Downer EDI Limited (DOW) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to Downer's 2022 Investor Day. My name is Adam Halmarick and I'm the Group Head of Investor Relations and Strategic Planning. I would like to begin by acknowledging the traditional custodians of the land on which we meet today, the Gadigal people of the Eora Nation and pay my respects to the elders past, present and future in maintaining the culture, country and spiritual connection to the land. It's my pleasure to welcome you here today. It's great to see some familiar faces in the crowd and some new faces as well, and I look forward to meeting you over the course of today. It's also great that we can webcast this live to an audience who are unable to be here today, and I welcome you all, too. A couple of quick housekeeping points from me before we kick off the presentation. Firstly, in the event of an emergency, please take the note and instruction from the staff here at the North Side Conference Center. If we do need to exit, we'll be exiting through the 2 emergency exits behind us, one where you came in and one just to the side here. Secondly, can I ask if you please hold any questions till the end. That is a designated Q&A panel at the end of the day, where you have plenty of time to answer -- ask any questions. That will help keep us on time. That would be greatly appreciated. That's all for me. I'll now pass to Grant Fenn, our Chief Executive Officer, to start the day. Thank you.

[ Thank you for coming ] to this 2022 Investor Day. We've got a great day or great morning in store for you. We've got a really interesting and I think really informative sort of discussion that's going to happen today around Downer's role to be played in Australia and New Zealand's decarbonization. So we're going to focus our attention in that opportunity that's going to be quite massive for Downer. Of course, you'll hear all about the individual businesses, you'll hear about the group. You very much will know that down into what we're doing in that area. And you'll see that we have a fabulous opportunity ahead of us. To start off, Michael and I -- let's just see how this goes. Michael Ferguson and I will take you through an overview. We're calling that, "Growth to net zero." We are one of the benefactors of this net 0 position, and we'll talk to you about that in an overall sense. We're then going to touch on a few of the areas that I think we do very well. And we're going to hear from Julie Wills, who's Head of Sustainability. And we're also going to hear from Natasha Palethorpe, who's Group Health Manager, on how Downer is making our communities better. We do a very, very good job in the ESG space and we're going to take you through that. Next -- right now, it's very good to be good at risk management, right? We think we do a very good job in this area. Peter Tompkins, our Chief Operating Officer, who looks after this particular area is going to take you through sort of in-depth view of how we do this. He'll take us through some examples, some actual real, real-time projects that we work on and how we actually take -- how we actually deal with risk in that from -- right from precontract through. So I think that will be pretty interesting for you. And then, of course, we get into the guts of really what we're talking about here today and Downer's role in decarbonizing the economy. And Ricky Bridge, who's our Group General Manager of Sustainability, will be talking to us about that. He's going to frame that in terms of what the world needs to do for net 0 in 2050. We'll then bring that down to what Australia needs to do. And then within what Australia needs to do, Australia and New Zealand, I should say, then what -- where is Downer going to play in that market, what are we doing today and what are we going to be doing in the future. Then we'll go through into each of the business units over the course of the morning, who will take you through what's happening in their business, and then they will focus in on what they're doing in this decarbonization. And I think you'll be quite amazed with already the amount of work that's going on and the discussions that are being had with this very wide customer base that we've got. Then we'll finish at the end with a panel session and Q&A where you can ask any question you like, and we'll see how we go in answering it. So let's kick off on a very important slide, probably the most important slide of the day. I always start with this. If you want to understand Downer, you need to understand this slide, right? So this is our purpose, our promise and our pillars. It is very much a foundational document, right? It brings everything that we do together. It's a common link, a common bond. When we talk about how we answer questions, how we make decisions, we do come back to this, all of our material that we train our people in, we come back to this. This is what we're trying to achieve. So in our purpose, it's to create and sustain the modern environment by building trusted relationships with our customers. What's very important there is the trusted relationships, right? That is what we bring to the table. We can't do our work without being trusted. It's just not possible. People will not bring you on often to do the most critical of tasks for them. They need to trust you, and you got to be trustworthy. Our promise is to work closely with our customers to help them succeed using world-leading insights and solutions. Now the key here is we're about helping our customers succeed. That's our #1 path. So it's not about us and maybe our customers also get on. That's not the case. The way that we operate is that we get our customers, we help our customers succeed. The second course of that, of course, if they succeed, we'll be successful. It's very, very important. It gets to the ethos of the business. And of course, the pillars that back those up: safety, delivery, relationships and thought leadership. Zero Harm is embedded in Downer's culture and it's fundamental to the company's future success. Nothing could be more truthful than that. We spend an inordinate amount of time and money and investment in this particular area. On the delivery side, we build trust by delivering on our promises with excellence while focusing on safety, value for money and efficiency. On the relationship side, we collaborate to build and sustain enduring relationships based on trust and integrity. And on thought leadership, we remain at the forefront of our industry by employing the best people and having the courage to challenge the status quo. And that is what we do, and you'll see that today in the presentations that will come from our business unit heads. So let's have a look at Downer today. We are the leading provider of urban services in Australia and New Zealand. It is undoubted and it's unchallenged. We're an Australian sovereign. We have a large capital base, 40,000-plus people, most of those skilled. We're a sustainability leader. We're a market leader. We're critical to the sustainment and operation of a vast portfolio of government and private infrastructure. If Downer doesn't get up in the morning, if we don't go to work, it's a very bad day for Australia and New Zealand, I can assure you. Our business can't be turned off because the critical infrastructure that we look after can't be turned off. We're diversified across capabilities, markets and geographies, and that is a very clear strength. Our service delivery excellence drives long-standing and trusted relationships, the $35 billion of work in hand stretched 30 years, right? And very regularly, we are bringing onto our books jobs that are 10, 12, 15 years. And what you'll hear a lot about today is we are uniquely placed to support the Australian and New Zealand economies and energy transition and decarbonization. So just a little look at that unique exposure to critical Urban Services, looking around the wheel that makes up this company. We're about 50% transport. And in transport, that's road surfaces, 23%; projects, 17%; and rail and transit systems, 10% of that. So transport makes up 50% of our business. 35% is made up of facilities, and there's a very broad technical and skills base in there; Asset Services, health and education, buildings out of New Zealand, defense, 7%; and government, 11%. And then the third part of our Urban Services is utilities, telco, 4% of the business, 4% to 5%; and power and gas, 6%, a really balanced portfolio. We are a market leader in most categories in both Australia and New Zealand. So we lead the markets in the things that we do around that circle. Now those markets are high growth, and you'll see a little later on that we expect across the portfolio -- or, in fact, BIS expects across the portfolio. When we take the growth levels around those markets and we weight them to the -- our percentages, a CAGR over the next number of years of 7% to 8% is the amount of money that's going to be spent in extra money in those areas. One of the interesting things that's happening right now is that the significant barriers that already exist in these markets are increasing. And those barriers really exist around systems. You can't work for the critical infrastructure players within Australia and New Zealand unless you have very, very good systems. And I don't necessarily mean IT systems, I mean ways of going about your work: quality systems, risk systems, safety systems, biggest 3 systems. So the barriers to entry to step into these markets is becoming higher and higher and higher. And of course, new energy and decarbonization opportunities are quite massive across this customer base, and you'll hear this today. So since COP26, we've seen quite a massive move in our customer base about how interested they are in net 0. Every manager, from the CEO down, has a target. And in many cases, they're scratching their heads as to how they solve them. So this business, you will see across those -- across this wheel and the customer base that sits below it, they've got a massive task. And in many cases, we are the major service provider with the collection of skills, technical capabilities, et cetera, across that decarbonization path, that can get them where they need to be. Again, you'll hear a lot more about that in a few moments. Now we have scale and capacity in both Australia and New Zealand. What we've put on the picture here is to show you the level and the percentages of the Australia and New Zealand position. And what you take from this is that New Zealand is, in the most part, a microcosm of -- or the nature of the business is the micro of Australia. We do most of the things in New Zealand that we do in Australia, not all, but most. If you've been to New Zealand, Downer is very much a household name. The brand in New Zealand is very, very strong. And we've got great growth prospects there as well as decarbonization opportunities. The business in New Zealand continues to improve each year. And you'll hear from Steve Killeen today more about that. It's undoubted that the New Zealand business gives the broader Downer group a lot of strength. It is very much a bedrock of the Downer business. Now I just touched before on what we expect in customer spend over the next number of years, and we expect it to be well above GDP. I get this question a lot from investors around is this business a GDP business. And I say, well, maybe when all of the infrastructure is built, we're at net 0, you don't have deficits in infrastructure, either in the capital build or in the maintenance, this business could be seen as a GDP business. But it's certainly not that, and it won't be for decades. In this graph here, what it shows is, and this is a BIS Oxford Economics 2022, the expectations of facilities growth, 6.5% CAGR. These are our customer spends, utilities 5.3% CAGR and transport 9% CAGR. Now when we work that down to our weighted average, right, that's 7% to 8%, if you think transport's 50% of the business. Revenue is not an issue going forward for this business. Yes, you've got to be good to get it. You've got to be right at your mark, but we are the market leaders. We seem to be very good in those areas. As I say, revenue will not be the issue. Our customers continue to spend. There are unprecedented levels of government investment in construction and sustainment. You hear it almost every day and certainly hear during the election cycle. But it's not just that, it's also in the budgets. Every time we turn around, there's more to be spent in defense. We're now the fourth largest defense contractor in the country and growing bigger in that area. Development is now becoming a large part of our position with defense. And our scale, management systems, technical capabilities put us in a very strong position. And as I said before, we've got a great cross sector of customer base for new energy and decarbonization solutions. I'll just hand over to Michael now, and he'll take you through a couple of slides on cash and a few other things, and then I'll come back and we'll talk about outlook for '22.

Great. Thanks, Grant, and good morning, everyone. The right slide here. Well, today is a great opportunity for you to hear from our operational leaders. I'd like to spend a few minutes reemphasizing the cash and capital profile of the reshape business, how we are thinking about capital allocation and our focus areas on driving improved performance and returns. You can see that Downer has a proven history of strong cash generation, with the last 10 financial years averaging 88% conversion. This improves to 93%, if you exclude the conversion rate of 40% in FY '20, which was predominantly driven by resource-based engineering and construction losses, with those markets having now been exited. If you look to the right of the slide, you will see that the strong operating cash flow performance is now complemented by reducing capital profile, particularly without mining. This has allowed us to invest in growth opportunities, including the recent acquisition of Fowlers Asphalting and some strategic land holdings in Queensland and Western Sydney for our Australian roads business. The group incurs approximately $150 million in lease cost per annum, with the majority of this relating to property and light vehicles. Continued strong operating cash flow, disciplined capital allocation, both see Downer well positioned to grow. We reported net debt-to-EBITDA ratio of 1.5x at 31 December 2021, which reflects the recent strong operating cash flow and reduced capital but also the benefits of the 2020 capital raising and the proceeds received from the divestment program. This is lower than our target range of 2 to 2.5x, which presents a number of opportunities and considerations. These include continuing to invest in bolt-on acquisitions. These types of acquisitions drive value for Downer by expanding our geographic footprint into regions where we don't currently operate or by supplementing our existing capabilities to enhance our service offering to clients. I mentioned Fowlers Asphalting, which we acquired in the first half of this year, and Dante will run you through a case study later today, which provides a great example of value creation through bolt-on acquisitions. We have a number of strategic acquisition opportunities in front of us across the group, including some that will enhance our sustainability capabilities. Our share buyback program has recently been extended for another 12 months, and we will assess the ongoing rate of buyback relative to our other growth opportunities. With regards to dividends, we will continue to target a payout ratio of 60% to 70% as the business matures under the new lower capital model. Having rationalized Downer's Urban Service portfolio, we will continue to drive performance in our business units and head office to ensure we are delivering appropriate returns on capital. Increasing margins across the portfolio is a key focus for management. We are targeting improvement in project delivery, which Peter will cover in a moment, and reduced overhead costs. With the transitional services for the divested businesses expiring by the end of the calendar year, we will be able to further reduce our corporate services' support model. We'll be disciplined in our approach to capital and acquisitive growth and ensure any investments are made within our defined risk appetite and required returns parameters. By driving our business to focus on growth, margin improvement and efficient use of capital, we will deliver increasing value to our shareholders through consistent growth in earnings and dividends. Thanks very much. I'll hand back to you, Grant.

Yes. Thanks, Michael. Right, FY '22 trading update, so a few things. Demand remains really strong across the business, right? That's really the point that I'd like to make. It's very, very strong. We're getting our main customers wanting more from us more often across the range of services that we provide, right? So outstanding, our brand, our quality seem to be very good, and that's coming through by way of demand from our customers. There's no doubting that. And we can see that. We're getting very strong contract awards and preferred status at the moment, which is excellent, which we're very happy about. But with that challenges in Q3, this year has been quite tough, as you can imagine, right? It's been probably the toughest year for most companies in most of their executives' living memory. Having said that, we're still very profitable, doing very well. In Q3, as we spoke about this at the half year in February, weather has continued to impact across the Australian business units, most notably in roads but also in utilities and also in facilities. I mean, you just can't get away from it. But every business has got the same issue. We're not the lone ranger here. And you'll hear more, I guess, as people speak about this particular quarter. We continue to do the work. Our service quality to our customers continues to be very, very good. So we're getting on and doing it, but it's more difficult. The cost to serve is a little more, et cetera. One of the new things -- not new, but certainly a bit different from many companies that are Australian-based is because we've got a New Zealand -- a large New Zealand business, of course, COVID is -- the cycle of COVID is a little different, right? So we've seen the Omicron variant hitting in quarter 3 as they open up the economy or open up from restrictions. And so we've seen that also hit our New Zealand business, which is a little -- it's a lag compared to the Australian business. In many ways, that happened in quarter 2 in Australia, not as much in quarter 3, but it certainly -- it's a little later in New Zealand. Now as we look at New Zealand, the same situation. We've sort of hit the peak. We're now on the downward run there. And Steve will talk about this later when he talks about the New Zealand business in more depth. But look, the worst is over, and that is going to improve over the course of the last quarter. When we tally up, of course, always, we have an eye on the impacts on the various businesses of COVID-19. And of course, whether when we tally those up, our best estimate at the moment is that, that's $50 million to $60 million as of the end of the third quarter. That's a big number. It's a big number. Our core year-to-date EBITA is just a little off from last year. As you can see here, around 4.7%, but we are expecting a strong fourth quarter, okay? So with everything going well, let's see how much of that 4.7% we can make up. So that's our current view at the moment. The immediate priority is, of course, earnings and cash performance for '22. We'd like to finish on a really good note. Our business is skewed to the second half, right? We do have a load of work in New Zealand, in certainly the last quarter of the financial year. And the rest of our businesses are skewed that way as well. So we're very, very hopeful of a very good fourth quarter. We'll be managing, of course, the remainder of the COVID-19 issues. Yes, there are supply chain issues, workforce availability issues, which the guys will talk about as we go through the day. We're very focused in on contract pricing. Now is not the time to underprice your work. And in a very similar vein, it's also a time to be very careful about cost management, making sure that we're not paying anything more than we absolutely have to. And then we make sure that, to the extent that those prices -- those costs are increasing, that we're passing them on at the -- on the price side. And of course, what that means, and you're going to hear from Peter Tompkins a little later about this, your pre-contract risk management has to be spot on, right? Now is the time that we have to be very, very careful about this. In many ways, this is a boom time for business and businesses like ours. And that is the time when many of those that aren't managed will go bust. So that risk management is very, very key. If we look through the noise, as we call it, of '22, there's a few things just to focus in on here. Our weighted average sector spend growth from BIS, right, 7% or 8% CAGR through to '25. As I say, our customers are spending in the areas that we are. We are in the right sectors at the right time. We're heavily leveraged to the new energy economy, and you'll see that today. And we do expect a strong rebound in earnings in FY '23, and you would expect that. Of course, we're expecting not to have the issues anywhere near the issues of COVID-19, and we're expecting better weather patterns, but we certainly are expecting FY '23 to be a better year. So I'll just touch on growth in net 0, Downer's opportunity. So net 0 emissions future, and you're hearing a lot about this in the election campaign, but it will require just massive adjustments to almost all urban infrastructure, but particularly, power generation, power transmission and distribution, energy management and transportation, right? The numbers that are going to be spent in these areas, no one can calculate. They're too big, right? We're right in the middle of this. So Downer's technical bent, right, is power. That's what we do. Here today, we're the largest transmission builder. We're the largest in managing distribution networks. We're the larger electrical contractor. So you're going to hear a lot about that. Whether it's through power generation, transmission and distribution, facility management, public transport, all of these things are going to have to change dramatically, and we're right in the guts of it. We've also invested heavily in the circular economy. So you're going to hear a lot more about that. But in the meantime, I'm going to take you -- Julie Wills, our Head of Sustainability, is going to take you through all of the fantastic things that we're doing on the ESG front, right? It's very important. We spend, as I say, a lot of time and effort on this. And I think we do a very good job. So Julie, you're going to talk to us about that. Thanks.

