Downer EDI Limited ABN 97 003 872 848

Details of a 1 for 4 accelerated renounceable Entitlement Offer of Downer EDI Limited ordinary shares at an offer price of A$3.25 per New Share

This Retail Entitlement Offer closes at 5.00PM (AEDT) on Wednesday 23 March 2011

Retail Entitlement Offer

This is an important document which is accompanied by a personalised Entitlement and Acceptance Form for you to subscribe for new ordinary shares in Downer EDI Limited. Please read this document carefully and call your professional adviser or the Downer Offer Information Line if you have any queries. If you have any doubt about whether you should invest in the Retail Entitlement Offer, you should seek professional advice before making any investment decision.

Not for distribution or release in the United States or to U.S. persons.

1	Key dates	1
2	Chairman’s letter	2
3	How to Apply	4
4	ASX Offer Announcements	12
	– ASX 1H2011 Results Media Release dated 28 February 2011	13
	– 1H2011 Results Presentation dated 28 February 2011	17
	– Capital Raising Presentation dated 28 February 2011	49
	– ASX Institutional Offer Completion Announcement dated 3 March 2011	62
5	Important Information	65
	Corporate directory	IBC

Important notice

This Retail Offer Booklet, including the ASX announcements and investor presentations reproduced in it and the Entitlement and Acceptance Form, does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this booklet nor anything contained in it shall form the basis of any contract or commitment. In particular, this Retail Offer Booklet and anything contained in it does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of, any “U.S. person” (as defined in Regulation S under the U.S. Securities Act of 1933 (the U.S. Securities Act )) ( U.S. Person ). None of this Retail Offer Booklet, the ASX announcements and investor presentations reproduced in it nor the Entitlement and Acceptance Form may be distributed to or released in the United States or to any U.S. Persons. Neither the Entitlements nor New Shares offered in the Entitlement Offer have been, or will be, registered under the U.S. Securities Act or the securities laws of any state or other jurisdiction of the United States. The Entitlements may not be taken up by persons in the United States or by persons who are, or are acting for the account or benefit of, a U.S. Person. The New Shares may not be offered, or sold, or resold, in the United States or to, or for the account or benefit of, a U.S. Person except in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and any applicable securities laws of any state or other jurisdiction of the United States. The New Shares may not be deposited in any existing unrestricted American Depositary Receipt Facility or future such program with respect to the securities of Downer that has been or may be established until 40 days following the completion of the Entitlement Offer.

Retail Entitlement Offer

1 Key dates

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|||
|---|---|
|Event|Date|
|Announcement of the Entitlement Offer|Monday, 28 February 2011|
|Record Date for the Entitlement Offer|7.00pm (AEDT) on Thursday, 3 March 2011|
|Retail Entitlement Offer opens|Tuesday, 8 March 2011|
|Retail Entitlement Offer closes|5.00pm (AEDT) on Wednesday, 23 March 2011|
|Retail Bookbuild|Monday, 28 March 2011|
|Settlement of Retail Entitlement Offer and Retail Bookbuild|Thursday, 31 March 2011|
|Allotment of New Shares under the Retail Entitlement Offer and Retail Bookbuild|Friday, 1 April 2011|
|New Shares issued under the Retail Entitlement Offer commence trading on ASX|Monday, 4 April 2011|
|Despatch of holding certificates and Retail Premium proceeds|
|(if any) to shareholders|Tuesday, 5 April 2011|

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Note: Dates and times are indicative only and subject to change. All times and dates refer to Australian Eastern Daylight Saving Time ( AEDT ) while in effect and otherwise to Australian Eastern Standard Time. The commencement of quotation of New Shares is subject to confirmation from ASX.

Downer and the Underwriters, as defined in section 5.16 below, reserve the right, subject to the Corporations Act 2001 (Cth) ( Corporations Act ), ASX Listing Rules and other applicable laws, to vary the dates of the Entitlement Offer, including extending the Entitlement Offer or accepting late applications, either generally or in particular cases, without notice. You cannot, in most circumstances, withdraw the application once it has been accepted. No cooling off rights apply to the Retail Entitlement Offer.

Eligible Retail Shareholders wishing to participate in the Retail Entitlement Offer (as defined in section 5 “Important Information”) are encouraged to submit their Entitlement and Acceptance Form as soon as possible after the Retail Entitlement Offer opens.

As the Entitlement Offer is renounceable, if you take no action, your Entitlement will be sold through a bookbuild process (See section 3.1 “The Retail Entitlement Offer”).

Enquiries

If you have any questions, please call the Downer Offer Information Line on 1300 053 760 (from within Australia) or +61 3 9415 4389 (from outside Australia) between 8.30am and 5.30pm (AEDT) Monday to Friday during the Retail Entitlement Offer period. We recommend you consult your stockbroker, accountant, solicitor, financial adviser or other independent professional adviser if you are in any doubt as to whether to participate in the Retail Entitlement Offer.

Website

www .downergroup.com

Downer EDI Limited

2 Chairman’s letter

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS.

8 March 2011

Dear Shareholder,

On behalf of Downer EDI Limited ( Downer ), I am pleased to invite you to participate in a 1 for 4 fully underwritten accelerated renounceable entitlement offer of new Downer ordinary shares ( New Shares ) at an issue price of A$3.25 per New Share ( Entitlement Offer ). This means that you have the opportunity to purchase 1 New Share at this price for every 4 existing Downer ordinary shares you owned at 7.00pm (AEDT) on Thursday, 3 March 2011 ( Record Date ).

This capital raising will strengthen Downer’s balance sheet, promote financial flexibility to pursue attractive growth opportunities, and support Downer maintaining investment grade credit metrics.[1]

Details of the Entitlement Offer

On Monday, 28 February 2011, Downer announced its intention to raise approximately A$279 million through an Entitlement Offer, comprising an institutional component ( Institutional Entitlement Offer ) and a retail component ( Retail Entitlement Offer ).

The Institutional Entitlement Offer was completed on Tuesday, 1 March 2011. A bookbuild for the Institutional Entitlement Offer ( Institutional Bookbuild ), through which institutional entitlements not taken up by eligible institutional investors (and those which would have been offered to ineligible institutional shareholders) were offered and sold to institutional investors, was completed on Wednesday, 2 March 2011. The Institutional Entitlement Offer and Institutional Bookbuild together raised approximately A$200 million. The Institutional Entitlement Offer was conducted at an offer price of A$3.25 and the clearing price for the Institutional Bookbuild was A$3.75.

This offer booklet ( Retail Offer Booklet ) is in relation to the Retail Entitlement Offer.

The offer price represents a 17.1% discount to the closing price of Downer shares on Friday, 25 February 2011 and a 14.2% discount to the theoretical ex-entitlements price.[2] New Shares will rank equally with existing Downer shares in all respects.

Under the Retail Entitlement Offer, eligible shareholders have three choices:

You may subscribe for your full entitlement of 1 New Share for every 4 existing Downer ordinary shares that you hold on the Record Date ( Entitlement ) at an issue price of A$3.25 per New Share; or
You may subscribe for some of your Entitlement and renounce the balance; or
You may renounce all of your Entitlement.

If you take no action or your application is not supported by cleared funds, you will be deemed to have renounced all of your Entitlement. You should note that if you renounce all or part of your Entitlement, then your percentage shareholding in Downer will be diluted by your non-participation in the Retail Entitlement Offer.

The renounceable nature of the Entitlement Offer allows all eligible retail shareholders who do not take up some or all of their Entitlement (together with those retail shareholders who do not satisfy the eligibility criteria required to participate in the Retail Entitlement Offer) ( Renouncing Shareholders ) to have their Entitlement (or, in the case of shareholders who are ineligible to participate, the Entitlement which would otherwise have been available to them) sold on their behalf by a nominee through a bookbuild process after the close of the Retail Entitlement Offer ( Retail Bookbuild ). It is expected that the Retail Bookbuild will be completed on Monday, 28 March 2011.

Retail Entitlement Offer

Any premium in excess of the Offer Price of A$3.25 per New Share that may be achieved under the Retail Bookbuild will be remitted to Renouncing Shareholders (net of any applicable withholding tax – see section 5.7, “Taxation” – and any other withholdings required by law) in proportion to the number of New Shares represented by their renounced Entitlement. However, as set out in further detail in the attached information, no assurance can be given as to the price that will be achieved under the Retail Bookbuild for the sale of New Shares. There is also no guarantee that Renouncing Shareholders will receive any proceeds from the sale of Entitlements that they do not take up.

Entitlements will not be able to be traded on ASX or any other exchange, or privately transferred.

Other information

This Retail Offer Booklet contains important information about the Retail Entitlement Offer under the following headings:

Key dates;
How to Apply;
ASX Offer Announcements; and
Important Information.

Accompanying this Retail Offer Booklet is your personalised Entitlement and Acceptance Form which details your Entitlement and is to be completed in accordance with the instructions provided on the form and the instructions in this Retail Offer Booklet on “How to Apply”.

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If you have any questions regarding the Retail Entitlement Offer, please call the Downer Offer Information Line on 1300 053 760 (within Australia) or +61 3 9415 4389 (from outside Australia) between 8.30am and 5.30pm (AEDT) Monday to Friday, or visit our website at www .downergroup.com.

You should also consult your stockbroker, accountant, solicitor, financial adviser or other independent professional adviser to evaluate whether or not to participate in the Retail Entitlement Offer. You should also carefully review the “Key Risk Factors” section of the Downer Capital Raising Investor Presentation released to ASX on Monday, 28 February 2011 which is included in this Retail Offer Booklet.

On behalf of the Board of Downer, I invite you to consider this opportunity and thank you for your ongoing support.

Yours sincerely,

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Michael Harding Chairman

It is important to note that the Retail Entitlement Offer closes at 5.00pm (AEDT[3] ) on Wednesday, 23 March 2011. To participate, you need to ensure that you have completed your application by paying application monies by Bpay[®] , or by lodging your personalised Entitlement and Acceptance Form with your cheque, bank draft or money order, before this time and date. Please refer to the instructions on “How to Apply” set out in this Retail Offer Booklet for further information.

Notes:

1 In recent times, Downer’s credit rating has been at the lowest level which is considered investment grade.
2 The theoretical ex-rights price (“TERP”) is a theoretical price at which Downer shares should trade immediately after the ex-date for the Entitlement Offer assuming 100% take up of the Entitlement Offer. The theoretical ex-entitlement price is a theoretical calculation only and the actual price at which Downer shares trade immediately after the ex-date for the Entitlement Offer will depend on many factors and may not be equal to the theoretical ex-entitlement price.

3 Australian Eastern Daylight Saving Time.

Downer EDI Limited

X Section Title 3 How to Apply

Retail Entitlement Offer

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS.

3.1 The Retail Entitlement Offer

Eligible Retail Shareholders (as defined in section 5, “Important Information”) are being offered the opportunity to subscribe for 1 New Share for every 4 existing Downer ordinary shares ( Shares ) held at 7.00pm (AEDT) on Thursday, 3 March 2011 ( Entitlement ), at the offer price of A$3.25 per New Share ( Offer Price ).

As the Entitlement Offer is renounceable, Entitlements will be offered for subscription by a nominee to certain institutional investors on behalf of Renouncing Shareholders through a bookbuild process ( Retail Bookbuild ). See section 3.4.

The Retail Entitlement Offer is being made pursuant to provisions of the Corporations Act which allow rights issues to be offered by providing certain confirmations to the market without the need for a prospectus. This Retail Offer Booklet does not contain all of the information which may be required to make an informed investment decision regarding the New Shares offered under the Retail Entitlement Offer. As a result, it is important for Eligible Retail Shareholders to carefully read and understand the information on Downer and the Retail Entitlement Offer made publicly available, prior to taking up all or part of their Entitlement.

Your Entitlement is set out on the accompanying personalised Entitlement and Acceptance Form and has been calculated as 1 New Share for every 4 Shares you held as at 7.00pm (AEDT) on Thursday, 3 March 2011 ( Record Date ), rounded up to the nearest whole share. If you have more than one holding of Shares, you will be sent more than one personalised Entitlement and Acceptance Form and you will have separate Entitlements for each separate holding.

New Shares issued under the Retail Entitlement Offer will rank equally in all respects with existing Downer ordinary shares on issue, including as to dividend/distribution entitlements.

In particular, please refer to this Retail Offer Booklet, Downer’s interim and annual reports and other announcements made available to the ASX at its website, w w w .asx.com.au.

Downer EDI Limited

3 How to Apply

3.2 Consider the Retail Entitlement Offer in light of your particular investment objectives and circumstances

Please consult with your stockbroker, accountant, solicitor, financial adviser or other independent professional adviser if you have any queries or are uncertain about any aspects of the Retail Entitlement Offer. You should also carefully review the “Key Risk Factors” section of the Downer Capital Raising Presentation released to ASX on Monday, 28 February 2011 which is included in this Retail Offer Booklet from page 49–61.

3.3 Complete and return the accompanying personalised Entitlement and Acceptance Form with your Application Monies or make a payment by Bpay[®1]

If you decide to take up all or part of your Entitlement, please complete and return the personalised Entitlement and Acceptance Form with the requisite application monies (with payment by cheque, bank draft or money order) ( Application Monies ) OR pay your Application Monies via Bpay[®] by following the instructions set out on the personalised Entitlement and Acceptance Form.

Downer will treat you as applying for as many New Shares as your payment will pay for in full up to your Entitlement. Any Application Monies received for more than your Entitlement of New Shares (only where the amount is A$1.00 or greater) will be refunded. No interest will be paid to applicants on any Application Monies received or refunded. If your application is not supported by cleared funds, you will have been deemed to have renounced in full your Entitlement and you will not be issued New Shares.

If you are paying by Bpay[®] , please be sure to use the specific Biller Code and your unique Customer Reference Number ( CRN ) on your personalised Entitlement and Acceptance Form. If you have multiple holdings and consequently receive more than one personalised Entitlement and Acceptance Form, please only use the CRN specific to the Entitlement on that Entitlement and Acceptance Form. If you inadvertently use the same CRN for more than one of your Entitlements, you will be deemed to have applied only for New Shares on the Entitlement to which that CRN applies.

Note:

1 ® registered to Bpay Pty Limited ABN 69 079 137 518.

Retail Entitlement Offer

3.4 Value for Renounced Entitlements

If you take up and pay for all or part of your Entitlement before the close of the Retail Entitlement Offer, you will be allotted your New Shares on Friday, 1 April 2011. Downer’s decision on the number of New Shares to be allocated to you will be final.

Downer also reserves the right (in its absolute sole discretion) to reduce the number of New Shares allocated (or any Retail Premium payment – see section 3.4) to Eligible Retail Shareholders, or persons claiming to be Eligible Retail Shareholders, if their claims prove to be overstated or if they or their nominees fail to provide information to substantiate their claims.

If you choose not to take up your Entitlement, you still have the potential opportunity to receive payment for those renounced Entitlements. Those retail shareholders who do not satisfy the Eligible Retail Shareholders criteria ( Ineligible Retail Shareholders ) may also have the potential opportunity to receive payment for Entitlements they would otherwise have received had they been eligible to participate in the Retail Entitlement Offer. Downer will arrange for Renouncing Shareholders to have their Entitlements offered for subscription to certain institutional investors on their behalf through the Retail Bookbuild and any proceeds in excess of the Offer Price ( Retail Premium ) will be remitted to Renouncing Shareholders in proportion to the number of New Shares represented by their renounced Entitlements (net of any applicable withholding tax – see section 5.7, “Taxation” – and any other withholdings required by law).

No assurance or guarantee can be given as to the price that will be achieved under the Retail Bookbuild for the sale of New Shares. The Retail Premium may be zero, in which case no distribution will be made to Renouncing Shareholders. To avoid doubt, any excess between the price at which Entitlements are sold under the Institutional Bookbuild and the Offer Price ( Institutional Premium ), which will be distributed as a premium pro-rata to each eligible institutional shareholder (to the extent they did not take up their full Entitlement), is not an indication that there will be a Retail Premium or what the Retail Premium may be. The ability to sell Entitlements under the Retail Bookbuild and the ability to obtain any Retail Premium will be dependent on various factors, including market conditions. Similarly, the Retail Bookbuild price may not be the highest price offered but will be determined by agreement between Downer and the Underwriters (as defined in section 5.16) having regard to a number of matters, such as having binding and bona fide offers which,

Downer EDI Limited

3 How to Apply

3.4 Value for Renounced Entitlements (continued)

in the reasonable opinion of Downer and the underwriters, will (if accepted) result in allocations to dispose of all, or as many as possible, New Shares offered for sale through the Retail Bookbuild. The Retail Premium may be less than, more than, or equal to the Institutional Premium.

To the maximum extent permitted by law, Downer, the Underwriters, and their respective related bodies corporate, agents or affiliates, or the directors, officers, employees or advisers of any of them, disclaim all liability, including but not limited to for negligence, for any failure to procure applications under the Retail Bookbuild at a price in excess of the offer price of A$3.25 per New Share and for any difference between the Retail Premium and the Institutional Premium.

Retail Premium amounts, if any, will be paid in either Australian dollars or New Zealand dollars based on your registered address as at the Record Date.[1] Shareholders with existing Australian bank account details on file with the share registry, for the purpose of dividend payments, will have any Retail Premium amounts transferred directly into these accounts. Otherwise, you will be paid by cheque sent by ordinary post to your address as recorded on the share register.

Any proceeds you may receive as a result of the Retail Bookbuild may have Australian and/or overseas tax consequences for you, depending on your individual circumstances. You should seek professional tax advice regarding the taxation of any proceeds received.

Eligible Retail Shareholders should note that if you choose to renounce all or part of your Entitlement, then your percentage shareholding in Downer will be diluted by your non-participation in the Retail Entitlement Offer.

3.5 Acceptance of the Retail Entitlement Offer

The method of acceptance of the Retail Entitlement Offer will depend on your method of payment being:

by Bpay[®] ; or
by cheque, bank draft or money order.

By completing, and Downer receiving, your personalised Entitlement and Acceptance Form with the requisite Application Monies or making a payment by Bpay[®] , you:

(a) agree to be bound by the terms and conditions of this Retail Offer Booklet and the provisions of Downer’s constitution;
(b) authorise Downer to register you as the holder(s) of the New Shares allotted to you;
(c) declare that all details and statements made in the personalised Entitlement and Acceptance Form are complete and accurate;
(d) declare that you are over 18 years of age and have full legal capacity and power to perform all your rights and obligations under the Retail Entitlement Offer;
(e) acknowledge that once Downer receives the personalised Entitlement and Acceptance Form or your payment by Bpay[®] , you may not withdraw it except as allowed by law;
(f) agree to apply for, and be issued with up to, the number of New Shares that you apply for at the Offer Price of A$3.25 per New Share;
(g) authorise Downer and its officers or agents to do anything on your behalf necessary for the New Shares to be issued to you, including to act on the instructions of the Downer Share Registry upon using the contact details set out in the personalised Entitlement and Acceptance Form;

Note:

1 Eligible Retail Shareholders with registered addresses in New Zealand will receive a cheque in New Zealand dollars with the Retail Premium amount converted off the AUD:NZD exchange rate as at the Record Date.

