McConnell Dowell 2018 Annual Review

• Cash balance 30 June 2018 of $142 million and was ahead of budget; and • Restored profitability with improved project execution and margin generation and positive cash flow. The operating result was solid, having made substantial progress in addressing underperformance on several projects and in securing an unprecedented level of work in preferred and/or sole source position. Good progress was made on the legacy projects. Historical matters resolved in FY18 saw a net cash positive outcome and a significant reduction in the Group’s exposure. All legacy projects are complete with the remaining commercial items anticipated to be cash accretive. Operational Highlights The business has renewed confidence and a greater level of predictability and consistency across all projects. This value is core in increasing our reputation as a reliable, consistent project delivery partner. Having come off one of our strongest performing financial years in recent history from a project execution and delivery perspective, there are several standout examples that highlight McConnell Dowell’s growing reputation and success. In Australia, there was excellent performance in project execution and progress on key projects across the region including: Amrun Export Facility Jetty in Queensland; Northern Gas Pipeline in the Northern Territory, Murray Basin Rail Upgrade and Swanson Dock East Rehab Works in Victoria. New Zealand and Pacific Islands had a renewed focus on operational efficiency with the business unit successfully completing key projects including the Kawarua Falls Bridge, Russley Road Overpass in the South Island and the Mangere BNR in the North Island. McConnell Dowell set a new distance world record at 1496.48 meters - the longest pipe tunnelled using the Direct Pipe® method - on the Army Bay Wastewater Treatment Plant. The South East Asia business continued to deliver strong operational performance. This was largely driven by strong progress on the Tuas Bridge, Marina Bay Sands, Rapid Solid Product Jetty and Nakhon Ratchasima Pipeline Projects. Our building business, Built Environs, continued to deliver solid performance on the construction on The West Franklin Apartments and Urbanest Student Accommodation project in Adelaide. McConnell Dowell also received significant industry awards and recognition during 2018, a testament to innovation, our creative brand and the commitment of our teams. New Business In 2018, the New Business & Strategy teams continued to evolve and implement Work Winning Rules into the business to apply a stronger focus on the needs of our customers whilst pursuing opportunities that will deliver quality results for the Group and our customers. Applying this approach in a disciplined manner has enabled us to make solid advancements and position the business for success within a highly competitive market landscape. Several high-profile projects have been secured, including; • Melbourne Airport Runway Development ECI Project and Toll Wharf Upgrade in Victoria; • Abbotts Road, Aviation Road and Wyndham Stable Yards as part of the Western Program Alliance in Victoria; • Public Transport Projects Alliance and Regional Bridges for Department of Planning, Transport and Infrastructure in South Australia; • VTB Submarine Pipeline Project at the ExxonMobil CRISP Facility in Singapore; • Wynyard Edge Alliance Delivery Partner, Lyttelton Harbour Wastewater Project, Hanua 4 and Te Mato Vai in New Zealand; and • Pago Pago Airport Apron (Phase 1) and Pago Pago Runway Overlay in American Samoa. While the level of new work booked was lower than planned, the Group made important progress on several key prospects and secured an unprecedented $1.3 billion in preferred and/or sole source position. McConnell Dowell finished the year with a secured revenue plus preferred position totalling over $2 billion which provides a greater level confidence and visibility of near-to-medium term earnings. The markets in our regions remain buoyant and we have been experiencing a high volume of tendering activity. We have participated in several large-scale and strategic bids that remain pending final award decision. The Group expects to see an upturn in the order book position as we convert the near-term contracts and continue to pursue further work into FY19. Our prospect pipeline remains strong, diversified across target regions and market sectors and is reflective of our value offering. We believe our disciplined approach to winning work together with strong market positions provides a solid platform from which to underpin sustained profitability in FY19 and beyond.