Thank you, Grant, and good morning, everyone. Many of you would be familiar with -- thank you, Grant, with Downer's purpose, as Grant had on the slide earlier, which is to create and sustain the modern environment by building trusted relationships with our customers. But for us, it goes beyond that. Downer exists to improve communities. The services that we deliver for our customers touch the lives of millions of people across Australia and New Zealand every day: the water they drink, the power they use, the roads they travel on, the public transport they rely upon and the communications networks that they use to stay connected. However, Downer's social relevance is deeper than the services we provide. With the footprint stretching across all corners of Australia and New Zealand, we have a unique platform to make our communities better. We're one of Australia's largest employers, as you've heard from Grant, with more than 30,000 people in Australia and 10,000 in New Zealand. We take the responsibility that comes with employing that many people very seriously. We are a people business, and we're committed to a workplace environment where our people feel included, where their health and wellness is supported and where they have opportunities to develop new skills and grow their careers. And I'll be talking to you a little bit about that today. We pride ourselves on being a good corporate citizen through the actions we take, the support we provide and the lengths that we go to ensure our operations have minimal impact on the environment. So this morning, you're going to hear a lot about decarbonization. You've already heard a fair bit, but there's going to be a lot more. So I won't go through much of that. I'm going to leave it to some of my team to go through as well as the operational managers, including the opportunities for the path that Downer has on the pathway to net 0. But I will take a few minutes to talk about Downer's ESG strategy and how that's guiding us in making communities that are right now. So I will start a little bit with the environment, as you'll see on this slide, and I introduced this last year to those that were here. So I'm not going to go through it in detail again, but you can read it. But I do -- well, I really would like to give you an update on how we're progressing on our own decarbonization journey. And I'm proud to say that Downer continues to be an industry leader in this. Last year, we became a signatory to the Science-based Target Initiative Framework, and we're currently progressing validation of our science-based targets. We focus on 6 key areas, which you can see on the slide, to meet our net 0 commitments. And you can read a lot more about the specific actions that we're taking under each of those areas in our sustainability report. As a result of the focus that we've been taking, absolute Scope 1 and 2 emissions have reduced by 40% since FY '20. Although I do note that the majority of those emissions reductions have come through the divestments of the mining and the laundries business. So Downer continues to monitor emerging trends in sustainability reporting. You've heard me refer to our sustainability report. We take great pride in improving that report year-on-year, and we hope that it provides very extensive value to you in guiding the thoughts that you're having about how Downer's progressing in our ESG journey. We do also continue to keep an eye on the developments of the International Financial Reporting Standards Foundation's newly created International Sustainability Standards Board in their quest to establish a global sustainability reporting framework. While another framework we continue to monitor is the progression of -- and the implementation of the European Union taxonomy. We have undertaken a review of the Integrated Reporting Standards and the SASB standard, 2 frameworks that have aligned with the ISSB with a view to aligning our disclosures in future sustainability reports. In addition, you would be aware that the task force on climate-related financial disclosures, or TCFD, there's an awful lot of jargon in this space, released an Annex in October 2021, they updated their implementation guidance around the TCFD recommendations. On this annex, we've undertaken a review. And over the last 12 months, we've undertaken some significant work to further assess the financial implications of decarbonization. Building on the TCFD disclosures that we've made since 2019 and coupled with the changes in Downer's business strategy, we've also completed a detailed review of Downer's most material climate-related risks and opportunities. This work has continued to inform business unit decarbonization plans and growth strategies, and you'll be hearing about some of that today. We are also undertaking an assessment with the end to quantify the estimated financial impact of different climate scenarios on Downer's value chain and assess the potential cost of mitigation against identified risks. There are 3 key areas of focus for this work: our fleet, our asphalt plants and the physical climate impacts on our fixed assets and our key operational locations. We're also in the process of completing a third piece of work to review Downer's current capital allocation decision-making process. We've drawn from mechanisms used by peers to look at opportunities to integrate a more formal climate consideration into our capital allocation decision-making processes. The insights and findings from this work will form Downer's TCFD disclosures due to be released in August this year along with our sustainability report. But I can confirm today that the work that has reinforced at Downer with our Urban Services strategy is a net beneficiary in the transition to a net 0 emissions economy, with more significant opportunities than risks. So I'll now move on to our approach to social sustainability, which is another area we've made great progress on, both in initiatives to support our own people as well as mechanisms to support our communities. There is strong competition for talent in many of our sectors, which places a strong emphasis on our talent attraction and retention strategies. So we focus on delivering a rich employee experience, where all our people feel accepted, valued and respected. We have just launched Downer's first group-wide inclusion and belonging strategy and action plan which outlines our objectives and actions over the next 3 years to empower our people to celebrate their diversity and own their differences. This marks a shift in the focus of our traditional diversity approach to emphasize the importance of inclusion and belonging as essential components to support our current and future workforce. Our inclusion and belonging strategy is underpinned by our Own Different campaign, which celebrates Downer's culture of inclusion, acceptance, engagement and encouragement and aims to build confidence and ambition in our people. Own Different is about accepting we each have different preferences and perspectives, histories and heritage. It's about understanding that we're different in the way that we think, the actions we take and the value that we contribute. It's about celebrating our differences, and it places us at the forefront of our industries in this space. And just as we aim to improve the assets that we maintain for our customers, we recognize that our biggest asset is our people. And we are focused on improving and developing our workforce through a suite of learning and development opportunities, which includes formal learning and development programs to enhance professional skills and capabilities, complemented by a range of courses to support the growth of our people as citizens of our communities. We've also continued to expand our female leadership professional development and capability program which we've called THRIVE. Over the last 12 months, this program has been rolled out, and it aims to cultivate and develop women at all levels. And of course, it wouldn't be a complete slide on people for me unless I speak to you about Zero Harm. So when it comes to our people, the most important aspect is that they arrive home from work every day in the same condition that they left in the morning or perhaps better. So our commitment to Zero Harm is -- well, and our industry-leading safety performance is a market differentiator for Downer. You've heard me speak about this before, because it enables us to work safely and environmentally responsibly in the industry sectors where there are inherent hazardous environments. We reported our LTIFR at the half year at 0.97 and our total recordable injury frequency rate at 2.57 per million hours worked. And I'm pleased to say that these have improved further since that time. So we've also expanded the reach of our community support programs this year. We've established a number of significant community partnerships that I'll touch on just a few today. So Downer's corporate giving strategy covers 3 core pillars, which is mental health, support for indigenous peoples and a workplace giving program. As we announced last year, Downer joined the national mental health organization, Beyond Blue as its major partner. We also match donations from public for Beyond Blue's 2021 national fundraising campaign up to a total of $250,000. I'm pleased to announce that we've reviewed that -- renewed that partnership for their 2022 campaign. In February this year, we also commenced a new partnership with the Mental Health Foundation of New Zealand to support the mental health and well-being of our people while also enabling the Mental Health Foundation to do more of their great work and reach out to more people in the community in New Zealand. We've also commenced partnerships with indigenous organizations, Stars Foundation and NRL Cowboy House to assist the great work both organizations do, supporting the education of young indigenous people. And in March, we launched Downer's first ever workplace giving program, which allows our people to donate money from their pretax pay to support 4 carefully selected charities, with Downer matching our employees' initial donations up to $250,000. Through this program, we are partnering with 4 very worthy charities, and these are the Australian Cancer Research Foundation, Greening Australia, TLC for Kids and the Salvation Army's Family Violence Stream. And this is to help them help millions of people across Australia every year. We're also committed to supporting our large and diverse supply chain. Downer will not tolerate any form of human rights abuse, including modern slavery, in our operations and supply chain. We believe our risk of exposure to modern slavery in our supply chain is low given around 96% of our $8 billion supply chain spend in FY '21 was in low-risk countries. And as we continue to reshape our business moving forward, we believe our exposure to modern slavery risks in our supply chain will reduce even further. Over the last 6 months, Downer has brought out sustainable sourcing practices into focus, and we are presently carrying out a current state and future state review. And as part of this review, we've refreshed our modern slavery framework. Modern slavery is an important issue to Downer, and we are committed to continuously improving our processes. This includes engaging our direct suppliers to educate, assess and encourage improvement in their own capacity to manage modern slavery risks within their broader supply chains. Now the last aspect of our sustainability strategy that we want to talk to you about this morning is supporting the mental health of our people and our communities. Mental health is so important to Downer that we included mental health first aid training as one of the 4 KPIs attached to our sustainability-linked loan that I spoke about last June. I'm really pleased, actually quite excited, to give you the opportunity to hear from our Group Health Team. In fact, the head of our Group Health Team, Natasha Palethorpe, who has been leading this exciting opportunity across Downer, to tell you more about our industry-leading mental health program.

Thank you, Julie. Good morning, everyone. I get incredibly passionate talking about Downer's mental health and wellbeing strategy. So I'm going to utilize my notes, so I stay on task today. But what I'd like to start with is how fortunate is it that we can talk more freely and more comfortably about mental health these days when, say, 5 years ago, it wasn't the case. It was still a fairly taboo topic. And in 2017, Downer acknowledged and recognized mental health as a growing societal issue and so formed the group health function. Our team is tasked with a multitiered strategy to really look after and skill our employees and their families with ways of supporting their own mental health and well-being. This is also an opportunity for Downer to leverage the size and scale of the organization to make a wider impact in the communities in which we work. The key role of the health team is to upskill through various training courses such as foundations of mental health or mental health first aid. Both of these courses arm our people with knowledge and insights to look after their own health and well-being, but also to help look after their colleagues, friends, family and wider communities. In just over 3 years, we have trained thousands in foundations of mental health, this course really targeting on the emerging mental health issues in Australia and New Zealand. And also we have partnered, in addition to Beyond Blue and the Mental Health Foundation of New Zealand, too many mental health. And we have partnered with Mental Health First Aid Australia to deliver an accredited recognized gold standard program. Now through this partnership, we have been recognized as a skilled workplace, and we have 2,000 strong mental health accredited employees. Each and every one of them trained to notice the signs and symptoms and the support services available if someone has deteriorating mental health. Having such a mature culture, at the beginning of 2020 when the pandemic emerged, we were able to partner with Mental Health First Aid Australia and trial and implement a 100% online version of the course. Now this allowed us -- this course has been endorsed by Mental Health First Aid Australia and is actually used still internally at Downer and around the world. This allowed us to continue our training through the pandemic, and we trained over 790 employees despite COVID lockdowns and restrictions. This armed our people with skills to navigate such an uncertain period, and we were hoping that those skills also trickled across the community. Most recently, in response to a need for continuous development and ways to redefine our resilience, we created a program called PROTECT. It's a 7-week webinar-based program that focuses in on various resilience topics such as how to create psychologically safe workplaces and spaces, how to use the latest neuroscience to really enhance our well-being, how to use mindful techniques, communication and empathic leadership. As Julie mentioned before, our mental health training performance is linked to Downer's sustainability-linked loan, which further is a very clear example of how committed Downer is to the health and well-being of our employees in the long term. Now I know the official data for the loan KPI we submitted was 2,000 employees have been trained. But I can tell you, it's far more than that. We've trained over 2,500 because we open up the course to employees' family members, our joint venture partners and other community members. Our commitment to mental health goes far beyond our own workforce. And I do start every foundations and mental health first aid course genuinely saying how lucky we are that Downer provides these courses for us because these are not work courses. These are life courses. We learn the skills to be able to maintain our own health and well-being and also support those around us, those we love. I've been working in the health and well-being space as a clinician for over 25 years. And I can truly say the proudest thing about being a Downer employee for me is that Downer truly cares about its people. Downer not only leads best practice but have been genuinely focusing in on employee mental health and well-being, long before international standards and concepts such as psychological safety at work were really embraced. Downer recognizes that if we can train and skill and arm our people and their families, we have the ability to reach out, touch and impact positively the communities that we work across, both in Australia and New Zealand. Anyway, thank you for allowing me a brief moment to share our passion in the health and well-being space. I'm off to run another mental health first aid course right now. So I'm going to say goodbye, and I wish you all a fantastic rest of your day. Thank you, everyone.

That's great, Natasha, and you do a great job in that area. Okay. We're now going to hear from Peter Tompkins, who's our Chief Operating Officer on Risk Management at Downer.

Thanks, Grant, and good morning to everybody. Yes, this part of the day is intended to give you an update on our approach to managing contract and commercial risk across our tendering and contract portfolio. But I think it's really important that we, given the particular conditions that we're facing, to focus primarily on our precontract, contract award and then into the contract mobilization. I don't know what's going on here. I'll just turn it off. Here we go, click it.

The arrow that works.

I'm not the IT manager. So what you'll see up here is really a layered view of a Downer standard and how that sits, first of all, within our purpose, promise and pillars. So Grant showed you our pillars. And this is very squarely within those pillars of relationships and most certainly, delivery. And within the Downer standard, you have your 17 core process areas. Whether you're doing mental health training with Natasha, whether you're doing on-site critical risk inspections, these are the things that our key people have developed and, over time, improved. And when you're out in the field, whether you're in a management review, you have the cues and you have the responsibilities and then you have the processes which you can check and verify what the people are doing in the field all the way up through to the top, very top of that governance hierarchy. So I'll get to some of that detail in a moment and guide you through what we mean by the Downer delivery management philosophy and how you can see that in action. So a bit of context, businesses right now are dealing with major supply chain uncertainty, whether that be in transport, logistics, base materials, technology, long lead time items and, certainly, labor costs. Now for a multifaceted services business like ours, we are in the business of managing risk but also opportunity. And regardless of the prevailing economic conditions, and these are particularly unique, we are all about constantly managing time, cost and quality and the commitments we make through our contracting arrangements. So business and investment communities right now are looking at the impact of post-pandemic uncertainty. But really, when I sit back and look at our delivery management methodology, we are managing the risks of the time through our existing governance frameworks, and they remain the same. And as an example of that, when I went back and we did a review of our more material, more long-dated contracts to understand the coverage for escalation, dealing with CPI, how we look at inflation, you will see a very, very high level of coverage. And that's because we have a very broad mix of contract types that give us coverage through aligned, cost reimbursable managing contractor. But where we have more fixed commitments, we have formulas and adjustments for CPI and other indexes that make sure that we're not taking the risk on these cost -- the cost base as the prices and the uncertainty increases. So I think that should give us all a very good level of comfort. So to expand on some of this a bit more, our key really is to be clear on the type of work that we do, where we do it and the contract models, the payment mechanisms and the commercial conditions that we sign up to. So we spent a lot of time upfront on job selection and spending a lot of time the way we look at risk. We negotiate our commercial arrangements so that we get a very fair allocation of risk. Quite simply, if we can't manage the risk, if we can't see a way to mitigate it, we don't touch it. So what I'm describing now are the end points of what happens when you follow the delivery management methodology. And you'll see from the display up here, we sit within the Downer standard, which is our integrated management system. So over the last few years, we've put a lot of effort into the TDS, and I will go into a few acronyms here, so bear with me. And this gives us a single governance framework, our operational policies, the procedures, tools and templates that sit across our entire business. Regardless of the functional area, the sector, the job type or the market, it is the same. And you'll see up on the screen, this phrase consistent, repeatable outcomes. And that has absolutely been the design philosophy as we have developed and enhanced the TDS. So you'll see here the TDS, you've got the key features. But what I think we're really talking about here is Downer's evolving culture and the systemization of our risk and opportunity management. And it's the way our people think. And any integrated management system is fine, but it needs to be used in the culture of the people and the managers to make sure that it is tested, verified, looked for -- looked at for conformances, nonconformances and the escalation of things to make sure they get closed out quickly. And I think this, along with our commitment to our purpose, promise and pillars, our sustainability focus, this is one of our top business characteristics, and it gives us a very distinct and a very sophisticated approach to our decision-making and the way we monitor performance. Right, so we'll get into some of the detail now. And I only have 10 or so minutes. So again, we'll be looking very much at that yellow mustard section, through to the blue and to the beginning of that handover and kickoff phase where I think we put a lot of work upfront. So I think the point is to make here, if you are a project manager, an executive involved in preparing for delivering contracts or monitoring the performance, you'll be seeing this landing screen on your computer and it will look very similar to this. So by clicking on these buttons here, dropping down boxes, the various sub-elements of the methodologies, processes and templates can be accessed, and they need to be correctly followed in order to move through the governance gates that sit around our delivery life cycle. So if you don't follow the steps, you will get caught at one of our governance checkpoints. And I'll go into a couple of those in a minute, but primarily, we're talking about our Tenders and Contracts Committee. All opportunities are monitored and developed through our CRM. Now whilst this is not unusual, the discipline of entering the opportunity, pursuing those which conform to our risk appetite is an important first step. And what has to happen at this gate is that we classify opportunities in accordance with our risk classification: 1 being low, all the way through to elevated risk, which are categories 4 and 5. Categories 3, 4 and 5 are typically greater than $30 million in value, may have design elements and are generally of a higher complexity. These tenders must be approved by our Tenders and Contracts Committee. And anything greater than $250 million must also be approved by our Board subcommittee. So opportunities which come to the TCC are now also assessed against our contracting-specific risk appetite statement. Now under this additional assessment, we look at the technical capability of the business to perform that scope of work against a prefilled scope document, and we apply a scoring system against key contract features. These being client type, to provide a ready reckoner of creditworthiness, public, private, the contract type, I mentioned aligned cost reimbursable lump sum; and whether there are other important characteristics like an early contractor involvement, which might mitigate against some of these headline items; and of course, any standout commercial terms like uncapped damages and the like. Now this is intended to provide another assessment point along the way. And importantly, it also allows us to keep track of our contract mix, the key features and how we report that to the Board. So again, another level of checking at the management level and monitoring by our Board and its subcommittee. Now if we dig into the Tenders and Contract Committee a little bit more. You've got 3 gates of review, the first being an approval to pursue, i.e., before we spend money on a bid, when there's still time to consider shaping the opportunity, who we might want to partner with and, importantly, we look at the opportunity cost of going ahead with the bid or not. The other 2 gates, the approval to prepare the tender and the approval to submit the tender just before it goes into the box. Now when the TCC does reject an opportunity, it is nearly always at that second gate. So early enough, but it's once we have gathered enough information from the customer's delivery requirements, the business unit have done their work, and that allows us to work out fairly early if it meets the company's risk profile or not. Now around all of this, you've got the project management office, and it's critical in providing our overall governance to the DMM, supporting functions like the Tenders and Contract Committee as well. And the PMO is the process owner of the delivery management methodology. And it is in charge of the constant refinement of the policies and responsible for the many checks and balances which sit around this delivery life cycle. And I'll get to some of these in a moment, but you'll see the bullet points which talk about the touch points to the process. So this process and this methodology never just sits in the drawer. It's living and it's in the management psyche, and it's actually hardwired into the roles, responsibilities and the way that we also measure and look at the performance of our key people. So the DMM, I think it's also important to note that it's followed regardless of job type. You'll see in this green section up here of the diagram that it covers jobs where you have an engineering component, a build, a construct, an operate, a maintain or a service responsibility. Now while there are key differences between maintenance and a construction contract, they've got their own requirements around technical delivery and capability, the same governance process is applied. It's just that these are accessed through a different part of the of the wheel when you're clicking in. So they just can't be missed. So why don't we look at some recent examples. So if we take a high-voltage transmission line opportunity recently that had a Category 4 risk profile, it fitted the core capability in a location where we had capability. The head of the business unit brought the opportunity to the TCC well before it came to market. So there were no surprises and no issue with the customer that had assets and financial substance. At the second gate, the business unit worked through the governance requirements through this wheel, filled out all of the pro formas. And these included a peer review of the estimate, a review of the program, which was particularly tight, but that was worked through as well. The preparation of the 3-way cash model to make sure that we're not funding the customer's operations and build process and, of course, a legal and commercial checklist. And you'll see up here, this is quite an important point. We have legal accounting, tax, insurance and treasury input to that checklist, which is a very sophisticated document but varies depending on whether it's a more straightforward opportunity or something like a very long-term PPP-style arrangement. So what were the issues here? Ultimately, the usual things. There were elements here of sourcing overseas materials and the price assumptions for steel lattice conduits, labor and other key equipment. Ultimately, they needed to be based dating in the submission because we could see that the client was dragging its heel in the assessment process. We also agreed here that there would be extensions of time entitlements for long lead time items because of supply chain. And the legal and commercial checklist also threw up an unacceptable interface risk and a liquidated damages exposure. Now as I said before, if we can't manage it, we won't take it. And that's exactly what the business did in this case. So the end point for this process, being the contract for submission was conditional on no responsibility for connection risk to the grid because of this adjacent wind farm development, a commercial qualification around LDs and a tag that met our responsibilities finished prior to the energization of the line, which is a very important point. So that's more of a construction focus. If you look at a second example and how the process sits across a maintenance contract, we've had one recently for a state government authority with a 7-year term, looking, after all, their social housing. The scope included all planned reactive, preventative maintenance, again, a Category 4 rating. So the issue here was really around the commercial model and validating supply chain. Now noting that we were managing contractor, subcontractors, we're going to be delivering the work. At the early stage of the process, the business unit undertook benchmarking and assessed the availability and quality of our supply chain. So what this meant was, at the end of the review, we'd only bid 6 of the 8 regions to make sure that our resources and our capability match the confidence level in the supply chain. So this just shows the process, looking at different issues and different situations. The TC checklist validated. It was a pass-through contract. Qualifications were there to deal with CPI increases. And because it was greater than $250 million, it was reviewed again by our Board subcommittee and ultimately, approved. So you'll see from these examples how the TCC, the functional managers, the PMO and the business managers and leadership group work together. And this is what I meant earlier when I said the TDS is really about our evolving culture, the systemization of our risk and opportunity management and the organizational psyche of our business leaders to set the tone for how we want our work shaped, won and delivered. So what I'll do now is just briefly touch upon this very early phase of the green quadrant. And this is our delivery phase. And I will finish up shortly, but we can talk about this over coffee or in the Q&A section just because of the time constraints. So when the opportunity is, one, the focus of the DMM shifts into mobilization and completion of key project deliverables and checking back through the TCC conditions, the bid qualifications and making sure there's a proper handover between the bid team and the team that's ultimately going to deliver the job. And this is where the TCC and the PMO provides that conduit as well as the operational leadership of the business. The complexity of the deliverables and governance oversight is again determined by the complexity of the work that we have won. But regardless, all of our categories 2 to 5 jobs must upload their core documents into our proprietary delivery management application. Now this includes the project mandate, the budget, the forecast, all of their procurement plans, engineering, commercial competencies, strategy and framework plans and the schedule. Now this is, I think, one of the really exciting parts of our evolving system. And what it actually allows us to do is to hardwire in all of the contract deliverables and all of the governance deliverables that the client has set and which our organization has set in terms of the parameters for delivering this work. And how that is then checked off and balanced is they reference up here the hold points. And this is one of the key governance gates that needs to be completed once the DGM app has all the documents loaded into it. For larger jobs, the PMO will actually release that hold point before anyone in the project can incur costs on that job. The app had become the critical reference point for both the project team and our operational managers in the delivery phase to measure and monitor project performance. And the beauty of this is that it is proprietary, and it was actually developed by Steve's team over in New Zealand. So it was geared up very much for our sorts of operations and the way in which we manage our risk and link it to our various governance forums. So look, I'm going to wrap up now, but experience will show that the work done upfront in those mustard, blue and early parts of the green quadrant are the key drivers for project success. Like any integrated management system, it's only as good as the people that follow it, the reporting that's done and the actions that are taken in relation to nonconformances. And while the PMO owns that process, the key requirements are owned by the business and the leadership group. And these are incorporated into their reporting metrics and escalated through to our Executive Committee and other monthly forum as conformances, nonconformances, actions and closeouts. And these are then reviewed and reported on to the Board. So I'm going to wrap up there. We have got a little bit more in that green box to chat about over coffee. So look forward to those discussions a bit later on, and thank you for your time.

Thanks, Pete. We'll all be contract managers and risk managers now. That's great. Okay. We're now going to hear from Ricky Bridge on Downer's role in decarbonizing the economy and he's going to take us through the global aspects, the Australian aspects and then what that means for Downer.

