facilitates the effective contribution of all 
Directors and promotes constructive and respectful relations 
between Directors and the Board and management. He also 
represents the views of the Board to Downer’s shareholders and 
conducts the AGM.

The Tender Risk Evaluation Committee’s primary purpose is 
to oversee tenders and contracts that exceed the delegation 
of the Group CEO. The Tender Risk Evaluation Committee, 
is chaired by an independent Director and comprises four 
members, including the Group CEO. Meetings of the Tender 
Risk Evaluation Committee are convened as required to review 
tender opportunities.

The Board has established the Nominations and Corporate 
Governance Committee to oversee the practices for selection 
and appointment of Directors of the Company.

The Nominations and Corporate Governance Committee’s 
primary purpose is to support and advise the Board on fulfilling 
its responsibilities to shareholders by ensuring that the Board 
is comprised of individuals who are best able to discharge the 
responsibilities of Directors having regard to the law and leading 
governance practice.

|     Downer EDI Limited139

During 2022, Downer’s Board renewal program continued. On 1 
September 2021, Mark Chellew joined the Downer Board as 
Non-executive Director and Chairman-elect, succeeding Mike 
Harding as Chairman on his retirement from the Board on 30 
September 2021. This was followed by the appointments of 
Mark Binns and Mark Menhinnitt on 1 March 2022 and Adelle 
Howse on 1 April 2022.

In making these appointments, the Downer Board identified the 
need to ensure ongoing engineering and operational expertise, 
experience in senior executive roles, various aspects of major 
infrastructure projects, as well as knowledge and experience of 
the construction and New Zealand markets.

Mr Chellew has extensive experience in engineering and the 
building materials sector, as well as a Chief Executive Officer, 
Non-executive Director and Non-executive Chairman of large 
publicly listed organisations.

Mr Binns is an experienced senior executive and Non-executive 
Director with extensive experience in New Zealand in the 
energy, construction and building materials sectors where he 
has been closely involved in many of New Zealand’s largest 
infrastructure projects.

Mr Menhinnitt is an experienced senior executive with extensive 
domestic and international experience in large infrastructure 
development and urban regeneration, investment management, 
construction, asset services, operations and maintenance.

Dr Howse has extensive senior executive and Non-executive 
Director experience in the infrastructure, energy and 
resources, construction, data centres, telecommunications 
and property sectors.

The Nominations and Corporate Governance Committee has a 
charter which sets out its roles and responsibilities, composition, 
structure, membership requirements and the procedures for 
inviting non-committee members to attend meetings. The 
Nominations and Corporate Governance Committee Charter 
gives the Nominations and Corporate Governance Committee 
access to internal and external resources, including advice 
from external consultants and specialists. The Nominations and 
Corporate Governance Committee Charter is available on the 
Downer website at www.downergroup.com.

The Nominations and Corporate Governance Committee, all 
members of which are independent Directors, is chaired by an 
independent Director and has a minimum of three members.

The Committee’s responsibilities include:
 § Assessing the skills and competencies required on the Board
 § Assessing the extent to which the required skills are 

represented on the Board

 § Establishing processes for the review of the performance 
of individual Directors, Board Committees and the Board 
as a whole

 § Establishing processes for identifying suitable candidates for 
appointment to the Board (including undertaking a formal 
due diligence screening process)

 § Recommending the engagement of nominated persons 

as Directors.

When appointing Directors, the Nominations and Corporate 
Governance Committee aims to ensure that an appropriate 
balance of skills, experience, expertise and diversity is 
represented on the Board. This may result in a Non-executive 
Director with a longer tenure remaining in office to bring that 
experience and depth of understanding to matters brought 
before the Board.

Given the breadth of Downer’s service offerings across a range 
of markets, the Board seeks to ensure that it maintains an 
appropriate range of technical skills and executive experience 
across engineering, construction and scientific disciplines 
as well as services activities and professional services when 
considering the appointment of a new Director.

Corporate Governance     |140

The chart below illustrates the balance achieved with the 
current Board composition. The Company recognises the value 
of diversity which has been a component of the appointment 
process over the past few years.

