DOWNER EDI LIMITED — Annual Report 2003

Aug 25, 2003

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2008 Results and Outlook

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RESULTS PRESENTATION

STEPHEN GILLIES MANAGING DIRECTOR

GEOFF BRUCE CHIEF FINANCIAL OFFICER

JOHN DAVENPORT GENERAL MANAGER GROUP FUNDING

COMPANY SUMMARY

"The diversification of Downer EDI's business" platform has delivered a robust financial performance, during a period of mixed economic activity in the region, and our industry platforms continue to strengthen."

$2003 - Key Points$

• Sales up 10% to record \$2.7 billion
• NPAT up 18% to record \$66.6 million (\$82.6 million pre-goodwill) $\blacksquare$
• $\equiv$ EPS up 18%
• Record Cashflow from Operations of \$225 million; matched by Cash on Hand of $\qquad \qquad \blacksquare$ \$207 million
• Interest costs down year on year (down 15%) $\qquad \qquad \blacksquare$
• First ever franked dividend 50% franking on 2003 final dividend $\qquad \qquad \blacksquare$
• Increased DPS due to higher $EPS 2.9$ cents per share full year $\qquad \qquad \blacksquare$
• Dividend payout ratio maintained at 50% $\qquad \qquad \blacksquare$

$2003 - Key Points$

• Net Debt to Equity at record low of 39% $\blacksquare$
• NPAT/Avg.Shareholders' Funds rose to 10.6% pre-goodwill $\blacksquare$
• Order book firm at \$5.5 billion and growing to \$6.0 billion
• New \$200 million 3 year Syndicated Facility established
• Available cash liquidity strong >\$300 million
• Acquisition of CPG completed
• Downer EDI management now a major shareholder; CPG management also $\qquad \qquad \blacksquare$ participated
• Investment Grade Credit Rating assigned

FINANCIAL COMMENTARY

2003 Overview

• Revenue grew by over \$200 million off stable/declining level of funds employed reflecting emphasis on services and working capital management.
• Strong organic growth in Power, Road and Mining. Telco and Rail maintenance $\blacksquare$ increasing.
• CPG delivered on budget first three months of ownership; strong management $\blacksquare$
• Result reflects one off charges for downsizing of Walkers to pure rail and $\qquad \qquad \blacksquare$ restructuring of Century and Capital Works
• Balance sheet is the strongest it has ever been $-$ a product of existing and $\qquad \qquad \blacksquare$ ongoing focus

2003 Overview

(A\$ Millions)	2002	2003	Change
Revenue**	2,442	2,697	10%
EBITA	128	140	9%
Net Interest	34	29	$-15%$
Profit Before Tax	79	95	19%
Net Profit After Tax	56	67	18%
Goodwill Amortisation	14	16	12%
Net Profit (Before Goodwill Amortisation)	71	83	17%
EPS
- Shares on Issue at 30 June (mill.)	963	976
- EPS (after Preference Dividend \$5.2 mill.)	5.3	6.3	18%
- Weighted Average, fully diluted shares (mill.)	1,036	1,098
- EPS fully diluted (Cents)	5.5	6.1	10%
DPS-Final (Cents) ** Excludes JV Sales	1.9	2.4	26%

2003 Result - Pro Forma CPG

(A\$ Millions)	2003	2003
	Full Year	Pro Forma
	(incl CPG 3 mths)	CPG Full Year
Gross Revenue	2,697	2,931
EBITA	140	155

2003 Overview

Balance Sheet as at 30 June (A\$ Millions)	2002	2003	Change
Total Assets (Excluding Cash)	1.724	1.826	$6\%$
Net Debt	447	296	$-34\%$
Shareholders' Funds	710	760	$7\%$
Funds Employed	1.157	1.056	$-9\%$

Sixth Consecutive Year of Profit Growth

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Wil

Reducing Funds Employed

Improving EBITA Return on Funds Employed

Margin Stable

For Year Ended June 30	2002	2003
Revenue (A\$ Millions)	2,442	2,697
EBITA (A\$ Millions)	128	140
Margin %	$5.2\%$	$5.2\%$
Average Peer Margin: 3 years to 2002	4.1%
(Peer Group: LEI; LLC; SPT; TEM; TSE; UGL)

Focus on maintaining margin combined with outlook for growing revenue will $\blacksquare$ deliver uplift in headline profit in 2004

Interest Cover Strengthening

2001	2002	2003	2003	2004
			Actual	Target
3.5		>4.0	4.3	>4.5
3.8			4.8	>5.0
6.6			8.4	>8.7
			Forecast* 3.3 3.7 $6.5$ $>7.0$	>4.5

* As at 2002 full year presentation

Gearing at Record Low

Working Capital Improved

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2003 Objectives (as per 2002 Results Presentation)

Objectives	Outcomes
Focus on key market sectors and	Sales from key market sectors in total
expanding service offering	expanded; services component increased by over \$350 million
"Trim" the balance sheet	Average Funds Employed and working capital decreased
$\uparrow$ Non-mining revenues as % total revenue	No change but on current forecast expect decrease to around 30%
$\uparrow$ EBITA / AFE (>12%)	EBITA/ AFE 12.7%
$\bigvee$ Gearing (Net Debt/Equity <50%)	Net Debt to Equity 39%
↑ Order Book (>\$5 Billion)	Order Book > \$5 billion and heading to \$6 billion

2004 Financial Year Targets

(A\$ Millions)	2004	2004
	Full Year	Change on
		2003 FY Actual
Gross Revenue	>3100	>15%
EBITA	>160	>15%

2004 Operating Outlook

MINING	Stable market conditions; selective growth; contain capital employed by pursuing emphasis on "as is business"; seeking value for intellectual property
POWER	Well positioned for increasing demand; strong growth expected; infrastructure assets failing; power shortages driving new production and reticulation upgrade opportunities
RAIL	Rollingstock manufacture steady, delivering long-tailed maintenance; rail track infrastructure failing; government needs to invest but how?

2004 Operating Outlook

ROAD	Strong growth; increasing expenditure on maintenance enhancement (upgrade); facilitation of greater carrying capacity is taxing governments
TELCO	Increasing demand for our services despite capex spend continuing at an all time low.
INFRASTRUCTURE ASSET DESIGN / F.M.	Increasing opportunities; "one stop shop" potential to deliver internally generated projects

2004 – Outlook Generally

• No requirement for new share capital $\blacksquare$
• EPS will continue to increase
• Surplus cash flow able to be reinvested into infrastructure operations otherwise $\blacksquare$ capital management initiatives will be considered
• Asia beginning to look attractive again $\blacksquare$

QUESTIONS & ANSWERS