Thank you, Grant, and good morning to you all. My name is Ricky Bridge, and I'm Downer's Group General Manager for Environment, Sustainability and reporting. Today, I'm going to talk to you about Downer's role in decarbonizing the economy, focusing on Australia and New Zealand. Looking at various sectors that require the greatest effort to decarbonize and highlighting Downer's presence in these sectors. This will provide a segue into the rest of the day where you'll hear from our operational leaders. Now our current data shows that globally, society emits around 50 billion tons of greenhouse gas emissions each year. This equates to a carbon dioxide concentration in the atmosphere consistently above 410 parts per billion -- parts per million and increasing -- and this is increasing, which is a significant increase compared to preindustrial levels of 270 parts per million. Now this increase has been driven by economic and population growth, largely due to the society's dependence on fossil fuels. To reduce emissions and achieve increasing prosperity at the same time, society needs to decouple greenhouse gas emissions from economic growth, and this is decarbonization. Whilst population growth will continue, we are already starting to see the economics of climate change rapidly shifting. And this presents significant opportunities in demands for Downer services. As mentioned by Grant and Julie, Downer is well positioned to service its customers through the energy transition that is necessary to achieve net 0 by 2050. So let's first take a look at the Australian and New Zealand government policies and commitments. So Australia is pleased to achieve net zero emissions by 2050, while New Zealand has already passed laws committing to achieving net zero by 2050. So Australia took that pledge to the COP last year. It's yet to be legislated, but the commitment is there. Australia is committed to reducing emissions by 26% to 28% below 2005 levels by 2030, while New Zealand has committed to being 50% below 2005 levels by 2030. Once again, the Australian government has come under some criticism about that near-term target in its ambition. But despite that, each state in Australia, each state and territory in Australia has also set net 0 targets by 2050, along with a range of near-term 2030 targets in addition to renewable energy targets, and you can see those on the slide. These commitments are driving capital allocation, investment decisions and how we deliver our services and products. Downer's customers, as you know, predominantly government or government-related, and governments have a major role to play in the sectors where the greatest effort to decarbonize is required. These sectors include transport, utilities and facilities. Now decarbonization is presenting opportunities for growth in the private sector as a result of investor and shareholder pressure. And corporations like Downer have set ambitious net 0 commitments that Julie has already discussed. This presents increasing opportunities for Downer to partner with the private sector organizations to help them on their decarbonization journey, and we expect that this is going to increase tenfold. So let's take a look at the Australian emissions, so we're getting to the sectors now. So let's take a look at Australian emissions profile by sector. So the major sectors are power generation, electricity. You can see there in blue. We've got transport. We've got manufacturing and construction. We've got industry, and we've got buildings, all of which Grant talked about in the earlier presentation today on the wheel and all the other sectors that we have a strong and leading presence in, with the exception of agriculture, aviation and shipping, of course. So Downer is well positioned to support the decarbonization of these sectors that is required for Australia to reach its net zero commitments. Let's now take a look at New Zealand's emission profile. A different profile, a slightly different profile to Australia's. It's nearly half or close to half of -- just under -- sorry, just under half of New Zealand's emissions is from agriculture with the other major sectors being transport, power generation, mainly electricity, manufacturing and construction. And once again, with the exception of agriculture, aviation and shipping, Downer has a leading presence in all major [ leading ] sectors. And Downer is well positioned to support the decarbonization of these sectors that is required for New Zealand to reach its net zero commitment. So you start to see a common theme. So I'll just draw your attention to this slide. And this slide is a -- it's the Intergovernmental Panel on Climate Change, the IPCC. Its latest report, AR 6, which was released last year, confirmed the science that we must cut global greenhouse gas emissions by 50% by 2030 and reach net zero by 2050 to have any chance of limiting global warming to 1.5 degrees by the end of the century and prevent catastrophic and universal harm. So this diagram or the graph here, you can see, it talks about -- I mentioned before that we're currently emitting 50 billion tons of greenhouse gas emissions. And you can see where we are today. You can see that there's 5 different scenarios based on different concentration pathways, which equate to different temperatures by the end of the century. You can see that the no-climate policies is sending us on a direction of 4.1 to 4.8. Now the recent supplementary report by the IPCC indicated that we're well on track to reach 3 degrees by the end of the century. So there's a huge amount of effort that's required. If we take into consideration the current policies, and referring to that earlier slide of Australia and New Zealand and the other commitments made by other countries around the globe, you can see that we're probably going to get to around a 2.5-degree world at best. We have additional pledges and targets. We can get to 2.1. The 2-degree pathway was the one that was set at the Paris Agreement in 2015. And back then, we would have been looking at that thinking, geez, 2030, it's a fair way away. However, we have 8 years. We have 8 years to get to that 2030 target. And from the recent IPCC report, that has now increased to a 1.5-degree pathway. So you can see there, the shaded area, just the rapid decline in GHG emissions that is required to achieve that 2030 target to have any hope in hell of having -- meeting the 1.5 degree by 2050. So I guess the cadence here is that the amount, like -- as Grant mentioned, the amount of transformation that is required in a short space of time to get those emissions and to decouple greenhouse gas emissions from economic growth is huge. The amount of capital and the amount of investment that is required, it is phenomenal. It is unprecedented. So I think, yes, I'll leave that slide for that. Moving on from that. So the International Energy Agency released its 1.5-degree pathway to net 0 by 2050, and here it is here on the screen, which shows energy transition required and the key sectors being power generation, industry, transport and buildings. The International Energy Agency modeled that to reach net 0 emissions by 2050, annual clean energy investment worldwide will need to be more than triple by 2030 to around $4 trillion. Whilst this is a global view of the energy transition, it is very comparable to what is required in Australia and New Zealand. Once again, I'll highlight that Downer has a leading presence in all these sectors, being power generation, industry, transport and buildings. And at a high level, the energy transition required includes -- I won't go through all of them, but they're on the slide there that you can see. It's no new unabated coal plants by 2021, phaseout of unabated coal plants by 2030, no new ICE vehicles and vehicle sales and phasing out of ICE vehicles by 2030, 2035; overall net 0 emissions electricity in advanced economies by 2035; and at least 70% of electricity from renewable sources, wind and solar. So right now, in Australia, 70% of our electricity comes from coal-fired power generation. So that's a complete flip, a complete flip. And we think about how many years it's taken us to get to that point and how many years, I guess, we've been able to transition and being able to bring some renewables into the mix and how many wind farms and solar farms that is. Just think about the magnitude of how much more investment in that infrastructure that is required. It is phenomenal. All new buildings are 0-carbon ready by '23. We're retrofitting by 2050. So as you look at every building out there, you look at the building we're in here, look at every building, everything that we do, everything that we service. When it comes into the facilities and the building sector, Downer has a role to play. Increasing alternate fuels, so for those sectors that are hard to abate, so where you can't electrify, there is going to be the advancement of alternative fuels such as the hydrogen and your biogases and other forms of synthetic fuels. And then, of course, we've got carbon capture storage. So the International Energy Agency has recognized carbon capture storage as one of the key technologies that will get us to a net 0 by 2050. Once again Downer plays in this space. I'll move now on to -- from that into this next slide, which talks to you about the federal government release, the Australia's long-term emission reduction planned. Underpinned by Australia's technology investment road map, it provides a strategy to accelerate development and commercialization of low-emission technologies to achieve Australia's net 0 commitments. The low-emission technologies that will enable net 0 across multiple sectors, as you can see on the screen, include low emission electricity, energy storage, electrification, energy efficiency, carbon capture and storage and other emerging technologies. Once again, a common theme, if you look on the left-hand side, the major sectors, electricity, building, transport, industry mining and manufacturing, agriculture and land. Now we play in all those sectors, although we don't play too much in the agriculture and land. But I'm sure you're going to hear from Jim Kafanelis a little bit later on. And we do -- we are involved in some pretty unique technology when it comes to wastewater treatment plants whereby you gasify the biosolids, then you turn that into biochar and that becomes a land application that sequesters carbon. So it increases the uptake of carbon in the soil, and it's becoming also another technology that the International Energy Agency and the IPCC, they're all recognizing as key to decarbonizing by 2050. So I want to reiterate that this is a federal government pathway. And once again, you can see the major sectors, as I've discussed. So moving on from that. So we now drill down into Downer's capability and looking at those priority and low-emission technologies. And across the top, you can see on this matrix we've got, I guess, they're a very simplified version of what Pete was just talking about with program development, program delivery, operations and optimization and where Downer plays in each of these areas. Now when we talk about low emission electricity, it's not just all about renewables. And whilst it will be, we have to transition. So we have to service our existing customers on their journey with coal power generation, gas power generation, the networks and enabling infrastructure required for them to transition into other fuels. And we've heard about the recent -- bringing forward the closures of coal power plants in Australia. And by no means is this going to be orderly. We talk about an orderly transition versus a disorderly transition. Now this is not going to be orderly. Now that creates opportunities. And we're here for our customers to support them through the uncertainty associated with that transition. So then it is, as I said before, it's about flipping that 70% and having of coal-fired power and having 70% renewables with wind, solar and hydro. And also looking at the enabling infrastructure, and Grant touched on it, I'm going to -- you're going to hear more about that from Mark Mackay later on around just the magnitude of what's required in terms of upgrading our electricity network here in Australia and New Zealand, taking it from a centralized dispatchable energy source going into renewables and basically changing that entire network, which looks at the battery storage and all the other things to make it a reliable and secure and stable network. So when you get low-emissions electricity, we then get -- we can then move to electrification. And this is the pathway, I guess, that globally, everyone is looking to go down where it's achievable. Electrification won't be for every situation. And so we look at the buildings, the roads, the rail networks and infrastructure, so Steve Kakavas will talk to us about the rail, the rail rolling stock. And so in that case, our networks, the rail networks, are already electrified. But there's a lot to do in terms of efficiency, reliability, the rolling stock that sits on that network. And it also will need upgrade as time goes on. So again, when you start thinking about the magnitude of electrification that is required, it's actually meaning we're going to be generating more electricity than what we do now, but it's just going to be from different sources and different networks to support that. With that electrification, we're going to need energy storage. Now Downer plays, as you can see by the tech, we play in all these spaces in all those bioemission technologies that I've just talked about, including energy storage. Now where we don't play in energy storage at the moment is pump hydro, but I'm sure we've got the capability to enter that market if we choose to. We then look at energy efficiency from the facilities and the buildings. I've talked -- touched on that. We talk about the alternative fuels for those sectors that are hard to abate. And then you start looking at the network such as Dante will talk about the road network. So whilst the vehicles might be operating off electric -- electric vehicles might be operating off hybrids, might be working -- operating off hydrogen, there is still a road network that needs to support those vehicles. Those road networks will need to become smarter. They'll need to become electrified. And with that becomes automation. So again, a lot of opportunity in that area. I've talked about carbon capture storage. We are probably one of the -- the only or one of very few service providers in Australia that have got capability in carbon capture use and storage. And I'm sure Pat will talk about that. I've talked about the land-based solutions, talked about this also, sequestration. We're using the biochar. And we're also keeping a very strong eye on other emerging technologies. One that comes to mind there is the carbon removal technology such as direct air capture. Now this is an emerging area, and it's also been recognized by international agencies in terms of the role that it will play in decarbonizing. We'll keep a strong focus on that in addition to new technology, with batteries and other forms of technologies that become available. Now that's not an exhaustive list of everything we do, but it gives you a good flavor in terms of the areas that we play, the areas that we don't play and those low-emission technologies, and you would have seen that thread all the way through. So thank you for your time. I think I'll end it there, Grant. And hand back to you.

Yes. Thanks, Ricky. That's a great teaser for the rest of the day. Look, we're just going to have a short break, I think, 10 minutes, 15, okay? And then we'll be back in here 10, 20. Thanks. [Break]

Okay. you're now going to hear from our business heads. They're going to go through their businesses, what's happening in them, how they're handling all the issues and really what's in store for them. But they're also then going to look at what we're doing in their areas on decarbonization, and it's a very good story. The slide that Ricky was showing us here -- that one as well. I'm just looking for backwards. There we go. So these 2 slides sort of highlighted at the moment in where we're thinking about where we're going to focus. In many cases here, we are already in the game, and you're going to hear about that from the business heads as we roll through today. So this isn't wishful thinking. We haven't sort of changed our strategy and said that we're now going to jump into this area and we're going to make hay. This is very much core business that we are doing with our customers. And as I said, the customers now all have targets in this particular area and they're looking for people to help them. How am I actually going to reach the targets that have been put on this business, on this organization, and they're looking for people to help them here. And that is what we're doing today and we're going to ramp that up very significantly. The challenge, as Ricky was talking about, is massive. No one can put a number on it. You haven't heard any number in the election around the amount of money that's going to be spent for 2050, and you won't, because it's very, very large. So first off the block is Pat Burke. Pat runs facilities and asset services, has a very large footprint in power generation and also buildings but other industrial situations as well. So Pat and his team have been doing a lot in this space and I'm looking forward to a very good 10 or 15 minutes here. Pat, maybe 25, okay.