From time to time, Downer engages external specialists to assist 
with the selection process as necessary, and the Chairman, 
Board and Group CEO meet with candidates as part of the 
appointment process.

Professional qualifications

Business, finance and economics

Technical*

Legal

0.0

1.0

2.0

3.0

4.0

5.0

6.0

* Comprises construction, engineering, metallurgy and science.

Industry experience

Professional services*

Resources and energy

Nominations for re-election of Directors are reviewed by the 
Nominations and Corporate Governance Committee and 
Directors are re-elected in accordance with the Downer 
Constitution and the ASX Listing Rules.

As part of its commitment to leading corporate governance 
practice, the Board undertakes improvement programs, 
including externally facilitated periodic reviews of its 
performance and that of its Committees and Directors. The last 
review was completed during FY22 and included consideration 
of the skills and knowledge of Directors.

The Company has formal induction procedures for both 
Directors and senior executives. These induction procedures 
have been developed to enable new Directors and senior 
executives to gain an understanding of:
 § Downer’s financial position, strategies, operations and risk 

management policies

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

 § Downer’s culture and values.

Transport and infrastructure

 § The respective rights, duties and responsibilities and roles 

of the Board and senior executives

* Includes banking, finance and legal.

Tenure (years)

9+

6–9

3–6

0–3

0.0

1.0

2.0

3.0

4.0

Gender diversity

3

5

Male

Female

Directors are given an induction briefing by the Company 
Secretary and an induction pack containing information about 
Downer and its business, Board and Committee charters and 
Downer Group policies. New Directors also meet with key senior 
executives to gain an insight into the Company’s business 
operations and the Downer Group structure.

Directors are encouraged to continually build on their exposure 
to the Company’s business and a formal program of Director 
site visits has been in place since 2009. Directors are also 
encouraged to attend appropriate training and professional 
development courses to update and enhance their skills and 
knowledge and the Company Secretary regularly organises 
governance and other continuing education sessions for 
the Board.

The Board is provided with the information it needs to discharge 
its responsibilities effectively. The Directors also have access 
to the Company Secretary for all Board and governance- 
related issues and the appointment and removal of the 
Company Secretary is determined by the Board. The Company 
Secretary is accountable to the Board, through the Chair, on all 
governance matters.

|     Downer EDI Limited141

Principle 3: Instil a culture of acting  
lawfully, ethically and responsibly
Downer’s Purpose is to create and sustain the modern 
environment by building trusted relationships with our 
customers. Its Promise is to work closely with our customers to 
help them succeed, using world-leading insights and solutions. 
Downer’s Purpose and Promise are founded on the Pillars of 
Zero Harm, Delivery, Relationships and Thought Leadership and 
define the way it manages its business and are the foundations 
that support Downer’s culture. An overview of the Purpose, 
Promise and Pillars can be found on the Downer website 
at www.downergroup.com.

Downer strives to attain the highest standards of behaviour 
and business ethics when engaging in corporate activity. The 
Downer Standards of Business Conduct sets the ethical tone 
and standards of the Company and deals with matters such as:
 § Compliance with the letter and the spirit of the law
 § Workplace behaviour
 § Prohibition against bribery and corruption
 § Protection of confidential information
 § Engaging with stakeholders
 § Workplace safety
 § Diversity and inclusiveness
 § Sustainability
 § Conflicts of interest.

Downer has a formal whistleblower policy and procedures 
for reporting and investigating breaches of the Standards of 
Business Conduct. This includes the Our Voice service, an 
external and independent reporting service which enables 
employees to anonymously report potential breaches of the 
Standards of Business Conduct, including misconduct or other 
unethical behaviour. Reports received through Our Voice are 
investigated where appropriate, with the Company Secretary 
overseeing the completion of any remedial action. The Board 
is informed of material breaches of the Standards of Business 
Conduct through reporting of incidents reported under the 
whistleblower policy, investigations of allegations of fraud and 
breaches of Downer’s Zero Harm Cardinal Rules.

The Standards of Business Conduct applies to all officers 
and employees and is available on the Downer website 
at www.downergroup.com.