Retail Entitlement Offer

(h) agree that the allotment of New Shares to you (a) constitutes acceptance of your application;

you are not in the United States and are not a “U.S. person” (as defined in Rule 902(k) under the U.S. Securities Act of 1933 ( U.S. Securities Act )) ( U.S. Person ), and are not acting for the account or benefit of a U.S. Person;

(i) declare that you were the registered holder(s) at the Record Date of the Shares indicated on the personalised Entitlement and Acceptance Form as being held by you on the Record Date;
(b)

you acknowledge that the Entitlements and the New Shares have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state or other jurisdiction in the United States and, accordingly, the Entitlements may not be taken up, and the New Shares may not be offered, sold or otherwise transferred, except in accordance with an available exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and any other applicable securities laws; and

(j) acknowledge that the information contained in this Retail Offer Booklet is not investment advice or a recommendation that New Shares are suitable for you, given your investment objectives, financial situation or particular needs;
(k) represent and warrant that you are a resident of Australia or New Zealand;
(l) represent and warrant that the law of any place (other than Australia and New Zealand) does not prohibit you from being given this booklet or making an application for New Shares; and

(c) you have not and will not send or distribute any materials relating to the Retail Entitlement Offer to any person (i) in the United States or that is a U.S. Person or is acting for the account or benefit of a U.S. Person or (ii) in any other country outside Australia and New Zealand, except Australian nominees may send this Retail Offer Booklet to beneficial shareholders who are institutional investors in other countries listed in, and to the extent permitted under, the section captioned “International selling restrictions” in the included Capital Raising Presentation, provided such institutional investors are not in the United States and are not U.S. Persons and are not acting for the account or benefit of U.S. Persons.

(m) represent and warrant that you are an Eligible Retail Shareholder and have read and understood this Retail Offer Booklet and the personalised Entitlement and Acceptance Form and that you acknowledge the matters, and make the warranties and representations and agreements, contained in this Retail Offer Booklet and the personalised Entitlement and Acceptance Form.

By completing, and Downer receiving, your personalised Entitlement and Acceptance Form with the requisite Application Monies or making a payment by Bpay[®] , you will also be deemed to have acknowledged, represented and warranted on behalf of each person on whose account you are acting that:

Downer EDI Limited

3 How to Apply

3.5 Acceptance of the Retail Entitlement Offer (continued)

Payment by Bpay[®]

For payment by Bpay[®] , please follow the instructions on the personalised Entitlement and Acceptance Form. You can only make a payment via Bpay[®] if you are the holder of an account with an Australian financial institution that supports Bpay[®] transactions.

Please note that should you choose to pay by Bpay[®] :

you do not need to submit the personalised Entitlement and Acceptance Form but are taken to make the declarations on that personalised Entitlement and Acceptance Form; and
if you do not pay for your full Entitlement, you are deemed to have taken up your Entitlement in respect of such whole number of New Shares which is covered in full by your Application Monies.

It is your responsibility to ensure that your Bpay[®] payment is received by the Downer Share Registry by no later than 5.00pm (AEDT) on Wednesday, 23 March 2011. You should be aware that your financial institution may implement earlier cut-off times with regards to electronic payment, and you should therefore take this into consideration when making payment.

Any Application Monies received for more than your final allocation of New Shares (only where the amount is A$1.00 or greater) will be refunded as soon as practicable after the close of the Retail Entitlement Offer. No interest will be paid to Eligible Retail Shareholders on any Application Monies received or refunded.

If you do not pay for your full Entitlement, you are deemed to have taken up your Entitlement in respect of such whole number of New Shares which is covered in full by your application monies.

Payment by cheque, bank draft or money order

For payment by cheque, bank draft or money order, you should complete your personalised Entitlement and Acceptance Form in accordance with the instructions on the form and return it accompanied by a cheque, bank draft or money order in Australian currency for the amount of the Application Monies, payable to “Downer Entitlement Offer” and crossed “Not Negotiable”.

Your cheque, bank draft or money order must be:

in respect of the full application monies (being for an amount equal to A$3.25 multiplied by the number of New Shares that you are applying for); and
in Australian currency drawn on an Australian branch of a financial institution.

The completed personalised Entitlement and Acceptance Form, together with Application Monies, should be mailed using the reply paid envelope provided with this Retail Offer Booklet or otherwise mailed to the Downer Share Registry at the following address:

Downer Entitlement Offer

Computershare Investor Services Pty Limited GPO Box 2987 Adelaide SA 5001

Retail Entitlement Offer

3.6 Confirmation of your application and managing your holding

You should ensure that sufficient funds are held in relevant account(s) to cover the Application Monies as your cheques will be processed on the day of receipt. If the amount of your cheque for Application Monies (or the amount for which the cheque clears in time for allocation) is insufficient to pay in full for the number of New Shares you have applied for in your personalised Entitlement and Acceptance Form, you will be taken to have applied for such lower number of whole New Shares as your cleared Application Monies will pay for (and to have specified that number of New Shares on your Entitlement and Acceptance Form). Alternatively, your application will not be accepted.

You may access information on your holding, including your Record Date balance and the issue of New Shares from this Retail Entitlement Offer, and manage the standing instructions the Downer Share Registry records on your holding, on the Investor Centre website w w w .investorcentre.com. To access the Investor Centre, you will need your Shareholder Reference Number ( SRN ) or Holder Identification Number ( HIN ) and you will need to pass the security challenge on the site.

Cash payments will not be accepted. Receipts for payment will not be issued.

Downer EDI Limited

X Section Title 4 ASX Offer Announcements

ASX 1H2011 Results Media Release dated 28 February 2011 1H2011 Results Presentation dated 28 February 2011 Capital Raising Presentation dated 28 February 2011 ASX Institutional Offer Completion Announcement dated 3 March 2011

Retail Entitlement Offer

ASX 1H2011 Results Media Release dated 28 February 2011

Media/ASX and NZX Release

DOWNER REPORTS UNDERLYING EBIT OF $132.4 MILLION WORK IN HAND OF $20.5 BILLION 28 February 2011

Downer EDI Limited (Downer) today announced underlying earnings before interest and tax (EBIT) of $132.4 million for the six months ended 31 December 2010, 5.5% lower than the previous corresponding period.

Total revenue was $3.4 billion, up 20.7%, when compared with the previous corresponding period. This strong revenue growth was driven by the Engineering, Mining and Rail divisions and offset by lower revenue from the Works divisions.

On 27 January 2011, Downer announced a pre-tax provision of $250.0 million in respect of the Waratah train project. As a result of this provision, Downer reported a net earnings before interest and tax (EBIT) loss of $117.6 million and a net loss after tax of $103.8 million. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $228.7 million, 3.0% higher than the previous corresponding period. Underlying net profit after tax (NPAT) was 18.2 % lower at $71.2 million Underlying operating cash flow remains strong at $185.9 million, which is 140.4% of underlying EBIT. After $62.3 million of cash outflows relating to the Waratah train project, operating cash flow was $123.6 million.

The Chief Executive Officer of Downer, Grant Fenn, said that while a further provision of $250 million in relation to the Waratah train project was extremely disappointing, Downer’s underlying business performed solidly and remains well positioned in its markets. “Our underlying business achieved EBIT of $132.4 million despite prolonged wet weather conditions, intense competition for our Engineering and Works divisions, lower government expenditure on road and rail infrastructure maintenance in Australia and New Zealand, and ongoing tough economic conditions in New Zealand,” Mr Fenn said. The impact of prolonged wet weather on the Group’s EBIT during the half year was $23.0 million, with $12.5 million relating to Downer Works, including Downer New Zealand. “In this difficult environment, we continued to win new contracts and secure contract renewals and work-in-hand is currently worth $20.5 billion,” Mr Fenn said.

Downer continued to report an industry leading safety performance, with Lost Time Injury Frequency Rate 4% lower than the previous corresponding period and Total Recordable Injury Frequency Rate 10% lower at 7.77 per million hours worked.

Downer EDI Limited A Triniti Business Campus, 39 Delhi Road, North Ryde NSW 2113 ABN 97 003 872 848 P PO Box 1823, North Ryde NSW 2113 T +61 2 9468 9700 | F +61 2 9813 8915 | W downergroup.com

Downer EDI Limited

4 ASX Offer Announcements

ASX 1H2011 Results Media Release dated 28 February 2011

“We have maintained our focus on Zero Harm. It is embedded in our culture and essential to our future success,” Mr Fenn said.

At 31 December 2010, Downer had gearing of 35.7 % and liquidity of $838.4 million, comprising cash of $322.5 million and undrawn committed facilities of $515.9 million.

Downer today announced it would undertake a fully underwritten 1 for 4 renounceable entitlement offer to all eligible shareholders to raise approximately $279 million. Eligible investors should refer to the separate announcement lodged with the Australian Securities Exchange (ASX) and available on the Downer website (www.downergroup.com).

Given that Downer is raising capital from shareholders and has no available franking credits to distribute, the Board has decided not to declare an interim dividend. Downer will assess whether to resume paying dividends at the full year.

Downer will continue to pay dividends on its Redeemable Optionally Adjustable Distributing Securities (ROADS).

Waratah Update

In December 2010, following the appointment of the new Waratah Project Director, a detailed review of the Waratah project was undertaken as part of Downer’s quarterly projects review process. An interim project report was tabled on 24 January 2011 which indicated that the existing project timetable and forecast cost to complete should be revised materially as a result of the following:

an expected further delay to presenting the first train set to RailCorp for Practical Completion (PC);
expected delays in production of subsequent trains as a result of asbestos in the Cardiff manufacturing facility (Cardiff); and
more extensive changes being required to engineering and production processes to facilitate the high-volume assembly that is required for this large-scale and complex project.

On 24 January 2011, in response to the issues raised in the interim project report, Downer was granted a trading halt by the ASX. The trading halt was lifted following the announcement by Downer on 27 January 2011 that a further onerous contract provision of $250 million would be required in respect of the Waratah project.

To address the issues identified, a revised Waratah project program has now been completed. Further information in relation to the Waratah project is provided in the Half Year Report and also the Condensed Consolidated Financial Report (Appendix 4D), both lodged with the ASX.

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Outlook

This “Outlook” section includes certain forward looking statements. Please see “ForwardLooking Statements” below for further information.

A number of factors are expected to affect Downer’s performance in the second half of the year.

Downer Engineering will experience strong competition, high tender costs, the completion of a number of underperforming contracts and the impact of maintaining capacity as a consequence of delayed projects.

Downer Works typically reports a higher contribution in the second half of the year, and a strong performance is expected again during the second half of this year, subject to weather conditions. This includes the commencement of projects relating to flood remediation work in Eastern Australia.

Downer New Zealand will continue to be affected by challenging economic conditions during the second half of the year.

Downer Mining will continue to ramp up work on its major projects, particularly at Goonyella, Norwich Park and Christmas Creek.

Strong demand for locomotives will keep Downer Rail’s manufacturing and maintenance facilities close to capacity during the second half of the year, even though a number of projects were completed successfully during the first half of the year. Costs and delays associated with asbestos remediation works at the Cardiff facility in New South Wales will also be included in the result for the second half of the year.

Based on the above, and subject to risks including weather and market conditions, Downer Group expects to deliver underlying EBIT of around $300 million for the Full Year and underlying NPAT of around $169 million.

Forward-looking statements

This release contains certain “forward-looking statements”, including under the headings “Waratah Update” and “Outlook”, The words “forecast”, “estimate”, “likely”, “anticipate”, “believe”, “expect', “project”, “opinion”, “predict”, “outlook”, “guidance”, “intend”, “should”, “could”, “may”, “target”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements, and include statements in this release regarding the Downer’s future financial and operating performance.

Downer EDI Limited

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ASX 1H2011 Results Media Release dated 28 February 2011

You are cautioned not to place undue reliance on forward looking statements. While due care and attention has been used in the preparation of forward-looking statements, forward-looking statements, opinions and estimates provided in this release are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements, including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance.

There can be no assurance that actual outcomes will not differ materially from forward-looking statements. Downer disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. An investment in Downer shares is subject to investment and other known and unknown risks, including, without limitation, risks associated with levels of economic activity and government spending, Downer’s ability to undertake construction within the prices required under its contracts, the ability of contractual counterparties, including suppliers and customers, to perform under their contracts, competition in the industries in with Downer operates and its ability to win future contracts, the outcome of any litigation against Downer, industrial accidents or other operational issues, the level of asset impairments in any period, access to labor and Downer’s relations with labor, financial risks associated with Downer’s indebtedness including continued compliance with covenants, and interest rate movements and risks associated with the Waratah project, including Downer’s ability to complete works under the contract in the time and at the specifications and costs required.

Downer does not guarantee any particular rate of return or the performance of Downer. The securities referred to herein may not be offered or sold in the United States, or to or for the account or benefit of, any “U.S. person” (as defined in Regulation S under the United States Securities Act of 1933 ( Securities Act ), unless the securities have been registered under the Securities Act or an exemption from the registration requirements under the Securities Act is available.

CONTACT DETAILS

Investors: Ross Moffat, EGM, Investor Relations Media: Michael Sharp, Group Head of Corporate Affairs

M: +61 412 256224 M: +61 439 470145

Downer EDI Limited (www.downergroup.com) provides comprehensive engineering and infrastructure management services to the public and private Minerals & Metals, Oil & Gas, Power, Road & Rail Infrastructure, Telecommunications, and Water sectors across Australia, New Zealand, the Asia Pacific region and the United Kingdom.

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1H2011 Results Presentation dated 28 February 2011

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Downer Group 2010/11 Half Year Results

28 February 2011

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1
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Disclaimer
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Reliance on third party information

The information and views expressed in this Presentation were prepared by Downer EDI Limited (the Company ) on a confidential basis. They may contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. No responsibility, warranty or liability is accepted by the Company, its officers, employees, agents or contractors for any errors, misstatements in or omissions from this Presentation.

Presentation is a summary only

This Presentation is information in a summary form only and does not purport to be complete. It should be read in conjunction with the Company’s 2010 financial report. Any information or opinions expressed in this Presentation are subject to change without notice and the Company is not under any obligation to update or keep current the information contained within this Presentation.

Not investment advice

This Presentation is not intended and should not be considered to be the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. The information provided in this Presentation has been prepared without taking into account the recipient’s investment objectives, financial circumstances or particular needs. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary.

No offer of securities Nothing in this Presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell Company securities in any jurisdiction. Forward looking statements

This Presentation may include forward-looking statements. Although the Company believes the expectations expressed in such forwardlooking statements are based on reasonable assumptions, these statements are not guarantees or predictions of future performance, and involve both known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control. As a result, actual results or developments may differ materially from those expressed in the statements contained in this Presentation. Investors are cautioned that statements contained in this Presentation are not guarantees or projections of future performance and actual results or developments may differ materially from those projected in forward-looking statements.

No liability

To the maximum extent permitted by law, neither the Company nor its related bodies corporate, directors, employees or agents, nor any other person, accepts any liability, including without limitation any liability arising from fault or negligence, for any direct, indirect or consequential loss arising from the use of this Presentation or its contents or otherwise arising in connection with it.

Downer EDI Limited

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1H2011 Results Presentation dated 28 February 2011

Agenda

Overview
Group financials
Transformation
Waratah update
Outlook

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Overview

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Overview

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Revenue
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Total Revenue[1] up 20.7% to $3.4 billion
Strong growth in Mining, Rail and Engineering but softer Works Revenue in both Australia and NZ
Pipeline of opportunities very strong across all businesses
Underlying[2] results reflect previous guidance of a softer first half
Earnings and • Underlying EBITDA[3] of $228.7 million (up 3%) and underlying EBIT[4] of $132.4 million (down 5.5%) impacted by weather, lower and deferred government expenditure,
cash flow margin pressure and a small number of underperforming contracts within the Engineering business
• Underlying cash flow[5] very strong at $185.9 million (140.4% underlying EBIT) • Work-in-hand remains very strong at $20.5 billion
Work-in-hand • Mining $7.6 billion, Engineering $2.2 billion, Rail $5.4 billion, Works $5.3 billion
1 Total revenue including joint ventures 3 EBITDA: Derived by adding back net interest expense, tax expense and 5 Net cash flows from operating activities 2 ‘Underlying’ excludes individually significant item 4 EBIT: Derived by adding back net interest expense & tax expense to NPATdepreciation & amortisation to Net Profit After Tax (NPAT) before $62.3m cash outflows relating to Waratah project. 5

Overview

Wet weather conditions impacted operations throughout the first half

Weather impact

Overall impact of wet weather was $23 million:
Works Australia and Downer New Zealand: $12.5 million
Mining and Engineering combined: $10.5 million
Good progress being made across the range of focus areas

Transformation in progress

Risk management – Returns on capital

– Market and client focus – Portfolio structure – Capability – Financial strength

Cost efficiency

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1H2011 Results Presentation dated 28 February 2011

Overview

Provision of $250 million on 27 January 2011, total project provision $440 million
• First set expected into service between May and July 2011
Waratah • Staged program to address manufacturing challenges in China and Cardiff • Revised Downer production schedule reviewed by independent experts • Full year underlying EBIT of around $300 million and underlying NPAT of around $169 million • Guidance assumes return to more normal weather patterns and the level of existing
Outlook demand continues or improves across our sectors and markets • Guidance is influenced by high levels of competition in our Works and Engineering businesses, challenging economic conditions in New Zealand and the successful delivery of existing projects
• Group capital structure needs to support – Maintaining investment grade credit rating metrics[1]
Capital –– Group growth opportunitiesStrong balance sheet • Launch of accelerated renounceable entitlement offer: 1 for 4 to raise $279 million 1 In recent times, Downer’s credit rating has been at the lowest level which is considered investment grade 7

Zero Harm

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Downer safety performance
(12-month rolling frequency rates)
1.2 8.8
• 2010 Sustainability report 1.1 8.59 8.6
1.02
Zero Harm • Investment in systems 1 0.98 8.4
• Focus on TRIFR 0.9 8.2
0.8 8
7.77
• Industry leading 0.7 7.8
0.6 7.6
LTIFR/ TRIFR • LTIFR 4% reduction
0.5 7.4
• TRIFR 10% reduction
0.4 7.2
• Leadership development LTIFR: Lost Time Injury TRIFR: Total Recordable Injury
Frequency Rate Frequency
People • Recruitment and retention programs
• Appointment of Group HR executive
Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10
LTIFR TRIFR
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Group Financials

