SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Management Reports 2008

Aug 24, 2008

Attention ASX Company Announcements Platform Lodgement of Open Briefing[®]

==> picture [277 x 62] intentionally omitted <==

==> picture [114 x 106] intentionally omitted <==

Southern Cross Electrical Engineering Ltd 41 Macedonia Street Naval Base, WA 6165

Date of lodgement: 25-Aug-2008

Title: Open Briefing[®] . Southern Cross. MD on FY08 Results & Outlook

Record of interview:

corporatefile.com.au

Southern Cross Electrical Engineering Limited (ASX: SXE) today reported proforma EBITDA of $21 million and NPAT before IPO costs of $14.3 million for the financial year ended June 2008. These results were $2.5 million and $2.1 million ahead of prospectus forecasts respectively. What were the drivers of the higher than expected earnings and what is the earnings outlook for the current year ending June 2009?

MD Stephen Pearce

Last financial year was a strong year for us and we’re pleased we’ve been able to report results above those contained in the prospectus forecasts. The key drivers that pushed the result above that forecast were finalising a number of client specified variations which is typical to our business, better than expected margins and achieving lower than forecast overheads, in particular recruiting fewer head office staff than we’d budgeted. These appointments were completed in July.

The FY09 outlook is positive. The level of infrastructure investment currently being undertaken by the mining and oil and gas industries in Australia presents us with a significant revenue growth opportunity in the current year. We’ve already given the market revenue guidance of $120 million for FY09, which is a 43 percent increase on the previous year. This forecast is supported by over $70 million of contracted revenue for the year and is our best start to a financial year.

1

We’re also seeing a shift in the mix of the contracts we’re performing from predominantly fixed lump sum to cost reimbursable. Due to our efficiency on the projects we undertake, we typically make better margins on fixed lump sum projects. Given my recent appointment as Managing Director, we won’t be providing a detailed profit guidance until later in the financial year.

corporatefile.com.au

Revenue was $84.2 million, up 3.8 percent from the previous year, but $12.6 million lower than prospectus forecast. In which areas was revenue lower than expected?

MD Stephen Pearce

There are two key drivers of revenue. One is the number of contracts you win; and the other is the timing of those contracts.

When we prepared the prospectus forecasts, we expected to win the electrical contract at Cape Lambert and Boddington. We were successful with Cape Lambert and missed the Boddington contract. In terms of timing, the forecasts assumed the Cape Lambert project would ramp up during the third quarter and be completed during December 2008. Actual ramp-up occurred between June and August instead, with no change to the expected completion date.

These two challenges were partially offset by above expectation revenues from overseas projects and some smaller projects in Australia.

corporatefile.com.au

In your prospectus, you provided a sensitivity analysis that indicated 10 percent higher (or lower) contract revenue would increase (or decrease) FY08 EBITDA by $2.8 million or 14.8 percent. Revenue was 10.8 percent lower than the forecast of $96.8 million, but EBITDA was $1.8 million higher. Can you explain why the FY08 results differed from the sensitivity analysis?

MD Stephen Pearce

As we just discussed, a combination of contracts awarded, better than expected margins and lower than planned costs contributed to the variance.

corporatefile.com.au

Total overhead costs, excluding IPO costs of $3.7 million, were $10.5 million, up $1.4 million from the previous year. What were the drivers of the increase in costs and what is the expected growth rate for overhead costs going forward?

MD Stephen Pearce

The main driver of the increase in overhead expenses was the cost associated with operating as a listed company, which includes expenses such as compliance costs and employee options. We’ve also increased our head office team to manage the increased level of activity; however, the actual increase incurred was below that budgeted.

2

Whilst our overhead costs are predominantly fixed, we expect they will increase in FY09 but at a lower rate than revenue growth. The expected increase is due mainly to the full-year impact of having a complete executive team in place and the additional head office staff.

corporatefile.com.au

One of the risks associated with SCEE’s business is the shortage of skilled labour. How are you seeking to mitigate this risk?