Downer endorses leading governance practices and has in 
place policies setting out the Company’s approach to various 
matters, including:
 § Securities trading (stipulating ‘closed periods’ for designated 
employees and a formal process which employees must 
adhere to when dealing in securities)

 § The Company’s disclosure obligations (including 

continuous disclosure)

 § Communicating with shareholders and the general 

investment community

 § Privacy.

Downer has an Anti-Bribery and Corruption Policy which 
expands upon the prohibition against bribery and corruption 
currently contained in the Standards of Business Conduct, and 
which addresses key issues such as working with government, 
political donations, human rights, conducting business 
internationally and gifts and benefits. The Board is informed of 
material breaches of the Anti-Bribery and Corruption Policy.

As Downer has operations in foreign jurisdictions, Downer 
employees are confronted by the challenges of doing business 
in environments where bribery and corruption are real risks. 
However, regardless of the country or culture within which its 
people work, Downer is committed to compliance with the law, 
as well as maintaining its reputation for ethical practice.

These policies are available on the Downer website 
at www.downergroup.com.

Principle 4: Safeguard the integrity 
of corporate reports
The Company has in place a structure of review and 
authorisation which independently verifies and safeguards 
the integrity of its financial reporting.

An external limited assurance engagement is performed 
on selected sustainability information in Downer’s annual 
Sustainability Report. Downer also follows a comprehensive 
internal verification process to ensure the integrity of the 
Sustainability Report and other periodic corporate reports 
which are not audited or reviewed by the external auditor, 
including the Directors’ Report, Corporate Governance 
Statement, and Information for Investors. This process involves 
review of reporting by relevant subject matter experts across 
the organisation to ensure it is materially accurate, balanced and 
provides investors with appropriate information.

The Audit and Risk Committee assists the Board to fulfil its 
responsibilities relating to:
 § The quality and integrity of the accounting, auditing and 

reporting practices of the Company with a particular focus on 
the qualitative aspects of financial reporting to shareholders

 § The Company’s risk profile and risk policies
 § The effectiveness of the Company’s system of internal control 

and framework for risk management.

The Audit and Risk Committee is structured so that it:
 § Consists of only Non-executive Directors
 § Consists of a majority of independent Directors
 § Is chaired by an independent Chairman (who is not 

the Chairman of the Board)
 § Has at least three members.

The Audit and Risk Committee comprises only independent 
Directors, includes members who are financially literate and 
has at least one member who has relevant qualifications 
and experience.

Corporate Governance     |142

The Audit and Risk Committee Charter sets out the Audit 
and Risk Committee’s role and responsibilities, composition, 
structure and membership requirements and the procedures for 
inviting non-committee members to attend meetings.

The Board receives assurances from the Group CEO and the 
Group CFO that the declarations provided to it in relation to the 
annual and half-year financial statements, in accordance with 
sections 295A and 303(4) of the Corporations Act 2001 (Cth), 
are founded on a sound system of risk management and internal 
control and that the system is operating effectively in all material 
respects in relation to financial reporting risks.

Downer’s external auditor attends the Company’s AGMs and is 
available to answer any questions which shareholders may have 
about the conduct of the external audit for the relevant financial 
year and the preparation and content of the Audit Report.

Information regarding the number of times the Audit and Risk 
Committee convened in FY22, together with the individual 
attendances of members at the meetings, is set out in the 
Directors’ Report on page 23.

The Audit and Risk Committee Charter is available on the 
Downer website at www.downergroup.com.

Principle 5: Make timely  
and balanced disclosure
The Company’s Disclosure Policy sets out processes which 
assist the Company to ensure that all investors have equal and 
timely access to material information about the Company and 
that Company announcements are factual and presented in a 
clear and balanced way. It includes that new and substantive 
investor or analyst presentations are released on the ASX 
Market Announcements Platform ahead of the presentation. 
A copy of the Disclosure Policy is available on the Downer 
website at www.downergroup.com.

The Disclosure Policy also sets out the procedures for 
identifying and disclosing material and market-sensitive 
information in accordance with the Corporations Act 2001 
(Cth) and the ASX Listing Rules. The Board receives copies of 
all material market announcements promptly after they have 
been made.