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Underlying financial performance

	$m HY11 HY10 Change (%) Total revenue 3,429.1 2,841.4 20.7 EBITDA1 228.7 222.0 3.0 EBIT1 132.4 140.2 (5.5) Net interest expense (34.9) (26.7) 31.0
	Tax expense1 (26.3) (26.5) 0.7 Net profit after tax1 71.2 87.0 (18.2) Effective tax rate1 27.0% 23.4% - ROFE2 17.2% 16.4% -

1 ‘Underlying’ excludes individually significant item 2 ROFE = underlying EBIT divided by average funds employed (AFE) (AFE = Average Opening and Closing Net Debt + Equity) # All financials contained in this presentation reflect the numbers in the Appendix 4D and therefore there may be minor rounding differences within these slides

Downer EDI Limited

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1H2011 Results Presentation dated 28 February 2011

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Operating cash flow


	$m HY11 HY10 EBITDA 228.7 222.0 Net interest paid1 (31.8) (24.1) Tax paid (7.4) (15.9) Movement in workingcapital2 (73.3) 36.9 Other 7.4 (53.7)
	Operating cash flow 123.6 165.2 Add: Waratah train net cash outflow to suppliers 62.3 104.0 Underlying operating cash flow 185.9 269.2 Underlying EBIT conversion 140% 192%

1 Interest received minus interest and other costs of finance paid.

2 Movement in trade and other receivables, inventory and trade and other payables.

Cashflow

	$m HY11 HY10 Total operating 123.6 165.2 Total investing (137.8) (153.0) Total financing (35.9) 14.5 Net increase in cash held (501) 267
	. . Cash at 31 December1 322.5 326.4

1 Cash excludes bank overdrafts of $4.7 million (2010: $8.7 million) which are included in borrowings

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Balance sheet and capital management

	$m Dec 10 Jun 10 Total assets 3,413.4 3,456.0 Total shareholders’ equity 1,095.5 1,242.9 Net debt 608.3 530.7
	Net debt to net debt plus equity 35.7% 29.9% Adjusted net debt / adjusted EBITDAR1 2.7x 2.6x Interest cover2 3.5x 4.1x

1 Adjusted Net Debt includes Net Debt plus 6x operating lease payments in the year. Adjusted EBITDAR equals underlying earnings before interest, tax, depreciation, amortisation and equipment and properties operating lease rental expense 2 Interest cover equals EBIT adjusted for significant items + 1/3 of FY10 (on a rolling 12 month basis) plant and equipment operating lease rentals divided by Net interest expense + 1/3 of 12 month rolling plant and equipment operating lease rentals

Debt and bonding facilities

	Debt facilities	$m
	Total facilities	1,447
	Drawn1	931
	Available facilities	516
	Cash	323
	Total liquidity	838
	Bonding	$m
	Total facilities	1,209
	Drawn	767
	Available facilities	442

	Debt facilities by type	%
	Syndicated bank loans	36
	Bilateral bank loans	18
	Capital markets: bonds	18
	Capital markets: UPP	8
	Export credit finance	13
	Finance leases	7
		100
	Debt facilities by geography	%
	Australia/NZ	68
	Asia	9
	Europe	4
	North America	19
		100

1 Includes mark-to-market revaluation adjustments for swap hedges plus deferred finance charges

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1H2011 Results Presentation dated 28 February 2011

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Debt maturity profile

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500 Finance Leases
Syndicate Loans
Capital Markets - Bonds
400
Capital Markets - US Pte Placements
ECA Finance
Bilateral Loans
300
200
100
0
Maturity
15
Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20
A$ million Equivalent
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Mining

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Total revenue $m EBIT $m
634 484 50.8 37.0
HY11 HY10 HY11 HY10
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EBIT margin ROFE % 8.0% 7.7% 15.4% 12.2% HY11 HY10 HY11 HY10

Continued strong performance, driven by large contract wins with BMA and FMG
Successful initial mobilisation at Christmas Creek, Goonyella and Norwich Park
Wet weather has had an impact on eastern operations and risk remains for ongoing weather disruptions in 2H
Improved returns from successful business model and a strong operational performance
Growth focus on contract extensions and expansions

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Rail

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Total revenue $m [1] EBIT $m
668 458 47.7 29.1
187
480 137
321
HY11 HY10 HY11 HY10
EBIT margin ROFE
7.1% 6.4% 25.1% 21.5%
HY11 HY10 HY11 HY10
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Revenue and EBIT performance a result of strong growth in locomotive demand and successful completion of projects
Close to full capacity in both passenger and freight locomotives during the period and into the second half
Cardiff asbestos costs will be incurred in the second half

1 Total revenue shows the combination of revenue related to the underlying business (HY2011: $480m) and the Waratah contract (HY2011: $187m)

Engineering

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Total revenue $m EBIT $m
1,172 870 48.4 57.5
HY11 HY10 HY11 HY10
EBIT margin ROFE
4.1% 6.6% 25.2% 23.5%
HY11 HY10 HY11 HY10
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Higher revenue from growth in WA activity as well as several projects hitting peak work load
EBIT impacted by
Competitive market dynamics, tender costs and wet weather
Projects delays and maintaining operational capacity for pending demand
Certain underperforming contracts including Curragh
Consulting operations in Australia and New Zealand continue to experience tough market conditions
Well positioned for upcoming opportunities which will be aided by Downer Australia initiative

Downer EDI Limited

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

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Works

Australia

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Total revenue $m EBIT $m
957 1,011 19.7 46.7
HY11 HY10 HY11 HY10
EBIT margin ROFE
2.1% 4.6% 12.8% 21.9%
HY11 HY10 HY11 HY10
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Extreme wet weather has significantly impacted operations and returns
Local and regional government spend has softened; moving from maintenance to larger capital projects
Market leading positions maintained

New Zealand

Economic recovery has slowed; competition remains tight
Downer New Zealand is continuing to restructure and drive efficiencies in response to these circumstances

‘Fit for business’ Overview

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Target
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Approach
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New five-year ‘Fit-for-Business’ program commenced August 2010
Targeting $250 million in sustainable savings across Downer
Build capability to sustainably, efficiently & profitably meet customer needs
Transform Downer’s productivity and culture through significant and sustainable change to business models and processes
Focus on all levers of margin improvement, including procurement
Program led by Group CFO

Programme Management

Central program office and procurement established, replicated in divisions
Governance for ‘vital few’ and ‘useful many’ established
Financial and milestone reporting in place

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Schedule
Dec ‘10 Mar ‘11 July ‘11 July ‘12 July ‘13
21
‘Fit for business’ program
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FY11 cost savings of $46m targeted

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FY11 cost savings of $46m targeted F4B Benefits
– Includes a number of one-off 75 ($m)
initiatives
• Includes $25m of sustainable savings 60
–
Annualised benefit $39 million 50 46 Pipeline of
• Areas of saving include: 36 sustainable
initiatives being
–
Operational and organisational 25 developed for
improvements FY12
25
–
Strategic procurement and efficient
New “one-offs”
purchasing 10
Full-Year effect
– Transformation of IT infrastructure and 21
rationalisation of IT equipment 14 initiativesof FY11
0
– Site consolidation FY11 FY12 impact
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1H2011 Results Presentation dated 28 February 2011

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Transformation
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23
Transformation program
Risk Management • Standardising approach across Group
• Focus on bidding, contract limits, execution and review
• Strategic risk management and contract formation
Markets & clients • Emphasis on Business development
• Downer Australia to drive opportunities
• Leverage Downer’s unmatched scope and capability
• Increased resources and focus on Western Australia
People & Capability • Project management
• Talent identification and succession
• Human resources, training and development
Cost Efficiency • Margin improvement
• Fit-for-business program
• Shared services
Return on capital • Focus the business on capital efficiency and returns
/metrics
Portfolio • Ongoing assessment
• Exit underperforming non core assets
Financial strength • Balance sheet to support growth
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Risk Management • Standardising approach across Group • Focus on bidding, contract limits, execution and review • Strategic risk management and contract formation
Markets & clients • Emphasis on Business development • Downer Australia to drive opportunities • Leverage Downer’s unmatched scope and capability • Increased resources and focus on Western Australia
People & Capability • Project management • Talent identification and succession • Human resources, training and development
Cost Efficiency • Margin improvement • Fit-for-business program • Shared services
Return on capital • Focus the business on capital efficiency and returns /metrics Portfolio • Ongoing assessment • Exit underperforming non core assets
Financial strength • Balance sheet to support growth 24

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Risk management framework

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Execution Post
Tender & Completion
Monitoring
• Approval to prepare bid • Approval of contract • Project reviews
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Approval of contract formation
Approval to submit bid
Key learnings
Mobilisation and
– >A$250m – TCC and Board commercial set-up • Update risk processes approval
<A$250m – TCC endorsement and CEO approval
<A$30m – Divisional CEO approval
Project valuations
Project reviews
Internal audit reviews

Market and Customer Strategy

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Downer EDI Limited

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1H2011 Results Presentation dated 28 February 2011

Downer Australia

Downer Australia brings together Engineering, Works Australia and the Emerging Sectors businesses
Annual revenues of almost $3 billion and over 7,000 people
Outcome of an extensive Group review with a focus on our customers and markets
Significant scale and stronger platform for leveraging capabilities
Western Australia key focus
Cost savings by creating a more efficient operating structure
Transition to be implemented progressively with full commencement in FY12

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Waratah update

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28 28

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Waratah project recap

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•
Maintenance
• Total revenue $220 million (fixed price lump sum)
facility
• Practical completion achieved in June 2010
•
• Joint venture with Hitachi Australia
Train build
•
• Original delivery period: 2010-2013
Through- • Provide TLS for all 78 eight-car sets
Life- • 72 sets in service
Support • Total revenue $2.25 billion over 30 years
contract
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Design, build and commission Auburn Maintenance Centre
Total revenue $220 million (fixed price lump sum)
Practical completion achieved in June 2010
Design, build and commission 78 eight-car sets (626 carriages)
Total Downer revenue $1.65 billion (fixed price lump sum)
Deductions/bonuses based on performance

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27 January – initial issues identified

Software defects and integration issues requiring additional testing
First set • Estimated delivery to RailCorp of train Set 1 (A03) for Practical Completion
delivery further delayed to late April 2011, subject to software issues being addressed and accepted by RailCorp
• Operations at Cardiff disrupted due to asbestos contamination −
Asbestos resulted in delayed production work on train Sets 2-5 (A04-A07) • Group implemented remediation plans in conjunction with statutory authorities and specialised service providers
• Ross Spicer appointed Project Director in December 2010 −
Production reports directly to Group CEO
- reports directly to Group CEO
Project review by Ross Spicer identified range of issues in train manufacturing program

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1H2011 Results Presentation dated 28 February 2011

27 January update – current status

Some software issues remain outstanding, but safe delivery into operation still
First set considered feasible delivery • Working constructively with RailCorp to facilitate delivery for PC
Delivery now expected in April to July 2011, subject to resolution of software issues and acceptance by RailCorp
Asbestos remediation complete

Asbestos

Disruption impacted train Sets 2-5 (A04-A07) only and not material to overall schedule
Remediation has provided an opportunity to re-design Cardiff facility to accommodate improved “flow-line” production approach and to reorganise stored materials more efficiently
In isolation, precise timing of early trains delivery is relatively immaterial to forecast cost to complete of the project
Financial impact • Overall production schedule throughout the project is the key cost driver
No additional provision following further review process

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Production – further review

Detailed review completed by Waratah Project team:

Complexity of design to build and low level of in-built tolerances impacting
Key production rate and quality at CRC in Changchun, China
production • Primarily related to interior components which can be re-designed for more issues efficient assembly but will require acceptance by RailCorp
Bodyshell design, bogies and traction system all working as expected and manufacturing to required timeline and quality
Current production at Cardiff and CRC is “cellular” which creates difficulty in delivery production rates required for the contract

Key conclusion

Production process improvements and recruitment of suitably experienced staff are key to successfully completing the contract by 1H 2014 - necessary to achieving a 10-day “cadence” rate
a “flow-line” production process at CRC and Cardiff is required to increase production rates
Cadence of manufacture and delivery into passenger service are critical to managing project costs – including labour and liquidated damages

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Production – improvement process

Production improvement process developed by the Waratah Project team, focused on implementing the following initiatives:

Redesign for Manufacture • Simplify design for manufacture, reduce skill level required to build (“value engineering”) and increase production rate • Freeze vehicle build configuration to provide a single, fixed
Configuration freeze blueprint or “baseline” to facilitate efficient vehicle production
three configuration phases through project: current (sets 1- 15), Freeze 1 (sets 16-25), and Freeze 2 (26-78)
Redesign production • Additional jigs, fixtures, tooling, gauges to improve repeatability process at CRC and “de-skill” build activity • Enhance process and quality controls - Inspection and Test Plans
Quality control and Production Hold Points, supervision, progressive build sign off and witnessing by Downer
• The most problematic CRC build scopes transferred to Cardiff – “fit
Transfer to Cardiff once, don’t rework”
transfer scope back after redesign

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33
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Production – revised plan

Revised production plan implemented in two stages:

Stage 1: Quick wins

Objective • Stabilise the production blueprint and reduce re-work requirements
Configuration Freeze 1 : freeze build design and create production baseline
Approach (entry from Set 16)
Scope transfer: finalise and project manage scope transfer from China to Cardiff to improve quality and minimise rework
Cardiff preparation: establish new production “footprints” in Cardiff to accommodate transferred China scope
Top 20: focus on hitting “Top 20” issues list identified by Downer and CRC staff in China
“Back to basics” : on process and quality controls in China – focus on in-line production process and sign-off at discreet hold points
Ease of Assembly : ensure consistent datums (component assembly reference points) are used throughout the build process

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1H2011 Results Presentation dated 28 February 2011

Production – revised plan

Stage 2: Redesign process and products

Objective	•	Increase output quality and rate of manufacture through re-design of interior components or amendments to production processes
Approach	•	*Configuration Freeze 2*: incorporate re-designed areas to improve manufacturability and reduce skill required in assembly
	•	*“Mini projects”:*execute prioritised improvement initiatives with responsibility
		assigned to cross functional teams: Engineering, Manufacturing, Quality
		Procurement, etc
	•	*Production processes:*increase use of jigs and fixtures to simplify and de-skill
		the build process and improve repeatability and quality control
	•	*Production ease*: provide clear and simple Documented Work Instructions for
		the build process
	•	*Supplier support:*provide direct support to select tier 3 suppliers with high
		non-conformance/reject and manufacturability issues
	•	*Scope re-transfer:*review ability to transfer scope back to China from Cardiff
			35

Production – implementation phases

Sets 16-25

Sets 1-15

Completion of sets in Cardiff
Configuration Freeze 1
Reflects implementation of quick win design changes to interior fit-out
Significant level of rework on fitout in Cardiff
Level of rework in Cardiff reduces from previous levels
Flow-process implemented in Cardiff
Some reduction of the scope of work in China, now undertaken in Cardiff
China sends sets undertaken in Cardiff reflecting existing design processes • Flow process implemented in China

Sets 26-78

Configuration Freeze 2
Full value engineering design changes implemented
Significant reduction of rework levels in Cardiff
Option to restore China to full scope of work on interior fit outs
Practical completion in 1H 2014

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Independent review

Simultaneous with internal review and program development, two rollingstock manufacturing consultants were engaged to independently review the Waratah Project and the revised production schedule
primary review by First Class Partnerships (“FCP”)
secondary review by J Boyle Associates Ltd (“JBA”)
Both have significant experience in manufacture and delivery and commissioning of high volume rollingstock manufacture and have prior understanding of Waratah Project
FCP concluded that, on balance, if Waratah Project “ has sufficient management focus from within the Project team and Downer as a whole, the Programme has a high likelihood of success”
Also identified opportunity to exceed the current delivery program through continuous improvement and value engineering processes
Majority of issues identified / recommendations made by FCP and JBA have been adopted by the Project Director and incorporated into Downer’s current project plan

Through Life Support (TLS) contract

30 year contract from date of practical completion of train Set 69 to maintain
TLS contract Waratah fleet terms • Availability payment regime with deductions/bonuses based on − availability of trains (72 sets available at all times) − in-service faults
• Expectation of ability to meet required performance benchmarks based on − extensive prototype tests and train A01and A02 reliability testing
Expected − Millennium train experience
performance • Expect low double digit EBIT margins
Risk: Not all aspects of train have been tested on-network – may not work as
Risks and anticipated • Opportunity: re-design process to consider maintenance simplification which
opportunities would deliver higher margins if successful
Critical that an experienced TLS Commercial Manager be appointed early in TLS phase to ensure appropriate focus from ‘Day 1’

Downer EDI Limited

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

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Financial impact

Update to market on 27 January 2011 disclosed expected provision of $250 million
Further work confirmed $250 million as an appropriate provision against the forecast cost to complete
independent reviews support this assessment
some movement in allocations to various cost categories
The $250 million provision provides a risk contingency (“executive contingency”) of approximately $73 million
makes allowance for some slippage in the targeted manufacturing program delivery milestones
a one month delay in overall project delivery schedule estimated to have impact of $9-14 million – principally comprising liquidated damages (net of interest on the Manufacturing Delay Account) and labour costs

Financial impact

		Current
	$m $190m $250m
	provision provision	FCAC1 1,018.8 324.2 131.0 143.2 1753
	Materials & Sub-Contract Components 117.3 37.7
	Labour 0.4 67.3
	Engineering Services (Incl T&C) 28.0 24.2
	Project Management 3.8 47.1
	Trnrt Liti & Prrmnt 05 212
	aspo, ogscs ocuee . .	. 95.3 154.9 (111.2) 78.1 72.6
	Insurance, Bonding & Finance - 11.9
	Liquidated Damages 10.0 104.9
	Manufacturing Delay Account interest - (111.2)
	Other Costs - 2.4
	Executive Contingency 30.0 42.6

	Total Net Costs 190.0 248.1	2,082.2 1,652.6
	Total Revenue - -

Forecast cost at completion
Forecast cost at completion
and differs slightly due to the write-back of profit recognised against the project in prior years.and differs slightly due to the write-back of profit recognised against the project in prior years.2. The forecast loss of $430 million differs from the combined $440 million of onerous contract provisions announced on 1 June 2010 and 27 January 2011, 2. The forecast loss of $430 million differs from the combined $440 million of onerous contract provisions announced on 1 June 2010 and 27 January 2011,

Retail Entitlement Offer

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Financial impact

As at 31 December 2010, total WIP of $347 million
Total cash outflow estimate of $430 million for the entire contract, implying a ~$83 million net cash outflow for the remainder of the program
Cash spend offset by accrued interest on Manufacturing Delay Account, currently projected at $111 million and payable at Practical Completion of Set 78.