Thanks, Grant. Yes, it's -- it really is an area where we play in every day in terms of the decarbonization space. It's -- we have lots of regular conversations with our customers on the topic. So it is something we live and breathe and it's not new to us by any means. So just a bit of a reminder. So facilities and Asset Services was -- next slide, please, was formed on the first of July last year. So it was really coming together with the final step in integrating the Spotless business into Downer. So the Spotless New Zealand businesses went down in New Zealand. The Spotless defense contracts went into the Downer defense business. And basically, everything else that was left over was joined with our Industrial Services businesses and became facilities and asset services. So as you can see, we have 5 key lines of business. We're structured across what we believe are our key growth sectors where we have considerable upside exposure to the ongoing growth in health, just steadily increasing government outsourcing, which is essentially ongoing over time. The energy transition of course, commodity markets, and also a really important factor for us, which is really the reemergence of Australian manufacturing and Australian industry. Our asset and development services business sort of works across provides specialist FM integrated facilities management services and HVAC, being heating, ventilation, air conditioning services, across all of our other businesses, across all the other sectors. So we turn over a bit over $2 billion per annum. We'll finish with this year with that $14 billion with work in hand. So really pleasingly for us, this year, we've not only replaced the revenue that we burned through the year, but we've also added another $1.8 billion to our work in hand. So we've been growing quite steadily. There's 3 key trends that really impact our business in a positive way. And the first, of course, is decarbonization, which is a thing I'll focus on today. The second is what we're seeing around that, I guess, the post-pandemic reflection on the quality of our health services and our government services and what we expect from governments and the health sector in general or the community expects some help. And the third is really the current geopolitical situation and how that's impacting the renewed investment in oil and gas, in power generation and in industry in general. There's a few big numbers on the slide. You'll see the 17 health and education PPPs. We're definitely in very much in the leading position when it comes to those sorts of PPPs in Australia. But you also see things like 287,000 buildings that were maintaining 100,000-odd social houses that we look after. And then it's important to keep in mind, as I refer to decarbonization through the presentation because the reality is that decarbonization isn't just about new infrastructure and new technology, it's also about retrofitting schools, buildings, hospitals and assets that we already look after, so modifying, et cetera. I'll talk about that a little bit later. I'll just slip across here. So just a quick one on the national footprint. So about 14,000 people in the business. So it just kind of gives you an idea of our spread you'll notice very importantly that we're -- the red dots, I'm not sure how we can see that, but the red dots are where we have over 1,500 people. So you can see our key presence in all of the key capital cities and urban centers. We've also got a fairly good coverage outside of the major cities. And you'll also see that we have a fairly significant presence in all the major ports around the country, which is going to be pretty important in the future, so Gladstone, port Kembla, Newcastle, Kwinana, Port Hedland basically, we've got reasonable sized businesses in all of those key industrial centers. I'd also point out, I think Julie mentioned earlier on, the zero harm performance of the business. And you can see the -- just the statistics in the top right-hand corner there, just 0.52 LTIFR and 1.6 odd for our TRIFR. They really are class-leading statistics, which we're pretty proud of. And safety is a ticket to play in a lot of the industries that we actually work in. So it's quite important for us to maintain that sort of outlook. Just over to our lines of business. So our Power Energy business covers all refining and petrochem, LNG, Coal Seam Gas, coal and gas-fired power generation, pumped hydro and renewables, including the O&M of 4 utility solar farms. So whilst we don't have -- currently don't have the capability to build, I won't say the capability to construct pump hydro, but we're not in that space. We're in the maintenance space. And hydro is a very important part of our business. And in fact, we do have the largest hydro maintenance business in Australia. So our work scope consists mostly of long-term maintenance of its long-term maintenance contracts with Tier 1 customers performing specialized turbine and [indiscernible] engineering, maintenance capital works and shutdowns. And as Grant said earlier, certainly, we have a very clear presence in that power generation space. So our key customers include Santos, Origin, AGL, the usuals, but very much a Tier 1 customer base. So as you'd expect, decarbonization for us, especially in this sector, is both -- you can see it as both a threat or an opportunity. In our case, we're very much in the latter. We really do see this as an opportunity piece. And we made the decision some time ago that we need to take the approach of helping our customers on their decarbonization journey rather than just being passengers along for the ride, if you like. So helping our customers to decarbonize is really the opportunity here. And this is -- we've got a very, very large asset base that we look after in this space and we've certainly got the technical capability to help them to do that. So we've been working pretty hard on developing solutions in that space since we held our first Future Energy Forum in 2019, right? So again, it's not new to us, and I'll come back to that later in the presentation. If I slide across to our Industrial & Marine business, so a similar scope in terms of maintenance shutdowns, capital projects and programs. But we've got our [ traditional ] on our markets, and BHP is quite a big customer of ours, as you'd probably expect. But also, we've got quite a lot of exposure to nickel and copper, which are pretty exciting markets to be in right now with the investment that we're expecting and we are seeing now and expecting to see over the next few years. So an example of that is our key presence as the largest contractor in Kalgoorlie. So Kalgoorlie in the middle -- right in the dead center of BHP's Nickel -- west nickel manufacturing assets. So we're in these prime positions, if you like, in several locations around the country. And we also completed an USD 80 million parcel of work, performing a large parcel of the Olympic Dam shutdown at Roxby Downs recently. So in that line of business, the industrial marine business, though, we really see the key opportunity here or a key growth opportunity. It's really around the rejuvenation and renewal of Australia's industrial and manufacturing fleet of assets. That whole sector has been run down for many years due to globalization and a lot more offshoring, as you know, and we're really starting to see some key investment decisions being made by some of our customers at the moment where we've seen them start to reinvest in those plants and actually create a vision in the future of what the future of those plants might look like. So really -- so I might add that when we see those sorts of investment decisions have been made, that we're also seeing those investments we made in the light of obviously lowering the carbon footprint for the future. So a key example of that, that we're dealing with at the moment actually and it's very early stages, but you will have seen the announcement recently the Blue Scope are going to reline #6 as furnace at Port Kembla Steelworks, right? And that's going to be a multiyear project. And it's going to also mean the introduction of several new technologies along the way. So there are sort of decisions that have been put off and put off for years, and some of these companies are now a lot more confident in terms of their ability to make the core because they're starting to see a bit more clarity around what the future looks like. So key customers there, of course, include BHP as already mentioned, BlueScope, Wesfarmers and Orica to name a few. But it's -- we've got a pretty good spread across the industrial base in the country. So just across now to health and education. So our focus in health and education, apart from COVID, of course, which hasn't helped, has very much been on consolidation in renewables. So over the last several months, we've renewed approximately $680 million in the reviewable services components of our PPPs, so the Royal Adelaide and Bendigo Hospitals. And we've also renewed our soft services contract at the Alfred. And we've renewed those on improved terms and conditions to what we had previously in place. With 17 PPPs in our H and E portfolio, we're very well positioned in this space to take advantage of increased government expenditure in line with both increasing community expectations and population growth, as I mentioned earlier. We're also reviewing a number of adjacent growth options in the health space because we really have been focused on that PPP area for the past few years as we pull that together. Our government business, though, is quite diverse geographically. And it provides mostly hard FM services across various state and federal agencies as well as cleaning and security services across trains and trams mostly rail space and light rail space. This includes a substantial number of government buildings as well as social housing as we mentioned earlier, of over 100,000 houses there across New South Wales, WA and South Australia, so it's quite a well-spread business. It's also quite a large market with significant organic growth opportunities. And this business, in particular, stands to benefit from any post-COVID stimulus, and we also are starting to see flood recovery works come through especially in the New South Wales areas and the North and New South Wales regions as well. From a carbon footprint perspective, both of these businesses are very much more of the end-user side as opposed to power generation we discussed earlier, but they're very much of the end-user part of the equation. And I think if you refer back to those numbers we mentioned earlier around the 17 PPPs, all the hospitals, the schools, the 287,000 buildings, 100,000 homes, if you consider that each one of those is going to have to be modified in some way as the country seeks to reduce our carbon footprint, even if the expenditure is only a couple of thousand dollars or less than $10,000, you multiply that by the number of assets that we look after, that's a substantial opportunity for us. It sits in that base line within our existing asset base with where we've got contracts in place that actually allow us to do that type of work. So you can sort of see how this is just such a huge opportunity for us over the next few years. So just a little bit, if you have enough that decarbonization already, I thought I'd mention it again. But hopefully, you get the message that it's certainly a very important part of where we sit going forward. But just to better explain our general approach to decarbonization, we've kind of identified sort of 3 key areas of opportunity that we've been positioning towards to really help our customers through the energy transition and their efforts to reduce carbon footprint. So if I just draw your attention to it just 3 horizontal boxes, if you like, across the top there. So the first area, transitioning our customers' assets to new technology. So the first area there is really through providing specialist skills, engineering support and technology aggregation to help our customers transition to new technologies. These new technologies might vary from the installation of hydrogen turbines, of which we have OEM agreements in place to help us to do that; and hydrogen fuel cells through the carbon capture and also through to improved building energy management control systems. So it's really about helping them to actually change technology or modify here. The second area is really providing and supporting and helping our customers operate their existing equipment differently to achieve a lower carbon footprint or because the market in which they now operate demands different operating parameters. So an example there would be the engineering studies that we've already completed on numerous power stations to help our customers run their power stations on lower loads and to ramp up and down more quickly to respond to market pressures with the impact of renewables on the NIM. So it might also include change in the maintenance regime to better suit efficiency rather than plant availability. So some of these coal-fired power stations, they've got all this capacity that they're not using in the past, they're all maintained around going flat out 100% of the time pretty well. But in the future, they've got -- with that excess capacity, they're going to be running those plants over the next few years on the basis of perhaps requiring 1 or 2 of the 4 units they have available. So therefore, they don't need to maintain their equipment the same way they did previously because not trying to achieve that higher availability and they've got more redundancy in their system. So it changes the whole way they maintain the kit. And we're certainly in the space and have been helping them to do that. The third, especially with our directly impacted customers, like some of our power station, coal-fired power station customers again for example. The third there is really helping our customers through their own structural changes. So this is a really big opportunity for us. So you've got large workforces with some of these power generators in predominantly fairly highly unionized regions and industry that basically don't really have a job anymore, to be honest, right? So renewables are fantastic, but a solar farm needs 4 to 6 people to run; a coal-fired power stations might need 400 people on it, right? So we're helping some of our customers very specifically and we've been doing this now for well over probably 18 months. We're helping them to find pathways to redeploy their people, right? So there's that redeployment piece. Well, we can use these people elsewhere in our business because we need people in other parts of our business that are growing, right? So there's that redeployment piece, but it also presents opportunities around outsourcing where some of these power station customers are trying to variabilize their cost base more. So we're starting to really start to see that pick up in the marketplace. The other point I just wanted to make on -- or one of the other points I want to make on this slide was, if you go down to the bottom half, it's really about the stuff that we're already doing. So right now, we have about $250 million worth of projects just in facilities and asset services that are decarbonization related. And there from very specifically around some new technologies like carbon capture. I think Julie mentioned before that -- sorry, Ricky mentioned before, that we're probably one of the few contractors that have actually done -- or we are one of the few contractors that have actually built carbon capture plants in Australia. So it's something we've had some heavy involved in. We've got some very unique perspectives on technology in that space through some of our technology and agreements and partners that we have in play. So if you do have a look on that list, especially down the left-hand side there, like I said, we're seeing some very specific technology plays, but we're also seeing decarbonization manifest itself in terms of helping our customers to electrify their assets, for example. So we are seeing electrification come through. And that's not quite -- that's not big technology stuff. This is building poles and wires for some of our customers where they had gas-fired engines in the coal seam gas fields for example, right, they're now converting to electric engines to run their wells. So there's opportunities associated with changing kit that's already in play with a kit that has a lower carbon footprint. So we're seeing that manifest itself across the business, too. Just a bit of a case study just quickly on Eraring. So Eraring Power Station. It's been previously announced disclosing in 2025. We have what's called a consolidated maintenance contract there, which covers maintenance, et cetera, right across the plant and some operating activities as well. But that contract goes to 2026. And you've got to think of these power stations in the context of Eraring power station and most coal-fired power stations were built in a specific location for a reason. It's their location on the grid that counts, right? And you think of all the infrastructure in terms of power transmission that sits around them. Companies like Origin, they won't walk away from a Eraring, right? Even if Eraring does close in 2025, they've already made announcements around a fair -- I think it's a 700-odd best battery energy storage system on site. We may also see other energy generation solutions on that site and we're certainly in a really good position to help them both in the transition period as I've already discussed, but also in terms of building and constructing and installing, if you like, new technology on site. I will point out that we don't see ourselves as constructive this is a services business, right? But we do install technology, right? So we do install technology for our Tier 1 customers on a very specific terms and conditions and a very specific risk profile. Just quickly solar farm, so we do operate number of solar farms. So you can see there 340 megawatts, this is why I know how much -- what it takes to maintain -- operate and maintain a solar farm because we need to do that. So 340 megawatts, we got about 1.18 million panels. So it's quite a nice capability to have, if you like, given some of the -- given what we're seeing across the market and given that when you talk about things like hydrogen and some other alternative fuels that they actually have to be generated by renewables. So it's another part of the puzzle, if you like, in terms of capability. Just on hydrogen. And again, it's always a lot to debate on hydrogen, of course. But we do want to touch on it. And I'm sure you've seen this slide in a number of forums. But it really just showcases the current proposed hydrogen projects around the country. There's about $200 billion in total. And I'm sure if you did this slide today and then next week, you'd get different numbers. But by the way, there's a lot of zeros involved. So I know there are a lot of doubters out there about what the hydrogen market looks like. But I think that you have to come from the perspective that along with renewables, batteries, pumped hydro, synthetic fuels, to name a few, hydrogen will have an important place, especially when it comes to replacement of reliable seasonal power generation and heavy freight. So I'm pretty certain we'll also see an export market of some scale. There's a lot of money being invested in that space, not only in Australia but offshore as well. Still on hydrogen. So over the last 3 years, we've been developing strategies and solutions on how we position ourselves as a -- not only as a ready-to-go choice for our customers, but also as thought leaders. Now we've really tried to get ahead of the game in terms of what the technology looks like and how to aggregate that technology. So to this end, we formed a number of technology and market relationships and partnerships. And this slide, I guess, showcases a few of those. And so we have been executive members of the Australian Hydrogen Council since just after its inception. And as far as I know, we are still the only contractor that sits on the Hydrogen Council, by the way. And we've taken very active roles in various policy setting committees. We've also built relationships range from exclusive partnerships like we do with Mitsubishi through the signed NDAs with a number of technology partners across the hydrogen value chain. We have an engineering-led future energy solutions group that sits within our Power and Energy business that, in conjunction with our technology partners, gives us a deep understanding of how to pull these different technologies together. So a lot of these technologies off the shelf, you just got to aggregate them in the right way. So I guess it also allows us really to pivot quickly and respond to our customers and respond to the market, which is changing every day. And whether that's hydrogen production, storage, generation, fueling or related infrastructure, storage infrastructure, for example. So we really responded to the market in this space. In fact, as I said, I would suggest we're probably a bit ahead of many of our customers. So it's an area we put a fair bit of effort in. I guess the takeaway really is that if we were to receive a hydrogen inquiry from the market tomorrow, we'd be pretty well placed to respond to that. Just to give a shift of focus, if you like. So just on to Royal Adelaide Hospital. So our contracted Royal Adelaide Hospital. It's a great example of a variety of complex services that we provide in our health and education business. So as per the slide, every day, at Royal, we preparing to deliver 3,600 meals. We complete 110 operating theater setups. Transport around 200 patients and take around 1,000 calls to a help desk whilst, at the same time, providing 24/7 security services, operating and maintaining a fleet of 25 AGVs auto guided vehicles and maintaining over 130,000 assets. So it's actually a very complex and unique capability that we have. And we're held to a very high standard by the state as well, which is important. So again, it's just a fantastic example of the complexity that we're able to deal with within our business. And certainly, as these sort of opportunities come up in the future, we've got a real showcase in the Royal Adelaide Hospital and Bendigo Hospital and Orange, et cetera, in those PPPs that we currently have in play. I haven't really mentioned much about our asset and development services business, but they basically provide a number of specialist services across our sectors. So these include installation and maintenance of HVAC and building management systems. And given that HVAC is usually the largest consumer of electricity in any building, then they again have an important role to play in rolling out low energy solutions across our customer base. So you can see that on the slide there that some of the areas we've already done that in over the past year or so have been in the Melbourne Airport and also [ Baxter Health ] to name a few. The next slide, still a part of our Asset and Development Services business is basically just demonstrates how we're pulling together the post-pandemic clean air theme with energy efficiency. Given the competing demands for better ventilation air conditioning tempered by lowering our carbon footprint, I mean they're almost odds of each other, right, wanting more better air con and better ventilation but also wanting less electricity use. So basically, we spent a lot of time and effort putting together technical solutions that allow us to do that. And as I said before, when you apply these sorts of solutions across the broad asset base that we have, you start to back up some scale of the opportunity. Just finishing off on some digital technology highlights aimed at reducing costs for both our customers and ourselves. So firstly, we have successfully piloted our blockchain trial with BHP at Port Hedland. That -- the contract that we have there maintaining the port facilities, it's large, it's very logistically complex because the amount of employees we're having to fly in and out and accommodate and feed and so on and assign work to. So it's very complex and incurs significant administrative effort. So it's early days, but so far, we're seeing some very promising results in reducing that administrative effort as well as a number of other opportunities that we're seeing with blockchain. So BHP aren't on our blockchain yet. So we've just set it up within our own team, and it's already showing some real advantages for us. And we believe that's the first in industry -- in our industry, at least. And it will really make a difference to us as some of these contracts grow over the next few years. Among the various other digital initiatives, including some of the trials we've been doing and implementations of augmented reality, we've also recently implemented Digital Twin, our Melbourne Connect PPP. So this is a tertiary education precinct in Melbourne. The clear early signs of it, we will see real savings generated in the way we maintain the assets and the assets that we have responsibility for in terms of being able to improve the life cycle or extend the life cycle of those assets, reduce repair time and costs should anything actually break down as well. So it's got real ramifications for the rest of our PPP portfolio given our ability to roll this out amongst those other 17-odd PPPs where we have life cycle cost responsibility. So it's a real promising technology for us. So that's basically my last slide. I guess just in closing, just the message I really want to leave you with is that our 4 key lines of business, all sit in growth areas aligned with our Urban Services strategy. Now we have considerable work in hand. Now we've got a strong pipeline of work that's growing. We do have a relatively -- or we do have a very low risk profile as a business, and we've done a lot of work to reduce that over the past few years. And we're very well positioned and, in fact, delivering on helping our customers on their decarbonization journeys. So it's a huge opportunity for us and we're really looking forward to, obviously, a bit of clear air post COVID. Thank you.

Yes. Thanks, Pat. That part of the business for us is a real technology leader. So thanks. So next up is Mark Mackay, who runs our projects business, a really, really important business for us, very much focusing on transport on one side, but also on power on the other. And we're going to hear from Mark now, particularly about the power aspects.

Good morning, all. Just go to my first slide. Here we go. All right. So our businesses are predominantly our project delivery business. At any one time, we've got about 40-odd projects going around the country. They range in size from quite small up to the $1 billion scale at the other end. And it's a business that plays in predominantly 2 areas, so power and also transport. And we do a little bit of defense work as well, joined opportunities with Jacob's business that I'm sure we'll speak about. What makes us a little bit different to a lot of the Tier 1 players is the internal engineering services capability that we have. So if we're looking at a power project, we can do end-to-end. So from project formation, through to the engineering, through to the delivery and hand off to maintenance, sometimes in Pat's area, that's all in-house for Downer, which is what's fantastic in this market because we're seeing a lot of demand on Tier 1 designers in terms of them being able to deliver being stretched, we can control all the pieces when we control that particular service offering. So it's fantastic for power. And we also have it in our rail business. So we have an internal rail systems engineering business. It does rail signaling design, rail safety assurance, rail systems assurance. And that's also an important differentiator for securing a project because our customers in rail want to know that we've got this risk profile under control. We're not outsourcing it to anyone. We can manage it end to end. So it is a differentiator for us. And clearly, we're one of Australia's largest and most experienced providers in the renewable energy market and power systems. On the right there, we've detailed our specific capabilities. So in power, we construct transmission lines, high-voltage substations, solar farms, battery energy storage solutions and wind balance of plant. In rail, everything from track construction to overhead wires and of course, the areas I mentioned around the rail systems, assurance and signaling. We do road and bridge construction and adjacent markets such as water and defense as well. And again, on the right, a little bit more detail on the specific engineering capability that we have in our business around that power, rail, water and systems engineering. I've got some good pictures at the bottom of some recent projects, projects that we've completed and are ongoing. On the left-hand side, we've got our Parramatta Light Rail build. That's in the tail end of delivery now. We'll complete the infrastructure works in around June or July this year. So it does demonstrate that light rail can be built in Sydney on time and on budget and also with COVID going on in the background. So it's quite a successful project by all accounts. Certainly, transport for New South Wales are very pleased with the efforts. Numurkah solar farm in the middle of a project we completed a few years ago. And we've got the Eyre Peninsula Transmission line job that we're doing down in SA right at the moment. So I'll talk a bit more about power in the next few slides. So the pipeline, we've heard it today several times. I mean, in the areas that we play in, in the project business, they have absolutely massive pipelines. Power and Renewables, we're talking about a $70 billion pipeline, of which specifically $40 billion is in transmission substations and also in battery energy storage solutions. Now that -- I've heard a range of figures on the best, but suffice to say there needs to be $10 billion to $15 billion spent to facilitate the transition away from coal-fired power just to deal with the demand curve. So that's an absolutely huge market for us. In the transport area, roads, rail and civil, this is a pipeline that just keeps on giving a lot more infrastructure projects to come. Specifically, $40 billion of that is in rail. So again, sweet spots for our business. And on the right-hand side, it's another graphic that attempts to show funded projects. So again, very, very large. That's an infrastructure partnership slide. I'll let you look at that at your leisure. Importantly, on the bottom left and picking up from Peter Tompkins earlier discussion and I did spend a bit of time last time I presented on this, but we do have a very defined project selection criteria, which we call internally the swim lanes. So it is around contracts that have the right commercial model. And clearly, we favor alliance, cost recoverable managing contractor type opportunities. Known customers are really important to us. And again, with the size of the pipelines, we can really afford to be picky and choosy about who we want to work for. And importantly, we want to play to our strength. So the capability and previous track record is very important for us in determining which opportunity to go for. This slide, I want to go a bit deeper here on power. So there is no transition without transmission. The current power network needs to be and is being significantly augmented to deal with the amount of renewables that need to come online. There's currently 45,000 kilometers of high-voltage transmission currently in Australia. And just on that point, understanding this was a very dormant space for a lot of years, so there is a lot of maintenance work and upgrade work that needs to happen on the existing network. And additionally, 10,000 kilometers of new, high-voltage power transmission line to be built over 10 years. There's a $20 billion transition funding proposed by federal labor that you would have seen in the press currently. And right now, the current industry capacity is 700 kilometers per year, and this is our estimation and what's available in the market is clearly inadequate. So that presents a big opportunity. And as Grant said before, this isn't a flash in the pan idea for us to go and have a run at. I mean, Downer has got a 70-year heritage in Australia in power transmission. We are the clear market leader. Behind us, we've got UGL. And then there's a lot of space to the next players. So unlike the transport area where there's a plethora of Tier 1, 2, 3 and 4 players, not so in power. And some of the reasons for that are: it's a highly regulated environment. Not -- you can't be anybody and go and play on a high-voltage power transmission network. So it's heavily regulated. Accreditations are needed. A range of competencies need to be demonstrated before you can go and play there. And fortunately, for Downer, we have all those. So we really have an opportunity to pick through this market over the next few years. And that means premium margins. We're a trusted provider to all the major TNSPs and some of which are on the board, and we're doing work with all of those TNSPs at the moment. And more broadly, in power, it's not just in high-voltage power transmission and substations. We've built a lot of wind farms and a lot of solar farms over the years. So we've got a lot of capability in that space and also in the big battery space, a number of projects under our belt. Right now, we're seeing the renewable energy zone outsourcing opportunity in New South Wales and Downer will play in that space. Right now, we've got Central West Orana, which is currently out in the market, and it will be closely followed by New England and then potentially 2 or 3 more. So these are major opportunities and clearly, a different delivery model being entertained by the New South Wales government. We expect that to be replicated in other states. Some of the major wins we've had in this particular market, SA Project EnergyConnect, $200 million secured. That was the second major new build that's come to market. And the first one is on the right-hand side that we're in build right at the moment. We're going to complete that job in November, December of this year. So a fairly fast build. It's gone really well. We're ahead of schedule and a great project for us for sure. So a good space to be in. Graphic up here of a solar farm that we completed recently. So this is at Chichester up in Western Australia. It was a project -- our customer was Alinta. Their customer is Fortescue Metals. So that was a mixed scope project for us, played to all our capabilities. 60 kilometers of transmission line substations, plus a 60-megawatt output solar farm as well. So we expect to have more opportunities. And right now, we're in negotiation with both Rio and BHP about similar projects. I mean Rio has just made a recent announcement of introducing 1 gigawatt of this type of project to their particular network in WA, and they're a trusted customer of ours. We've worked for Rio for 5 years on the rail. Our recent project up there, Ballarat Energy Storage System, BESS project completed in 2021. Grid connected 30-megawatt. First stand-alone BESS installed in front of the meter and directly connected to the network. So it was a bit of a first. And since then, as we know, the BESS solutions have only got bigger. And as I mentioned before, many more of these projects needed around the country over the next few years for network stability. On transport, we have a big transport business. On the right-hand side, Warringah Freeway. It's a joint venture opportunity that we're currently into. It's a major piece of work, just north of the Harbor Bridge. So it's an enabling project to connect the Western Harbour Tunnel & Beaches Link. Also, Waurn Ponds Duplication and Alliance rail contract down in Victoria that we've been -- we're currently preferred, and we're working towards contract execution by June. So another fantastic project for the team in rail. And then a defense project on the right-hand side at Williamtown, Jacob will talk to a little bit later in more detail. But the place that we want to play and we do play: roads, upgrades, metro rail systems, faster rail projects, transport access program. And that particular program, we've worked on 35-odd railway stations around Sydney over the last 6 years, putting in new lifts, DDA compliance, platform extensions, enabling works to give us a better transport network in New South Wales. And that's been a very profitable, ongoing and fantastic stream of work for the business. The picture up there, that's our Metronet project over in WA, which is a joint venture project with CPB. It's new rail in WA. So we've got 11 kilometers of new railway line down on the southern side, connecting Thornlie and Cockburn. And then a 17-kilometer new section of rail in the North, including 4 new stations, which enables Perth to continue its urbanization in the North. Right. That's it. Short and sweet for me today. I'm happy to take questions later or catch me at the break. Thank you.

That's great, Mark. Thanks very much. Next up is Jim Kafanelis. Jim runs our Utilities business in Australia. Jim's had a number of years recently in New Zealand. He's had a sort of a large role there in running various parts of that business, including utilities, but also the ex-Spotless businesses that we acquired. This particular part of the business, obviously with the name utilities, is right in the middle of this decarbonization path. All of the customers there are really interested in what we can provide. So Jim, let's let the investors know what you're doing.