Downer’s Disclosure Committee consists of two independent, 
Non-executive Directors (one of which is the Chairman of the 
Board) and the Group CEO. The Disclosure Committee oversees 
disclosure of information by the Company to the market and the 
general investment community.

Principle 6: Respect the rights  
of security holders
Downer empowers its shareholders by:
 § Communicating effectively, openly and honestly 

with shareholders

 § Giving shareholders ready access to balanced and 

understandable information about the Company and 
its governance

 § Making it easy for shareholders to participate in 

general meetings

 § Giving shareholders the option to receive communications 
from, and send communications to, the Company and its 
security registry electronically.

The Downer Communication Policy sets out the Company’s 
approach to communicating with shareholders and is available 
on the Downer website at www.downergroup.com.

The Company publishes corporate information on its website 
(www.downergroup.com), including Annual and Half 
Year Reports, ASX announcements, investor updates and 
media releases.

Downer encourages shareholder participation at members’ 
meetings through its use of electronic communication, including 
by making notices of meetings available on its website and 
audio casting of general meetings and significant Group 
presentations. All substantive resolutions at meetings of 
shareholders are conducted by poll.

The Directors and key members of management attend the 
Company’s AGMs and are available to answer questions.

Principle 7: Recognise and manage risk
To mitigate the risks that arise through its activities, Downer has 
various risk management policies and procedures in place that 
cover (among other matters) interest rate management, foreign 
exchange risk management, credit risk management, tendering 
and contracting risk and project management.

Downer has controls at the Board, executive and business unit 
levels that are designed to safeguard Downer’s interests and 
ensure the integrity of reporting (including accounting, financial 
reporting, environmental and workplace health and safety 
policies and procedures). These controls are designed to ensure 
that Downer complies with legal and regulatory requirements, as 
well as community standards.

Downer has a Risk Management Framework in place to enable 
business risks to be identified, evaluated and managed. 
The Board ratifies Downer’s approach to managing risk and 
oversees Downer’s Risk Management Framework, including 
the Group risk profile and the effectiveness of the systems 
being implemented to manage risk. The last review of the Risk 
Management Framework was completed in 2022. The Board 
reviews the Group risk profile twice each year and considers 
other risk matters, such as business resilience, tender review 

|     Downer EDI Limited143

processes, risk appetite, and specific risk areas, on a regular 
basis, as well as regular reports from senior management, the 
internal audit team, and the external auditor.

Downer’s annual Sustainability Report provides a 
detailed overview of Downer’s approach to managing 
its environmental and social risks. The Sustainability 
Report is available on the Downer website at  
www.downergroup.com/2022sustainabilityreport.

The Company’s internal audit function objectively evaluates 
and reports on the existence, design and operating 
effectiveness of internal controls. Downer’s internal audit team 
is independent of the external auditor and reports to the Audit 
and Risk Committee.

Downer’s Audit and Risk Committee assists the Board in 
its oversight of Downer’s risk profile and risk policies, the 
effectiveness of the systems of internal control and Risk 
Management Framework and Downer’s compliance with 
applicable legal and regulatory obligations. The Audit and 
Risk Committee Charter is available on the Downer website 
at www.downergroup.com.

Management reports regularly to the Audit and Risk Committee 
on the effectiveness of Downer’s management of its material 
business risks and on the progress of mitigation treatments.

Principle 8: Remunerate fairly and responsibly
The Board has established a Remuneration Committee and 
has adopted the Remuneration Committee Charter which sets 
out its role and responsibilities, composition, structure and 
membership requirements and the procedures for inviting 
non-committee members to attend meetings.

The Remuneration Committee is responsible for reviewing and 
making recommendations to the Board about:
 § Executive remuneration and incentive policies
 § The remuneration, recruitment, retention, performance 

measurement and termination policies and procedures for 
all senior executives reporting directly to the Group CEO

 § Executive and equity-based incentive plans
 § Superannuation arrangements and retirement payments.

Remuneration of the Group CEO, Executive Directors and Non- 
executive directors forms part of the responsibilities of the 
Nominations and Corporate Governance Committee.

Downer’s remuneration policy is designed to motivate senior 
executives to pursue the long-term growth and success of 
the Company and prescribes a relationship between the 
performance and remuneration of senior executives.