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500 430 (347)
400
300
200
100 (55)
(113) 56
0 29
(100)
(200)
Total loss on WC already 2H11 net cash FY12 net cash FY13 net cash FY14 net cash
project contributed flow flow flow flow inc. MDA
interest
41
A$m
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Risks

Recruitment of key personnel with necessary high volume rolling-stock production
Key personnel experience is required
- Ross Spicer in role from December 2010
- China Manufacturing Manager commenced in February 2011
- Trains Into Service Manager commences today
- preferred candidate identified for Production Director to oversee manufacturing, operations and engineering
- Commercial Director and TLS Contract Manager appointment pending
The revised production plan assumes that RailCorp will adopt a reasonable industry
Train approach to the acceptance of the Waratah trains for passenger service, including
acceptance acceptance of software compliance. Non acceptance of the current version of the software is expected to result in a delay of up to 7 weeks of the first set delivery
Contract imposes strict obligations on Downer regarding train delivery to RailCorp
New joint project steering committee now established with RailCorp to allow informal discussions to take place with RailCorp at a senior level

Downer EDI Limited

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

Risks

Implementation • Need to fully engage with CRC management and workers in production improvement program
of production
improvements • Without full engagement, and partnership decision-making at manufacturing level, production rate will be slower than required
- simplification of manufacturing through re-design should aid staff engagement
- senior CRC management responding positively to new approach
1H 2014 delivery completion date assumes RailCorp can accept trains later in
Delivery program faster than 10 day rate
acceptance rate
Strict compliance with 10-day delivery cadence would push completion to 2H 2014

Risks

Timing of • Current production program assumes accelerating manufacturing rate from production train Set 26, with steady state reached by train Set 38 enhancements −

  - assumes “quick win” initiatives for configuration Freeze 1 and temporary transfer of fit out work to Cardiff results in improved production rate and quality in China and reduces level of rework in Cardiff for train Sets 16-25

Delay in re-design process or implementation of new program that moves program back would delay overall delivery schedule and increase costs
- external reviews identified potential for production to exceed scheduled cadence at back end which could recover time
Downer believes that it can deliver a high quality train able to meet required
TLS contract service performance thresholds – have utilised learning from Millennium
Risk remains that issues arise through train life that result in penalties against Downer

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Reliance Rail

Special purpose vehicle established to fund Waratah Train project - $1.9 billion bonds outstanding, $357 million bank debt to be drawn
Reliance Rail advises it remains solvent, although risk of ‘switch date’ if both monoline issuers become insolvent - would provide option for banks to not fund $357 million
Non recourse to Downer
Other stakeholders have significant interest in maintaining the structure
It is considered unlikely that Reliance Rail (or any successor) will default under the contract, but in this event, the financial implication for Downer is illustrated below

• • • •	Reliance Rail advises it remains solvent, although risk of ‘switch date’ if both monoline issuers become insolvent - would provide option for banks to not fund $357 million Non recourse to Downer Other stakeholders have significant interest in maintaining the structure It is considered unlikely that Reliance Rail (or any successor) will default under the contract, but in this event, the financial implication for Downer is illustrated below
	$m P&L impact ($m) Cash impact ($m) Write-off of WIP on Downer B/S 31 Dec 2010 347 - Write-back of total provision on Downer B/S as at 31Dec 2010 (430) - Estimated cash payments on cancelled orders 250-300 250-300
	45 Mark-to-market losses on hedge instruments 64 64 Write off of Reliance Rail hedge reserve 75 - Supplier obligation to mitigate loss Reduce loss Reduce outflow Sale of Waratah assets owned by Downer to mitigate loss Reduce loss Cash inflow Approximate Net Impact (pre mitigation) 306-356 314-364

•
•
•
•

Reliance Rail advises it remains solvent, although risk of ‘switch date’ if both monoline issuers become
insolvent - would provide option for banks to not fund $357 million
Non recourse to Downer
Other stakeholders have significant interest in maintaining the structure
It is considered unlikely that Reliance Rail (or any successor) will default under the contract, but in this
event, the financial implication for Downer is illustrated below

$m
P&L impact
($m)
Cash impact
($m)
Write-off of WIP on Downer B/S 31 Dec 2010
347
-
Write-back of total provision on Downer B/S as at 31Dec
2010
(430)
-
Estimated cash payments on cancelled orders
250-300
250-300

45
Mark-to-market losses on hedge instruments
64
64
Write off of Reliance Rail hedge reserve
75
-
Supplier obligation to mitigate loss
Reduce loss
Reduce outflow
Sale of Waratah assets owned by Downer to mitigate loss
Reduce loss
Cash inflow
Approximate Net Impact (pre mitigation)
306-356
314-364

Summary

Detailed review of Waratah Project completed by Ross Spicer and his team
A number of remaining challenges in achieving practical completion of train Set 1 (A03), but working with RailCorp and expecting delivery in late April to July
financial impact of train Set 1 delivery timing, of itself, is immaterial
Production rate and quality the key issues and main driver of financial outcome on project
Implementing a multi-faceted program to address production issues, including focus on "value engineering and process improvement" exercise to facilitate flowline production at required rate
Program has been developed through detailed internal process
External reviews by FCP, who concluded that on balance the revised program, as a whole, has a high likelihood of success, subject to sufficient management focus
Risks remain to both near term delivery and overall production, but Downer is focused on mitigating these wherever possible
Detailed review confirmed that the $250 million provision is appropriate
supported by external expert reviews

Downer EDI Limited

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

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Outlook

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47
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Work-in-hand over $20 billion

Work-in-hand by division

Engineering ($2.2b, 11%) Mining ($7.6b, 37%) Rail ($5.4b, 26%) Works ($5.3b, 26%)

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Work-in-hand by type
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Alliance (2%) Cost Plus (5%) Fixed price/lump sum (29%) Schedule of rates (44%) Recurring / annuities (20%)

Downer maintained a strong work-in-hand
Growth opportunities in all our markets
Mining increasing its share of forward work
Engineering sector has large volume of work pending
Rail and Works see good opportunities ahead

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Waratah PPP (RSM & TLS) (14%)
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Retail Entitlement Offer

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Group outlook

A number of factors expected to influence the second half:
Competitive markets in Engineering and Works Australia with Downer New Zealand operating in a tough economy
The ability of Works Australia and Downer New Zealand to deliver their typically stronger second half performances
Mining is expected to continue to ramp up work on its contracts at Goonyella, Norwich Park and Christmas Creek
Rail remains close to full capacity in the second half, however, an impact will be felt from costs and delays associated with asbestos remediation
High tender costs are anticipated as we continue to bid on a large volume of forward work
The overall impact of weather across all our businesses

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49
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Group outlook

Based on the above, and subject to risks including weather and market conditions, Downer Group expects to deliver underlying EBIT of around $300 million for the Full Year and underlying NPAT of around $169 million.
Downer Group continues to be well placed in its sectors and markets.
Our transformation program is expected to drive profitable growth in the coming years

Downer EDI Limited

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

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Downer Group 2010/11 Half Year Results

28 February 2011

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51
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Supplementary information

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Retail Entitlement Offer

Market outlook – commodities

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Million Tonnes (mt)
3,000
Demand for commodities is 2,500
expected to remain solid globally. 2,000 Thermal Coal
The Chinese structural growth 1,500 Coking Coal
story – of industrialisation, 1,000 Iron Ore
urbanisation and modernisation –
will continue to underpin strong 500
growth. Steady growth is 0 2009 2010F 2011F 2012F 2013F 2014F 2015F
expected for the production of Thousand Tonnes (kt) 120,000
thermal coal, coking coal and
iron ore. 100,000
80,000 Nickel
Lead
60,000
Zinc
40,000 Aluminium
Copper
20,000
0
2009 2010F 2011F 2012F 2013F 2014F 2015F
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Source: Macquarie Research, January 2011.

Market outlook – engineering construction

Some softening is expected in Australia’s civil construction market as major private sector projects move to completion without being completely offset by new work and with pull-back in public sector commitments to new projects.

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$b 2007‐08
120 Other
Mining & Heavy Industry
100 Telco
Recreation
80 Pipelines
Electricity
60 Sewerage & Drainage
Water Storage & Supply
40 Harbours
Railways
20 Bridges
Roads, Hwys & Subdivs
0 CFC
2005 2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F
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Sources: BIS Shrapnel, Engineering Construction in Australia 2009/10-2023/24, October 2010; BIS Shrapnel, Road Construction In Australia 2010 – 2025, November 2010 (updated for Roads Hwys & Subdivs and Bridges); Constructing Forecasting Council, January 2011.

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1H2011 Results Presentation dated 28 February 2011

Market outlook – maintenance

The total maintenance market in Australia was estimated at $32 billion in 2010 with over half (~53% or $16.7 billion) contracted out. The proportion of maintenance work being outsourced is expected to continue to grow to ~57% by 2015, which, when coupled with growth in the overall maintenance market to 2015, will add an additional $4.1 billion in outsourced contract maintenance spend.

In‐House vs. Contract Maintenance In Australia

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$b 2007‐08
40 100%
35 90%
80%
30
70%
25 60%
20 50%
15 40%
30%
10
20%
5 10%
0 0%
2010 2011F 2012F 2013F 2014F 2015F
Contract Expenditure Inhouse Expenditure % Contract (RHS)
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Source: BIS Shrapnel, Maintenance in Australia 2010-2025, August 2010.

Market outlook – maintenance cont.

Maintenance spending was on pause during the GFC as private firms cut all non-emergency expenditure to control costs. Strong economic growth over the medium term will see high rates of capacity utilisation and rising incomes leading to a catch-up of maintenance delayed during the downturn. A rolling construction cycle in two years will also keep activity strong.

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$b 2007‐08 Contract Maintenance In Australia
22 Non‐Residential Buildings
20 Defence
18 Light Manufacturing
16 Heavy Manufacturing
14 Mining
12 Telco
10 Gas Pipelines
8 Electricity Supply
6 Water & Wastewater
4 Ports
2 Railways
Roads
0
2010 2011F 2012F 2013F 2014F 2015F
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Source: BIS Shrapnel, Maintenance in Australia 2010-2025, August 2010.

Retail Entitlement Offer

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Summary income statement

	$m HY11 HY10 Change %
	Revenue from ordinary activities 3,273.5 2,783.6 489.9 17.6 Interest revenue 4.0 8.1 (4.1) (50.5) Other revenue 2.4 19.6 (17.2) (87.5) Total revenue 3,280.0 2,811.3 468.7 16.7 Employee benefits expense (1,111.9) (999.1) (112.8) (11.3) Raw materials and consumables used (846.6) (709.4) (137.3) (19.4)
	Subcontractor costs (605.3) (434.9) (170.4) (39.2) Plant and equipment costs (320.6) (266.9) (53.6) (20.1) Other operating expenses1 (176.8) (175.9) (0.9) (0.5) Depreciation and amortisation (96.2) (81.8) (14.4) (17.7) Finance costs (38.9) (34.7) (4.2) (12.1) Share of net profit of JV 14.0 5.0 9.0 179.3 Significant item (250.0) - (250.0) (100.0)
	Profit before income tax (PBT) (152.5) 113.6 (266.0) (234.3) Income tax benefit/(expense) 48.7 (26.5) 75.2 283.5 Net (loss)/profit after tax (103.8) 87.0 (190.8) (219.3)

1 ‘Other operating expenses’ includes communication expenses, occupancy costs, professional fees, travel and accommodation expenses and other expenses from ordinary activities. 57

Summary balance sheet – assets


	$m Dec 10 Jun 10 Change % Current assets Cash and cash equivalents 322.5 385.1 (62.6) (16.3) Inventories 190.4 193.1 (2.8) (1.4) Trade and other receivables 1,039.3 1,183.9 (144.6) (12.2) Other current assets1 60.3 55.3 5.1 9.2
	Total current assets 1,612.5 1,817.4 (204.9) (11.3) Non-current assets Property, plant and equipment 971.2 862.1 109.1 12.7 Intangible assets (including goodwill) 582.1 589.4 (7.3) (1.2) Deferred tax assets 178.2 123.3 54.9 44.6 Other non-current assets2 69.3 63.8 5.5 8.6
	Total non-current assets 1,800.8 1,638.6 162.2 9.9 Total assets 3,413.4 3,456.0 (42.6) (1.2)

1 ‘Other current assets’ includes other financial assets, current tax assets, other assets and non-current assets held for sale.
2 ‘Other non-current assets’ includes equity-accounted investments, other financial assets and other assets

Downer EDI Limited

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

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Summary balance sheet – liabilities

	$m Dec 10 Jun 10 Change % Current liabilities Trade and other payables 1,012.3 987.3 25.0 2.5 Borrowings 73.7 272.2 (198.4) (72.9) Provisions 215.6 199.4 16.2 8.1 Other current liabilities1 818 465 352 758
	. . . . Total current liabilities 1,383.4 1,505.4 (122.0) (8.1) Non-current liabilities Borrowings 804.5 617.0 187.5 30.4 Deferred tax liabilities 22.7 23.3 (0.6) (2.5) Other non-current liabilities2 107.3 67.5 39.9 59.1 Total non-current liabilities 9345 7078 2267 320
	. . . . Total liabilities 2,317.9 2,213.1 104.7 4.7

1 ‘Other current liabilities’ includes other financial liabilities and current tax liabilities.

2 ‘Other non-current liabilities’ includes trade and other payables, other financial liabilities and provisions.

Summary balance sheet


	$m Dec 10 Jun 10 Change % Total assets 3,413.4 3,456.0 (42.6) (1.2) Total liabilities (2,317.9) (2,213.1) (104.7) (4.7) Net assets 1,095.5 1,242.9 (147.4) (11.9) Id itl 11463 1118 26 2
	ssue capa ,. ,.7 7. .5 Reserves (120.1) (107.9) (12.2) (11.3) Retained earnings 69.2 232.0 (162.8) (70.2) Non-controlling interest 0.1 0.1 - 2.1 Shareholders’ equity 1,095.5 1,242.9 (147.4) (11.9)

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Engineering


	$m HY11 HY10 Change (%) Total revenue 1,171.8 869.8 34.7 EBIT 48.4 57.5 (15.9) EBIT margin1 4.1% 6.6%
	ROFE2 25.2% 23.5% Work-in-hand3 2.2b 2.9b

1 EBIT Margin = EBIT divided by total revenue

2 ROFE = underlying EBIT divided by average funds employed (AFE) (AFE= Average Opening and Closing Net Debt + Equity) 3 Work-in-hand reflects current Work-in-hand at the end of January 2011 and includes an element of recurrent minor works

Mining


	$m HY11 HY10 Change (%) Total revenue 634.2 483.5 31.2 EBIT 50.8 37.0 37.4 EBIT margin1 8.0% 7.7% ROFE2 154% 122%
	. . Work-in-hand3 7.6b 2.5b

1 EBIT Margin = EBIT divided by total revenue 2 ROFE = underlying EBIT divided by average funds employed (AFE) (AFE= Average Opening and Closing Net Debt + Equity) 3 Work-in-hand reflects current Work-in-hand

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1H2011 Results Presentation dated 28 February 2011

Rail

	$m HY11 HY10 Change (%) Revenue – Rail (ex Waratah PPP) 480.2 320.8 49.7 Revenue – Waratah PPP 187.4 137.2 36.5 Total revenue 667.5 458.0 45.7 EBIT 47.7 29.1 63.8
	EBIT margin1 7.1% 6.4% ROFE2 25.1% 21.5% Work-in-hand3 5.4b 5.7b

1 EBIT Margin = EBIT divided by total revenue

2 ROFE = underlying EBIT divided by average funds employed (AFE) (AFE= Average Opening and Closing Net Debt + Equity) 3 Work-in-hand reflects current Work-in-hand

Works


	$m HY11 HY10 Change (%) Total revenue 957.0 1,011.4 (5.4) EBIT 19.7 46.7 (57.9) EBIT margin1 2.1% 4.6% 2
	ROFE 12.8% 21.9% Work-in-hand3 5.3b 5.3b

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Capital Raising Presentation dated 28 February 2011

Media/ASX and NZX Release

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS

DOWNER ANNOUNCES $279 MILLION CAPITAL RAISING

28 February 2011

Downer announced today it is undertaking a fully underwritten 1 for 4 accelerated renounceable entitlement offer (Offer) to all eligible shareholders to raise approximately $279 million.

This capital raising will provide financial flexibility to pursue attractive growth opportunities, strengthen Downer’s balance sheet and support Downer maintaining investment grade credit rating metrics[1] .

The Offer price of $3.25 per share represents a 17.1% discount to the closing price of Downer shares on 25 February and a 14.2% discount to the theoretical ex-rights price (TERP).

The key dates for the Offer are:

28 February Trading halt commences, opening of institutional entitlement offer 1 March Institutional entitlement offer closes 3 March Trading Halt lifted 3 March Record date to determine entitlement to participate 8 March Retail entitlement offer opens 15 March Institutional entitlement offer settlement 23 March Retail entitlement offer closes 1 April Final allotment of shares under the retail entitlement offer

New shares issued under the Offer will rank equally with existing shares. Renounced entitlements will be sold via the institutional and retail bookbuilds, with any proceeds in excess of the issue price returned to renouncing shareholders.

1 In recent times, Downer’s credit rating has been at the lowest level which is considered investment grade

Important Information

Downer EDI Limited ABN 97 003 872 848

A Triniti Business Campus, 39 Delhi Road, North Ryde NSW 2113 P PO Box 1823, North Ryde NSW 2113 T +61 2 9468 9700 | F +61 2 9813 8915 | W downergroup.com

Downer EDI Limited

4 ASX Offer Announcements

Capital Raising Presentation dated 28 February 2011

in Regulation S under the United States Securities Act of 1933 ( Securities Act )) ( U.S. Person ), or in any other jurisdiction in which such an offer would be illegal. The securities referred to herein may not be offered or sold in the United States, or to or for the account or benefit of, any U.S. Person, unless the securities have been registered under the Securities Act or an exemption from the registration requirements under the Securities Act is available. The offer or sale of the securities referred to herein have not been and will not be registered under the Securities Act. The distribution of this release in other jurisdictions outside Australia may also be restricted by law and any such restrictions should be observed. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

CONTACT DETAILS

Investors: Ross Moffat, EGM, Investor Relations Media: Michael Sharp, Group Head of Corporate Affairs

M: +61 412 256224 M: +61 439 470145

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Capital raising presentation

28 February 2011

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Important notices

Disclaimer

This Presentation has been prepared by Downer EDI Limited (ABN 97 003 872 848) ( Downer ).