MD Stephen Pearce

Whilst the media widely reports labour costs as an issue, on the construction projects we’re involved in there’s typically a site employment agreement in place that has been agreed prior to tenders being submitted. The rates contained in those agreements are known when the tenders are submitted. By adopting this approach, the contractor has control over its labour costs across the life of the project.

There are differences in the rates paid on different projects, however from our experience the employee’s main considerations are the location of the project, the company they’ll be working for and the project itself. We believe we have an excellent reputation as an employer. Most of the people we employ on our projects have had a long association with the company. This is also apparent in the senior management team most of whom have been with us for well over 10 years.

corporatefile.com.au

Pre-tax cash flow from operations was $19.1 million, excluding IPO costs, compared with the prospectus forecast of $17.2 million. This reflects your higher than forecast EBITDA result. If your revenue is to grow to $120 million in FY09, will that result in an increased investment in working capital?

MD Stephen Pearce

Over the next 12 months we don’t expect a material change in our working capital position. This is because the trading terms on our receivables and payables operate at about the same number of days.

corporatefile.com.au

Net cash was $24.5 million as at 30 June 2008 up from $7.71 million a year earlier. What is the scope for growth in terms of acquisitions for SCEE?

MD Stephen Pearce

In our prospectus we stated that we’d consider acquisitions where they made sense for us. Our main market over the last five years has been electrical construction for the mining sector. We’ve stated that we’ve commenced the training necessary to expand into the oil and gas market and now have an accredited team that can work in that environment. To accelerate this growth strategy we’d consider acquisition opportunities. We believe that given the current credit environment, our cash balance may provide us with a competitive advantage if the right opportunity presents itself.

3

corporatefile.com.au

You’ve announced a fully franked final dividend of 4 cents per share, bringing the full year dividend to 6 cents. This brings the dividend payout ratio to 50.3 percent. What is the outlook for dividends in the current year?

MD Stephen Pearce

Consistent with the overall financial result being above the prospectus forecast, it was also pleasing to be able to declare a final dividend of 4 cents, 1 cent above the prospectus forecast.

The aim of the company is to deliver consistent and profitable growth over time and this should also see growth in both earnings and dividends per share.

corporatefile.com.au

You have been appointed recently as Managing Director. What attracted you to the role and what experience and expertise do you bring to SCEE?

MD Stephen Pearce

I’m very pleased to have taken on the role of Managing Director of SCEE and will look to continue the proud tradition of delivering quality outcomes to our customers in a structured and profitable way.

The team here is very strong in terms of the technical and operational experience built over the last 30 years. The company also appointed Stephen Fewster as Chief Financial Officer in March 2008. Both Stephen and I bring extensive financial, operational and M&A experience within a public company environment which complements the existing management skill set and now sees the company with an experienced board and management team to lead and grow the company in the years ahead.

Having worked extensively in senior management roles across mining, oil and gas and infrastructure, I bring a unique perspective to SCEE both in the key industries that it currently serves and in key growth areas.

corporatefile.com.au

What do you see as the challenges and opportunities for SCEE?

MD Stephen Pearce

We have good exposure to high growth industries. We have strong exposure to the Australian resources sector, particularly in Western Australia, and an expanding presence in oil and gas. The infrastructure requirements across Australia are also significant over the next five years.

The company has minimal debt, has cash at bank and strong experience of managing international projects over many years. In this environment, we’re well placed to pursue growth opportunities. The challenge is to manage that growth in terms of people, systems, etc. to ensure that the growth translates to profit and growth in EPS.

4

corporatefile.com.au Thank you Stephen.

For more information about Southern Cross Electrical Engineering, visit www.scee.com.au or call Stephen Pearce on +61 8 9410 1833.

To receive future Open Briefings by email, visit www.corporatefile.com.au.

DISCLAIMERS: Corporate File Pty Ltd has taken reasonable care in publishing the information contained in this Open Briefing®. It is information given in a summary form and does not purport to be complete. The information contained is not intended to be used as the basis for making any investment decision and you are solely responsible for any use you choose to make of the information. We strongly advise that you seek independent professional advice before making any investment decisions. Corporate File Pty Ltd is not responsible for any consequences of the use you make of the information, including any loss or damage you or a third party might suffer as a result of that use.

5