The Remuneration Committee is structured so that it:
 § Consists of a majority of independent Directors
 § Is chaired by an independent Director
 § Has at least three members.

The Executive Director is not a member of the 
Remuneration Committee.

The maximum aggregate fee approved by shareholders that can 
be paid to Non-executive Directors is $2.0 million per annum. 
This cap was approved by shareholders on 30 October 2008. 
Further details about remuneration paid to Non-executive 
Directors are set out in the Remuneration Report at page 27.

Retirement benefits are not paid to Non-executive Directors.

Non-executive Directors do not participate in any equity 
incentive schemes.

The remuneration structure for Executive Directors and senior 
executives is designed to achieve a balance between fixed and 
variable remuneration taking into account the performance of 
the individual and the performance of the Company. Executive 
Directors receive payment of equity-based remuneration as 
short-term and long-term incentives.

Executive Directors and senior executives are prohibited from 
entering into transactions in associated products which limit 
the economic risk of participating in unvested entitlements 
under any of the Company’s equity-based remuneration 
schemes, as set out in the Securities Trading Policy. A copy of 
the Securities Trading Policy is available on the Downer website 
at www.downergroup.com.

Further details about the remuneration of Executive Directors 
and senior executives are set out in the Remuneration Report 
at page 27 and details of Downer shares beneficially owned by 
Directors are provided in the Directors’ Report at page 10.

Corporate Governance     |144

Information for Investors

for the year ended 30 June 2022

Downer shareholders
Downer had 26,221 ordinary shareholders as at 30 June 2022, of 
which 24,525 shareholders had a registered address in Australia.

The largest shareholder, HSBC Custody Nominees (Australia) 
Limited, held 35.80% of the 675,425,623 fully paid ordinary 
shares issued at that date.

Securities exchange listing
Downer is listed on the Australian Securities Exchange (ASX) 
under the ‘Downer EDI’ market call code 3965, with ASX code 
DOW, and is a foreign exempt issuer on the New Zealand 
Exchange with the ticker code DOW NZ.

Company information
The Company’s website www.downergroup.com offers 
comprehensive information about Downer and its services. 
The site also contains news releases and announcements to 
the ASX and NZX, financial presentations, Annual Reports, 
Half Year Reports and Company newsletters. Downer printed 
communications for shareholders include the Annual Report 
which is available on request.

Dividends
Dividends are determined by the Board having regard to a range 
of circumstances within the business operations of Downer 
including operating profit and capital requirements. The level of 
franking on dividends is dependent on the level of taxes paid to 
the Australian Taxation Office by Downer and its incorporated 
joint ventures.

Dividends are paid in Australian dollars, other than for 
shareholders with a registered address in New Zealand, who 
receive dividends in New Zealand dollars unless an election 
is made to receive payment in Australian dollars by providing 
Australian bank account details.

International shareholders can use Computershare’s Global 
Payments System to receive dividend payments in the currency 
of their choice at a nominal cost to the shareholder.

Dividend reinvestment plan
Downer’s Dividend Reinvestment Plan (DRP) is a mechanism 
to allow shareholders to increase their shareholding in the 
Company without the usual costs associated with share 
acquisitions, such as brokerage. Details of the DRP are available 
from the Company’s website or the Easy Update website 
at www.computershare.com.au/easyupdate/dow.

Share registry
Shareholders and investors seeking information about 
Downer shareholdings or dividends should contact the 
Company’s share registry, Computershare Investor Services 
Pty Ltd (Computershare):

Level 3
60 Carrington Street
Sydney NSW 2000

GPO Box 2975
Melbourne VIC 3000

Tel: 1300 556 161 (within Australia)
+61 3 9415 4000 (outside Australia)

Fax: 1300 534 987 (within Australia)
+61 3 9473 2408 (outside Australia)

www.computershare.com

Shareholders must give their holder number (SRN/HIN) when 
making inquiries. This number is recorded on issuer sponsored 
and CHESS statements.

Updating your shareholder details
Shareholders can update their details (including bank accounts, 
DRP elections, tax file numbers and email addresses) online 
at www.computershare.com.au/easyupdate/dow.