Summary information

This Presentation contains summary information about the current activities of Downer and its subsidiaries. The information in this Presentation does not purport to be complete nor does it contain all the information which would be required in a disclosure statement or prospectus prepared in accordance with the requirements of the Corporations Act. It should be read in conjunction with Downer’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. No member of the Downer Group gives any warranties in relation to the statements and information in this Presentation.

Not financial product advice

This Presentation is for information purposes only and is not a prospectus, disclosure statement, product disclosure statement or other offering document under Australian law or under any other law. This Presentation is not a recommendation to acquire Downer shares ( New Shares ) and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek appropriate advice, including financial, legal and taxation advice appropriate to their jurisdiction. Downer is not licensed to provide financial product advice in respect of Downer shares. Cooling off rights do not apply to the acquisition of Downer shares.

Financial data

All dollar values are in Australian dollars (A$) and financial data is presented as at 31 December 2010 unless otherwise stated. The pro forma historical financial information included in this Presentation does not purport to be in compliance with Article 11 of Regulation S-X of the rules and regulations of the US Securities and Exchange Commission.

Future performance

This Presentation contains certain “forward-looking statements”. The words “forecast”, “estimate”, “likely”, “anticipate”, “believe”, “expect', “project”, “opinion”, “predict”, “outlook”, “guidance”, “intend”, “should”, “could”, “may”, “target”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements, and include statements in this Presentation regarding the conduct and outcome of the capital raising, the use of proceeds, and Downer’s outstanding debt.

You are cautioned not to place undue reliance on forward looking statements. While due care and attention has been used in the preparation of forward-looking statements, forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ materially from forward-looking statements. Downer disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise.

An investment in Downer shares is subject to investment and other known and unknown risks, including those summarised under “Key Risks” in this Presentation. Downer does not guarantee any particular rate of return or the performance of Downer, nor does it guarantee the repayment of capital from Downer or any particular tax treatment. Persons should have regard to the risks outlined in this Presentation.

Past performance

Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

The historical information in this Presentation is, or is based upon, information that has been released to the market. For further information, please see past announcements released to ASX.

Not an offer

This presentation, including the information contained in this disclaimer, is not a prospectus and does not form part of any offer, invitation or recommendation in respect of securities, or an offer, invitation or recommendation to sell, or a solicitation of an offer to buy, securities in the United States or to any person that is, or is acting for the account or benefit of, a “U.S. person” (as defined in Regulation S under the United States Securities Act of 1933 ( Securities Act )) ( U.S. Person ), or in any other jurisdiction in which such an offer would be illegal. The securities referred to herein may not be offered or sold in the United States, or to or for the account or benefit of, any U.S. Person, unless the securities have been registered under the Securities Act or an exemption from the registration requirements under the Securities Act is available. The offer or sale of the securities referred to herein have not been and will not be registered under the Securities Act. The distribution of this presentation in other jurisdictions outside Australia may also be restricted by law and any such restrictions should be observed. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Downer and the underwriters

The underwriters have not authorised, permitted or caused the issue, lodgement, submission, dispatch or provision of this Presentation and does not make or purport to make any statement in this Presentation and there is no statement in this Presentation which is based on any statement by the underwriters.

Downer, the underwriters and their respective affiliates, officers, employees agents and advisors, to the maximum extent permitted by law, expressly disclaim all liabilities, including, without limitation, liability for negligence in respect of, make no representations regarding, and take no responsibility for, any part of this Presentation and make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of information in this Presentation.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Downer EDI Limited

4 ASX Offer Announcements

Capital Raising Presentation dated 28 February 2011

Capital raising overview

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• Downer is undertaking a fully underwritten $279 million capital raising by way of a 1 for 4 accelerated
renounceable entitlement offer
• The decision to pursue a capital raising of this size takes into account a number of factors:
• Without the raising, Downer would move beyond the top end of its internal target
Balance Sheet gearing range (25-35%)
strength • Raising moves Downer to ~20% gearing, providing flexibility in managing the business
going forward
• Downer has been placed on Rating Watch Negative by Fitch
Credit rating and covenants • Raising will support Downer maintaining investment grade credit rating metrics [1]
• Provides additional headroom under financing facility covenants
• Downer continues to see significant opportunities to invest for growth across its business
Funding for • Mining division is seeing particularly strong demand with ability to generate attractive
growth returns on capital
• Current Mining division contracts are funded however attractive expansion and new
opportunities have been identified with new and existing clients
1 In recent times, Downer’s credit rating has been at the lowest level which is considered investment grade
3
NOT FOR DISTRIBUTION OR RELEASE IN THE
UNITED STATES OR TO US PERSONS
Offer detail summary
• 1 for 4 accelerated renounceable pro-rata [1] entitlement offer to raise approximately A$279 million
Offer size and • Approximately 86 million new Downer ordinary shares to be issued (25% of issued capital)
structure • The offer is fully underwritten
• A$3.25 per share
Offer price • 17.1% discount to Downer’s closing price on Friday 25 February 2011
• 14.2% discount to theoretical ex-rights price (TERP) [2]
Institutional • Institutional entitlement offer open from 10:00am Monday 28 February 2011 to 11:00am (AEDT)
entitlement Tuesday 1 March 2011
offer • Entitlements not taken up will be placed into the institutional shortfall bookbuild to be conducted from
4:30pm (AEDT) Tuesday 1 March to 11:00am (AEDT) Wednesday 2 March 2011
Retail • Retail entitlement offer open from 9.00am (AEDT) Tuesday 8 March 2011 to 5.00pm (AEDT) Wednesday
entitlement 23 March 2011
offer • Entitlements not taken up will be placed into the retail shortfall bookbuild to be conducted on
Monday 28 March 2011
• 7:00pm (AEDT) on Thursday 3 March 2011
Record date
Notes:
1 There will not be any entitlements trading on ASX
2 The theoretical ex-rights price is the theoretical price at which Downer shares should trade immediately after the ex-date for the entitlement offer assuming 100%
take-up of the offer. The theoretical ex-rights price is a theoretical calculation only and the actual price at which Downer shares trade immediately after the ex-date
for the entitlement offer will depend on many factors and may not be equal to the theoretical ex-rights price
3 Dates are indicative only and subject to change. All times and dates refer to Australian Eastern Daylight Saving Time (AEDT) while in effect and otherwise to
Australian Eastern Standard Time
4
NOT FOR DISTRIBUTION OR RELEASE IN THE
UNITED STATES OR TO US PERSONS
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Retail Entitlement Offer

Balance sheet impact

Pro-forma Downer balance sheet

A$m	31-Dec-2010	Adjustments1	Pro-forma post raising
Cash and cash equivalents	322.5	269.0	591.5
Property, plant and equipment	971.2	–	971.2
Other assets	2,119.7	3.0	2,122.7
Total assets	3,413.4	272.0	3,685.4
Gross debt (Borrowings)	878.2	–	878.2
Trade and other payables	1,012.5	–	1,012.5
Other liabilities	427.2	–	427.2
Total Liabilities	2,317.9	–	2,317.9
Net assets/Equity	1,095.5	272.0	1,367.5
Note:
1 Assumes proceeds from the entitlement offer of approximately $279 million based on the offer price less assumed transaction costs of $10 million

Key credit metrics

		31-Dec-2010	Pro forma post raising
Gearing (%) 1		35.7	19.9
	Adj. Net debt/Adj. EBITDAR(x) 2	2.7	2.3
Interest Service Cover ratio(x) 3		3.49	3.49

1 Net debt including mark-to-market revaluation adjustments of ($52.6) million/(net debt + swap adjustments + book equity) 2 Adjusted Net Debt includes Net Debt plus 6x operating lease payment in the year. Adjusted EBITDAR equals underlying EBITDAR adjusted for operating lease payments in the year

3 Ratio is historic only (6 months to December 2010) and hence is not impacted by raising until future periods

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Offer timetable

	Event Date Trading halt commences, institutional entitlement offer opens Monday 28 February Institutional entitlement offer closes Tuesday 1 March 11:00am Institutional shortfall bookbuild Tuesday 1 March 4:30pm to Wednesday 2 March 11:00am Trading halt lifted Thursday 3 March Record date Thursday 3 March (7:00pm AEDT)
	Retail entitlement offer opens Tuesday 8 March Institutional entitlement offer settlement Tuesday 15 March Allotment of shares under the institutional entitlement offer and institutional shortfall bookbuild1 Wednesday 16 March Retail entitlement offer closes Wednesday 23 March (5:00pm AEDT) Retail shortfall bookbuild Monday 28 March Retail entitlement offer and retail shortfall bookbuild settlement Thursday 31 March
	Final allotment of shares under the retail offer and shortfall bookbuild Friday 1 April

Event
Date
Trading halt commences, institutional entitlement offer opens
Monday 28 February
Institutional entitlement offer closes
Tuesday 1 March 11:00am
Institutional shortfall bookbuild
Tuesday 1 March 4:30pm to
Wednesday 2 March 11:00am
Trading halt lifted
Thursday 3 March
Record date
Thursday 3 March (7:00pm AEDT)

Retail entitlement offer opens
Tuesday 8 March
Institutional entitlement offer settlement
Tuesday 15 March
Allotment of shares under the institutional entitlement offer and institutional shortfall bookbuild1
Wednesday 16 March
Retail entitlement offer closes
Wednesday 23 March (5:00pm AEDT)
Retail shortfall bookbuild
Monday 28 March
Retail entitlement offer and retail shortfall bookbuild settlement
Thursday 31 March

Final allotment of shares under the retail offer and shortfall bookbuild
Friday 1 April

Note:

1 Trading of New Shares under the institutional entitlement offer and shortfall bookbuild is also expected to commence on this date 2 Dates and times are indicative only and are subject to change. All dates are 2011 and times refer to AEDT

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Downer EDI Limited

4 ASX Offer Announcements

Capital Raising Presentation dated 28 February 2011

Key Risk Factors

Business Specific Risks

Level of economic activity

Downer’s operational and financial performance is linked to both the overall level of activity in the economy and the level of outsourcing in the sectors in which Downer operates. A reduction in economic activity, and particularly a reduction in demand for the commodities produced by many of Downer’s larger clients, or a reduction in the level of outsourcing in the sectors in which Downer operates, is likely to negatively impact the level of earnings generated by Downer.

Level of government spending

Public authorities in Australia, New Zealand and Singapore are major clients of Downer. Changes in prioritisation of government spending or restrictions on the level of spending undertaken by governments could impact the level of earnings generated by Downer. Capital Expenditure

Certain aspects of Downer's operations are reliant on significant capital investment being made in order for Downer to provide services to its customers. Downer's ongoing ability to attract customers in respect of new projects and to comply with its obligations in respect of existing contracts may be dependent on sufficient funds being available to Downer in respect of this capital expenditure. There is no guarantee that Downer will be able to make the necessary capital expenditure in a time and manner necessary to meet customer demands at the relevant time.

Business interruptions

Significant business interruptions as a result of natural disasters (such as fire, earthquake, flood or cyclone), general periods of prolonged rain, unstable service sites or regulatory intervention may have a materially adverse impact on the business activities of Downer and its clients and may lead to a decrease in profitability and earnings

Wet Weather

Downer's ability to undertake some of its operations, particularly in the Works Australia and Mining divisions, is dependent on weather conditions. For the Mining division, there is a risk that sustained periods of rain may hamper the mines' ability to maintain mining output levels and may impact Downer's ability to access the mine and undertake operations. For the Works Australia division, there is a risk that sustained periods of rain may impact Downer's ability to undertake road construction and maintenance services, leading to reduced activity levels.

Industrial incidents and accidents

While Downer maintains a rigorous focus on Zero Harm for its employees and environment, an industrial incident may occur that results in serious injury or death, damage to property or contamination of the environment. Such incidents and any industrial disputes can adversely impact on project completion. Occupational health and safety metrics are important benchmarks for clients of Downer. There is a risk that should an industrial incident occur within Downer’s operations that results in injury or death or significant environmental damage, Downer may suffer reputational damage impacting its ability to secure or retain customer contracts. In addition, if Downer fails to comply with the necessary occupational health and safety legislative requirements across the jurisdictions in which it operates, it could result in fines, penalties and compensation for damages as well as reputational damage for Downer. Insurance

The availability of insurance at an appropriate term and price is not guaranteed. It is possible that the occurrence of an event may not be fully covered, or covered at all, by insurance.

NOT FOR DISTRIBUTION OR RELEASE IN THE

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UNITED STATES OR TO US PERSONS

Key Risk Factors (cont)

Business Specific Risks (Cont)

Key contracts

A number of contracts that Downer enters into are long term contracts with recurring revenues but are terminable on short notice. There is a risk that key contracts may not be renewed, may be renewed on less favourable terms or may be cancelled, which may lead to a decrease in profitability and earnings. In addition, due to the nature of its business, Downer is from time to time not in compliance with all the terms of its key contracts. Correspondingly, not all parties who deal with Downer are in full compliance with the terms of contracts where they have contractual obligations to Downer. Where this arises, it is usual in the industry for negotiations to occur between contracting parties and, in some cases for this to be followed by mediation, arbitration or litigation. The consequences of a party terminating a key contract or seeking other remedies could have a material adverse impact on Downer. However, the experience of this occurring is unusual in the industry and the Company's business relationships.

Competition and contract retention

The markets in which Downer operates are competitive, with the majority of the services provided by Downer also available from competing companies. Increasing competition could impact on Downer’s ability to win new work and the margin it receives on the new work. Downer may lose business to its competitors if it is unable to demonstrate competitive pricing, reliable performance, and technical competence to its customers.

Key supplier risk

Where Downer is reliant on one or a small set of key suppliers to provide goods and services, the performance of these suppliers will impact Downer’s ability to complete projects and earn profits. Where suppliers do not fulfil contractual obligations or do not roll over pre-existing contracts, the ability of Downer to complete projects and win new work may be reduced. In addition, there are particular suppliers with whom Downer has a long term relationship which support Downer’s business activities. A change in relationship with these suppliers could negatively impact Downer’s financial performance.

Downer has exposure to the price of commodities used in its operations. Any adverse change in the pricing of these items could impact unfavourably on the profitability of the business. Downer also has a large capital equipment fleet which is subject to availability of major spare parts such as tyres for mining equipment. New contracts often require the acquisition of new equipment and the timing of purchase is dependent upon availability from suppliers in a world market.

Fixed price contract risk

Some of the contracts that Downer enters into include provisions capping the maximum that Downer can charge the client under the contract. To the extent that the cost of delivering on its contractual obligations exceeds the agreed cap, then Downer is likely to incur losses.

Key personnel and labour shortage

Downer’s growth and profitability may be limited by the loss of key operating personnel, the inability to attract new suitably qualified personnel or by increases in compensation costs associated with attracting and retaining personnel. Downer is dependent on the availability of suitably skilled labour to provide its services and therefore, access to labour represent an ongoing risk to the business.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Retail Entitlement Offer

Key Risk Factors (cont)

Business Specific Risks (Cont)

Environmental risk and regulation

Downer and the industries in which it operates are subject to a broad range of environmental laws, regulations and standards (including certain licensing requirements). This results in significant compliance costs and could expose Downer to legal liabilities or place limitations on the development of its operations. In addition there is a risk that property utilised by Downer from time to time may be contaminated by materials harmful to human health (such as asbestos and other hazardous materials). In these situations Downer may be required to undertake remedial works on contaminated sites and may be exposed to third party compensation claims and other environmental liabilities.

Product and services liability

There is a risk that Downer may fail to fulfil its statutory and contractual obligations in relation to the quality of its services, which could give rise to contractual damages or statutory penalties.

Future dividends and franking capacity

Given that Downer is raising capital from shareholders and has no available franking credits to distribute, the Board has decided not to declare an interim dividend with respect to the half year ended 31 December 2011. Downer’s underlying cash flows remain robust and Downer expects to resume paying dividends at the full year, subject to the decision of the Board at that time. Any future dividends and the level of franking will be determined by the Board of Downer having regard to a range of factors including the Group, the availability of cash, capital requirements of the business and obligations under debt instruments. There is no guarantee that any dividend will be paid by Downer or, if paid, that they will be paid at previous levels, or with the same level of franking.

Information technology

Downer’s business is dependent on the efficient operation of information technology systems. Failure of such systems could result in business interruption, the loss of customers, damaged reputation and a weakening of its competitive position, particularly where substitute technology systems are not available on acceptable terms. Additionally, the use by competitors of alternative, superior technologies may pose a threat to Downer’s profitability and market share.

Design liability and defect rectification

Some entities in the Downer Group are subject to normal design liability in relation to completed design and construction projects where that entity has had design responsibility and in some cases also construction responsibility. The liability may include claims, disputes and/or litigation against Downer Group companies and/or joint venture arrangements in which the Downer Group has an interest. It may also include an obligation on Downer to rectify the design defects at its own cost. The directors are of the opinion that there is adequate insurance to cover these potential liabilities and accordingly, no amounts are recognised in the financial statements.

Partnerships and joint ventures

Controlled entities have entered into various partnerships and joint ventures under which the controlled entity could ultimately be jointly and severally liable for the obligations of the partnership or joint venture.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Key Risk Factors (cont)

Business Specific Risks (Cont)

Asset impairment

As a consequence of the global financial crisis, the Australian Securities and Investments Commission has specifically identified impairment of assets as an issue for Australian companies. The Downer Board regularly monitors impairment risk. Consistent with accounting standards, Downer is periodically required to assess the carrying values of its assets. Where the value of an asset is to be less than its carrying value, Downer is obliged to recognise an impairment charge in its profit and loss account. Impairment charges can be significant and operate to reduce the level of a company’s profits and potentially, its capacity to pay dividends. Impairment charges are a non-cash item.