Thanks, Grant. Good morning, everyone, and good afternoon to our New Zealand colleagues and family. Thanks, Grant. Could have listened to that all day. So look, I just thought it's a great opportunity for me to be here. I mean recently transitioned about 3 weeks ago now from New Zealand straight to Australia. I was welcomed back with COVID. Now feel better and right into it. So it's great to be home and based out of Melbourne. And as Grant said, the time, the connection to our New Zealand business has been absolutely sensational over a period of 7 years. So look, I just thought I'd cover a few slides today that will give you some insights as to what the utilities business is about in Australia. We have a balanced portfolio across power, water, gas, telco, the obvious standard utilities. We include renewable energies, the emerging sector, as you've heard quite clearly today, and we'll touch on some cases across that shortly. But if we look at the last sort of period, we've come out of a transition of a big build for NBN, a once-in-a-generation build, arguably. And what's next? Well, what's next has been a fantastic take-up of services, new connections, maintenance, optimization and still a considerable amount of program work taking place and being presented to the market. We're offering unique -- and that's in the telco or technology and communication space. And in the water space, not too dissimilar, a lot of presence in that space right now. And we'll touch on the gasification, which Ricky mentioned a little bit earlier, but also the elements of services that we provide right across the water business. So the innovative solutions that we provide across the board. The IP, we've touched on the design that Mark's just covered. We do a lot of engineering and design, and that will show through some of the cases, the business cases that we've put up here, but also in our normal operations as a point of difference and expertise within the actual Utilities division. Keeping in mind, regulated industries, certified resources, qualified and well versed in what we do in that space. It's a really critical space for all the reasons that we would understand. We're well positioned to capitalize on the market. You heard Grant talk earlier about our compounded annual growth rate of about 5.3%. So that tells us we're in that space. But also more importantly, not just to the external market, but a One Downer presence if we look at right across the business. And one of my focus areas and objectives is certainly to leverage that One Downer, having formed utilities in the New Zealand business. Leading the Utilities business in Australia gives us a great opportunity to leverage our capability, the IP, the technical [ fraternity ] and community right across the board. The opportunities are interestingly increasing through the relationships that are existing from the businesses you've just heard about, where value-add proposition does create a point of difference for us right across the board. So that's certainly a key area of focus. And if you look at the infographics, basically our clients, long-term relationships, generally we've been servicing for a long time. They're an important part of our existence, and we're an important part of theirs. We support many thousands of families right across the group, which is absolutely paramount to us, and they're all extremely valuable in ensuring that we deliver services with a value-add proposition to our clients. So if you look at our revenue. Utilities business in Australia, $1.3 billion. Couple that with the New Zealand business, you're now starting to get to -- for the utility space in New Zealand, you're now getting close to $2 billion of revenue annually. So when we put up the #1, we say it with facts, and we certainly have growth opportunities sitting in that space as well. Our pipeline, there is a slight shift into the water space. It's growing right now. And you can see 49% work-in-hand is sitting in the water space, but opportunities are still presenting right across all the utility sectors. And the renewable space working closely and aligning with our businesses. One of the areas of focus for us is now starting to develop. We talk about renewables. We talk about decarbonization. But now starting to look within the Downer business, whether it's Keolis Downer and understanding how can we build the infrastructure that supports their buses, whether that's through charging stations and the like. We've also got the opportunity to look at our buildings and our facilities right across the board. And we're working closely with rail, and we're working closely with the other parts of the business to see where we can add value in that space and bring some of that point of difference that we've got and demonstrating for clients out there in the open market. And the general services, a million electrical assets inspected. What does that mean? It means that we're out there in a big way doing a lot of work that is really important. But I want to cover the 2 national industry awards that we've received. And I think these people, it's nice to recognize where people really step up. And Michelle Oberg was a best individual contribution. She runs a human operational performance program for the Utilities business, has been recognized by Logan Water. So congratulations to her. And also [ Chris Haschistabru ], right, who Multinet Gas Chairman's award in Victoria for his contribution to a Zero Harm Culture. So shout out to those people. Look, the numbers are straight there. I'm not going to talk about every little aspect of it, but there is a lot of activity, a lot of moving parts and a lot of good things happening in the business. The business is in a really good position. And it's -- I'm really excited about working closely with it and really complementing the good work that's already been undertaken. So as you've seen, again, pretty self-explanatory. The areas that we're looking and we're currently operating and we'll continue to operate in, and flex and leverage with my colleagues and their businesses to get the best out of our service offerings, our construction offerings and our engineering offerings to our clients, are right across the standard sectors of utilities. So really important we acknowledge that and the emerging technologies that present with it. So this slide is really just to give an indication of what's our national footprint. If I put the New Zealand footprint there as well for the utility space, we're right across -- well spread across both countries. So it's a good, diverse business, presence across all states, territories and also New Zealand. So that's complementary of all the good work that's been undertaken over many years and the relationships we've held with our clients. A lot of these contracts aren't 5-minute exercises. We work with a relationship. We work with clients. We're part of a strategy, and we deliver services and projects for a long time. So -- and obviously, the list of clients there, you can see, and New Zealand is not too dissimilar. They're the Tier 1 clients of the country and play a significant role in every aspect from social to economical and alike within those countries -- and within the countries and territories and states. So look, the case studies that I thought I'd just really touch on today was especially to the decarbonization elements. But the team [ of them ] looked at renewable energy in Queensland. It was 600 schools, the project. It was really where we went out there, talked to every particular school, understood their needs and developed the solution, developed that solution from a design perspective and then delivered and installed and implemented whatever that solution was. And that program ran across a number of phases. It's obviously referred to advancing clean energy schools. What's been interesting is as part of that process and to educate our youth, there's some technology that's been applied where the actual -- school children can actually see the power being generated through the cells and actually start to understand how electricity is being utilized right across the group. So it's quite educational sort of process and quite good. The fact is we've saved our clients there a significant amount of money in energy use, which is quite important. We've installed over 81,000 solar panels just in the space of schools, and we're looking at what other opportunities, for example, LED lighting, LED to lighting and see what other things we can do with the government and some of the programs that exist or will be existing in the near future. So this particular project ran over a number of phases. And obviously, due to delivery, and originally, there were 3 providers, now has been reduced to 2, so we're continually taking up additional work in that space. And equally as important, we're having a lot more input as to what goes on. So it's really good because clients, or schools if we refer to them as customers or clients, are now changing their needs. They're expanding their assets, and they need further work to upgrade or add further technology or so forth to their -- whether it's through batteries or anything else through those facilities. So quite an exciting project, and one that's been delivered extremely well across the group. And just on the last one. So you heard Ricky talk about it. Now I'm not the subject matter expert on this, but I'll certainly convey some of the information that I've learned and read over the last sort of few weeks. But effectively, biosolids, as Ricky talked about, produced right across every wastewater treatment plant. It's not complicated to understand that. This new technology, which Downer has been a part of for over 5 years developing this with partners being Logan Water and certainly [ Porokel ] as well. So specific gasification partner there and obviously a client to enable us to get involved in that process and some serious engineering capability, process engineering there from the Downer team. The technology now allows their biosolids to be basically dried out, not shipped. So currently, what happens is, say, for example, for that wastewater treatment plant, treatment plant services 300,000 households. 90 tonnes a day of waste product gets shipped out of that location 300 kilometers away and -- to get disposed of or dried out, which is not good. We can all understand the logic of that. This process has enabled that product to now be dried out through a process engineering perspective, an upgrade to the plant. And then that used -- basically forms a biochar, another product that can be used as energy, and the remainder of that product is actually a conditioner for soil. So you can see it's basically a net zero aspect out of that technology that's been applied right across, and we see a big future for it. And there's now a lot of interest in these particular plants, and there's a lot of their clients or other customers or potential interested parties now visiting this particular site to understand more about the technology. And no doubt, we want to expand that further into the New Zealand business as well, and the New Zealand clientele that we service there as well. And so this is a great opportunity, and it will account for about 70-or-so percent of the actual energy through the biogas that it produces. And the other 30% part of this project required 1,000 panel installation of solar to support that. So that's when I say it's a net zero type facility now. It supports itself through its energy consumption, environmentally-friendly, reduces a lot of trips going 300 kilometers a day to offload product. And just basically creates a new avenue for innovation, technology and sustainability coming together, or the ESG elements of some of that all coming together for a common goal. And it's quite exciting from that space to know we've been in that arena for the last 5 years, working closely with our 2 partners, and it gives us rights basically to that IP and to start liaising with a number of other clients that we have, right across our portfolio. So some stats around it. Reduces CO2 output by 4,800 tonnes per annum. It's quite significant. It reduces the disposal of biosolids. Bioenergy from waste reduces energy input. So again, the obvious things that we've been covering off. And technology is relatively simple, we can retrofit any wastewater treatment plant basically with this technology. So it provides an avenue for us to continue to be able to work on that. So look, that's just a quick fired way of just a bit of an update for the business, the key focus areas for us going forward. If I look at it, I have the honor of leading this division, and I'm extremely excited about it. The team, we support 3,500 families at our external partners. It's probably closer to 6,000. Does a lot of great work. We need to acknowledge the efforts getting through all these challenging periods like everyone else. We've got -- we're quite passionate about what we do, and we're quite excited about the opportunities that presents. So my job is to enable a lot of those elements. Will be the -- what you heard from Peter Tompkins, whether it's projects, whether it's governance, these are all enablers for our business that we're embracing. And we're working through at a rapid pace, and we'll continue to evolve as a business. So thank you.

Yes. Thanks, Jim. That's not bad for 3 weeks, sort of getting across it, I must say. So Jim has come in. And Trevor Cohen, who -- if you were here last year, you would have seen who was running utilities, Trevor's retiring. So Jim is coming in to replace Trevor who's done a great job. And yes, good for 3 weeks, mate. Well, Jacob, you're up, our defense business. As I said, we're the fourth largest defense contractor now across the Australian defense business. And Jacob has got a number of really interesting things happening within that business right now. And of course, the government is spending a lot of money in this particular area and specifically in the areas that we play. Thanks, Jacob.

I'll talk to 3 key themes this morning. The first is to give you a bit of an idea of the shape of our defense business and what we do and, perhaps for some of you, some clarity around what we don't do and we don't play in the space. Second point, I'll cover off is our heritage, where we've come from and what makes us slightly different to the other participants in the market. And thirdly, I'll try and map out where the growth is coming in defense and how we're well positioned to take advantage of that growth. So in June last year, we formed Downer Defense, which effectively brought together Spotless and Downer's former Defense businesses under one single business unit. We've got 3 business units there and to Grant's, I guess, opening remarks, we've got 3 business units of scale and 3 business units that are regarded as market leaders in their particular spaces. We talk about ourselves as being thinkers, builders and maintainers. And so there's -- the market is awash with large U.S. defense primes who play very narrow and very deep. We're one of the few providers that plays across an asset life cycle. So I'll talk a little bit about the 3 businesses and how they relate. The first is our Downer Professional Services business, which is really a white collar high-end consulting business. We have 2 primary clients there. The first is the Capability and Acquisition Group or CASG. In layman's terms, on behalf of defense, they are figuring out what kit do we need for the defense of our nation, how does that fit in with the portfolio of kit we've already got, how are we going to get it to communicate and talk to each other and how are we going to sustain it over the long term. And so we're in a very strong position there. CASG has a panel of only 4 providers that do all of the acquisition work of bringing new military capability into the system, and we are 1 of those 4 providers on the panel. So extremely well positioned there. The second major client group is the Chief Information Officer Group, which effectively is the comms and technology part of defense. So again, how do you get these disparate bits of kit that you bought from the Europeans and the Americans, how do you get it into a coherent fighting system where it can actually talk to each other, communicate. It's protected from cyber. It's protected in terms of its security, and it's a modern system there. So we've got about 500 of our own guys and girls that are playing in that space, and we've got an additional 500 either SMEs or partner organizations that are working as part of our offering to Defense. So a large-sized consulting business in its own right. The second business we operate is our base and estate management business that is more of a traditional facilities maintenance business, really looking at the sustainment of defense as built estate. And we're effectively doing asset management, maintenance and running the defense PPP and HQ job there. The third business unit is an estate development and base upgrades business, and that is effectively around how do you refresh, extend and refurbish the defense estate. And we're working at 2 ends of the scale there. At one end of the scale, we're doing programmatic work, so very large programs of effectively very small projects. So give or take, we're doing 300 small upgrades across the defense estate currently with a June 30 completion date on them. So they are quite quick churn and burn. At the other end of the scale, we're doing large multiyear base redevelopments, where effectively, we take Defense -- we act as an agent for them. We go through a process of 2 years of optioneering and design to work out what should we do with the estate. And then following Public Works Committee approval, we then move into traditionally between a 4- and 7-year construction phase where we procure and manage construction on behalf of defense to totally refurbish those estates. Perhaps just to help you understand the nature of the businesses exposed to estates. These estates are -- you've obviously got Air Force bases, you've got ports, you've got education, precincts. You should think of these as like a small country town. They are precincts in their own right. But unlike a small country town, they are effectively a gated community. So any infrastructure from the rest of the world ends at the gate. And so Defense need to look after their own power generation or backup power generation, water, wastewater, roading systems, telecoms, gas, any of that stuff effectively gets looked after by us. So in terms of where we come from, we have a long and proud heritage of working with defense. We started in the '40s, actually up at Steve's facility at [ Maroubra ], building frigates for the Australian Navy. For 30 years, we built ships for the Navy, churning out about 47 of those. We then moved into a couple of decades of building infrastructure across the Defense estate. In the last 30 years, we've really pivoted our presence with Defense into this professional services and consulting offering and also an upgrade and facilities management business. So I guess the kind of takeaways here is, in terms of our role in the Defense ecosystem, we are one of the last remaining Australian sovereign providers. So there's really only us and Lendlease, the great Australians that Defense traditionally turned towards. The United groups, the [ Latines ], the [ Transfields ], the John Holmes have all moved into a phase of foreign ownership. And so our ability to bid and position ourselves as a sovereign player, particularly around that kind of strategic advice, is a very strong characteristic for us. And the second takeaway here is really just our role as a partner, a loyal and enduring partner to Defense over 80 years. So again, when we have those conversations with us -- from us to them, they really see us as a long and enduring partner helping to maintain their capability. One of our cornerstone contracts is our EMOS contract, and EMOS stands for estate maintenance and operating services. We look after 170 defense facilities. It's effectively a geographic franchise or patch-style contract where we look after everything within the patch of Queensland, the patch of ACT and the patch of Southern New South Wales. We provide a very broad range of services. And in layman's terms, we do everything on a base other than the soldiering. I said I'd provide some clarity about what we're not doing. So generally, we're not exposed to and we're not involved with, in layman's terms, things that go bang or pop. And so we look after the infrastructure, but we are fundamentally not building or maintaining the war fighting kit. So a very broad range of services that we provide to keep these bases operational and functional, impressive in their own right, but probably more impressive of just the sheer industrial scale of which we do them. So we do somewhere around 1.3 million planned statutory maintenance tasks a year across the base in terms of accommodation. We don't just provide accommodation in housekeeping management. We do it for the equivalent of 28 commercial hotels. So everything we do, we do at scale. So you just about can't turn on the TV or radio at the moment without having an announcement around increased spending in defense. So I'll finish up by talking a little bit about where we play in the market and why we are well positioned to benefit from that growth, and as you kind of hear stuff get announced, how that maps through to us. So effectively, there are 4 major areas of government spending, and I'll run through each of those. So when you hear increased spending around defense, call it materiel or capability. In layman's terms, it's the kit, the ships, the tanks, the planes and the boats. As Defense make increased spending in that area, that all generally will run through the capability and acquisition group, where we are on the panel of 4. We work to help Defense work out what they need and how they bring that in. We have very large teams of up to 60 to 100 people working hand-in-hand with defense there. So every time the government buys more kit, they will put an integrated works program together to basically look after that acquisition program, and so we benefit in that form. Where you see announcements around the upgrading of bases. In recent days, we've seen the Prime Minister announcing the upgrade to RAF basis. We see upgrades to barracks and ports and co. We're well positioned there, both in terms of the smaller programmatic works of upgrades, but also the larger managing contractor style upgrades for redevelopments there. And so we are really a market leader in that space. Defense have a huge budget, but have not had a track record of being able to spend all their money. So what they are starting to do is smash together smaller programs into larger mega programs, and we have made a choice to try and position ourselves at the top end of those MC programs that are going to come out to market, which gives you access to bigger parcels of work. It's low-risk work under a managing contractor framework, and there are really only 3 or 4 competitors in the market that are capable of bidding and delivering that work. Where you see announcements around the increase in defense personnel numbers, and we've recently seen the Prime Minister commit to a further 18,500 people or a 30% increase in defense numbers. That flows through to our FM business in terms of all the volumetric stuff we're doing. So that drives an increase in training, accommodation, cleaning and housekeeping, all the accommodation-related stuff there. And then the fourth area really, and again, around today, seem as Defense have been slow out of the blocks in terms of decarbonization. But they have arguably the biggest of the government estates in terms of buildings and assets there, and there will be a significant spend in that area. So I'll just finish on probably a good case study around Defense and its building efficiency improvements. Defense fundamentally have 2 drivers in terms of what they're looking to do in the space. The first driver at the moment is really around energy security and resilience. To be honest, there's a lot of bases where the lights from time to time will flicker, and Defense want to make sure that they have the resilience in terms of backup power so that they are not reliant on the grid. And so there will be a number of opportunities there. And then obviously, the second driver will be around net zero and a decarbonization agenda, and they will be a major instrument of government policy. And delivering that recently at Russell, which is in the ACT, a large complex that is effectively the home to all the defense chiefs and all the senior defense people. A good example there. We had chillers coming to end of life. By virtue of being the estate maintenance contractor, we can see that coming through the program. It gets handed to us. It's not well scoped. We chose to go away and do some third-party engineering around what were the options, what should we replace it with, what should it look like. We were able to scope that up, put it back to Defense, have them say, yes, no, that's a great idea. That's what we want to do. We want to move to a more modern solution and a more carbon-friendly solution. And then on behalf of Defense, we went out, procured that from the market, oversaw and supervised that work and have delivered a great outcome in terms of decarbonization. So I'll finish up just in closing by just reiterating we have 3 strong businesses in the Defense sector. They are all businesses of scale. Each of them in their own market segment are regarded by Defense as being one of the top 2 or 3 providers and a leader in the market. The underlying Defense market has very, very strong inherent growth as the government continues to invest in the space. And we are not only well positioned by virtue of our heritage, our market positions to be the beneficiaries of that growth, but we've also been very thoughtful about the commercial models and the parts of the market that we're playing to ensure that we can do that in a low-risk and repeatable, reliable manner. So thank you.

That's great, Jacob, you are an increasingly important part of our business. But we're going to have a break now, I think, for 10 or 15 -- 10 minutes. And then we'll come back, and we're going to hear from Dante in Road Services, Steve in rail and transit systems and then across the Tasman to New Zealand. And Steve Killeen is going to talk to us all about things down in New Zealand. So back in 10. Thanks. [Break]

So now we're going to hear from Dante Cremasco, who runs our Road Services business. It's one of our very great businesses. It's got a great market share. What's interesting here is you've probably not heard of a green road, but Dante is going to be able to take you through why our particular business is actually creating green roads and what that's going to do, within road transport at least, in the way that, that's manufactured and why we can do it the way we do it. Dante?