Shareholders will require their holder number (SRN/HIN) and 
postcode to access this site.

Tax file number information
Providing your tax file number to Downer is not compulsory. 
However, for shareholders who have not supplied their tax file 
number, Downer is required to deduct tax at the top marginal 
rate plus Medicare levy from unfranked dividends paid to 
investors residing in Australia. For more information please 
contact Computershare.

Lost issuer sponsored statement
You are advised to contact Computershare immediately, in 
writing, if your issuer sponsored statement has been lost 
or stolen.

Annual Report mailing list
Shareholders must elect to receive a Downer Annual Report 
by writing to Computershare Investor Services Pty Ltd at the 
address provided. Alternatively, shareholders may choose to 
receive this publication electronically.

Change of address
So that we can keep you informed, and protect your interests in 
Downer, it is important that you inform Computershare of any 
change of your registered address.

|     Downer EDI Limited145

Registered office and principal 
administration office
Downer EDI Limited
Level 2, Triniti III
Triniti Business Campus
39 Delhi Road
North Ryde NSW 2113
Tel: +61 2 9468 9700
Fax: +61 2 9813 8915

Auditor
KPMG
International Towers Sydney 3
300 Barangaroo Avenue
Sydney NSW 2000

Australian securities exchange information as at 30 June 2022
Number of holders of equity securities:

Ordinary share capital
675,425,623 fully paid listed ordinary shares were held by 26,221 shareholders. All issued ordinary shares carry one vote per share.

Substantial shareholders
The following shareholders have notified that they are substantial shareholders of Downer as at 30 June 2022

Shareholders

Aware Super Pty Ltd atf Aware Super
Yarra Management Nominees Pty Ltd
Pendal Group Limited
T Rowe Price Associates, Inc.
The Vanguard Group
L1 Capital Pty Ltd
Dimensional Fund Advisors

Distribution of holders of quoted equity securities
Shareholder distribution of quoted equity securities as at 30 June 2022 is as follows.

Range of holdings

1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Holding less than a marketable parcel of shares 

Number of
shareholders

Shareholders
%

Ordinary 
shares held

14,361
8,899
1,799
1,107
55 
26,221              
 1,354

54.77
33.94
6.86
4.22
0.21

6,005,399
20,965,274
12,919,359
24,251,009
611,284,582
675,425,623 

Ordinary 
shares Held

% of issued
shares

44,049,193
43,790,962
41,010,826
35,171,878
35,082,734
34,994,479
34,203,417

6.52
6.48
6.07
5.21
5.19
5.18
5.06

Shares
%

0.89
3.10
1.91
3.59
90.50
100.00

Information for Investors     |              
146

Twenty largest shareholders
Downer’s 20 largest shareholders of ordinary fully paid shares as at 30 June 2022 are as follows.

Shareholders

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CHASE MANHATTAN NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD 
ARGO INVESTMENTS LTD
BNP PARIBAS NOMINEES PTY LTD 
NETWEALTH INVESTMENTS LIMITED 
SANDHURST TRUSTEES LTD 
CITICORP NOMINEES PTY LIMITED 
UBS NOMINEES PTY LTD
BNP PARIBAS NOMS (NZ) LTD 
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 
CPU SHARE PLANS PTY LIMITED
HOBSON WEALTH CUSTODIANS LTD 
WOODROSS NOMINEES PTY LTD
MR BARRY SYDNEY PATTERSON + MRS GLENICE MARGARET PATTERSON
BNP PARIBAS NOMINEES PTY LTD 
GRANT FENN
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD 
Total for top 20 shareholders

Shares held

241,772,057
159,929,817
105,917,928
36,083,434
23,787,058
13,315,059
3,660,060
2,966,310
2,811,073
2,507,866
1,572,535
1,365,616
1,254,143
1,079,890
1,051,196
922,250
891,642
870,000
795,809
718,840
603,272,583

% of issued
shares

35.80
23.68
15.68
5.34
3.52
1.97
0.54
0.44
0.42
0.37
0.23
0.20
0.19
0.16
0.16
0.14
0.13
0.13
0.12
0.11
89.32

|     Downer EDI Limiteddownergroup.com

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