Guarantees and indemnities

Downer and certain of its controlled entities are called upon to give guarantees and indemnities in respect of the performance by counterparties, including controlled entities and related parties, of their contractual and financial obligations. These guarantees and indemnities are generally indeterminable in amount. Litigation

Downer is subject to the usual business risk that disputes or litigation may arise from time to time in the course of its business activities. Downer is currently involved in a number of litigation processes, which if decided unfavourably for Downer would have a financial cost for Downer. This level of litigation is not unusual in the context of Downer’s business or inconsistent with the past experience of the Downer Group. The Downer Group is currently managing a number of claims/disputes in relation to contracts, the most significant of which are set out below.

a) A claim of approximately SGD85 million by SP PowerAssets Ltd in relation to the construction of an electrical services tunnel in Singapore. The success of Downer’s defence depends upon the determination of complex legal and factual matters. The matter will be closely monitored as further information becomes available as the arbitration proceeds.
b) A claim by Siemens Ltd in relation to remediation works on the exhaust system of the Laverton Power Station in Victoria. Downer has submitted a claim of $14.2 million and Siemens have made a counterclaim of $17.5 million. Downer does not expect that this claim will result in a material liability.
c) In December 2009, Patrick Stevedore Operations Pty Limited adjoined Emoleum Road Services Pty Limited and Emoleum Roads Group Pty Limited (acquired by Downer on 28 February 2006) as fifth and sixth defendants in a matter related to its Port Botany Terminal in Sydney. Downer does not expect that this claim will result in a material liability.
d) An unquantified claim by Sembawang Engineers and Constructors Pte Ltd in relation to the design of temporary work on a construction project. An arbitration is scheduled to commence in July 2011.
e) IMF (Australia) Ltd has announced to the ASX that it proposes to fund claims of certain current and former Downer shareholders against Downer. The claim relates to Downer’s $190 million impairment to its Waratah rollingstock manufacturing contract announced on 1 June 2010. Downer does not currently have sufficient information to make any meaningful assessment of the potential claims. No provision has been made in the financial statements in respect of this.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Downer EDI Limited

4 ASX Offer Announcements

Capital Raising Presentation dated 28 February 2011

Key Risk Factors (cont)

Financial Risks

Continued access to capital markets

Downer’s ability to service its existing debt will depend on its future performance and cash flows, which in turn will be affected by various factors, certain of which are outside of its control (such as changes in interest and foreign exchange rates, and general economic conditions). Any inability to service its existing debt may have a material adverse effect on Downer. Further, to the extent that additional equity or debt funding is not available from time to time on acceptable terms, Downer may not be able to take advantage of acquisition and other growth opportunities, develop new business or respond to competitive pressures.

Refinancing requirements

Where existing loans either approach or reach maturity, Downer may seek to re-negotiate with existing and new lenders to extend the maturity date of those loans. Downer’s earnings profile, credit rating, state of the economy, and other factors may influence the outcome of those negotiations. Where refinancing occurs at a higher cost, this may impact the ability of Downer to win new work and the profitability of its operations. Breach of covenants

Downer has various covenants in relation to its banking facilities. Factors such as increases in base rates, increased borrowings and weak operational performance could lead to Downer breaching its debt covenants. In certain circumstances, lenders may require that such banking facilities be repaid immediately. Under such a scenario, there is no guarantee that Downer will be able to secure alternative financing on commercially acceptable terms or at all. Credit ratings

Changes to Downer’s credit rating by Fitch may impact the ability of Downer to win new work as well as the cost of funding. Where the credit rating is reduced, or placed on negative watch, customers and suppliers may be less willing to contract with Downer as Downer may be considered to be higher counterparty risk. Banks and other lending institutions may demand a higher interest rate on funds provided to Downer to reflect the higher risk of lending. In such circumstances, both the revenue and profitability of Downer may be reduced.

Impact of interest rate movements

While Downer takes reasonable steps to protect itself through the use of hedges, rising interest rates may nonetheless adversely impact Downer’s interest payments on its floating rate borrowings and inflation in underlying input costs may also adversely impact the anticipated returned from client operations.

Impact of foreign exchange movements

Downer operates internationally and faces foreign exchange rate risks associated with foreign currency denominated debt, input costs and offshore earnings.

11 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Key Risk Factors (cont)

Waratah Contract Risks

The Waratah Train contract is a Rolling Stock Design and Manufacture contract with Reliance Rail for a total of 78 passenger train sets for use on the New South Wales rail network. The contract is large scale, is complex in specification and involves design and manufacturing in both Australia and China. In order to meet the revised production plan and avoid any material further increases to the forecast costs to completion, a number of improvement processes need to be implemented including recruitment drives and production facility reorganisation. Details of the planed improvement processes are set out in the Waratah Update Presentation lodged with ASX on 28 February 2011. Downer has a parent company guarantee in relation to the Rolling Stock Design and Manufacture contract with Reliance Rail of A$1.2 billion.

Successful completion of testing

Downer is currently completing testing of the first Waratah Train to be presented to RailCorp for acceptance. Issues identified in completion of this testing could further delay delivery of trains to RailCorp and result in additional cost being incurred by Downer. RailCorp acceptance Downer’s revised production schedule is subject to RailCorp’s acceptance of the trains for practical completion. Any decision by RailCorp not to accept a train or trains presented by Downer for practical completion could result in further delays to the project delivery schedule and result in additional costs being incurred by Downer.

Performance of trains in service

Once trains have been delivered and accepted by RailCorp and entered passenger service, the trains must meet certain performance thresholds. Failure of the trains to meet the required benchmarks is likely to results in additional costs being incurred by Downer. Production quality If Downer and its production partner CRC are not able to manufacture trains to the quality standard required, Downer may incur additional costs in undertaking rework on those vehicles that may exceed amounts currently provided for. Speed of production and acceptance rate If Downer is not able to manufacture trains at the rate required to meet its revised production schedule or it is not able to agree a delivery timetable with RailCorp in line with its revised production rate, then additional costs may be incurred by Downer above those currently provided for.

Recruitment of key personnel

Downer has identified a need to recruit a number of additional senior personnel to assist with the Waratah Project. If Downer is not able to recruit appropriately experienced personnel within a reasonable timeframe this may impact on Downer’s ability to deliver the Waratah Trains in line with its revised production schedule. Through Life Support (TLS) contract Downer has a contract with RailCorp for Through Life Support maintenance of the Waratah fleet for a 30 year period to commence from the date of practical completion of the first train. Should the Waratah trains not meet the performance levels required in the contract, Downer will not generate the expected profit on the contract, or in the case of significant underperformance could incur losses.

12 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Retail Entitlement Offer

Key Risk Factors (cont)

Waratah Contract Indirect Risks

Reliance Rail’s funding arrangements are on a non-recourse basis to Downer, and Downer is not obliged to provide further equity to Reliance Rail. Additionally, in the event that Reliance Rail’s financing was to fail, the contracting arrangements for the project give RailCorp (or lenders) the option of stepping into the place of Reliance Rail to enable Downer to continue delivery of the train sets under its contract. If this did not occur, however, and Reliance Rail defaulted under the contract, Downer is likely to incur costs relating to existing commitments to suppliers and subcontractors.

The issues that may affect the viability of Reliance Rail include the following.

Potential default by monoline insurers

Reliance Rail currently has a $357 million bank construction loan facility which is guaranteed by two specialist financial guarantors, FGIC (UK) Ltd and Syncora Guarantee Inc (“monoline insurers”), however this facility may be withdrawn under certain circumstances prior to the scheduled drawdown date commencing in February 2012. The facility contains a termination provision that in the event of the insolvency of both monoline insurers, the banks have a right to terminate any undrawn commitments. Since 2009, the monoline insurers have been adversely affected by the global financial crisis and the financial position of both monoline insurers remain uncertain, although they are still operating. If both the monoline insurers default, the $357 million undrawn facility could be cancelled by the banking syndicate if three of the four banks resolve to do so.

Current Reliance Rail financing

On the occurrence of a prescribed event of default, it is possible that the lenders providing financing to Reliance Rail may seek to cancel any existing facilities and/or not make available any un-drawn facilities.

Reliance Rail refinancing

Where existing financing arrangements approach or reach maturity, Reliance Rail may seek to engage with existing and new finance providers to refinance these arrangements. Reliance Rail will be subject to the risk of not being able to access credit markets on the same loan terms, including the risk of higher interest rates.

Reliance Rail restructuring

It is possible that a restructure of Reliance Rail’s finances will be necessary in the future to support the long term viability of Reliance Rail and refinancing prospects. Reliance Rail credit rating

A change in Reliance Rail’s credit rating can affect Reliance Rail’s ability to, and cost of, refinance.

RSM subcontract and ancillary documents

As part of the project’s financing structure, Reliance Rail, Downer and its subsidiary Downer EDI Rail Pty Ltd entered into a number of ancillary agreements with a security trustee (acting on behalf of the lenders). This is a typical arrangement for PPP style projects. However, if Reliance Rail, Downer or Downer EDI Rail is in serious breach of any of these agreements, this may amount to an event of default and may entitle the lenders to cancel their facilities to Reliance Rail. Downer does not believe that such breaches presently exist.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Key Risk Factors (cont)

General Risks

General equity market and investment risk

The price of Downer shares will fluctuate due to various factors including movements in Australian equity markets, recommendations by broker and analysts, interest rates, inflation, Australian and international economic conditions, changes in government, fiscal, monetary and regulatory policies, global and geo-political events and hostilities and acts of terrorism, investor perceptions and other factors that may affect Downer’s financial position and earnings.

Government policies and legislation

Downer’s business is affected by a range of industry specific and general legal and regulatory controls. Changes in these types of controls can have an adverse effect on Downer’s financial performance. Further, any major shift in regulatory policy may impact on the profitability of Downer and its customers. In particular, the Australian Federal Government is in the process of negotiating legislation in relation to the Mining Resource Rent Tax (‘MRRT’) for certain coal and iron ore projects. The uncertainty relating to government legislation, such as taxes, carbon trading schemes and regulation of resource projects could lead to delays and project abandonment, which would adversely affect the market for services which Downer provides. Infrastructure projects, which are a key source of revenue for Downer, remain subject to significant discretion by government departments and ministers.

Taxation risk

Future changes in Australian and New Zealand taxation law, including changes in interpretation or application of the law by courts or taxation authorities in Australia and New Zealand, may affect taxation treatment of an investment in Downer shares or the holding and disposal of those shares. Further, changes in tax law, or changes in the way tax law is expected to be interpreted in the various jurisdictions in which Downer operates may impact the future tax liabilities of Downer.

Changes in accounting policy

Changes to Australian Accounting Standard could affect Downer’s reported earnings and its financial position from time to time.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Downer EDI Limited

4 ASX Offer Announcements

Capital Raising Presentation dated 28 February 2011

International selling restrictions

United States of America

This presentation, including the information contained in this disclaimer, is not a prospectus and does not form part of any offer, invitation or recommendation in respect of securities, or an offer, invitation or recommendation to sell, or a solicitation of an offer to buy, securities in the United States or to any person that is, or is acting for the account or benefit of, a “U.S. person” (as defined in Regulation S under the United States Securities Act of 1933 (Securities Act)) (U.S. Person), or in any other jurisdiction in which such an offer would be illegal. The securities referred to herein may not be offered or sold in the United States, or to or for the account or benefit of, any U.S. Person, unless the securities have been registered under the Securities Act or an exemption from the registration requirements under the Securities Act is available. The offer or sale of the securities referred to herein have not been and will not be registered under the Securities Act.

This presentation may not be sent to any investors in the United States or to a U.S. Person (or to any person acting for the account or benefit of a U.S. Person). By accepting this presentation, you agree to be bound by the foregoing limitations.

New Zealand

The New Shares being offered under this document are being offered to eligible shareholders with registered addresses in New Zealand pursuant to the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand). This document has not been registered with, filed with or approved by any New Zealand regulatory authority or under or in accordance with the Securities Act 1978 (New Zealand). Under the entitlement offer, no securities may be offered or sold to the public within New Zealand and no member of the public in New Zealand may accept the entitlement offer, other than persons, being existing holders of shares in Downer, to whom it is permissible for the entitlement offer to be made to in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002.

United Kingdom

Notice to residents of the United Kingdom

This document and the entitlement offer are only addressed to and directed at persons in the United Kingdom who are “qualified investors” within the meaning of section 86 of the Financial Services and Markets Act 2000 of the United Kingdom (the FSMA) (Qualified Investors). New Shares may not be offered or sold except in circumstances which have not resulted and will not result in an offer to the public in contravention of section 85 of the FSMA in the United Kingdom.

In addition this document is being distributed in the United Kingdom only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the Order), and/or (ii) who are high net-worth entities falling within Article 49(2)(a) to (d) of the Order, and other persons to whom it may otherwise lawfully be communicated (all such persons being referred to as “relevant persons”). This document must not be acted on or relied on in the United Kingdom, by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only in the United Kingdom to relevant persons and will be engaged in only with such persons.

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NOT FOR DISTRIBUTION OR RELEASE IN THE
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International selling restrictions (cont)

Hong Kong

The contents of this document have not been reviewed or approved by any regulatory authority in Hong Kong. In particular, this document has not been, and will not be, registered as a “prospectus” in Hong Kong under the Companies Ordinance (Cap 32) (“CO”) nor has it been authorised by the Securities and Futures Commission (“SFC”) in Hong Kong pursuant to the Securities and Futures Ordinance (Cap 571) (“SFO”). Recipients are advised to exercise caution in relation to the entitlement offer. If recipients are in any doubt about any of the contents of this document, they should obtain independent professional advice. This document does not constitute an offer or invitation to the public in Hong Kong to acquire any New Shares nor an advertisement of New Shares in Hong Kong. This document must not be issued, circulated or distributed in Hong Kong other than:

(a) to “professional investors” within the meaning of the SFO and any rules made under that ordinance (“Professional Investors”); or (b) in other circumstances which do not result in this document being a prospectus as defined in the CO nor constitute an offer to the public which requires authorisation by the SFC pursuant to the SFO. Unless permitted by the securities laws of Hong Kong, no person may issue or have in its possession for issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the New Shares, which is directed at, or the content of which is likely to be accessed or read by, the public of Hong Kong other than with respect to the New Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to Professional Investors. Any offer of the New Shares will be personal to the person to whom relevant offer documents are delivered, and a subscription for the New Shares will only be accepted from such person. No person who has received a copy of this document may issue, circulate or distribute this document in Hong Kong or make or give a copy of this document to any other person. No person allotted New Shares may sell, or offer to sell, such New Shares to the public in Hong Kong within six months following the date of issue of such New Shares.

Singapore

This document has not been registered as a prospectus with the Monetary Authority of Singapore and may not be circulated or distributed in Singapore nor may any of the New Shares be offered for subscription, directly or indirectly, nor may any invitation to subscribe for any of the New Shares be made, in Singapore except in circumstances in which such offer or sale is made pursuant to, and in accordance with the conditions of, an exemption invoked under Subdivision (4), Division I of Part XIII of the Securities and Futures Act, Chapter 289 of Singapore, and to persons to whom the New Shares may be offered or sold under such exemption. By accepting this document, the recipient hereof represents and warrants that he is entitled to receive it in accordance with the restrictions set forth above and agrees to be bound by limitations contained herein. Any failure to comply with these limitations may constitute a violation of law.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Retail Entitlement Offer

International selling restrictions (cont)

Japan

The filing of a securities registration statement under Article 4, Paragraph 1 of the Financial Instruments and Exchange Law of Japan (as amended, the “FIEL”) with respect to the solicitation of an offer to acquire the New Shares have not been, and will not be made, pursuant to an exemption under Article 2, Paragraph 3, Item 2, Sub-Item A of the FIEL. No transfer of the New Shares may be made except for a transfer by an acquirer to a qualified institutional investor (TEKIKAKU-KIKAN-TOSHIKA) as defined in Article 2, Paragraph 3, Item 1 of the FIEL and Article 10 of the Cabinet Office Ordinance on Definitions Provided in Article 2 of the Financial Instruments and Exchange Law. The holders of the New Shares agree not to transfer the New Shares except to another qualified institutional investor. When a holder of the New Shares transfers the New Shares to another qualified institutional investor, it must provide written notice to such qualified institutional investor stating the same herein prior to or simultaneously with such transfer.

China

The subscriptions to New Shares by the PRC investors are in compliance with, and will continue to comply with, all requirements of applicable laws and regulations of the PRC, including without limitation, applicable foreign exchange regulations and all rules, regulations and interpretations of any regulatory authority to which the PRC investors are subject insofar as they are applicable to the activities contemplated by the subscriptions to New Shares.

Canada

Any offer documents in connection with the New Shares constitute an offering of the securities described herein only in those jurisdictions of Canada and to those persons where and to whom they may be lawfully distributed in Canada, and therein only by authorized persons. The offer documents are not, and under no circumstances are to be construed as, an advertisement or a public offering of the securities referred to in this document in Canada. The offer documents must only be distributed in Canada to persons that are “accredited investors” within the meaning of National Instrument 45-106 - Prospectus and Registration Exemptions (“NI 45-106”).

No securities commission or similar authority in Canada has reviewed or in any way passed upon the offer documents or the offering of the New Shares in the Offer or the merits of the New Shares described herein and any representation to the contrary is an offence. No prospectus has been or will be filed in Canada with respect to the offering of the New Shares in the entitlement offer or with respect to the resale of such New Shares. As such, any person in Canada lawfully participating in the entitlement offer will not receive the information, legal rights and protections that would be afforded to such persons had a prospectus been filed and receipted by the applicable securities commission or similar authority in Canada. Any resale of the New Shares must be made in accordance with applicable Canadian securities laws.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

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17
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International selling restrictions (cont)

Italy

The offering of the New Shares has not been registered with the Commissione Nazionale per le Società e la Borsa (“CONSOB”) pursuant to Italian securities legislation and, accordingly, no New Shares will be offered, sold or delivered, nor copy of this document or any other offer document relating to the New Shares will be distributed in the Republic of Italy (“Italy”) except:
(a) to qualified investors (investitori qualificati), as defined pursuant to Article 100 of the of Legislative Decree No. 58 of 24 February 1998, as amended (the “Financial Services Act”) as amended and Article 34-ter, paragraph 1, letter b), of CONSOB Regulation No. 11971 of 14 May 1999, as amended (“Regulation 11971”); or
(b) in circumstances which are exempted from compliance with the restrictions on offers to the public, as provided under Article 100 of the Financial Services Act or Article 34-ter of Regulation 11971.
Moreover, and subject to the foregoing, any offer, sale or delivery of the New Shares or distribution of copies of this document or any other document relating to the New Shares in Italy under paragraphs (a) or (b) above must be:
(i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Financial Services Act, Legislative Decree No. 385 of 1 September 1993, CONSOB Regulation No. 16190 of 29 October 2007, all as amended; and
(ii) in compliance with any other applicable laws and regulations, including all relevant Italian securities, tax and exchange controls laws and regulations and any limitation or requirement which may be imposed from time to time by CONSOB, the Bank of Italy or any other Italian authority.

Article 100-bis of the Financial Services Act affects the transferability of the New Shares in Italy to the extent that any placing of the New Shares is made solely with qualified investors and such New Shares are then systematically resold to non-qualified investors on the secondary market at any time in the 12 months following such placing. Where this occurs, if a prospectus compliant with the Prospectus Directive has not been published, purchasers of New Shares who are acting outside of the course of their business or profession may in certain circumstances be entitled to declare such purchase void and to claim damages from any authorised person at whose premises the New Shares were purchased, unless an exemption provided for under the Financial Services Act applies.”