Well, good morning all. Dante Cremasco. I've been with Downer now for 23 years. I run the National Roads business here within Australia. I want to share a story first up around a bit of weekend activity that I got to partake in. And I was fortunate enough to witness a partial rebirth of the entertainment industry and witness a live concert by Midnight Oil at Rutherglen. Now for those that aren't aware, Midnight Oil started in 1972 as the Farm, soon renamed in '76. Peter Garrett has been on the bandwagon for a long, long time, both politically and environmentally. And even on Sunday night, he was lamenting the fact that we're not doing enough. It doesn't mean he's going to stop, but I guess I was sitting there in the audience and thinking about what we've done not just as a community, but as a business, to address some of the issues that have been on the forefront of our minds. And I'm sure you've sat through this morning already very much experienced a lot of the change that Downer is going through. And with my presentation, I want to lead you down the path of not just the assets we maintain, but the assets that we have built, the positions that we keep, the positions that we are in to ensure that Peter Garrett won't be lamenting anymore. So I'll start with a quick photo. Anyone recognize where we are on the screen? It's here in Sydney. You almost have city views in the distance. You're somewhere in the West. If you're thinking Rose Hill, fantastic infill opportunity at the old Viva refinery or Shell refinery. We're at Clyde. And that's not a facility that we maintain. What you're looking at is a facility that we've just built. Now that facility will soon come online in the next few weeks. What you're seeing in the middle is a big gray shed that houses virgin aggregates. We won't be requiring any loaders to lower those aggregates into our plant. To the right, you see a wash plant, a repurposing plant that's capable of diverting all of the street sweepings off our roads around Sydney and putting them back into our products that we manufacture and make from a low-cost perspective. To the left, I've got the drone sitting at about 40 meters now. You can see a rather large industrial-looking building, it's an asphalt plant. It's capable of producing 100% recycled product, and I'll go into why that's important a little bit later. But just in front of you, it's not a fancy gazebo. It's not something that I've left the roof off. It's in construction. It's the first of its kind in Australia, and it's a place where we're plugged into the grid, and we'll be screening and manufacturing our own reclaimed asphalt pavement at our site, at our 8-hectare site at the center of Sydney that will service the generations of road users to come. And I'm sure you've all, for those that are Sydney-based, experienced some pretty poor conditions on our networks at the moment with pot holes. And that maintenance burden isn't going away, and we're going to be challenged to get better outputs from what we do to service our road users. So the business profile. I guess, ultimately, we are a leading supply of integrated sustainable road network solutions. We're a road network manager. We operate in the asset management space. We provide services so that when we are the network manager, we can recommend not just the lowest cost solution, but by virtue of the fact of our asset management and our R&D, the best possible long-term solution to get the most out of the road networks that we manage. As you can see down below, we acquired a substantial part of the manufacturing capability in Australia of, for example, asphalt, which the majority of our built-up urban and large collector road networks operate and which our cars travel on. We manufacture in excess of 3 million tonnes per annum, which is a healthy proportion of the Australian market. In doing so, we are very proud in how much we are able to divert existing pavements into repurposed pavements and reduce that burden as we go forward. On the right-hand side, you'll see that we talk about sustainable road resources centers. Now since I last spoke to you a year ago, we have -- are now in the process of officially opening the one in Brisbane, where we sit on our own significant land parcel, very close to the Brisbane CBD to, again, service very similar to what you've seen with the Rose Hill Devon Street development, and I'll talk about that in a case study in a moment. Our strategic footprint is one that leverages the proximity to the markets in which we operate, to the communities in which we are part of. As mentioned, we are very heavily engaged now in the reuse of existing assets that belong to our customers. And some $135 million has been invested in this space in the type of technical and industrial equipment that we need, including purchasing land to be Johnny On The Spot when it comes to servicing those customers on a low-carbon basis footprint. We've had opportunity to look at bolt-on acquisitions. But more importantly, we're in every major jurisdiction around Australia and stand ready to enter the call from a low carbon perspective. We talk about relationships creating success, and you would have heard Michael mention that we have had a bolt-on acquisition by the name of Fowlers Asphalting several months ago now. What a lot of people don't probably recognize is that this was a buyback some years later. In 2009, we had a very small, very poor condition, needing to be replaced asphalt plant in the Gippsland area, and we just had lots of work to do in other jurisdictions. And we didn't have crews. We didn't have people. We weren't in that market. And the owners of Fowlers approached us and wanted to know whether we would be keen to somehow strike up an accord going forward. We recognized pretty quickly that whenever you're not in those communities, then it's really going to be difficult. So rather than trying something together, we said, "Look, I think our asset will be better in your hands. I think you've got a better feel for what's happening in this community right now. But we want to support you on that journey, and we want to live our relationships creating success. And when you're ready to pass on the business to work a little bit differently, then we want to make sure that we're the first people you talk to." And that happened a few years ago, pre-COVID. Obviously COVID put the brakes on a lot of that. But Fowlers today represent a significant proportion of the Eastern part of Victoria. It's a business that's -- that they've managed to rebuild very comprehensively. You're looking at a German Benninghoven plant in front of you that they've retooled. They have huge market share in that area. They've got lots of passionate people that live in service, both the agricultural and the communities that exist out there from an energy perspective or tourism, and it's a great place to be. And importantly, our relationships with the people at Fowlers over the last 13-odd years, in being their supply chain partner, in supplying both R&D and materials, has put us in the right spot to continue that journey. And hats off to the people at Fowlers that they are continuing on in that journey today. They're doing a great job and really making us very proud about that very relationship going forward. But what's going to keep us going? What's going to make the difference? There are lots of people playing in that space. You've often heard the road side, and what happens in that space is very highly commoditized. There are no differentiators. But we know there are boom markets: Western Melbourne, Western Sydney. You've heard about the Olympics in Brisbane going to a net carbon zero. You've seen a little bit about opportunistic bolt-ons. But ultimately, what we will do then is turn those opportunities through our IP, through the smart people that we have driving those low carbon initiatives by increasing our utilization, reducing our waste and turning them into, ultimately, game changers. Our road map to do that is pretty complex. There are lots of steps along that, but it all comes together when you move from left to right underpinned by a bent towards recycling, a bent towards lower carbon, turning our customers into our supply chain. Our customers own massive networks of materials, and they're called roads, and these roads are infinitely recyclable. They can be repurposed. They can be reused. They're even capable of being changed insofar as traditionally, you've seen this industry operate and manufacture asphalts at high temperatures, 170, 180 degrees, and we can't continue to do that. Our R&D and our intellectual property around where we're working today will mean that we will trend towards ambient temperatures in what we do. We will reduce our Scope 1 emissions to ensure that -- as time goes on, where we invest will be more and more carbon neutral trending to negative. So I mentioned Brendale. This is up in Brisbane. We have a 9-hectare site up there that we've purchased a few years ago now. The plant in front of you is a sister plant to what we're just finishing now here in Sydney. The color is a little bit different because EPA has views on what color should be in Sydney. So we're happy to toe the line there. But ultimately, you can see stockpiles of recycled asphalt pavement in the background, large bituminous tank farms, huge R&D facility that allows us to specify new materials. And also the wash plant, very similar to what we're doing here in Sydney and also what I'll talk about in a few moments with respect to Melbourne as well. Closed loop solutions, lower cost production. Our customers are becoming our suppliers. Local government, state government, they're surely but slowly changing to ensuring that the products that get to the end-of-life on their networks, on their roads, will come back to places like you see in front of you to be repurposed at a lower cost and sent back out there to have another go under this harsh Australian climate. From an economic standpoint, the market is large. We estimate that's somewhere between 10 million to 12 million tonnes, depending on projects that are laid in the asphalt space per annum. Our local government has been a very big friend of ours, pushing the recycled content very, very strongly. They seem to think they have a lower risk appetite or about the type of networks and the types of vehicles that are on their networks. But what we're seeing more and more is state governments are now responding and are also getting on and specifying high recycled content and different types of products in the road surfaces that were out there maintaining. You can also see that it does lend itself very heavily to carbon reduction. Recalling that the 2 plants that we've just finished in both Brisbane and Sydney are capable of doing 100% recycle at current temperatures. A lot of our plants will be able to do 100% recycle at lower temperatures. So the key here is on R&D. But the graph shows you that as you increase recycled content, if you can minimize the logistics requirements of where that material comes back and gets repurposed and gets reused, sorted, graded and remixed and sent back out there, that's where the real savings are. We're reducing our virgin materials. We're reducing our price exposure. We've all been at the [indiscernible]. We can see what's happening. Our bitumen, the glue that holds our roads together is inextricably linked to hydrocarbons, to our fuel prices. So every time a customer puts a new piece of road out there, they pay in today's dollars. When we go to recycle it in 15 to 20 years' time, we're getting the value of tomorrow's dollars to be repurposed and offsetting our cost of today. It's a cost driver. It's a carbon reducer, and you can just see what the capabilities of around the 30% -- if industry can get the 30%, we're well and truly capable of doing that. We made good discussions with our clients around enabling those sorts of changes to specifications, but we're seeing the slow and steady march towards it. So how do we market ourselves. I mentioned that state governments are changing. This is a case study in Victoria, where the state government road authority has specified a high-recycled content asphalt mix. We market our recycled content. Asphalt mix is reconophalt. There are lots of opportunities within reconophalt to use a wide suite of 100% perpetually, infinitely recyclable products that can be taken back off the road network to our facilities that we own, operate, repurposed and sent back out there, and it makes huge differences to what we do from a community perspective. Repurposed our joint venture that you heard me mention last year has also well and truly gone into the [indiscernible] space, also recycling the green waste, and that gives us opportunities with respect to different energy sources and how we play in built-up urban environments as well from a green space perspective as well. Now along this whole process, you'll see repurpose, it very much acts like a quarry. But the 70 hectares or the 210 acres of land that it manages through our 3 locations in Victoria become very much borrow pits, temporary storage, places for us to temporarily stockpile materials to understand their value to treat them, to watch them, to recrush them, to send them back out to market. And in doing so, we again reiterate the simple point that our customers are becoming our suppliers. And when your customers become your suppliers, you start moving away from carbon because it's -- they're very -- the very nature of the materials that they no longer have a useful that they need to replace that they need to ensure that their traveling public are kept safe that those very products that we can take and inset. So you'll hear a lot about offsetting, you'll hear a lot about carbon reduction. But we think we've set up a business today that is ready to be starting the carbon in-setting journey, one whereby we will have lower carbon-based inputs from our supply chain, which happens to also be our customers that require those very products. So looking forward to taking some questions a little bit later on, but there's a quick whip around what we do in the road space here in Australia. Thank you for your attention.

Thanks, Dante. It's great. And just to bring that into perspective, by increasing the amount of recycled asphalt that goes into the mixes that are put down -- to the extent that we can take that up to 30% and 40% on the roads that are built, we've got literally tens of -- that's an equivalent of literally tens of thousands of cars off the road. This is quite a competitive advantage that we have because what our roads team have done is invest in plants that manufacture this high level. No one else does that. And in fact, the philosophy around this is that we're not quarry owners. We don't care about aggregate throughput, that's very different to our competitors. That's what they care about. We don't care about that. And in fact, -- if we can take the aggregate off the road, it's better if you get anyway, and it's already cut in bitumen, right? So a really important aspect of our business and it's a large part of our business. And I think we will see specifications for roads change. At the moment, you've got low levels in the major highways, et cetera, low levels of recycled asphalt. Soon, given the green style of what we can produce, we will see much greater levels of recycled asphalt because there's no quality problem, right. So the quality is fine. So anyway, Dante, very good. So next up is Steve Kakavas, who runs our rail and transit systems business, and we've got some really interesting things going on there. We're a market leader in this particular part of the business in Australia.

Well, good afternoon, everybody. I guess given I expected to say good morning, I might try and move through this relatively quickly. If I characterize the business in a couple of ways, we're the largest passenger rollingstock maintainer in the country. And you'll sort of see a few stats up there, but basically 1,100 vehicles today, when we see the balance of the HCMT fleet in revenue service completely. So late in 2024. That will put us at around about 1,600 units in revenue service. For context, that's bigger than Queensland Rail for passenger vehicles, that's bigger than Melbourne Metro for passenger vehicles, so a business of significant scale. I think the second characteristic for our business, which is important, is our contracts are largely long-term asset management contracts. So they are a whole of life, 25- to 35-year contracts. So when we think about some of the changes that Ricky alluded to that we would expect to see through this carbon journey, we will still be maintaining this rollingstock through that journey. We have contracts that will finish in 2050. So we will be part of that journey. We will be the incumbent provider in that space. And I'll talk about some of those opportunities as we move forward. I think the third thing is really important to characterize the business is we sit within a broader transport ecosystem of Downer. So if you think about Keolis Downer's capability, some of the capability in Mark Mackay space. And if we combine those things, we don't have any competition that provides that breath of service in the marketplace. It is absolutely unique. If we couple that with the incumbency that we get from these long-term contracts and customers are looking to change, they're looking to us to effect that change for them. If I talk a little bit about that capability more specifically, so those capabilities extend to rollingstock design, manufacture, test and commissioning and delivery. It extends to rail maintenance service and infrastructure maintenance in that respect, rollingstock asset management, systems integration, signaling again in that business, public transport infrastructure upgrades, and then lastly, into the operational space with Koelis Downer. We are strategically well positioned in terms of our footprint. Just a quick outline there where we have our facilities located. I guess one of the things that sort of we find quite buoyant about the marketplace at the moment is the renewed interest in local manufacturing, sovereign capability. There's a number of sort of label for it. But even in New South Wales, which up until fairly recently, has been a staunch outsourcer of rollingstock procurement. We're starting to have conversations now about building locally, which is refreshing to us. If I look quickly at KD in that respect, and KD is the largest operator of light rail vehicles in the country. We are the largest bus operator in the country, and they're the only multimodal operator in the country. So again, if we think about a value chain that has incumbency as a function of asset management or operations at its key, having that position and looking at the augmentation opportunities that sit within that space is absolutely key and critical to us. When you look within the context of this we've got an addressable market within the rail pace of around about $40 billion. What we're really looking at here is the discrete targeted opportunities that we think are right for this business. So there's a few things that I think are important to us. One, the underlying work in hand is consistent. And as I said, we've got sort of 25 to 35-year contracts in that space. We have a number of option sets within existing contracts that are not called off. So across HCMT and the SGT contracts, we've got 900 cars that the government has yet to call off. Now we don't believe that there's a need for quite amount of volume, but there is a need with increased patronage for additional rollingstock, and we expect the government to move on some of those in due course. We do see continued demand for fleet replacement and we know that networks are aging and fleets are continuing to age. So all in all, the pipeline for us looks very healthy in that respect. If I focus on sort of the 2 key areas, if you like. So the first is really our sort of Horizon 1 work. So this is areas where we're looking to extend and defend our existing service offering. So this is a core business for us. And we've got a few examples there. But things like the Queensland Train Manufacturing Program, so this is 65 6 car sets, a new manufacturing facility, a new depot south of [indiscernible] and then up to 35 years worth of contract. So something quite similar to what we've seen in the HCMT context. We're currently bidding that. We're 1 of 3 in that space. And we think given our extensive experience in Queensland, we're well placed to secure that work. Similarly, if we move down the coast and look at Melbourne, then we do see market soundings for MR5. So this is into light rail franchising space and the heavy rail franchising space that the government is starting to move and starting to make inquiry about how they approach the market there. In our Horizon 2 space. So this is where we're trying to think a little bit further ahead and a little bit out of the box. We're really dividing that area into 2 key focus areas. The first is really around energy efficiency. So this is energy use reduction and energy storage. In that things like zero-emissions buses, which I'll talk about reduction initiatives that we can deploy on fleets become very, very key. The second one of those initiatives is really around improved asset performance and asset efficiency. And a lot of work is being done by the team in that space in 2 critical areas: one is around the deployment of robotics into maintenance activities to get higher reliability outcomes and lower cost of service provision. And then secondly, into the data and digital space around leveraging some of the extensive investments that we've made into particular products that we think can address broader needs within the market. If I just talk about a couple of case studies, this is not work that is prospective, this is work we're actually doing today. So the first of these in simple terms is in double deck fleet in New South Wales. So in this space, we have transport for New South Wales as the second largest consumer of electricity in the state. Within that, if we just look at modifying the air conditioning systems within our double-deck fleet, then we're seeing an equivalent reduction of 10,000 cars per year by modifying the software control systems and some of the inverter technology on the fleet. So this is something that our customers are very, very keen to and are really reaching deeply into us to look for solutions. If I move into Melbourne and into the HCMT space, so brand-new fleet, only halfway through delivery here. But we're in conversations with the customer at the moment, in fact, doing some advanced engineering work around deploying onboard energy storage systems on to the sets that do, I guess, 3 sort of principal things. First, by sort of putting batteries on the sets, then we're capturing regenerative braking energy, and we're not dispelling that as heat or trying to put it back into the overhead but fundamentally lowers the cost of operations is the first thing. Secondly, in areas of the network that have low power capabilities, we're able to deploy the fleet without having to have significant levels of infrastructure upgrade. And the third is a little more esoteric. But because we're running 3 parts of the network or can run 3 parts of the network on energy storage, then the electromagnetic interference that all electrical systems generates is greatly reduced. So in the Melbourne Metro tunnel where you've got rollingstock running through the tunnel close to the university and hospital precinct and obviously, lots of very, very sensitive equipment. We're able to provide a solution to the government, which we think is vastly more effective and sustainable and infrastructure response, which would see some of that thing being moved. I thought it might be worthwhile just talking quickly around the Sydney Bus Region 8 contract. So this is a contract that KD has secured. And I guess this is a supply operation and maintenance of 125 electrical buses that are progressively decanted into the fleet as they take diesel buses out. So what's interesting for me in this space is I think it's an excellent case study of where the collective business comes together. So this is not just the operations from KD. This is the broader business being able to design and construct, deploy and maintain these sorts of critical systems and fundamentally result in what is the best part of 250,000 tonnes of carbon reduction over the life of those buses. And the last one really is in to our data and digital space. So we have, as a consequence of having long contracts in availability-based PPPs often, invested very, very significantly over the last 10 years into developing a very, very comprehensive data and digital management system. So this is taking a fairly industry standard piece of software and really building out the modules that I've shown on the page there to provide a full suite of tools that enable people to manage rollingstock assets very efficiently. When we look at this across the country, there is no comparable product. So we think it's readily deployable into other fleet management opportunities. When we look internationally, we only find one product which scores highly from a capability perspective. So we do think it positions us and potentially is well placed to take the business offshore. I guess that's the quick outline of where we are with RTS. Thanks for your time.

Yes. Thanks, Steve, to the next Steve. Steve Killeen, tell us all about New Zealand.

