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1 Downer EDI Limited Presentation by:- Engineered for Success STEPHEN GILLIES Chief Executive Officer GEOFFREY BRUCE Chief Financial Officer Credit Suisse First Boston Australia Equities Limited Participating Organisation of the Australian Stock Exchange A.B.N A.C.N March 2004

2 Downer EDI Snapshot ASX Listed top 150 company by market capitalisation Leading provider of outsourced engineering services design, project management, installation, operations and maintenance Comprised of five business platforms all leaders in their chosen fields Operate in over 8 countries 14,000 + employees (>25% professionally qualified) High level of engineering capability with strong intellectual property (IP) focus Major customers Government OUR SERVICES AND PRODUCTS IMPACT EVERYDAY LIFE THROUGH THE GOVERNMENT AND PRIVATE SECTORS 2

3 Downer EDI Vision DOW aims to be the leading provider of outsourced engineering services in the Australasian and selected Asian regions Outsourcing is a major growth industry and DOW intends being a strong participant in this emerging sector DOW s leading market positions provide a robust platform to tackle these markets and deliver on these key financial objectives: ROIC > 14% pa Long Term Sustainable EBIT Margin > 5% NPAT Growth of 8-10% pa 3

4 Downer EDI What We Do Products & Services Linkage Strengths Mining and Mine Infrastructure Services Transport Infrastructure Services Energy & Communication Infrastructure Services Design, Project Management & FM Manufactured Products & Services Engineering Capability & IP Delivering Infrastructure Solutions Market Leadership Client Relationships Modern Plant & Equipment Capable People IP & Technology OUR SERVICES AND PRODUCTS IMPACT EVERYDAY LIFE THROUGH THE GOVERNMENT AND PRIVATE SECTORS 4

5 Downer EDI Financial Overview FY'03 H1'04 Operating Revenue % % NPAT % % Total Assets % % (A$ Millions measured against PCP) 5

6 Downer EDI Business Drivers MINING & MINE INFRASTRUCTURE SERVICES DEMAND FOR VALUE ADDED SERVICES eg Infrastructure Upgrades Explosives Supply GDP GROWTH eg Increasing Power Consumption INCREASE TREND TO INCREASE OUTSOURCING TREND TO OUTSOURCING GLOBAL COMMODITY DEMAND eg China 6

7 Downer EDI Business Drivers INFRASTRUCTURE SECTORS: #1 SHIFTING TECHNOLOGY eg eg 3G 3G Networks 4 th 4 th Generation Train Train Electronic Ticketing POPULATION GROWTH GOVERNMENT SPEND PUBLIC DEMANDS eg Safety & Value 7

8 Downer EDI Business Drivers INFRASTRUCTURE SECTORS: #2 DEMAND FOR MODERNISATION eg Efficiencies New Technologies GDP AGEING & RUNDOWN INFRASTRUCTURES OUTSOURCING eg Changing Client Focus Shrinking Civil Service Redefined Govt. Roles 8

9 Downer EDI What Are Our Strategies? Develop and Leverage IP Selling Integrated Solutions Capitalise on Outsourcing Financial Discipline Achieve Strong Market Share 9

10 Downer EDI What Is Our IP? SEGMENT EXAMPLES: Master Planning Design Diagnostic Testing Process Design Patents FM Management Tools Train Operating Systems Freight Locomotive Design Patents Crash and Anti-roll Designs Explosive Patents Minerals Separation, Design and Manufacture Patented Rollingstock Design Design Time Sold to EMD - GM Proprietary Job Management Software FM Management Tools Infrastructure Mapping Software Cogeneration System Design Instrumentation and Controls Traffic System Management FM Management Tools Sealing Techniques and Product Patents Simulators Testing Laboratories 10

11 Downer EDI Selling Integrated Solutions Increased penetration rate for client disposable spend Partnering / Alliancing Co-Investing 11

12 Downer EDI Capitalise on Outsourcing Public Non Core Privatisation PPP/PFI Private Operations Maintenance Full Service 12

13 Downer EDI Financial Discipline Maintain Strong Balance Sheet Improve ROE / ROIC Reinvest Free Cash Flow in: R&D Investment eg Innovonics IP Business Development Strategic Positioning Growth Options Recovery of Unproductive Capital = Capital Management 13

14 Downer EDI Achieve Strong Market Share Organic M & A Geographic Expansion 14

15 Downer EDI How Have We Developed? (All figures: A$ Millions) FY01 FY02 FY03 FY04E Engineering % % % Mining & Resources % % 1040 (6%) Infrastructure % 630 9% Rail % 319 (12%) % Continuing Business % % % Discontinued & Other Total Revenue % % % Division PBT Weighted Avg PBT Margin (FY01-03) 4.1% SERVICES BUSINESS DELIVERING STRONG SALES GROWTH 15

16 Downer EDI Where To? IMPROVING SHAREHOLDER RETURNS FY'02 FY'03 H1'03 H1'04 EPS* 22.16c 24.24c +9.4% 7.96c 9.12c +14.6% DPS** 10.80c 12.10c +11.3% 2.00c 4.00c % Franking 0% 41.4%** pts 0% 50.0% pts ROIC*** 11.5% 12.7% +120bps 11.1% 13.1% +200bps (Rolling 12 months) * Fully Diluted ** Final Dividend FY03 50% Franked *** EBITA / Avg (Net Debt + Equity) 16

17 Downer EDI Leverage Strong Foundations GEARING Vs REVENUE OUTLOOK 120% 110% 100% 90% 80% 70% 60% 50% Gearing (Net Debt/Equity) (A$ billions) Order Book 40% 1 30% Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Jun-04E 0 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Actual Preferred Target Maximum Target Minimum Order Book 17

18 Downer EDI Committed Sales Profile Order Book as at 30 June 1999 Order Book as at 31 December ,500 3,500 3,000 3,000 2,500 2,500 A$ Millions 2,000 1,500 A$ Millions 2,000 1,500 1,000 1, FY'00 FY01 FY02 FY03 FY04 Beyond 0 FY04 FY05 FY06 FY07 FY08 Beyond Forward Orders Forward Orders H1'04 18

19 Downer EDI Growth Path 19

20 Downer EDI Summary #1 Outlook for FY05 and beyond is very positive Expected sales growth well ahead of CPI No requirement for new share capital to fund expansion via continuing businesses and bolt-on acquisitions Continued strong focus on: Improving Group EBIT Margin Working Capital Funds Employed Increasing ROIC and ROE 20

21 Downer EDI Summary #2 Founding shareholder stakes placed to institutions in late 2003 to improve free float now 73% Management took advantage of opportunity to invest. Self-funded entry into DOW. Holding 6% relevant interest Attractive investment on a relative value basis 21