DOW 2.29% $4.91 downer edi limited

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    Company Announcement

    Acquires CPG Corporation Pte Ltd from Temasek Hldgs Pte Ltd

    HOMEX - Sydney
    Downer EDI Limited (Downer EDI) today announced that it has signed a
    Sale and Purchase agreement with Temasek Holdings Pte Ltd (Temasek),
    a leading investment company in Singapore, for the purchase of its
    wholly-owned subsidiary CPG Corporation Pte Ltd (CPG). Settlement is
    expected to be completed by 1st April 2003.

    CPG (formerly known as PWD Corporation) is one of Asia's leading
    facilities management, project management and engineering consultancy
    companies, previously operating as the Singapore Public Works
    Department (established 1833). Based in Singapore, CPG employs over
    2000 staff and is expecting net fee income of at least S$200 million
    (A$195 million) for financial year ending 31 March 2004. Major
    clients include Singapore Government departments under ongoing
    facilities management, project management and consultancy contracts.
    Principal markets include transport (road, rail and airports),
    education, health, environmental, government buildings and master
    planning of public infrastructure.

    Managing Director of Downer EDI, Stephen Gillies, said Downer EDI is
    delighted to have been chosen by Temasek to acquire CPG. "There are
    natural synergies between the companies with a common emphasis on
    providing total infrastructure solutions to clients and the
    acquisition will be mutually beneficial. This investment represents a
    further push by Downer EDI into facilities management across its core
    sectors of road, rail, power, telecommunications and mining," Mr
    Gillies said.

    "This transaction is consistent with Downer EDI's historical
    participation in a number of government privatisation programs
    including our highly successful 1996 acquisition of the former New
    Zealand Public Works Department, now known as Works Infrastructure,"
    he said.

    Mr Gillies said CPG has maintained a highly successful operating
    business both before and after corporatisation and this is evidenced
    by its growing revenue base and consistently strong profits.

    "The addition of CPG will reposition Downer EDI in Asia as a service
    company and significantly expand our existing, well established
    operating base in Singapore. CPG is a longstanding and reputable
    provider of high value-adding engineering services and will enable
    Downer EDI to provide turnkey end-to-end solutions to its clients,"
    Mr Gillies said.

    "Further, CPG has a substantial presence in facilites management
    comprising the management of over 1,000 buildings, structures and
    facilities, and over 8 million square metres of gross floor area,
    further enhancing Downer EDI's service offering.

    "CPG's highly skilled and experienced workforce is expected to be
    able to provide significant benefits to our clients in the
    Asia-Pacific region," Mr Gillies said.

    Mr Jimmy Phoon, Managing Director of Stategic Development (Asia
    Investments), Temasek said: "We are pleased with this successful
    sale. We believe that Downer is a strategic shareholder, which will
    be able to add value and enhance CPG's business and potential as a
    regional player. On the other hand, CPG's track record in Singapore
    and the region provides the opportunity for Downer to reach out to
    the growing opportunities in Asia.

    "This is an excellent win-win partnership for both Downer and CPG
    given their successes in providing integrated services to diverse
    industries in the Asia Pacific region. Temasek is pleased that both
    companies will benefit from the transaction, with Downer
    strengthening its presence in Singapore and CPG now able to complete
    its transformation into a fully fledged private sector company and
    also leverage off Downer's extensive Asia-Pacific network."

    CPG President & CEO, Khor Poh Hwa said: "With the combined expertise
    and market reach of CPG and Downer, we look forward to increased
    opportunities for CPG in the Asia Pacific region, including entry
    into new markets."

    CPG has a gross order book exceeding S$500 million in revenue (A$490
    million), underpinning CPG's future revenue stream, and in its 3
    years of operation since corporatisation, has achieved annual net
    profit after tax consistently above S$22 million (A$20 million).

    Mr Gillies said there would be significant strategic and financial
    benefits from the acquisition, leading to excellent short term and
    long term prospects for Downer EDI.

    "This business has been prepared for privatisation and its order book
    strongly underpins revenue for the next two years.

    "The acquisition will increase our order book from $5.0 billion to
    around $5.5 billion and will not have a material impact on gearing
    owing to continued strong operating cash flow and further disposals
    of non-core assets," Mr Gillies said.

    "At the time of our 2002 half year results announcement (24 February
    2003), we said we were on track to deliver a full year 2003 profit
    after tax of at least $63 million. The acquisition of CPG was struck
    on an Enterprise Value to EBITDA multiple of around three times
    (Enterprise Value being $76 million), which is comparable to similar
    businesses, and will be EPS positive from day one. We now expect a
    significant uplift to the outlook advised in February.

    "In terms of 2004, organic growth is expected to continue according
    to plan, and combined with this opportunity, we expect 2004 will be
    another record year with profit up by at least 15% on 2003," he said.

    John Shuey
    61 2 9251 9899
    or 0413 705 491

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