[Foreign Language] That was my pepeha or a personal introduction. Pretty common to start a meeting with that or a mihi a more general greeting in New Zealand these days. And it's one of the more obvious ways that Te Ao Maori or the Maori world has influenced the way we go about our business, probably less obvious is what we call Maori Tikanga or Maori values. And there's a particular value I want to share with you today. It's called kaitiakitanga and it talks to an expectation or a value that we are all guardians of the land, the sea and the skies. And it's relevant today because it talks not only about our corporate responsibility, but our personal obligation and expectation to look after the planet for future generations. And at the end of the day, why wouldn't we? We work in some glorious places, whether it's Fiordland National Park, where we look after the roads and the Avalanche program; whether it's Antarctica, one of our telco technicians, Daniel, recently went only 15 -- sorry, 13 month deployment, what we call fly-out and forget about me. We won't forget you, Daniel. But glorious part of the world. We work in the Pacific Islands. The photo there is out in Samoa where we rebuilt the runway. We're currently in the Solomons Lua and the lesser known Pacific Island of the Chatham, and we work all across New Zealand in our various roles. I guess the key factor a lot of these have in common is they're all under threat. So we see less now in Fiordland but more out full. We see a receding ice shelf in Antarctica. We see floods in the Pacific Islands, and we see increasing storm intensity across New Zealand. The photo at the bottom right is our team in Gisborne. They are currently clearing up after recent storms in what we call the recovery phase. And then we'll go on to resilience, which is rebuilding it. There will be in a very small space of time, if you like, a few days of weather $200 million of damage. So that's effectively what we're facing in these glorious places that we work. I'll come to our sustainability journey, but first, just so you understand the New Zealand business. So we have 3 divisions. I wonder -- if that's okay. We have transport, utilities and facilities, align very well to the divisions in Australia. So we talk about New Zealand and Australia. We're actually not separate businesses. We work in a very aligned way, sharing resources and increasingly developing strategy. So we have a Downer group strategy across these activities. I'm hoping this year, we had $3 billion of revenue, and we look after 10,000 people. Our divisions are pretty well balanced and they're pretty well placed for what New Zealand needs. In terms of our work in hand, we have $6 billion of work in hand. That's secured work in hand. We also have contract extensions. Now we would typically be 90% confident that we'll get our contract extensions. So effectively, our work-in-hand expectation is about $9 billion. So we effectively have 3 years of work locked in ahead of us. In terms of who that's for, 80% plus is for government or government-related entities. The balance is private sector. The 3 private sector clients that were most -- doing most work for at the moment is Vodafone, Microsoft Corporation and Powerco. In terms of the balance of work in hand, it kind of reflects the balance of our business. But the key growth area, I believe, is utilities because utilities will be benefiting from water reforms and also some climate change funding that is coming down the pipeline. So let's talk about that government policy. So post the Paris agreement, the legislation of that was put into an act in 2018 -- 2019, sorry. And that's committed us to net 0 by 2050 and a 30% reduction by 2030. At this point, you're probably thinking Rick's slide saying 50% reduction is wrong. It's actually not. That was corrected post Glasgow where New Zealand committed to a 50% reduction in emissions by 2030. Now the slight challenge to that is the green box is the Ministry of Environment predictions under current policy settings. And without boring you with too much detail, our emissions in 2005 were 83 million tonnes of carbon equivalents. Now that gets reduced somewhat by our forestry. So we get about a 15 million to 20 million tonne offset, but it still leaves us with a big number. The targets there on our current trajectory mean in 2050, we will only just have achieved the goals that we're aspiring to achieve by 2030. So that brings us to the next bullet points on this slide. We need a change to our emissions plan. And this is coming out next month. So it will come out in May. It will focus on a number of sectors, but including from our perspective, transport, energy and construction, and it will change the settings to get us on the right trajectory to honor our 2019 commitments. We're also seeing what's called a National Adaptation Plan. So last year, New Zealand went through a risk assessment around climate change risk. It identified 43 priority areas and 10 critical areas. So this will address how we're tackling those. No particular surprises in that. The 10 risks really talk about the risk to the ecology, the risk to our personal safety and ultimately, the risk to the economy if climate change impacts remain unaddressed. And as you'd expect, New Zealand has signed up to the UN sustainability goals. Today, we're focusing more on climate change goal '30, but we have started to do some detail around our commitment as Downer to all the sustainability goals under those rather unusual UN definitions. So that works in progress. So what are we doing? So in New Zealand, we talk about being very green, but actually 60%, give or take, of our energy requirements still come from fossil fuels, largely related to transport and manufacturing. So it would be incumbent on us as an organization to address our in-house activities, first, which basically comes down to our carbon emissions from fleet and manufacturing facilities. So what we started to do is to revolutionize our light vehicle fleet more to EVs. We're well down the track of that, both in actual action, and you saw our blue MGs in the photo earlier, but also in planned action as capacity of vehicles comes online. We'll be trialing our first EVs later this year. We're also looking at our heavy goods fleet. Again, we're seeing a lot of potential both in hybrids, but also improved engine emission capacity. So we're moving next year to some hybrid trials, but also to Euro 6 engines. Euro 6 engines meet the Clean Air Act. From a European point of view, they represent a 70% reduction on emissions versus normal heavy goods vehicles. We're also looking at our manufacturing areas. So the tank here is a refurbished fuel tank that now runs off electricity. That was done in conjunction with the Energy Commission who we're working with to go through our manufacturing capability and to electrify from other fuel sources. Now that's significant because actually, New Zealand has a very good story to tell in electricity production and the renewal capacity of that. So 84% of our electricity is green which also gives us the capacity to produce green hydrogen down the line. I'll talk to the photo first because I think in order to go on this sustainability journey, you need an ecosystem of suppliers, willing customers, but also people that challenge you, people that bring you thought leadership. This was an ESG panel that we ran last year. Michael is up on one of the screens there. Michael was under fire, but did a great job in representing Downer. The other screens, chap called Andrew Grants. Andrew Grants is the global partner of government and infrastructure development at McKinsey. We have Anne-Maree there from New Zealand Super, responsible -- Head of Responsible Investment. And Louise Francis from [ IDG ]. And the final person in the picture is Marc England, Marc runs Genesis Energy, 51% owned by New Zealand government. And Marc has the challenge of being renewable on one side of his business being a key provider of hydro power, but also on the other side of the business, he runs the coal power plant that supplies the 5% of New Zealand energy that's still generated from fossil fuels. Now conversation with Marc led to the fact that he is driving a different agenda for Genesis Energy. And now he is working with us to ensure Downer from 2025 can buy fully endorsed renewable energy or renewable electricity. Now if you think about what that means, currently, our emissions are 118,000 tonnes in Downer, New Zealand. Most of it is about manufacturing. In fact, 99% of it is manufacturing and fleet. If we can change our fleet to a power source that is clean, we can really make a dramatic change. So it's actually taking what is an aspiration to a reality, but it requires an ecosystem of people. It's also a good when you can do the odd project for those people. So the picture on the left there is actually one of Marc's hydro schemes. So this is where we're putting some gates in to control earthquakes surge on the water. But it's on a hydro project, 190-megawatt, feeds circa 124,000 houses. So it supplies energy to 124,000 houses. If you prefer to think of that in EV mode, the other picture is a wind farm we're currently building in Turitea. That's for Mercury Energy. And that provides enough energy, 220 megawatts, which will power 375,000 electric vehicles per year. Moving on, this next project is -- it's a big one for our New Zealand business, and we've been involved from the very outset. So CRL is a city rail link. It's New Zealand's biggest transport project. It will enhance our public transport network in Auckland. The real sustainability story is it takes ISCA, the Infrastructure Sustainability Council framework, which basically allows you to take good practice to the ground, good practice to projects. And it looks at ecology, it looks at stakeholders, it looks at social outcomes. And it's something we adopted on the early stages of this project, which was called C1, basically the works on the Britomart railway station to start the tunneling work. On this project, we used our Green Vision capability, which is a recycling company we run, which basically takes materials out of the ground that would normally go to landfill, recycles them into engineering quality material. We convinced the project. It was a good idea. We convinced the customer. It was a good idea. We're convinced a partner in the concrete business that it was a good idea to use recycled aggregates. The outcome was that was a 55% reduction in emissions. through not extracting virgin aggregates and also reducing transport. So as a consequence of this and lots of other activities in terms of water reuse, not using diesel for power using electricity and preference, resulted in an excellence award under the ISCA standard. We're now adapting this through the project. And this project in the whole will be somewhere between $3 billion and $5 billion. I'll keep the range wide. In terms of final outcome costs, we will be involved in 90% of the delivery of this project with our partners and we are continuing to use recycled materials, and we're actually setting the benchmark for how projects can be delivered in a sustainable way. Another one, I think this is really exciting. This is New Zealand's first green star building. It's for Auckland University. We have a bit of a partnership with the university where they keep giving us projects to build. We built the engineering block, which is to the left of this picture. We're currently building the recreation center, and this is the social sciences block affectionately known as building 201. The really unique thing about this is we didn't knock down the old building. We stripped it back. We took it back to a concrete frame. We used reinforcement textile and fabrics to reinforce the existing frame, so it met the seismic standards and now we're building it out again. So what you're seeing at the top picture is the facade has just been completed. So this will look and feel like a new building. It will be on the old concrete frame. We haven't knocked it down. We haven't sent the materials to landfill. We haven't had the emissions coming back in, in terms of materials, and it will function -- actually, it will save 60% emissions in the build in its running. It's actually designed to reduce versus a normal building of similar ilk sort of 70% reduction in operating emissions. And I actually think it's one of the best examples of a brave client and actually a very committed construction team to do this challenging projects, but with huge sustainability benefits and a positive outcome. So there are a few case studies. We've got many. But the New Zealand market is -- as the Australian market, we're well placed. The market as a whole -- addressable market is always a tricky thing, but the market as a whole, about $27 billion in terms of what we physically can do. We choose not to do a lot of it either because of quality of clients or because of quality of contract. So even though we only represent $3 billion of that $27 billion, we are the market leader in infrastructure delivery in New Zealand. So we are the biggest provider of integrated infrastructure. We also work through all elements of the cycle. So we enable design. I say we enable, we do good design management. We have good temporary works design. We have some niche aspects of design like pavements. And we also design manage in terms of taking them from the design office to integration. We're not b**** on seats designers. We build, we maintain. And as we've demonstrated, we operate. So for example, on CRL, we'll be maintaining the stations for the 25-year life once they're built. In terms of a forward trajectory, the market without climate change budget is due to grow at CAGR of about 3%. We'll grow slightly ahead of that because of our market position. So we expect to grow at CAGR of about 5%. We do have some choices to make on where to next for New Zealand. We've gone through quite a growth. So we've effectively doubled our revenue in the last 6 years, largely on the back of acquisitions like Tenix, Hawkins, Spotless. So we've got some choices to make. Key thing for us is actually to capture work in the right way. Most of our work is repeat business. Most of it is early contractor involvement or negotiated. Most of our service contracts are rolling over in many ways, uncontested through the tender process, just put through a value for money lens. So we are well placed in many ways for growth and for certainty of a prosperous future business. In terms of the work we do, we'll continue to have projects that are multimodal in shape. So the one here with the tree, you can actually see that, that's actually traditionally would have been motorway build. It's now a cycle way and a waterfront area that adjoins the motorway and the railway line. So our work in its core will become more multimodal by nature. We do expect the water market to expand, particularly with water reforms. The compact looking plant there, you see is a thermal dryer, sustainable at 2 levels. Firstly, it takes human waste that would have gone to landfill, turns it into pellets for fertilizers, but more critical in this plant is it's designed to run off hydrogen. So when our hydrogen capacity comes off-line, this plant can run off it unencumbered. The other 2 -- this is where I do some work with my friend here, Steve Kakavas, who kind of joined at the moment. But the first one is some, I guess, thought leadership work we've been doing with KiwiRail. So we have an interesting topography in New Zealand. And Steve's team did some work, and they've designed this loco concept to move freight around the country. And it will use a small backup diesel engine, battery storage and overhead electrification in small parts of the network. It will reduce our emissions by 90% and the fuel bill by $6 million per year. So massive impact on KiwiRail sustainability goals, a massive impact for New Zealand in taking freight off the roads, putting on rail, but servicing it on rail in a way that's sustainable for the future. And then the bottom one, I spoke to someone at the break about Auckland Light Rail. That's the next big transport project potentially hasn't got bypass support yet. So it's a bit of a watching brief, quite a complex project. But I think regardless of what shape, what form, whether it's light rail or just the future of transport corridors will be in the mix. So I guess in summary, New Zealand business-wise, we're very aligned to my Australian colleagues. We share lots of good ideas. We have some really good things in the water and rail space, particularly that we can bring from Australia to New Zealand. We are well placed for the future. I think we can run a financially successful business, but we can do it in a way that enables society to thrive. Thank you.

That's great, Steve. A lot of fantastic things going on in New Zealand. Now I think we're going to have questions, Adam, is that right?

Yes. So what we'll be doing, we'll take a quick 5-minute break. We just need to redesign the stage here with enough seats for our presenters. So stretch your legs, think of some questions that you would like to ask. We'll just be 5 minutes on the stage here. Thank you. [Break]

Yes. All right. Thank you very much, everybody. We're now on stage for a panel Q&A. We've got a lot of presenters from the day who are keen for any of your questions. We've got Leanne and Ash on microphones. So I'll now ask, if you'd like to ask a question, please put your hand up, introduce yourself and fire away.

John Purtell from Macquarie. Just had a couple of questions. There's a big panel in front of us, so I might just put it out there. But look, obviously, Grant, Michael, we heard from you earlier in terms of your commentary regarding revenues not being an issue for the business going forward. It's probably fair to say it hasn't been an issue sort of in the past so much either, but the focus is on sort of improving margins. So my sort of general question is sort of what drives that? I mean we've heard from various presenters about an opportunity to be more selective about the work you do, just given the opportunity set. Is there a willingness to trade off some revenue growth for margin improvement? And what are the opportunities to increase margins, notwithstanding we're looking at obviously higher labor costs. So do you think you can get ahead of that?

Yes. Thanks, John. Look, I think just first of all, the last couple of years aren't ones that I'd look to for broader patterns. It's been a difficult time for all businesses on cost to serve. And so I think the last 2 years, when you look at margin deterioration or whatever -- in whatever business you're in, you have to look past that. And certainly, we are. We've got a few areas that we'll be looking at in this. But at the heart of it, better project performance, and that's across the range, but certainly in our construction side, typically, everywhere in the world, construction being relatively low margin. But if we can improve our performance on just a handful of contracts, then that will be very, very positive for us. We're also looking at our overhead base, and we're also doing a lot of work. When Peter was talking around the systems that we have, that's all designed really to get better performance at our margin, right? So more consistency, better quality. We know what comes out of that. So over time, we're expecting that to make a significant difference to the business. Yes, right now, yes, margin is all about making sure that your cost inputs are very well managed, right? So in a very short-term way making sure that your procurement, the risk that you're taking on in that supply chain is managed very, very well. And I think that's our focus right now is to make sure that, that's the case. So the 2 things are project performance, and we're putting a lot of time and effort into that. Again, it's not just construction, it's also our services contracts, making sure that we've got the best attention to optimizing those contracts and then also the cost [ in ports ] in managing that.

I've just got one follow-up. And just on the theme of costs, obviously, we're seeing it across the economy and in your space as well, whether it's labor, fuel, energy, supply chain. I'd just be interested in maybe 1 or 2 comments from the divisions if anyone wants to accept that just around how you're managing that cost inflation in your business.

Yes, I'm happy to kick off. So I think, yes, the cost increasing are a reality for us. But materials, a lot coming from overseas. And if you look at the bulk shipping or containerized shipping costs, your 500% to 600% increase. Iron ore up some 180%, which obviously translates into steel, which comes back to us on shipping. So you can see where the costs are coming from. Labor scarcity globally across the type of activities we do, but particularly exacerbated in New Zealand's case by border controls. We are provided. And I think going back to the last comment, one of the ways of protecting your business is to be very selective on the contracts you do. Most of our contracts allow for full CPI or better adjustments. So we are generally well covered in New Zealand for cost increases, but it also doesn't take away our obligation to manage it through hard work in getting the best prices we can and controlling the labor cost. I think it's always easy under pressure to pay whatever you think is required. But I think management discipline around that is a key focus. So I think good controls to look after our money and our customers' money. But likewise, most of our contracts and selection of those contracts being risk insured through the clauses that are inherent in them.

Might be some others on your long-term contracts?

Yes. I mean it was a pretty good coverage now and apply that across our business, the [ border ] business as well. One of our long-term contracts have a large [ cost-free ] component. Sometimes we get some misalignment in labor cost, like it's misaligned in terms of your [ EDI ] versus your ability to recover, but it tends to be a fairly short-term issue. And the other comment I'll make is just an example actually is recently with one of our contracts in WA, where we had [ change of rates ] so basically a subcontract management contract where we had change of rates for [indiscernible] We were actually able to -- rather than just accepting increased costs, we actually had the ability to actually not do the work. So rather than just paying anything for subcontractors, we paused and then went back to our customer, and our customer then agreed to increase the rates they paid us and then we recommenced the offering of the service. So we've got some flexibility, and we do tend to spend a lot of time, obviously, building relationships with our customers and making sure they're aware of the issues that we're facing. When these guys want to get the work done, they want to get it done by the A team, not by third rate contractors, if you like. So we've been pretty successful at managing, I think, so far.

All right. Thanks for the question, John. Next up, Andrew?

Andrew Hodge from Credit Suisse. I guess it sort of follows on from John's question, Grant. Just in terms of the position, I guess, most of the presentations really demonstrated a very strong position that they have within their respective businesses and how that translates to pricing and I guess margin. You mentioned the margin idea around contract execution, but do you think that, that leadership eventually leads to pricing at a big level?

Well, certainly, in some markets, there's no doubt that that's the case. And if we look at just in the construction side of things, pricing on transmission is much easier than pricing a road. You'll get better margins from that. And it's all down to competition. As Mike was saying, there's any number of people that have the capability and machinery and people, et cetera, to build a road, there's very few that have it for transmission lines. So it does come down to really the competitive position that you have. The pricing right now is a very, very key aspect of our business and try and get those prices up. And I think that the current inflationary environment is certainly in the discussions that everyone is having with their customers. There's an acceptance now that prices are rising, right? So that's how well we are going to get the outcomes there that will be all important. So it's not just the stuff that's hardwired into our contracts that are long term, it's the new work that we're bringing on and where can we get those price increases. So it's a very key focus of this.

And can I follow up with one question for Peter? Just expanding on the answer that Grant gave previously on John's question. So just with relationship to TDS, if you talk -- yes, like businesses, like geography doing the same work, how much variation do you typically see between the best set of contract performance and the worst set of contract performance, not in percentage terms per se or maybe just in relativities, not in sort of absolute terms if that -- I think does that make sense?

Yes, do you mean internally within the business or with competitors?

No, internally within the business. So when you go through the TDS process, you get to the end and you're evaluating a contract. So if you've got a number of different contracts that share enough similarity between geography and the type of work to go, well, we made x percent on these. But this one, we only made 0.7x. Where's the variation come from? What is that variation typically between best and worst sets of contracts?

Yes. It's a good question. I think the first comment is when you apply the TDS and you have a central governance process, you do get the benefit of benchmarks, prior performance and maybe leave WA out as a little bit of an outlier for the time being. I think the East Coast pricing and performance, you can see a fairly close alignment if you were to take a theoretical like-for-like or even, in some cases, where we've got, say, a big facilities footprint, you will see that as well. So I think there's a pretty good alignment with that. And I think coming back to the key point, the libraries and the benchmarking is probably one of the things that sets us apart. I hope that answers the question.

Thanks, Andrew. Nathan?

Nathan Reilly from UBS. So just in relation to the Utilities business, a lot of focus there on the transition and the amount of work that's going to be potentially out there to be executed on. But I guess relative to also some of the more recent projects we've seen, where there's been some more unfavorable sort of risks taken on by contractors, can I get a sense of, I guess, how you're seeing the commercial terms on this whole growth phase in terms of what projects? And will you be willing to accept and also whether there's any shift in commercial terms or client relationships I just need to be aware of?

Yes, Nathan, I'll probably hand it over to Mark Mackay on the construction side because that's where the markets have the issues. So Mark, do you want to take that one?

Look, there's definitely been a shift, and it's consistently moving in the right direction for us. I mean, what we're finding now is large TNSPs are starting to be very cognizant of the fact that resources are going to be scarce, and they're actively reaching out to Downer to talk about what's our forward commitments look like and pipeline. And it's getting to a point in the market where they want their projects built. They have to be built under this increasingly shortened time scale. Therefore, it puts us in a position where we can drive those commercial terms more actively than we could have in the past. So to talk -- picking up on the question before about price rises, where we can, we'll go to client supply items around high-risk volatile commodities. So if there's a substation component, we would ask that the client supplied if we don't think we can adequately deal with it. And more often, they're taking that suggestion onboard in their contracts. We're excluding risk areas that, yes, just -- we just can't control. So if it's a particular geo tech situation, it will either be a shared risk or a risk that we'll put back to our customer. And again, they need us to play. So it gives us a lot more latitude to be able to change the dial there. In terms of transport though, this is an industry shift. So if you look across the Australian contracting fraternity, you'd all be well aware that a lot of Tier 1s have taken some pretty big losses there. So that's more of a consolidated movement that's -- we're pushing back with our customers, and we're seeing a change. So we're seeing alliance delivery frameworks right around the country, managing contractor, various cost recoverable components. And only going back 4 or 5 years, that wouldn't have been the case. Now within our portfolio, you've also got some contracts that were formed 3 and 4 years ago there, if not wound out, getting very close to it. So what's ahead of us is substantially better than what's behind us. I hope that answers the question, Nathan.

Yes. No, that's helpful. And I guess bringing it back to, I guess, the growth opportunity and how this sort of fits into the M&A strategy, I guess I'm curious around whether the group needs some technology or other sort of services or capability enhancements to go and target some of those growth prospects.

So the short answer is yes, and we've identified where that is, and we're actively looking. So all bolt-on size. But now we're very clear in what that needs to be.

And across the group at the moment, where you're seeing, I guess, the most prospects in terms of M&A? So if we're looking, where should we be expecting to see some of those M&A opportunities coming to support earnings across your business?

Well, we continue to build out our geographical and, in some cases, product suite within roads. We're looking specifically within facilities. And we've also got an active program in defense.

Scott?

Scott Ryall from Rimor Equity Research. Grant, if I interpret the theme of today's presentation, going to a couple of other questions around margin, it's -- you've got a lot of capability, particularly in where the world is going in transition and things like that, which should result in margin growth. So I just want to check that I'm not putting words in your mouth on that. And assuming I'm not, can you just comment on when you think it makes a difference for the group, please?

Yes, sure. So look, the general question there. Demand for our services will be strong. And we think the way that the world is going and in particular, around decarbonization adds to that pressure. So when I sort of [ throw away a line ], revenue is not the issue. We still have to work hard for our revenue, of course, and we don't get it in our own way, right? There's no doubt about that. But we are in a position, and I think it's been stimulated sort of each period that we are getting stronger in comparison to our competitors, in my view. And that will allow better pricing pressure. We're getting better at what we do, right? So if you like, our cost to serve eventually, after we've sort of got through the COVID and the supply chain issues, comparatively, that should be better. And that will result in margin improvement. Yes. In some of the things, as you build these things, there are more costs as you're getting your IT systems right, as you're getting the TDS right, et cetera. So we're in the middle of building some of these things out. But they will undoubtedly provide the competitive edge that we need, both in winning business and in driving margin.

Okay. So -- and in terms of talking to customers about some of these areas, if I go to last year's sustainability report, your waste diversion is at about 21%, which is well and truly lower than the national average. Scope 3 emissions are around about 95% of your total, and they actually went up last year, even though your Scope 1 and 2 went down, mostly as you've said, because of divestments. How much do your customers look at your own tent and say, if you can't solve your own problems, how are you going to be able to solve ours?

Yes, just on the detail of what you're recounting there, we'll hand over to the experts in a moment. But every response to our customers now requires a very extensive discussion around all of the ESG parameters. So it's our carbon, it's our attention to modern slavery, it's moving into cybersecurity environmental requirements, et cetera. So I spoke a little earlier around some of the barriers to entry. This is one of them. You've got to be across and you've got to have systems to deal with these issues because increasingly, as we all look through our own supply chain, our customers are looking through their supply chain for those that are good in these areas. So you're right, like our own carbon footprint and how we're going to be pushing those reduction in that area is a key element, yes. So that's it. Ricky, Julie, would you like to comment on the specifics?

I guess, do you believe you're good enough, though? I mean your Scope 3 is pretty big, and it went up. So I'm just wondering what -- if you can go and solve that for yourself, can't you then take that to a customer and say, look at what a great job we did?

Totally. So we're taking a lot of stuff to customers. If you just look at -- on the road space, how much we can save in the state government's emissions just through using recycled asphalt. We're the only ones that can do it. But I'm going to hand over to Ricky, if you want to...

Yes. So just on the Scope 3 last year was our first year of doing a comprehensive assessment on Scope 3, which is industry-leading in terms of our competitors. We will look to -- we're doing a lot of work. We've signed up to the CDP Supply Chain program. Now as you could appreciate, the Scope 3 emissions, it's very hard to get actual data, right, to make those accounting. So a lot of the greenhouse gas emission protocols has been set up around estimations. So we've used those proxies and we've used those estimations and we've invested in the CDP Supply Chain program to get better actual data. Now a business like ours, it's quite common to have your Scope 3 emissions to be 9, 10x your Scope 1 and 2. That is normal. And we're actively working, as Dante was saying, and everyone here on this panel is actively working with their customers to look at how they can reduce those Scope 3 emissions. So we'll start to track that. So now we've got last year as our benchmark, we'll start to track that moving forward. And we'll also start to refine those proxies and get more actual data into that data set. So we're early adopters at that and presenting that information to the market. But yes, look, we're fairly well advanced in that space, and we are doing a lot of work there.

And you're still going to give a target for Scope 3 for -- at the fiscal '22 year-end?

Look, it's -- we're going through the science. So that's part of the Science Based Targets initiative. It's a requirement to have a Scope 3 target for an organization with a makeup like Downer. We're working through that at the moment. And yes, we'll -- yes, you'll see.

Next up, any questions? Unique opportunity for any head of business to ask a question.

