DOWNER EDI LIMITED — AGM Information 2007

Nov 1, 2007

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DOWNER EDI LIMITED ANNUAL GENERAL MEETING FRIDAY, 2 NOVEMBER 2007

Chairman’s Report Mr Barry O’Callaghan AO

Good morning Ladies and Gentlemen and thank you for your attendance here today.

It is extremely disappointing to have to report that once again the strong performance of the Group’s core business has been overshadowed by some of the same problem contracts that led to the previous financial year’s loss.

The board accepts and acknowledges that this has been an extremely frustrating period for our shareholders.

I want to assure you that the board is absolutely focussed on redressing this situation and will do whatever it takes to resolve it.

The board has acted decisively to change the leadership of the company through the appointment of Brent Waldron as interim Chief Executive. In turn Brent has rapidly implemented a series of senior management and operational changes and with the Board implemented a full business review which is well advanced.

Brent was appointed at the beginning of August with a clear mandate from the board to quickly identify and execute those initiatives required to re-establish Downer EDI’s reputation. His work is supported by a Board Steering committee that meets with the Executive team weekly.

The rationale for the appointment of an interim CEO was to ensure the business moved rapidly to bring about the changes that would restore investor confidence and realise the value latent within Downer EDI, not allowing the business to sit still.

At the same time the board is committed to ensuring that the selection of a permanent CEO follows a robust process so that the best possible candidate is appointed. Brent Waldron is a candidate in that process, and we expect that process to be completed before Christmas.

With the Board’s full support Brent moved quickly to realign the senior leadership team, bringing about increased clarity of roles and clearer lines of accountability.

The business review announced just over two months ago is now well underway, and Brent will update you on progress in his report.

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The changes that have already been made have been well received by our investors, employees and customers.

We appreciate that support is earned over time based on consistent delivery on our promises and we do not take it for granted. We have further work to do to earn back your trust.

The leadership changes initiated by the Board were driven by a series of events that were brought to a head at the start of August.

In the settlement and ensuing work-out of our position surrounding the last few of the problem contracts identified to you at last year’s AGM, it became clear to the Board that a more conservative view on settlements overall was warranted.

This is the key component of the write-back and subsequent trading-halt and market disclosure on 1 August.

The only appropriate way to assess our risk management policies and procedures is the quality of our pipeline of work and the fact that no new problem projects have emerged.

It is in this light that we are genuinely able to take great heart in the underlying performances of our businesses.

For the financial year ended 30 June 2007, Group revenues totalled $5.4 billion – up 15% on the previous year.

The underlying EBIT performance of $281 million was an increase of 22% on the prior year and pleasingly the year saw a return to positive cash flow.

An unfranked final dividend of 8 cents per share was declared, bringing total dividends for the year to 21 cents per share, representing a payout ratio of 66%.

The integrity of our underlying operations was also ultimately reflected in September with Fitch Ratings affirming our investment grade credit rating.

Underpinning that performance were a large number of the small to medium sized contract wins which characterise the engine room of so much of our Group’s performance, but which really go unreported.

The wins that did make the headlines included –

• The Reliance Rail consortium, of which Downer EDI is a 49% equity partner, winning the NSW Government’s contract to design, manufacture and maintain 72 eight car sets;

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• The Reliance Rail consortium winning CFO Magazine’s Structured Finance Deal of the Year award;

• Downer EDI Rail securing $75 million worth of contracts to supply BHP Iron Ore and Rio Tinto Aluminium 15 new locomotives;

• Extension orders from Queensland Rail and the Western Australian Government for passenger trains and the second tranche of locomotives to BHP’s Pilbara operations;

• The successful integration of Emoleum and Southern Asphalters into the Downer EDI Works Australia businesses, and the acquisition of bolt-on businesses in Singapore and the UK;

• New alliance contracts entered into with Xstrata Coal for the development of two coal processing plants in NSW;

• Downer EDI Engineering securing $400m more work through the extension of its Foxtel contract;

• Two further acquisitions in our consulting Division;

• Downer EDI Works winning $50m of work through securing New Zealand’s first water industry contracting alliance;

• Downer EDI Works securing a two year extension to its alliance contract with the Australian Rail Track Corporation for rail track maintenance in Victoria.

Turning to the future, the 2008 outlook is positive and underpinned by record levels of spending on Infrastructure by Governments across all of the geographies in which we operate.

In FY 2008 Australian Governments alone are expected to spend over $40 billion on infrastructure and in the four years to FY 2011, spending on infrastructure is expected to exceed $150 billion.

With just under 23,000 employees and a demonstrated capacity to deliver on the new order of contract and strategic alliance business models that are destined to be the future in our core markets,

Downer EDI is well positioned to capitalise on these trends through our core competencies in supply, service and maintenance.

In this context it is important to comment on the NSW PPP.

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The NSW PPP contract is for the manufacture and maintenance of a crucial piece of the Infrastructure of NSW, and was won by the consortium of which Downer EDI is a 49% partner.

The contract represents one end of a spectrum of contractual forms that will increasingly dominate the manner in which public infrastructure needs are being met.

Participation in these relationship-driven models requires a business with the configuration and core-competencies which characterise Downer EDI, and which Brent Waldron will talk about more in his address.

Let me say a couple of things about the Board.

Given the changes which have taken place at senior management level, it is important that Board stability is maintained whilst we go through the processes of searching for and appointing a permanent CEO, settling that CEO into Downer EDI and completing the review of our businesses.

I am standing for re-election today. As part of an orderly succession process I advised the Board two years ago that I would stand down at the conclusion of next year’s AGM.

Within the next twelve months, it is proposed, after a robust best practice approach, to appoint two more non-executive directors, a net gain therefore of one following my retirement.

I would like to thank shareholders for your ongoing support through what has been a difficult period, and to confirm the Board’s commitment to ensuring that Downer EDI delivers the consistency of earnings we are all looking for.

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