I don't share the same positive outlook for Downer.Their...

I don't share the same positive outlook for Downer.

Their restructure doesn't really seem to address any major issues which is within the management level below the CEO board and CFO, rather they appear to be reshuffling the board. Remember it was only a few years ago they restructured as well so the question has to be asked, why again? And lastly ICAC will surely give them a big penalty. Following LinkedIn people movements a lot of long-serving employees have left and gone elsewhere to competitors or other major construction projects like North East Link. A serious question needs to be asked about other contracts performances given there was a "utilities error" which I struggle to believe a CFO and CEO can't be across. What other skeletons are in the closet?

I do note they have made a few divestments over the last few years which has been beneficial and would be interesting to see what the sale of their Major Projects division means, was it an ultimately loss maker or low value add business?

I have a few questions for Downer I would like answered before I were to invest.

1. What is the plan with $100m of reduced overheads in the business, and what level of investment is required in technology or other plant/gear to sustain the business?
2. What is the plan for Downer to reduce subcontractor costs and to bring more services in house? Over the last few years the trend of subcontractor costs has been increasing each half which indicates to me that skilled labour is being sought elsewhere rather than in-house generating margins.
3. Cash flow seems to be relatively poor given their level of finance expenses in the business which is circa 30% of EBIT, what actions are in place to mitigate such large finance costs which chew into margins year on year?