It's Winston Chong from Antares Equities. I guess when we think about the broader decarbonization opportunity, you've spoken to a lot -- you've spoken about your capabilities in -- I guess, both the engineering side and then at the tail end, your desire to do that recurring operations and maintenance work. When you think about the broad life cycle of opportunities and where the market is at now, how critical is it to have -- I guess, you've got the desire at the start, but then the construct element where if you kind of read the tea leaves that Downer has been putting out, you've been stepping away from that area, particularly in some of these larger projects. So I guess what I'm asking, is there a need to rethink that or partner with other people to share that risk where those opportunities -- like to get the rest of the opportunity, if that makes sense?

Yes, sure. So yes, we've made lots of comments over the last end and, in fact, enacted a strategy around extracting ourselves from certain parts of the construction market that we thought was high risk and low margin, very low margin, and we've done that. And typically, that's been the mechanical, electrical hard-dollar work, essentially for [ mining ] customers. So we've stepped out of that market. The work that we do in the transport sector and within Mark's business is very heavily risk-managed around project selection. And it's benefiting, as we just touched on before, a change in the market in a way that risk is allocated and our ability to participate in larger parts of that market because of the aligned-style contracting that's coming in. And that's all a very good thing. A part of the market -- so we've never walked away from for transport-related construction, although it's heavily risk-managed. We could be 5x the size in this area if we wanted to be, right? But we choose not to because we're very select. We've never walked away also from transmission and power construction. It's always been a very much a hallmark of Downer. And right now, our intention is to double down on that. Now this is not an area where typically we've lost money, and it's a higher-margin area. It's highly skilled. You need the right people. You need the right engineering and we've got all of that, and we do a very good job on it. So if you think about the transmission lines that are going to be built here, the substations that have got to be built, the battery storage, et cetera, that's right in our sweet spot. So no, we won't be walking away from that. Our skill base, our control systems, et cetera, are very much aligned to making that business very successful. And it is very successful for us at the moment.

Can I just add to that too, if I may. I mean, in my business, it does a range of projects, and this picks up Scott's question, a little bit specifically on margin. I mean we've got a set of capabilities that delivers projects. And we brought power into that. We're about a $1.5 billion business. And what we want to do is we're trying to shift that portfolio mix a bit more to power and a little bit less to transport. And the reason we're doing that is because we can get better margins out of the work. Typically, from what we've seen to date, and it's pretty early days, we're 1.5% to 2% better off at the EBIT line around power, and there's less risk around the execution. So it's a very buoyant power market with very buoyant transport market. And I'm not foolish enough to tell you that we're just going to go and get heaps more revenue and we're going to make more margin because it would be lovely if companies can do that, but it's very hard to do. So what we're going to do is say, we've got this really active revenue pot that we can choose from. We're going to pick projects, probably more in power, that will allow us to execute. So that caters to the question specifically on margin, but also about where we play. So I hope that sort of helps.

Yes. If I can indulge just one more maybe. On the capability in this area, so there's obviously a big -- there's a lot of activity, a lot of work in that area. And I'm sure even some of your clients are looking at some of your people going, "Hey, they're pretty good. They've been trained pretty well." How do you think about your ability to retain people and avoid those hidden costs? So we know that there are things in place to manage the inflation in costs that are coming through. But things like turnover and -- yes, how do you hold on to your people with this big wave of work coming through?

Sure. Before everyone here sort of jumps and says, yes, that's what's happening. It's always been the case. It's more acute now, but it's always been the case that -- our customers, in particular, but also our competitors look to us as we are market leaders across many of the things that we do, most of the things that we do. So we've always been fending that off over the years. We are an employer of choice, right? So there's lots of good things about working for Downer. But there's pressure right now undoubtedly, right? And it's as much from our customers as it is from competitors. We've got -- we've also got lots of young people coming through the ranks who are very well trained and are just itching to get an opportunity. So where there's an issue, in some cases, we bring someone through and we say, "Oh, gee, why didn't we do that a long time ago?" But it is front and center of everybody sitting up here. It's a very difficult time, but you got to manage through it. So that's just what you've got to do. And in some cases, as best we can in limited cases, it means having to match or give more money. But for the most part, it's about driving the benefits of working for Downer in your progression, your lifestyle and just a good place to work.

So just as a broad comment, would it be fair to say like Downer hasn't been -- I mean, things have been the same...

All of us up here are going through the situation we're having our people pinched. And we're trying to stop it and we're dealing too.

My name is Diane Belliveau. I'm from Export Development Canada, Chief Representative here. Thank you very much for the presentation. This is my first year attending, and I had heard very good things about it. So happy to be here with everyone. Your -- Downer's in the first year, finishing out the first year of a significant restructuring. And I'm curious to hear about your challenges for the next year with this new restructuring. And I'm sad to tell you that there's -- we're close to year-end already, 2 months left. So the challenges for next year and also the balancing, I like the comment about more power, maybe a little less there. What are you looking for to set the stage for next year for Downer? And what we should expect to maybe discuss in a year's time?

Well, perhaps I'll start off and others will follow here, but wouldn't it be great to see the end of COVID for a start, COVID impacts and see perhaps supply chain issues reduced, skilled migration increased. Some of what I'd call the fog and the hays, particularly around restructures, right? So we've restructured. We've sold businesses within the year. Working through our results, it's quite difficult. Working through exactly where you would like to be as opposed to where you thought you would be and where you are is difficult. So I'm very hopeful that '23 will be a much clearer year. We think it will be. And if we can, it looks like in COVID that we're through the worst. So now we get back to really back concentrating on making sure that the service to our customer is very good. It's not dropped off, but let's see if we can get the cost to serve at the right levels and making money out of what we do. We do a very good job for our customers. We do think we should get more for it, right, both the pricing level, but also at the cost level. So we've got a big program of trying to reduce costs at both the business unit level with everyone here working very hard on that and also at head office. It is interesting, one of the difficult things in the business these days, particularly a public business, that competitive position that you have to have around systems and process and the rest, it all costs a lot. Insurance costs now, cyber costs, et cetera, are very high, which just means that you've got to find more efficiency, better performance in other parts of the business to compensate. So you just can't drop your ball anywhere. And also '23, let's hope we'll see all that coming together. It sort of in the last couple of years has come together in the negative. Let's see if we can come together in the positive for '23, that would be great.

I think the -- yes, a question -- a lot of the questions, I think, follow a very similar theme. I was out on site and spoke to one of our young women graduates. And I said, "Why do you work for Downer?" And she said, because we get s*** done. Not the answer I was expecting, but perfectly relevant. I think the first thing we have to do is value ourselves, so looking forward. To be honest, a lot of the challenges you saw in the data today is not going to be solved without engineers and scientists. We are well endowed with engineers and scientists that get s*** done. So we should value ourselves. I think the second one is maturity of conversation. So our clients, bearing in mind 80% are government aren't really getting what they want in terms of intergenerational change. They're delivering business as usual. The minute you look at intergenerational change, they can't get it through the politics or they can't do the technology piece of the solution. We can help with that. So maturity of conversation. That requires a contract form that isn't about screwing the price down. It requires a contract form that is about us doing a good job, us getting rewarded appropriately. I think the final piece for us is us threading the capability of Downer because we have huge capability to only through the recent restructure that we get to see what we do and we get to align it. And that's starting to happen, and you've seen it with working from a New Zealand perspective. I've worked with Steve. I've worked with Jacob. We're working with Pat. We're working with Mark. We work with Dante on materials. So we're all talking more than we ever did. So I think value ourselves, maturity of client conversation and aligning and explaining our capability, they are the keys to solving Scott's point about how do we improve our emissions targets. But it also solves how do we get our margins up, so we're truly rewarded for what we bring to the table.

Back to Andrew?

I'm going to steal it first, Scott. So I -- maybe I think it's for Mark. Could you just talk us through your -- what you think are the sustainable competitive advantages for you guys doing transmission/power dealer, the other power investments that are required to decarbonize, please? And I stress the word sustainable as in long term, not due to staff turnover or anything like that.

Yes. Look, I mean, I think it stems from the depth that we've already got and the position we have. I mean, we've got an engineering team internal of around 130 engineers. We've got long-term transmission tower designers that have been with the business 35 years. They sit on worldwide industry bodies. We're availing ourselves of technology around tower design. Last week, I went out and saw a presentation of a partner we're working with on drone stringing, which has a cost imperative. It takes away the safety concern of helicopters, and companies like Transgrid have banned helicopters due to crashes and stringing. So those sorts of things. Because we've got scale and momentum, we're continuing to invest in that space. As far as the battery technology goes, we have and we're looking at further enhancing our understanding of battery chemistry and battery management systems, energy management systems. And that's a risk mitigation as much as anything else. Because no matter where you play, if you want to be an EPC or an installer, you need to understand that technology. You need to understand the risk that you're taking on as an organization. So it's building a lot more capability and depth in that space. And I think when you're already at the front of the pack, if you don't -- if you're not cognizant of others sort of wanting to come in there and how do you protect your position, you're going to be in a bit of trouble. So to that end, in terms of labor and bringing in the right people. For example, in the Eyre Peninsula job at the moment, we bid that job with extra dollars in the bid to allow for double ups of key staff to train to make sure that we're bringing in more of high-voltage linesman as an example. So we're continuing to do that. So that's about retraining, upskilling from adjacent industry, upskilling from industries that are in decline. Unfortunately, for us, in power, the airline industry was at a bit of a downturn at that time. So we've taken on logistics people. I've got one of my senior executives, a General Manager from New South Wales, who's going to be working out of the U.K. from July 1 for 6 months. And that's purely to put a key resource here to be able to take advantage of the opened immigration channels. So we want to bring in more people from countries like Canada. Diane, I don't know if it's good or bad for you, but we're going to target that area. So that's what we're going to do to make sure we stay ahead of the pack because it's not a very easy industry to come into and gain that foothold, but also understand the technology.

Okay. And then just while we're on turnover. So you started to disclose staff turnover, 28% in fiscal '20 down to 24% in fiscal '21. Where is good, Grant? And would you expect in this year, it would be higher than the 24% because of all the pressures that you've been talking about?

A simple answer is yes. Look, good, it varies on the type of business. But if you're sitting somewhere between 10% and 15%, that's pretty good.

We'll jump back to Andrew and then it's probably time for one more question, after we come back to John.

Thank you. Maybe just for each of the business very quickly. If we use 5% -- sort of maybe the 5% to 7% [ CAGR ] for the group as the revenue that's available, would the limiting factor for each of your divisions is to do revenue growth above that? Is it a shortage of people? Is it a shortage of work? Is it -- can you get the risk budget from the TCC? And maybe just 10 or 15 seconds on what your limits are over and above the sort of the group level of revenue expectation in the next couple of years is for your respective division?

Yes, this will be good.

I lost my mic. I guess for us a lot of our new work is characterized by [indiscernible] and the refinery outcome. You can often do a very good job, a very good offer in front of the customer, but not necessarily get the outcome you're looking for. So for us, there's a little bit of hapchance in terms of getting the right sort of outcomes in terms of those opportunities. In terms of the accretive stuff, so the augmentation stuff work that sits in here, we don't really see barriers around that side of things.

So yes, so I'm going to be a mixed bag, so with various businesses when you look across the health and education business, for example, those PPPs are similar to Steve's business where they're chunky they have like a 3-year cycle time to get going and then I come up every day of the week. So for us in health and education, it's looking at not only the future PPPs that are coming through, but also adjacent sectors. So we're just sort of playing around with our strategy a little bit in that space at the moment and have look at what else we can do to grow outside of PPPs. You go across the government, and I don't really think there's any real barriers to growth in that space. I think we'll see continued outsourcing. It's a big market. We've already got a big part of the pie, but the pie is pretty big. And I do think that we'll see increased outsourcing in that market in the future. If you go across to power and energy, there's going to be some pluses and minuses in that space. So that transitional piece is -- as I said before, it creates an opportunity for us but we are going to see some parts of our business reduced revenue over time as the big power stations perhaps start to close down, but we're working pretty hard to replace that revenue by going to the renewables space or the alternative energy space. So I think we'll see some ups and downs in that business over time, but there's a lot of work being done in LNG and CSG at the moment, and we are really well positioned in that market. We've got a big slice in coals and gas in particular and in terms of market share, and that's growing. We've got a small market share in LNG, but we've got a very strong capability in that space. So I think we can grow market share in [ PME ]. If I go to industrial marine, that's where we're most resource-constrained, right? So -- and hopefully, that will change once the borders start to open again. So that's probably a bit of a problem for us in the medium term. But hopefully, when international borders, state borders open up, FIFO resumes, we might see a change. So yes, it just varies across the businesses but I'm very bullish on being able to grow beyond that 5% to 6%.

Like, our business is very sub-business specific. So if you look at the professional services business, the major constraint there is operating in a Canberra bubble. So how can you find very highly skilled people in that market. And so we're doing a lot of work, both politically and at the top end of [ KSG ] and [ CIOG ] to convince them you're probably overpaying for what you get if you can actually do the stuff out of Brisbane, Melbourne or Sydney, we can get more resources on to the assignments and we can get them at a better rate. And so we are starting to see a slow relaxing there. But in terms of winning our fair share on the panels, I think there's headroom there for us. So we're not kind of growth constrained there. If you look at the FM space, that stuff is very lumpy. So we're a big fish in a small pond in terms of the estates. So you've got a binary point around those contract renewals, where you take a large leap on those. We'll target opportunities as they come up. But in general, we think we'll win our fair share. And then if you look at the project side, the virtue of our positions gives us a lot of pull-through, sole-source, noncompetitively bid by virtue of the relationship. The nature of that work, because we're acting as an agent for the Commonwealth, we're not actually doing the construction, means we're less exposed to having to come up with the blue collar resources. So that's not kind of a cap on us. We're more doing programmatic management and project management. And then at the sort of larger end of the major redevelopments, we -- again, it's a massive leverage model there where you might have a team of 15 or 20 people, but they might be managing $1 billion worth of work. So you get a lot of bang for your buck there. So we don't see a kind of constraint on that.

Yes, and from a utilities perspective, not too dissimilar to a lot of the points. So utilities doesn't tend to grow overnight rapidly. As I said, there's lot of work that's undertaking with clients. Those relationships, the journey, the existing contracts that we have are generally long term. And so we go through a process around that for the L&M sort of sector and space. The resource is basically what's available in the country. So unless we can bring in resources from overseas and to fast track, look, we're undertaking traineeships, apprenticeships, as many things that we can possibly do, making sure that we have that availability as these existing clients actually generate a lot more CapEx activity in their space, and they're chasing nonregulated activity, we pursue those elements. So we're actively participating right across the space. In the project sectors, as you can see, there's shifts going on. There's a lot of potential going in, but we don't want to go in with teams that aren't capable of delivering. So we're being selective around to the TDS point where we're looking at our risk profile, understanding our capability, not biting off more than we can chew, we want to deliver great outcomes for our clients, right? We don't want to put anything at risk just by jumping at too many opportunities too quickly. So we are being selective. The risk profile is important. The relationship is important. Do we understand the clients and investing that time and effort to work collectively for [ when we now come ]? So it's a myriad of things that we're looking at. We will grab opportunities where there is great potential and we have existing capability. And the other element is leveraging the capability right across the organization to support us for some of those opportunities where we can. And external partnerships are really important to us. We don't just self-deliver everything. We have a number of valued and external suppliers and partners that we work with closely. So it's getting that balance right as well without undermining our safety and quality and expectations right through that chain.

Look, for us, yes, we're a low-capital business, so that's a start. And you've heard from me on the -- this gold major transport, huge power market. People, considerations, we've talked about that as an issue. We have strategies in place for it. For ourselves about what we do is relatively complex. So we've got to make sure that our revenue sort of aspirations don't outweigh our sort of engineering capability and talent. So we manage that. It's certainly buoyant. We'll be getting uplift in revenue. But for us, it is very much a focus on the bottom line. It's about delivery and getting more out of what we do. So that's really the big push from our business in the next sort of 1 to 3 years.

Thanks, Mark. I guess for me, obviously, we've emerged as a high capital business within Downer, given where we've invested in not just what we do today, but what we're going to be doing in the future. There's no question that costs are rising. Revenue will rise probably quicker than margins because of the fact that all of our inputs to the work that we produce, whether it's raw materials, labor, logistics, are all going up. For me, it's -- we have finite resources and what we can call upon to go and deliver that work. Where there's a big impact, our ability to do that, we will always improve incrementally on what we do from a productivity base perspective. We've got more production capability, so we can call on more subcontractors. But I think we also need to recognize we're a fair old chunk of the market. We don't want to go and create huge issues from a delivery standpoint and let our customers down. We need to slowly inch up on the advantages through our investment and ensure that they understand, that they can get lower cost inputs into their network needs by working more closely with companies like Downer.

And finally for me, the limit would be people and tools, 2 different pockets. I think the people one is opening up slightly. So since our Board has opened probably only 3 weeks ago now, we've recruited circa 68 people from overseas of trade and engineering skills. So that's good. People still want to come to New Zealand and they have appropriate skills. The second thing is integrating them in -- at the right pace into the right environment, so they work effectively as teams. So people opening up teams still to work on, and that's, by far, our most limiting factor.

Andrew, it's worth -- if we just take all that together, I think the answers there that the reality of the situation is that demand is not the problem. There's plenty of it. So we look to regulate ourselves to make sure that we get the right service quality to the customer and then we do it so that we get the right answer to the bottom line, right? And we'll continue to do that. We've always done it. As I said, some of these businesses could be a lot larger. The growth in the level of spend of the customers will exceed our growth, right? And that's because we'll be very selective as to what we -- what we're choosing. As I said a little earlier, it's in these times often that companies go broke, right? And we will see a number go broke over those periods. Downer will comparatively do very well.

All right. Thanks, everyone. Last question coming from John. Thank you.

Just a question for Michael Ferguson in terms of the financials and gearing balance sheet. Obviously, you've only geared at 1.5x versus your targeted 2 to 2.5x. You've identified, obviously, the use of cash flow and balance sheet in terms of the mix of acquisitions and growth capital, buybacks, dividends, et cetera. Is there any -- really 2 questions. Is there any point of emphasis within those, Michael? And just in terms of your growth capital projects, we've obviously seen a bit of an emphasis in Dante's area in terms of asphalt plants and projects. Should we expect that to continue? Or you see good sprinkling across the businesses?

Roads is a very good returning business for us, John. So we'll continue to focus on that. It's also been very successful for us for the bolt-ons, particularly as we look across the sort of sustainability credentials, we're looking across a broader net than just roads, across, as Grant said, facilities defense. And then as far as sort of use of the dollar, the -- we think there's plenty of M&A opportunities that can outperform the accretion of the buyback. We're committed. We've extended the buyback. As I said, we'll always like to use this as a capital management tool, but the size of the business, we'd like to invest.

All right. Thank you very much for all the questions and to the presenters for answering them. I'll now hand to Grant for some closing comments before we go to lunch. Grant?

Thanks, Adam. Just very quick one on the close here. We're really looking through the noise of '22 into '23 now. And we've been working very hard over the last number of months on what '23 to '25 looks like. We think it looks good. You've heard a lot of that today. The businesses are in good shape. So just to leave you with a few things that have already come up. We've got a weighted average sector spend growth of 7% to 8% CAGR. That's what we expect our customers to spend, an increase in spend, right? And that's weighted to where we make our money. We are in the right sectors and at the right time, right? So if you look at what we do, where the money is being spent, we're in the right spot. And because of all of the amount of money that's being spent, the decarbonization effort that's got to go on, we're here at the right time, right? And this will be, I think, a buoyant area of transport, utilities, facilities certainly over minimum the next decade. We're heavily leveraged, as I say, to new energy economy. And the whole economy will change. I don't know. Just we'll go back to say the amount of change that's going to happen over the course of the next 2 decades is monumental, right? Ricky was pointing that out a little earlier to us. There is so much change. And we're seeing an acceleration of all of our customers in how they think about this, right? So if you're listening to the television around Glasgow and the COP meetings, it was always -- all seen as didn't really come up with much. They didn't really commit too much. Well, from an Australian perspective, just the government saying that they're now going to commit to it, irrespective of whether it's legislated or not, is having a massive change to everyone in the economy that we can see, right? That's at both government level and in private sector. So everyone's head has turned very much that we've now got to get on with this. So it's a massive change. You will see it within your own businesses. It's going to be a very different place in 5 years. This will be massively mainstream. Now we're already making money in this market. But every one of our customers, and we've got a lot of them right around that wheel, we're now talking to around these issues. And we're trying to help them and trying to help them with their targets. And from the work that we've done so far, we do expect a very good bounce back in '23. Obviously, we think COVID will be behind us. We won't have the wet weather that we've seen over the last couple of years as well. And I think Downer is in for a good period ahead. Thanks very much for coming. Thanks. Thank you for everyone that's on the web, and we'll see you again soon. Thank you.