Downer EDI’s Link Alliance JV Secures C3 Contract For Auckland City Rail Link Project

Downer EDI’s Link Alliance JV Secures C3 Contract For Auckland City Rail Link Project

Downer EDI Limited (ASX: DOW), headquartered in North Ryde, is a leading integrated services provider operating across New Zealand, Australia as well as the Asia-Pacific, South America, and Southern Africa. The company has over 53,000 people employed across more than 300 sites and also holds 88 % interest in Spotless Group Holdings Limited (ASX: SPO).

On Aril 18th, 2019, the company announced that the City Rail Link Limited has selected Link Alliance as the preferred bidder for the C3 alliance contract, the largest package of work for the NZD 4.4 billion Auckland City Rail Link project.

The Link Alliance is a joint venture (JV) comprising AECOM, Downer, Soletanche Bachy, Tonkin + Taylor, Vinci Grands Projects, and WSP Opus.

The C3 contract involves the construction of two new underground railway stations near Aotea Square and Karangahape road in Auckland central, the redevelopment of the railway station at Mount Eden and the tunnels connecting them. The two new stations would be designed to carry larger nine-car trains to better meet the needs of a growing city.

In addition, Downer has been appointed to maintain three stations, that are part of the Auckland City Rail Link project, for up to 30 years. In total, Downer’s share of all work is estimated to be over NZD 1 billion of revenue from the construction and maintenance contracts, currently underway as well as planned for the future.

Recently, Downer EDI announced that Downer Group Finance Pty Limited successfully priced an issue of Medium-Term Notes (MTNs) totalling AUD 300 million under its AUD 1 billion Debt Issuance Programme. The MTNs are expected to be issued on April 29TH, 2019. The issue follows a successful roadshow in Australia and Asia that fetch strong support from a variety of domestic and international investors. Mizuho Securities Asia Limited, National Australia Bank Limited and Westpac Banking Corporation acted as Joint Lead Managers on the transaction.

The Chief Financial Officer of Downer, Michael Ferguson remarked “the issue met the key objectives of lengthening the maturity profile and enhancing the diversity of the Group’s debt portfolio at a rate that compares favourably with existing debt levels.”

According to the company’s Half-year financial Report for the period ended December 31st, 2018, the total revenue and other income from ordinary activities amounted to $ 6,324.5 million, which is 9% higher than $ 5,803.1 million in the prior corresponding period (pcp) ended December 31st, 2017.

The EBIT stood at $ 236.6 million and the EBITA at $ 268.0 million, both recording an increase of 352.4% and 222.9% respectively on the pcp.

Downer EDI’s profit from ordinary activities after tax and before amortisation of acquired intangible assets (NPATA) increased substantially by 2766.7% to $ 163.4 million from $ 5.7 million in pcp. The half-year was closed with net cash and cash equivalents of $ 505.3 million.

For the concerned period, the basic earnings per share increased by 946.2% to 22.0 cents. The company also paid out an interim dividend (50% franked) of 14.0 cps to shareholders, on March 21st, 2019.

With around 594.7 million outstanding shares (current market cap $ 4.59 billion), the DOW stock price is trending at AUD 7.830, up 1.56% on Thursday, April 18th, 2019 at 03:35 PM AEST.


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