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Downer EDI Limited

4 ASX Offer Announcements

Capital Raising Presentation dated 28 February 2011

International selling restrictions (cont)

Norway

The offering of New Shares falls outside the scope of the public offer rules under the Norwegian Securities Trading Act. Accordingly, the contents of this document have not been approved by nor registered with the Financial Advisory Authority of Norway or any other Norwegian public authority. This document should not in any way be copied or otherwise distributed by the recipient.

Switzerland

The New Shares may not be publicly offered in or from Switzerland and neither this document nor any other offering materials relating to the New Shares may be made available through a public offering in or from Switzerland. Each copy of any of those documents is addressed to a specifically named recipient and may not be passed on to third parties. The New Shares may only be offered and this document may only be distributed to a limited circle of investors (as defined by the Swiss Code of Obligations). Ireland

This document has not been approved by the Financial Regulator in Ireland for the purposes of the Prospectus (Directive 2003/71/EC) Regulations 2005 of Ireland. If you are in any doubt about the contents of this document or as to the action you should take, you should if resident in Ireland seek independent financial advice from a stockbroker, bank manager, solicitor, accountant or other independent financial adviser who is duly authorised or exempted under the European Communities (Markets in Financial Instruments) Regulations 2007 (as amended).

The Netherlands

The New Shares will not be offered to the public in the Netherlands other than

(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; (b) to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000; and (iii) an annual turnover of more than €50,000,000, as shown in its last annual or consolidated accounts. For the purpose of this provision the expression of an “offer of New Shares to the public” in the Netherlands means the communication in any form and by any means of sufficient information on the terms of the Offer and the New Shares to be offered so as to enable an investor to decide to purchase or subscribe for the New Shares. This document and any other materials in connection with the Offer may only be sent or otherwise distributed in the Netherlands to investors who meet the criteria set out above. 19 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

International selling restrictions (cont)

Germany

The New Shares are neither registered for public distribution with the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin") according to the German Investment Act (Investmentgesetz) nor listed on a German exchange. No sales prospectus pursuant to the German Sales Prospectus Act (Verkaufsprospektgesetz) as well as the German Securities Prospectus Act (Wertpapierprospektgesetz) has been filed with BaFin. Consequently, the New Shares may not be distributed within Germany by way of a public offer, public advertisement or in any similar manner, and this document and any other document relating to the New Shares, as well as information or statements contained therein, may not be supplied to the public in Germany or used in connection with any offer for subscription of the New Shares to the public in Germany or any other means of public marketing. Any resale of the New Shares in Germany may only be made in accordance with (i) the German Investment Act, (ii) the German Securities Prospectus Act or the German Sales Prospectus Act, and (iii) any other applicable laws in Germany governing the sale and offering of securities. No view on taxation is expressed. Prospective investors in Germany are urged to consult their own tax advisers as to the tax consequences that may arise from an investment in the New Shares.” As regards any investor representations and warranties, please note that although it is not required by law, it could be recommendable to ask for a representation or warranty in case the Company intends to rely on a private placement exemption which refers to a specific qualification of the investor, such as the qualification as “Qualified Investor” within the meaning of the WpPG.

UAE

This document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. France

The New Shares may only be offered or sold, directly or indirectly in the Republic of France, to (i) persons providing investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers) and/or (ii) qualified investors (investisseurs qualifiés) acting for their own account, all as defined in, and in accordance with, articles L. 411-1, L. 411-2, D. 411-1 to D. 411-3, D. 744-1, D. 754-1 and D. 764-1 of the French Code monétaire et financier (Monetary and Financial Code); neither this document, nor any information contained therein or any offering material relating to New Shares, may be distributed or caused to be distributed to the public in France. This document has not been submitted to the clearance procedure of the Autorité des marchés financiers. In the event that the New Shares, thus purchased or subscribed to by such investors listed above, are offered or resold, directly or indirectly, to the public in France, the conditions relating to public offerings set forth in Articles L. 411-1, L.411-2, L.412-1 and L. 621-8 to L.621-8-3 of the Monetary and Financial Code and applicable regulations thereunder shall be complied with.Switzerland The New Shares may not be publicly offered in or from Switzerland and neither this document nor any other offering materials relating to the New Shares may be made available through a public offering in or from Switzerland. Each copy of any of those documents is addressed to a specifically named recipient and may not be passed on to third parties. The New Shares may only be offered and this document may only be distributed to a limited circle of investors (as defined by the Swiss Code of Obligations).

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Retail Entitlement Offer

International selling restrictions (cont)

Belgium

The New Shares may not be distributed in Belgium by way of an offer of securities to the public, as defined in Article 3 §1 of the Belgian Law of 16 June 2006 on public offerings of investment instruments and the admission of investment instruments to trading on regulated markets (the “Prospectus Law”), save in those circumstances set out in Article 3 §2 of the Prospectus Law. The Offer is exclusively conducted under applicable private placement exemptions and therefore it has not been and will not be notified to, and the Offer Documents or any other offering material relating to the New Shares has not been and will not be approved by, the Belgian Banking, Finance and Insurance Commission (“Commission bancaire, financière et des assurances/Commissie voor het Bank-, Financie- en Assurantiewezen”).

Accordingly, the Offer may not be advertised and each of the Managers/Dealershas represented, warranted and agreed that it has not offered, sold or resold, transferred or delivered, and will not offer, sell, resell, transfer or deliver, the New Shares, and that it has not distributed, and will not distribute, any memorandum, information circular, brochure or any similar documents, directly or indirectly, to any individual or legal entity in Belgium other than qualified investors, as defined in Article 10 of the Prospectus Law and in any other circumstances set out in Article 3 §2 of the Prospectus Law. This document has been issued only for the personal use of the above qualified investors and exclusively for the purpose of the Offer. Accordingly, the information contained herein may not be used for any other purpose nor disclosed to any other person in Belgium. Sweden In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), Downer has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of New Shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the New Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of New Shares to the public in that Relevant Member State at any time:

(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than EUR43,000,000; and (3) an annual net turnover of more than EUR50,000,000, as shown in its last two annual or consolidated accounts; or (c) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an “offer of New Shares to the public” in relation to any New Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the New Shares to be offered so as to enable an investor to decide to purchase or subscribe the New Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

21 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

International selling restrictions (cont)

Bahamas

FOR INVESTORS IN THE BAHAMAS

The shares described in this document are being offered only to persons and/or entities who (i) are “accredited investors” (as defined in regulation 90 of the Securities Industry Regulations, 2000 of The Bahamas) and (ii) (a) have obtained the approval of the Central Bank of The Bahamas to purchase and hold such shares, or (b) have been designated as “non resident” under the Exchange Control Regulations or (c) are otherwise deemed to be “non-resident” under the said Regulations. Consequently, this document is exempt from the requirement to be registered with the Securities Commission of The Bahamas in accordance with the provisions of the Securities Industry Act, 2000.

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NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Downer EDI Limited

4 ASX Offer Announcements

ASX Institutional Offer Completion Announcement dated 3 March 2011

Media/ASX and NZX Release

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS

SUCCESSFUL COMPLETION OF INSTITUTIONAL ENTITLEMENT OFFER

3 March 2011

Downer EDI Limited (Downer) today announced the successful completion of the institutional component (Institutional Entitlement Offer) of its fully underwritten 1 for 4 accelerated renounceable entitlement offer (Offer) to raise approximately $279 million.

The Institutional Entitlement Offer will raise gross proceeds of approximately $200 million at the Offer price of $3.25 per new share. Downer received strong support from existing institutional shareholders, with eligible institutional shareholders electing to take up approximately 97% of their entitlements.

As a result of the strong institutional support, only approximately 1.8 million shares were available for the institutional bookbuild, which was conducted from 1 March to 2 March 2011. This was well supported, attracting bids from both new and existing Australian and international investors.

The clearing price under the institutional bookbuild was $3.75 per new share, a premium of $0.50 to the Offer price of $3.25 per new share. Therefore, institutional shareholders who elected not to take up their entitlements and ineligible institutional shareholders will receive $0.50 for each new share not taken up (less any applicable withholding tax).

The Chief Executive Officer of Downer, Grant Fenn, said there was strong support for the capital raising from both local and overseas investors as well as existing and new investors.

“This capital raising will strengthen Downer’s balance sheet and provide the financial flexibility to pursue attractive growth opportunities,” Mr Fenn said.

The new shares taken up under the Institutional Entitlement Offer are expected to be issued on 16 March 2011 and commence trading on the ASX on the same day.

Retail Entitlement Offer

The retail component of the Offer (Retail Entitlement Offer) will raise approximately $79 million. The Retail Entitlement Offer will open on 8 March 2011 and is expected to close on 23 March 2011.

Downer EDI Limited ABN 97 003 872 848

A Triniti Business Campus, 39 Delhi Road, North Ryde NSW 2113 P PO Box 1823, North Ryde NSW 2113 T +61 2 9468 9700 | F +61 2 9813 8915 | W downergroup.com

Retail Entitlement Offer

Eligible retail shareholders will be able to subscribe for 1 new share for every 4 Downer ordinary shares held at 7:00pm (AEDT) on 3 March 2011 (Record Date), at the Offer price of $3.25 per new share, which is the same as the Offer price for the Institutional Entitlement Offer.

The retail offer booklet will be sent to eligible retail shareholders on 8 March 2011 and will also be made available on Downer’s website for eligible shareholders to view (www.downergroup.com). Eligible retail shareholders wishing to acquire new shares under the Retail Entitlement Offer will need to complete, or otherwise apply in accordance with, the personalised Entitlement and Acceptance Form that will accompany the retail offer booklet.

Eligible retail shareholders may choose to take up their entitlements in whole, in part, or not at all. A number of shares equivalent to those not taken up together with those which would otherwise have been offered to ineligible retail shareholders, will be offered for subscription to selected institutional investors through a retail bookbuild scheduled for 28 March 2011. Retail shareholders who do not take up their entitlements or who are ineligible to participate in the Retail Entitlement Offer will receive any premium between the clearing price under the retail bookbuild and the Offer price for new shares of $3.25 (less any applicable withholding tax). No amount will be paid if the clearing price is equal to the Offer price. There can be no guarantee that the clearing price will be higher than the Offer price or that the clearing price achieved in the institutional bookbuild will be matched in the retail bookbuild.

Retail shareholders who have questions regarding the Offer should call the Downer Offer Information Line on 1300 053 760 (within Australia) or +61 3 9415 4389 (outside Australia) at any time between 8.30 am and 5:30 pm (AEDT) Monday to Friday during the Retail Entitlement Offer period or visit the website at www.downergroup.com.

Downer expects the trading halt on its shares to be lifted shortly after the making of this announcement and for trading of Downer shares to recommence on an ex-entitlement basis.

CONTACT DETAILS

Investors: Ross Moffat, EGM, Investor Relations M: +61 412 256224 Media: Michael Sharp, Group Head of Corporate Affairs M: +61 439 470145

Downer EDI Limited

4 ASX Offer Announcements

ASX Institutional Offer Completion Announcement dated 3 March 2011

Important notice

This release, including the information contained in this disclaimer, is not a prospectus and does not form part of any offer, invitation or recommendation in respect of securities, or an offer, invitation or recommendation to sell, or a solicitation of an offer to buy, securities in the United States or to any person that is, or is acting for the account or benefit of, a “U.S. person” (as defined in Regulation S under the United States Securities Act of 1933 ( Securities Act )) ( U.S. Person ), or in any other jurisdiction in which such an offer would be illegal. The securities referred to herein may not be offered or sold in the United States, or to or for the account or benefit of, any U.S. Person, unless the securities have been registered under the Securities Act or an exemption from the registration requirements under the Securities Act is available. The offer or sale of the securities referred to herein have not been and will not be registered under the Securities Act. The distribution of this release in other jurisdictions outside Australia may also be restricted by law and any such restrictions should be observed. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Retail Entitlement Offer

Important Information[5]

Downer EDI Limited

5 Important Information

This Retail Offer Booklet (including the ASX

Offer Announcements) and accompanying personalised Entitlement and Acceptance Form have been prepared by Downer. The information in this Retail Offer Booklet is dated 8 March 2011.

No party other than Downer has authorised or caused the issue of the information in this Retail Offer Booklet, or takes any responsibility for, or makes, any statements, representations or undertakings in the information in this Retail Offer Booklet.

You should read the information in this Retail Offer Booklet carefully and in its entirety before deciding whether to invest in New Shares. You should also consult your stockbroker, accountant, solicitor, financial adviser or other independent professional adviser to evaluate whether or not to participate in the Retail Entitlement Offer. If you have any doubt about whether you should invest in the Retail Entitlement Offer, you should seek professional advice before making any investment decision. In particular, you should carefully consider the risk factors outlined in the “Key Risk Factors” section of the Downer Capital Raising Presentation released to ASX on Monday, 28 February 2011, any of which could affect the operating and financial performance of Downer or the value of an investment in Downer.

Downer has applied for the grant by ASX of official quotation of the New Shares. It is expected that trading will commence in relation to New Shares issued under the Retail Entitlement Offer and Retail Bookbuild on Monday, 4 April 2011. Downer will have no responsibility and disclaims all liability (to the maximum extent permitted by law) to persons who trade New Shares before the New Shares are listed on the official list of ASX or before they receive their confirmation of issue, whether on the basis of confirmation of the allocation provided by Downer or the Downer Share Registry or otherwise.

5.1 Eligible Retail Shareholders

The information in this Retail Offer Booklet

contains an offer of New Shares to Eligible Retail Shareholders in Australia or New Zealand and has been prepared in accordance with section 708AA of the Corporations Act as modified by Australian Securities and Investments Commission ( ASIC ) Class Order [CO 08/35].

Those holders of Shares who:

are registered as a holder of Shares as at 7.00pm (AEDT) on Thursday, 3 March 2011;
– have an address on the share register in Australia or New Zealand;
are not in the United States and are neither a U.S. Person nor acting for the account or benefit of a U.S. Person;
were not invited to participate (other than as nominee, in respect of other underlying holdings) under the Institutional Entitlement Offer, and were not treated as ineligible institutional investors under the Institutional Entitlement Offer; and
are eligible under all applicable securities laws to receive an offer under the Retail Entitlement Offer,

are eligible retail shareholders ( Eligible Retail Shareholders ).

For the avoidance of doubt, Downer may (in its absolute sole discretion) extend the Retail Entitlement Offer to any institutional shareholder who was eligible to participate in the Institutional Entitlement Offer but was not invited to participate in the Institutional Entitlement Offer (subject to compliance with applicable laws).

Downer also reserves the right (in its absolute sole discretion) to reduce the number of New Shares allocated to Eligible Retail Shareholders, or persons claiming to be Eligible Retail Shareholders, if their claims prove to be overstated or they fail to provide information to substantiate their claims.

Retail Entitlement Offer

5.2 Ineligible Retail Shareholders

Downer has decided that it is unreasonable to make offers under the Retail Entitlement Offer to holders of Shares who have registered addresses outside Australia and New Zealand, having regard to the number of such holders in those places and the number and value of the New Shares that they would be offered and the cost of complying with the relevant legal and regulatory requirements in those places.

Ineligible Retail Shareholders are not eligible to participate in the Retail Entitlement Offer due to securities laws restrictions on the offer of New Shares in certain jurisdictions. As detailed in section 3.4 of “How to Apply”, Downer will arrange for the Entitlements that would otherwise have been offered to those Ineligible Retail Shareholders had they been eligible to participate in the Retail Entitlement Offer ( Ineligible Entitlements ) to be offered on their behalf by a nominee for subscription to selected institutional investors. Any proceeds of sale with respect to these Entitlements realised through the Retail Bookbuild in excess of the Offer Price of A$3.25 per New Share will be remitted to the Ineligible Retail Shareholders in proportion to the number of New Shares represented by those Ineligible Entitlements. However, as detailed in section 3.4 of “How to Apply”, no assurance can be given as to the price that will be achieved under the Retail Bookbuild for the sale of New Shares. There is also no guarantee that any proceeds will be realised from the sale of Entitlements that would otherwise have been offered to ineligible Shareholders.

5.3 No cooling off rights

Cooling off rights do not apply to an investment in New Shares. You cannot, in most circumstances, withdraw your application once it has been accepted.

5.4 No Entitlements trading

Entitlements are renounceable but cannot be traded on ASX or any other exchange, nor can they be privately transferred.

5.5 Notice of nominees and custodians

Nominees and custodians which hold Shares as nominees or custodians will have received, or will shortly receive, a letter in respect of the Entitlement Offer. Nominees and custodians should consider carefully the contents of that letter and note in particular that the Retail Entitlement Offer is not available to eligible institutional shareholders who were invited to participate in the Institutional Entitlement Offer (whether they accepted their Entitlement or not) and institutional shareholders who were treated as ineligible institutional investors under the Institutional Entitlement Offer.

Downer EDI Limited

5 Important Information

5.6 Not investment advice

The information in this Retail Offer Booklet is not a prospectus, disclosure document or other offering document under the Corporations Act (or any other Australian or foreign law) and has not been lodged with ASIC. It is also not financial product advice and has been prepared without taking into account your investment objectives, financial circumstances, taxation circumstances or particular needs. Downer is not licensed to provide financial product advice in respect of the New Shares. The information in this Retail Offer Booklet does not purport to contain all the information that you may require to evaluate a possible application for New Shares, nor does it contain all the information which would be required in a prospectus prepared in accordance with the requirements of the Corporations Act. You should make your own assessment of what information is relevant to your decision to participate in the Entitlement Offer.

Before deciding whether to apply for New Shares, you should consider whether they are a suitable investment for you in light of your own investment objectives, taxation circumstances and financial circumstances and having regard to the merits or risks involved. If, after reading the information in this Retail Offer Booklet, you have any questions about the Retail Entitlement Offer, you should contact your stockbroker, accountant, solicitor, financial adviser or other independent professional adviser. You should obtain any professional advice you require to evaluate the merits and risks of an investment in Downer before making any investment decision based on your investment objectives.

5.7 Taxation

Set out below is a summary of the Australian tax implications of the Retail Entitlement Offer for Eligible Retail Shareholders who are residents of Australia for tax purposes and who hold their Shares on capital account.

The summary below does not deal with the tax implications for Eligible Retail Shareholders who are not residents of Australia for tax purposes, or who hold their Shares as revenue assets or trading stock such as banks, insurance companies and taxpayers carrying on a business of share trading or whose Shares were acquired under an employee share plan. It is intended as a general guide only and is not an authoritative or complete statement of all potential tax implications for each Eligible Retail Shareholder.

The summary below also does not take account of any individual circumstances of any particular Eligible Retail Shareholder. Taxation is a complex area of law and can be subject to constant change and the taxation consequences for each Eligible Retail Shareholder may differ depending on their own particular circumstances. Accordingly, Eligible Retail Shareholders should seek specific advice applicable to their own particular circumstances from their own financial or tax advisers.

The summary below is based on the law in effect as at the date of this Retail Offer Booklet.

Issue of Entitlements

The issue of the Entitlements should not itself result in any amount being included in the assessable income of an Eligible Retail Shareholder.

Retail Entitlement Offer

Sale of Entitlements

The Entitlements are renounceable but will not be able to be traded on ASX or privately transferred. Renouncing Shareholders may however receive proceeds on sale of their Entitlements under the Retail Bookbuild. The taxation treatment of an amount received in these circumstances is unclear. As such, any Eligible Retail Shareholder who does not take up their Entitlement or Ineligible Retail Shareholder who receives proceeds as a result of the Retail Bookbuild is strongly advised to obtain professional advice as to the taxation treatment of those proceeds.

The Commissioner of Taxation has expressed the view in Draft Taxation Ruling TR 2010/D8 that any proceeds received by Eligible Retail Shareholders from the Retail Bookbuild are to be treated as an unfranked dividend or, to the extent that the proceeds are not a dividend, as ordinary income. This is consistent with the previously expressed view of the Commissioner of Taxation as set out in Taxpayer Alert TA 2009/11 and the accompanying Fact Sheet released in May 2009.

If the position adopted by the Commissioner of Taxation is accepted as being correct, the receipt of the proceeds should not be treated as a capital gain and hence will not be eligible for the capital gains tax ( CGT ) discount.

It is, however, not clear whether the position adopted by the Commissioner of Taxation is correct at law. Nevertheless, at present, the description above is a summary of the manner in which the Commissioner is likely to apply the law, and the Commissioner has indicated that taxpayers in receipt of such proceeds should return the proceeds as an unfranked dividend or, to the extent that the proceeds are not a dividend, as ordinary assessable income.

The law requires that tax be withheld by Australian resident companies from dividends paid to certain shareholders (for example, subject to certain exceptions, Australian tax resident shareholders who have not provided their Tax File Number ( TFN ) or shareholders who are not Australian residents for tax purposes). Given the Commissioner’s position, Downer considers that it may be obliged to withhold tax in relation to any proceeds on sale of their Entitlement under the Retail Bookbuild. Therefore, an amount may be withheld from any proceeds paid to certain Eligible Retail Shareholders such that the ultimate receipt may be net of any withholdings.

If you are an Australian tax resident shareholder, and you have not previously provided your TFN to Downer, you may wish to do so prior to the close of the Retail Entitlement Offer to ensure that withholding tax is not deducted from any proceeds payable to you. If you do not provide your TFN, withholding tax may be deducted from such payment at the rate of 46.5%.

You are able to provide your TFN online with the Downer Share Registry at w w w .investorcentre.com. When providing your details online, you will be required to enter your Shareholder Reference Number ( SRN ) or Holder Identification Number ( HIN ), as shown on your Issuer Sponsored/CHESS statements and other personal details such as your postcode.

Exercise of Entitlements

Eligible Retail Shareholders who exercise their Entitlements and are allocated New Shares will acquire those Shares with a cost base for CGT purposes equal to:

where the Eligible Retail Shareholder’s existing Shares were acquired (or are taken to be acquired) on or after 20 September 1985, the Offer Price payable by them for those New Shares plus certain non-deductible incidental costs they incur in acquiring them; or
where the Eligible Retail Shareholder’s existing Shares were acquired (or are taken to be acquired) before 20 September 1985, the sum of the market value of the Entitlements when they were exercised and the Offer Price payable by them for those New Shares plus certain non-deductible incidental costs they incur in acquiring them.

Eligible Retail Shareholders should not make any capital gain or loss, or assessable income, from exercising the Entitlements or subscribing for the New Shares.

Downer EDI Limited

5 Important Information

New Shares

Eligible Retail Shareholders who exercise their Entitlements will acquire New Shares. Any future dividends or other distributions made in respect of those New Shares will be subject to the same taxation treatment as dividends or other distributions made on Shares held in the same circumstances.

On any future disposal of New Shares, Eligible Retail Shareholders may make a capital gain or capital loss, depending on whether the capital proceeds of that disposal are more than the cost base or less than the reduced cost base of the New Shares. The cost base of those New Shares is described above.

New Shares will be treated for the purposes of the CGT discount as having been acquired when the Eligible Retail Shareholder exercised the Entitlement to subscribe for them. Accordingly, in order to benefit from the CGT discount in respect of a disposal of those New Shares, they must have been held for at least 12 months after those dates before the disposal occurs.

Taxation of Financial Arrangements (TOFA)

The Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 ( TOFA Amendments ) made amendments to the Australian income tax law that operate to make assessable or deductible, gains or losses arising from certain “financial arrangements”. The TOFA Amendments will apply for income tax years commencing on or after 1 July 2010. However, a taxpayer can elect to apply the TOFA Amendments to income tax years commencing on or after 1 July 2009 and may also elect to apply the TOFA Amendments to existing financial arrangements held at the relevant start date.

An Entitlement or right to receive a share is a “financial arrangement”. However, depending on the circumstances of the particular taxpayer, the TOFA Amendments may be effectively excluded from applying. Further, certain taxpayers may be excluded from the application of the TOFA Amendments unless they make an election for them to apply.

As the application of the TOFA Amendments is dependent on the particular facts and circumstances of the taxpayer, Eligible Retail Shareholders should obtain their own advice in relation to the potential applicability of the amendments contained in the TOFA Amendments, in light of their own individual facts and circumstances.

Other Australian taxes

No Australian Goods and Services Tax ( GST ) or stamp duty is payable in respect of the grant or exercise of the Entitlements or the acquisition of New Shares.

5.8 Rounding of Entitlements

Where fractions arise in the calculation of Entitlements, they will be rounded up to the nearest whole number of New Shares.

5.9 Information availability

Eligible Retail Shareholders in Australia and New Zealand can obtain a copy of this Retail Offer Booklet during the Retail Entitlement Offer period on our website, www .downergroup.com, or by calling the Downer Offer Information Line. Persons who access the electronic version of this Retail Offer Booklet should ensure that they download and read the entire Retail Offer Booklet. The electronic version of this Retail Offer Booklet on the ASX website will not include a personalised Entitlement and Acceptance Form. A replacement personalised Entitlement and Acceptance Form can be requested by calling the Downer Offer Information Line on 1300 053 760 (from within Australia) or +61 3 9415 4389 (from outside Australia) between 8.30am and 5.30pm (AEDT) Monday to Friday during the Retail Entitlement Offer period. Alternatively holders can view, download and print their personalised Entitlement and Acceptance Form at w w w.investorcentre.com. You will be required to enter your Shareholder Reference Number ( SRN ) or Holder Identification Number ( HIN ), as shown on your Issuer Sponsored/CHESS statements and other personal details such as your postcode.

Retail Entitlement Offer

5.10 Future performance and forward-looking statements

Neither Downer nor any other person warrants, represents or guarantees (expressly or by implication) the future performance of the New Shares or any particular rate of return on any investment made pursuant to the Entitlement Offer, or any particular tax treatment.

This Retail Offer Booklet contains certain “forward-looking statements”. Forward looking words such as, “expect”, “should”, “could”, “may”, “predict”, “plan”, “will”, “believe”, “forecast”, “estimate”, “target”, “likely”, “anticipate”, “project”, “opinion”, “outlook”, “guidance”, “intend”, “could”, “should” and other similar expressions are intended to identify forward-looking statements within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.

Forward-looking statements, opinions and estimates provided in the information in this Retail Offer Booklet are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. No representation or warranty (express or implied) is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this Retail Offer Booklet. The information provided in this Retail Offer Booklet includes information derived from third party sources that has not been independently verified.

Forward-looking statements including forecasts, projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. While due care and attention have been used in the preparation of forward-looking statements, you are cautioned not to place undue reliance on such statements. Forward-looking statements only speak as to the date of this Retail Offer Booklet. To the maximum extent permitted by law, Downer disclaims any obligation or undertaking to release any updates or revisions to such information to reflect any change in expectations or assumptions.

An investment in Downer is subject to investment and other known and unknown risks, uncertainties and assumptions, many of which are outside the control of Downer and the Board, which could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by any forward-looking statements in this Retail Offer Booklet.

You should also carefully review the “Key Risk Factors” section of the Downer Capital Raising Presentation released to ASX on Monday, 28 February 2011 which is included in this Retail Offer Booklet.

Downer EDI Limited

5 Important Information

5.11 Past performance

Investors should note that the past share price performance of Downer shares provides no guarantee or guidance as to future share price performance. Past performance information given in this Retail Offer Booklet is provided for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. The historical information in this Retail Offer Booklet is, or is based upon, information that has been released to the market. For further information, please see past announcements released to the ASX.

5.12 Governing law

This Retail Offer Booklet, the Retail Entitlement Offer and the contracts formed on acceptance of the personalised Entitlement and Acceptance Forms are governed by the laws applicable in New South Wales, Australia. Each Eligible Retail Shareholder who applies for New Shares submits to the non-exclusive jurisdiction of the courts of New South Wales, Australia.

5.13 Financial data

All dollar values in this Retail Offer Booklet, other than as specified, are in Australian dollars (A$).

5.14 Foreign jurisdictions

The information in this Retail Offer Booklet has been prepared to comply with the requirements of the securities laws of Australia and New Zealand.

The New Shares being offered under the information in this Retail Offer Booklet are also being offered to Eligible Retail Shareholders with registered addresses in New Zealand in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand). The information in this booklet is not an investment statement or prospectus under New Zealand law, and may not contain all the information that an investment statement or prospectus under New Zealand law is required to contain.

The information in this Retail Offer Booklet does not constitute an offer in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer. No action has been taken to register or qualify the Retail Entitlement Offer, the Entitlements or the New Shares, or otherwise permit the public offering of the New Shares, in any jurisdiction other than Australia and New Zealand. Return of the Entitlement and Acceptance Form or your Bpay[®] payment shall be taken by Downer to constitute a representation by you that there has been no breach of any such laws.

The distribution of the information in this Retail Offer Booklet (including an electronic copy) outside Australia and New Zealand is restricted by law. If you come into possession of the information in this Retail Offer Booklet, you should observe such restrictions and should seek your own advice on such restrictions.

Any non-compliance with these restrictions may contravene applicable securities laws.

(a) New Zealand

The New Shares are not being offered or sold to the public within New Zealand other than to existing shareholders of Downer with registered addresses in New Zealand to whom the offer of New Shares is being made in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand).

Retail Entitlement Offer

This Retail Offer Booklet has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978 (New Zealand). This document is not an investment statement or prospectus under New Zealand law and is not required to, and may not, contain all the information that an investment statement or prospectus under New Zealand law is required to contain.

(b) United States

This Retail Offer Booklet and anything contained in it does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of, any U.S. Person. None of this Retail Offer Booklet, the ASX announcements reproduced in it nor the personalised Entitlement and Acceptance Form may be distributed to or released in the United States or to any person that is or is acting for the account or benefit of a U.S. Person.

The Entitlements and the New Shares have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state or other jurisdiction of the United States. The Entitlements may not be taken up by persons in the United States or by persons who are, or are acting for the account or benefit of a U.S. Person, and the New Shares may not be offered, sold or resold in the United States or to, or for the account or benefit of, a U.S. Person, except in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and the applicable securities laws of any state or other jurisdiction in the United States. The Entitlements and the New Shares offered in the Retail Entitlement Offer may only be offered and sold outside the United States to persons that are not U.S. Persons and are not acting for the account or benefit of U.S. Persons in “offshore transactions” (as defined in Regulation S under the U.S. Securities Act) in compliance with Regulation S under the U.S. Securities Act.

In addition, the New Shares may not be deposited in any existing unrestricted American Depositary Receipt Facility or future such program with respect to the securities of Downer that has been or may be established until 40 days following the completion of the Retail Entitlement Offer.

See the “International Selling Jurisdictions” section of the Downer Capital Raising Presentation released to ASX on Monday, 28 February 2011, which is included in this Retail Offer Booklet for more information.

5.15 Nominees

Downer is not required to determine whether or not any registered holder is acting as a nominee or the identity or residence of any beneficial owners of Shares. Where any holder is acting as a nominee for a foreign person, that holder, in dealing with its beneficiary, will need to assess whether indirect participation by the beneficiary in the Retail Entitlement Offer is compatible with applicable foreign laws. Eligible Retail Shareholders who are nominees, trustees or custodians are therefore advised to seek independent advice as to how to proceed.

Downer EDI Limited

5 Important Information

5.16 Underwriting

Downer has entered into an underwriting agreement with UBS AG, Australia Branch,

RBS Equity Capital Markets (Australia) Limited and Deutsche Bank (the Underwriters ), which have agreed to manage and fully underwrite the Entitlement Offer.

As is customary with these types of arrangements:

Downer has agreed to indemnify each Underwriter, its affiliates and related bodies corporate and the directors, officers, employees, agents and advisers of each Underwriter, their affiliates or related bodies corporate against losses in connection with the Entitlement Offer; and
the Underwriters may (in certain circumstances, including having regard to the materiality of the relevant event) terminate the underwriting agreement and be released from its obligations under it on the occurrence of certain events, including (but not limited to) where:
Downer shares are suspended for a period or Downer is delisted;
Downer withdraws the Entitlement Offer (or any part of it);
there is a delay in the timetable for the Entitlement Offer without the prior written approval of the Underwriters;
there is a change in the senior management of Downer or a change to the Downer board;
there is a material adverse change in the assets, liabilities, financial position or performance, profits, losses or prospects of Downer;

The Underwriters will be remunerated by Downer for providing these services at market rates and may be reimbursed for certain expenses.

The Underwriters have not authorised or caused the issue of this Retail Offer Booklet and take no responsibility for any information in this Retail Offer Booklet or any action taken by you on the basis of such information. To the maximum extent permitted by law, the Underwriters exclude and disclaim all liability, for any expenses, losses, damages or costs incurred by you as a result of your participation in the Entitlement Offer and the information in this Retail Offer Booklet being inaccurate or incomplete in any way for any reason, whether by negligence or otherwise. The Underwriters make no recommendations as to whether you or your related parties should participate in the Entitlement Offer, nor do they make any representations or warranties to you concerning this Entitlement Offer, or any such information, and you represent, warrant and agree that you have not relied on any statements made by the Underwriters or any of their affiliates in relation to the New Shares or the Entitlement Offer generally.

Downer will arrange for Entitlements to be sold on behalf of Renouncing Shareholders. It will engage the Underwriters to assist in selling such Entitlements through the Retail Bookbuild. However, it is important to note that Underwriters will be acting for and providing services to Downer in this process and will not be acting for or providing services to Shareholders. The engagement of the Underwriters by Downer is not intended to create any agency or other relationship between the Underwriters and the Shareholders.

there are certain major disruptions to financial markets; or
the S&P/ASX200:
is, at the close of trading on any day after the institutional closing date and up to and including the institutional settlement date, 10% or more below the opening of the Institutional Offer ( Starting Level ); or
– after the institutional settlement date, at the close of normal trading on any two consecutive business days is 10% or more below the Starting Level.

Retail Entitlement Offer

5.17 Disclaimer of representations

No person is authorised to give any information, or to make any representation, in connection with the Retail Entitlement Offer that is not contained in this Retail Offer Booklet.

Any information or representation that is not in this Retail Offer Booklet may not be relied on as having been authorised by Downer, or its related bodies corporate, in connection with the Retail Entitlement Offer. Except as required by law, and only to the extent so required, none of Downer, or any other person, warrants or guarantees the future performance of Downer or any return on any investment made pursuant to the information in this Retail Offer Booklet.

Downer EDI Limited

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Corporate directory

Downer EDI Limited ABN 97 003 872 848

Downer Share Registry

Computershare Investor Services Pty Limited GPO Box 2987 Adelaide SA 5001

Registered office

Downer EDI Limited Triniti Business Campus 39 Delhi Road North Ryde NSW 2113

Website

www .downergroup.com

Downer Offer Information Line

1300 053 760 (toll free from within Australia) +61 3 9415 4389 (from outside Australia) Open between 8.30am and 5.30pm (AEDT), Monday to Friday during the Retail Entitlement Offer period.

AI assistant

DOWNER EDI LIMITED — Capital/Financing Update 2011

64784_rns_2011-03-07_fcb947f8-5508-49a7-ba7d-b969a4f7d441.pdf

Retail Entitlement Offer

Contents

Important notice

1 Key dates

Enquiries

Website

2 Chairman’s letter

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS.

Dear Shareholder,

Details of the Entitlement Offer

Other information

X Section Title 3 How to Apply

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS.

3.1

The Retail Entitlement Offer

3 How to Apply

3.2

Consider the Retail Entitlement Offer in light of your particular investment objectives and circumstances

3.3 Complete and return the accompanying personalised Entitlement and Acceptance Form with your Application Monies or make a payment by Bpay[®1]

3.4

Value for Renounced Entitlements

3 How to Apply

3.4

Value for Renounced Entitlements (continued)

3.5

Acceptance of the Retail Entitlement Offer

3 How to Apply

3.5

Acceptance of the Retail Entitlement Offer (continued)

Payment by Bpay[®]

Payment by cheque, bank draft or money order

3.6

Confirmation of your application and managing your holding

X Section Title 4 ASX Offer Announcements

ASX 1H2011 Results Media Release dated 28 February 2011

Media/ASX and NZX Release

4 ASX Offer Announcements

ASX 1H2011 Results Media Release dated 28 February 2011

Waratah Update

Outlook

Forward-looking statements

4 ASX Offer Announcements

ASX 1H2011 Results Media Release dated 28 February 2011

CONTACT DETAILS

1H2011 Results Presentation dated 28 February 2011

Downer Group 2010/11 Half Year Results

Reliance on third party information

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

Overview

Overview

4 ASX Offer Announcements

Overview

Zero Harm

Group Financials

Underlying financial performance

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

Operating cash flow

Cashflow

Balance sheet and capital management

Debt and bonding facilities

4 ASX Offer Announcements

Debt maturity profile

Mining

Rail

Engineering

4 ASX Offer Announcements

1H2011 Results Presentation dated 28 February 2011

Works

Australia

New Zealand

‘Fit for business’ Overview

4 ASX Offer Announcements

Risk management framework

Market and Customer Strategy

4 ASX Offer Announcements

DOWNER EDI LIMITED Capital/Financing Update 2011